Stubbings v Jams 2 Pty Ltd - [2017] VSC 404

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT

S CI 2016 02053

JEFFREY WILLIAM STUBBINGS	Appellant
v
JAMS 2 PTY LTD (ACN 600 173 117) AND OTHERS	Respondents

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JUDGE:	ELLIOTT J
WHERE HELD:	MELBOURNE
DATE OF HEARING:	25 MAY 2017
DATE OF JUDGMENT:	17 JULY 2017
CASE MAY BE CITED AS:	STUBBINGS v JAMS 2 PTY LTD
MEDIUM NEUTRAL CITATION:	[2017] VSC 404
ORDERS APPEALED FROM:	23 March 2017, relying on earlier judgment [2016] VSC 711

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PRACTICE AND PROCEDURE – Appeal from associate judge – Application by mortgagees for summary judgment – Judgment for possession granted at first instance – Whether defence has real prospect of success – Proposed defence that loan was unconscionable – Whether unconscionability requires moral obloquy on the part of the lenders – Asset based lending – Appeal allowed – Civil Procedure Act2010 (Vic), ss 61, 63, 64 – Supreme Court Act (General Civil Procedure) Rules 2015 (Vic), rr 22.03, 77.06, 77.06.1, 77.06.9.

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APPEARANCES:	Counsel	Solicitors
For the Appellant	Mr A Dinelli, Mr G Kozminsky and Mr A Christophersen	-
For the Respondents	Mr J Mattin	Ajzensztat, Jeruzalski & Co

TABLE OF CONTENTS

A.. Introduction................................................................................................................................... 1

B.. Background to the appeal........................................................................................................... 2

B.1... The further hearing before the associate judge............................................................... 2
B.2... Grounds of appeal............................................................................................................... 3

C.. Factual background..................................................................................................................... 3

C.1... Facts establishing the Mortgagees’ claim........................................................................ 3
C.2... Facts relevant to the unconscionable conduct defence.................................................. 4

D.. Further key findings below........................................................................................................ 8

E... Relevant principles.................................................................................................................... 13

E.1... Summary judgment........................................................................................................... 13
E.2... Appeal from an associate judge...................................................................................... 14
E.3... Unconscionability.............................................................................................................. 14

F... Determination of the appeal.................................................................................................... 17

G.. Security......................................................................................................................................... 21

H.. Conclusion................................................................................................................................... 22

HIS HONOUR:

A. Introduction

Jeffrey William Stubbings (“Stubbings”) appeals primarily from certain orders made by an associate judge on 23 March 2017 (“the Orders”). Pursuant to the Orders, the court gave summary judgment in favour of the respondents (“the Mortgagees”)[1] for possession of 3 properties owned by Stubbings (“the Properties”). Summary judgment was granted essentially based on reasons for judgment published previously by the associate judge on 28 November 2016 (“the Earlier Reasons”).[2]
[1]The Mortgagees are Jams 2 Pty Ltd, Conterra Pty Ltd and Janaco Pty Ltd.
[2]Jams 2 Pty Ltd v Stubbings [2016] VSC 711.

In the Earlier Reasons, her Honour found that Stubbings had no real prospect of success in defending the Mortgagees’ claims, but ordered the proceeding proceed to trial under s 64(b) of the Civil Procedure Act 2010 (Vic) on the grounds that the dispute was of such a nature that only a full hearing on the merits was appropriate.[3] However, because her Honour found Stubbings obtained a benefit from the transaction with respect to pre-existing obligations,[4] the orders made on 5 December 2016 to give effect to the Earlier Reasons also required Stubbings to provide security to the satisfaction of the Senior Master in the sum of $240,124.42 (“the Security Order”). Her Honour ordered that, in the event this security was not provided by 30 January 2017, the Mortgagees…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2017] VSC 404
Decision Date: 17 JULY 2017

CaseChat Overview and Summary

The case of Stubbings v Jams 2 Pty Ltd involved an appeal from an associate judge's decision in a property dispute. The mortgagees, Stubbings, sought summary judgment for possession against Jams 2 Pty Ltd, which had been granted at first instance. Jams 2 contested the judgment, proposing a defence that the loan agreement was unconscionable. The central legal issue before the court was whether the defence had a real prospect of success, particularly concerning the requirement for unconscionability to include moral obloquy on the part of the lenders.

The court examined whether the defence of unconscionability could be upheld in the absence of moral blameworthiness on the part of the lenders. Given the asset-based nature of the lending, the court found that the defence had a real prospect of success. The court determined that unconscionability could be established through the inequality of bargaining power and the lack of an opportunity for the borrower to understand the nature and effect of the loan agreement. The court concluded that moral blameworthiness was not a necessary element for establishing unconscionability in such circumstances.

As a result, the appeal was allowed, and the earlier judgment granting summary judgment for possession was set aside. The case underscored the importance of considering the broader context of unconscionability in lending agreements, particularly in asset-based lending scenarios. The final orders of the court included the setting aside of the summary judgment and the remanding of the matter for further proceedings to allow Jams 2 Pty Ltd to present its defence.

Orders