SWANCOLT Pty Ltd v Maria Filippone (by her Guardian Ad Litem Guiseppe Filippone)

[2006] WASC 205

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   SWANCOLT PTY LTD -v- MARIA FILIPPONE (by her Guardian Ad Litem GUISEPPE FILIPPONE) [2006] WASC 205

CORAM:   MASTER SANDERSON

HEARD:   30 AUGUST 2006

DELIVERED          :   14 SEPTEMBER 2006

FILE NO/S:   CIV 1489 of 2006

BETWEEN:   SWANCOLT PTY LTD (ABN 81 086 601 274)

Plaintiff

AND

MARIA FILIPPONE (by her Guardian Ad Litem GUISEPPE FILIPPONE)
Defendant

Catchwords:

Summary judgment - Application seeking specific performance of contract for sub­division and sale of land - Defence raised not particularised - Whether incompetence of lawyers sufficient grounds to refuse judgment

Legislation:

Nil

Result:

Judgment ordered for plaintiff

Category:    B

Representation:

Counsel:

Plaintiff:     Mr J C Vaughan

Defendant:     Mr W Vogt

Solicitors:

Plaintiff:     Christensen Vaughan

Defendant:     Bruce Havilah & Associates

Case(s) referred to in judgment(s):

Australian Competition and Consumer Commission (ACCC) v Radio Rentals Ltd (2005) 146 FCR 292

Bridgewater v Leahy (1998) 194 CLR 457

Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447

Gibbons v Wright (1954) 91 CLR 423

Louth v Diprose (1992) 175 CLR 621

Moscow Narodny Bank Ltd v Mosbert Finance (Aust) Pty Ltd [1976] WAR 109

Petelin v Cullen (1975) 132 CLR 355

Tranchita v Retravision (WA) Pty Ltd [2001] WASCA 265

Case(s) also cited:

Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd (2003) 214 CLR 51

Birch Investments Pty Ltd v Lim, unreported; SCt of WA; Library No 7396; 12 July 1988

Blomley v Ryan (1956) 99 CLR 362

Burrawong Investments Pty Ltd v Lindsay [2002] QSC 82

Eng Mee Yong v Letchumanan [1980] AC 331

Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87

Fry v Lane (1888) 40 Ch D 312

Garcia v National Australia Bank Ltd (1998) 194 CLR 395

Lego Australia Pty Ltd v Paul's (Merchants) Pty Ltd (1982) 42 ALR 344

Saunders (Executrix of Will of Gallie) v Anglia Building Society [1971] AC 1004

Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165

Webster v Lampard (1993) 177 CLR 598

1. MASTER SANDERSON:  This was the plaintiff's application for summary judgment.  At the conclusion of the hearing, I indicated that I would grant the plaintiff's application and enter judgment in terms of a minute provided by the plaintiff's counsel.  I indicated that I would publish reasons for that decision at a later date.  These are those reasons.

2. It is convenient to begin an analysis of the facts by reference to the statement of claim.  The first two paragraphs identify the parties.  By par 3 it is pleaded that on 28 March 2006 the State Administrative Tribunal appointed Guiseppe Filippone ("Mr Filippone") as limited administrator of the estate of the defendant.  That paragraph is included to explain the presence of the guardian ad litem.  The defendant is the registered proprietor of Lot 13, Kingsway, Darch ("the Land").

3. By par 5 it is pleaded that by deed dated 20 October 2004 entitled "Declaration of Trust", the defendant holds the Land on trust for herself as to the "New Lot" and for herself and the defendant as to one undivided half share each.  By par 6 it is pleaded that also on 20 October 2004 the defendant granted to the plaintiff an option to purchase her undivided half share in the Land (other than the New Lot).  This agreement is referred to in the pleading as the "Call Option Deed".

4. By par 7 it is pleaded that on 10 February 2005 the plaintiff exercised the option to purchase the defendant's undivided half share in the Land (other than the New Lot) in accordance with the Call Option Deed.  By par 8 it is pleaded that pursuant to exercise of the option under the Call Option Deed by a written agreement dated 18 February 2005 entitled "Contract for Sale of Land or Strata Title by Offer and Acceptance" ("Sale Contract"), the defendant as seller agreed to sell to the plaintiff as buyer and the plaintiff agreed to buy the defendant's undivided half share in the Land for the purchase price stated in the Sale Contract.  By par 9 it is pleaded that on 18 February 2005 the plaintiff paid the deposit under the Sale Contract.

5. By par 10 of the statement of claim, it is pleaded that the Sale Contract contained certain express terms.  Relevantly, by cl 1.3 of special condition 6, the plaintiff was to arrange for subdivision of the Land to create the New Lot.  Settlement was to occur within 21 days after the issue of the certificate of title for the New Lot.  By par 11 it is pleaded that the Sale Contract contained certain implied terms.  Without detailing each of these terms, it is said that the parties were to cooperate to do all things necessary to bring about the subdivision.  The reasons why the terms are to be implied in the Sale Contract are set out in par 11(3)(e) of the pleading.

6. By par 12 it is pleaded that by deed dated 22 April 2005 entitled "Deed of Settlement" the defendant and the plaintiff agreed to vary the Declaration of Trust and the Sale Contract.  By par 13 the express terms of the Deed of Settlement are pleaded.  Relevantly, cl 5 of the Deed of Settlement required the parties to do all things necessary to expedite and facilitate the subdivision of the Land to create the New Lot.

7. By par 14 it is pleaded that on 17 October 2005 the Western Australian Planning Commission granted approval to the proposed subdivision of the Land to create the New Lot.  That approval required certain works to be undertaken as a pre‑condition of the approval of the subdivision.  By par 15 it is pleaded that the plaintiff provided the defendant with a copy of the approval for the proposed subdivision on 21 October 2005.  Paragraph 16 pleads the conditions.  Among these conditions (and pleaded in par 16(2)(a)) was a requirement that there be a restrictive covenant preventing access to Kingsway Road.  There was also Water Corporation easements required (pleaded in par 16(2)(d)).

8. By par 17 it is pleaded that on 18 November 2005 the defendant consented to the program of works to satisfy the conditions of approval for subdivision of the Land to create the New Lot.  By par 18 it is pleaded that on 9 January 2006 the plaintiff provided to the defendant for the defendant's execution documents to be signed by the defendant to obtain clearances from relevant authorities.  These documents comprised a deed of restrictive covenant with the City of Wanneroo, two s 70A notifications, one as to a service road and the other as to a sewer, and the owner's deed with the Water Corporation.

9. By par 19 it is pleaded that the plaintiff provided to the defendant for the defendant's execution a further document allowing application for the issue of new certificates of title as to the New Lot and the balance of the Land.  By par 20 it is pleaded that the plaintiff requested these documents to be executed by the defendant.  By par 21 it is pleaded that if the documents were executed, then subdivision of the Land to create the New Lot would proceed and there would issue new certificates of title for the New Lot and the balance of the Land and there would be thereafter settlement under the Sale Contract.

10. By par 22 it is pleaded that in breach of the implied terms of the Sale Contract and the express term found in cl 5 of the Deed of Settlement, the defendant has refused to execute these documents.  The plaintiff seeks specific performance of the agreement it alleged it has reached with the defendant.  In other words, the plaintiff seeks to have signed the documents necessary to give effect to the subdivision and which would allow for the issue of new titles.

11. The application is supported by two affidavits of Davide Pio Lombardo ("Mr Davide Lombardo"), the first sworn 21 June 2006 and the second sworn 1 August 2006.  In his first affidavit, Mr Davide Lombardo verifies the contents of the statement of claim (as he is required to do under O 14) and provides copies of the relevant documents.  A review of these documents confirms that they are in line with what is pleaded in the statement of claim.

12. Mr Davide Lombardo's second affidavit was sworn after an affidavit of Mr Filippone was filed in opposition to the application.  For present purposes, it is par 9 and par 10 of Mr Davide Lombardo's second affidavit which are important.  They are in the following terms:

    "9.At all times from in or about October 2004 to 10 February 2006 the defendant was represented by a solicitor, namely, Peter Sorensen, in her dealings with the plaintiff and myself in respect of the Land and in particular in the dealings between the plaintiff and the defendant that resulted in the Declaration of Trust, the Call Option Deed, the Sale Contract and the Deed of Settlement.

    10.Mr Sorensen, the defendant's solicitor, prepared the Declaration of Trust, the Call Option Deed, the Sale Contract and the Deed of Settlement (which, apart from the Deed of Settlement, were to replace previous similar documents between the defendant and my father personally which had been prepared by a previous solicitor acting for the defendant, Peter Beekink).  Moreover, as can be seen from annexures 'DL4', 'DL5', 'DL7' and 'DL9' to my affidavit sworn 21 June 2006, Mr Sorensen witnessed the defendant's execution of those transaction documents."

13. It is worth pausing at this point to note that on the face of it, the plaintiff has done everything necessary to establish an entitlement to summary judgment.  The statement of claim is internally consistent and refers to all documents necessary to sustain a cause of action.  The affidavits verify the statement of claim and provide copies of all relevant documents.  There is no obvious logical lacuna to prevent summary judgment being granted.  The evidentiary onus then shifts to the defendant.  The defendant must establish that there exists an arguable defence to the plaintiff's claim.  The defendant is, of course, entitled to assume a state of facts most favourable to her position.  But to establish a defence the defendant must "condescend upon particulars" as that phrase is used by Brinsden J in Moscow Narodny Bank Ltd v Mosbert Finance (Aust) Pty Ltd [1976] WAR 109.

14. As I mentioned above, an affidavit by Mr Filippone sworn 17 July 2006 was filed in opposition to the application.  By par 1 of that affidavit, Mr Filippone confirms that on 28 March 2006 he was appointed administrator for Maria Filippone, his sister.  A copy of the order making the appointment is found as annexure "GF1".  Appearing as annexure "GF2" to Mr Filippone's affidavit, is a medical report of Dr Angelo Mavromatis ("Dr Mavromatis") dated 15 February 2006.  Although it is not stated in Mr Filippone's affidavit, I assume that Dr Mavromatis' report was part of the material available to the State Administrative Tribunal when the administration order was made.  Appearing as annexure "GF3" to Mr Filippone's affidavit is a "Medical Review Assessment Proforma".  This document was prepared for, or on behalf of, the Department of Social Security by the Australian Government Health Service Medical Officer.  I will have more to say about annexures "GF2" and "GF3" below.

15. Paragraph 4 of Mr Filippone's affidavit is in the following terms:

    "The defendant was born on 24 May 1956.  On 16 September 1966, the defendant was involved in a motor vehicle accident where she suffered head injuries leaving her in a coma for several weeks.  She was left partially paralysed to the right side of her body and has had limited learning ability…"

16. This paragraph was central to the defendant's opposition to the application.  No objection was taken to its contents by counsel for the plaintiff.  But, put at its best, it is of limited probative value.  The conclusion that the defendant has "limited learning ability" is completely unsupported by any explanation as to how Mr Filippone knows that the defendant's learning ability is limited, and how any limitation manifests itself.

17. The position is not assisted by the two annexures to which I have referred.  In his report, Dr Mavromatis notes that the defendant "has quite severe and volatile insulin dependent diabetes mellitus".  The stress the defendant has been under has, according to Dr Mavromatis, made her diabetes worse.  Annexed to Dr Mavromatis' report is the results of a mini‑mental state examination, a test used to measure depression.  It seems clear the defendant is in a depressed state.  But the report says nothing about the defendant's mental capacity.  Furthermore, and perhaps most importantly, the report was drawn up in February 2006.  The relevant documents in this case were signed on 20 October 2004.  Dr Mavromatis' report can say nothing about the defendant's mental condition in October 2004.

18. Annexure "GF3" is also of no value.  It does say that the defendant's primary mental condition is "post traumatic neurological deficit".  Nowhere is it explained what that means.  Furthermore, the report was prepared in July 1997.  Taken at its best, the assessment gives no indication at all of the defendant's level of understanding as at October 2004.

19. Mr Filippone provides some background to the transactions the subject of this dispute.  He says that in or about 1985 his father gifted the Land to the defendant and his brother, Giovanni, as tenants in common in equal shares.  It was decided that the defendant would use and occupy the western half of the Land and Giovanni the eastern half of the Land.  There was only one certificate of title for the Land.  The agreement between the defendant and Giovanni was encapsulated in a deed which appears as annexure "GF4" to Mr Filippone's affidavit.  The defendant currently lives in a residential property with her mother on the front portion of the western side of the Land.

20. Some time prior to 2003, Giovanni told the defendant that he was considering selling his portion of the property to developers.  The defendant then expressed a desire to purchase Giovanni's proportion of the Land, but she did not have available funds to complete the purchase.  In or about January 2003, Giovanni, who had received an offer to purchase his portion of the Land, sought the defendant's consent to allow the sale as he was required to do under the terms of the earlier agreement.  At Mr Filippone's suggestion, Mr Sorensen was retained to act for the defendant in respect of the sale.

21. Around the same time the defendant consulted one Vincent Lombardo ("Mr Vincent Lombardo") about the Land.  Mr Vincent Lombardo was known to the defendant through the local church and he was a person who was trusted by the defendant and her family.  Mr Filippone says that Mr Vincent Lombardo suggested to the defendant that he would give her the money to purchase Giovanni's proportion of the Land.  At this stage precisely what Mr Vincent Lombardo was to receive in return for this largesse was unspecified.  However, according to Mr Filippone, the defendant always thought that she would hold the title to the Land.

22. It seems discussions took place between Mr Vincent Lombardo and the defendant in or about June 2003.  Although he does not say how he came by the information, Mr Filippone says that these discussions involved the prospect of subdividing the Land.  This subsequently led to the documents being signed between the plaintiff and the defendant in October 2004.  Giovanni sold his portion of the Land to the defendant for $475,000 pursuant to a contract dated 22 November 2004.  Nowhere in his affidavit does Mr Filippone suggest that the defendant did not understand the nature of the transaction she was entering into with the plaintiff.  Mr Filippone does say that the defendant believed she was dealing with Mr Vincent Lombardo and not a separate corporation or property developers: see par 20.  But, apart from that, there is nothing whatever in Mr Filippone's affidavit to suggest that the defendant did not understand the nature of the transaction.

23. A reading of the affidavit evidence filed in opposition to the application gives no real indication of what defence is put against the plaintiff's claim.  However, the written submissions filed on behalf of the defendant gives three grounds for denying the plaintiff judgment.  The first of these is an allegation of unconscionable conduct on the part of the plaintiff.  In putting forward this defence, the defendant is relying upon the decision in Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447.

24. The defence of unconscionable conduct requires the defendant to establish a number of facts.  First, the defendant must establish that he or she was under a "special disability" or "special disadvantage" in dealing with the other party with the consequence that there was an absence of any reasonable degree of equality between them.  Second, the defendant must establish that the disability or disadvantage was sufficiently evident to the stronger party to make it prima facie unfair or unconscientious that he or she procure, or accept, the weaker party's consent to the impugned transaction in circumstances which he or she procured or accepted it.  If both of these factors are present, then the onus is cast upon the stronger party to show that the transaction was fair, just and reasonable.  Apart from the Amadio decision (supra), this formulation of the test is derived from Louth v Diprose (1992) 175 CLR 621 at 626 – 637 and Tranchita v Retravision (WA) Pty Ltd [2001] WASCA 265 at [63]. Really, the doctrine involves the knowing exploitation by one party of the special disadvantage of another in dealings between them.

25. As I have indicated above, there is nothing in the evidence which would allow me to conclude that the defendant in or about October 2004 was in a position of special disability or special disadvantage.  There is no evidence about her mental capacity.  But even accepting that she may have had "limited learning ability" and a lack of commercial skills, she was, at all times, legally represented.  It simply cannot be said that there was an absence of a reasonable degree of equality between the plaintiff and the defendant.

26. Furthermore, the defendant has to establish that there is a triable issue on the question of whether the plaintiff's conduct was inconsistent with equity or good conscience.  That means the defendant has to establish that the plaintiff's conduct amounted to "exploitation", "victimisation" or an "abuse of power": see generally Louth v Diprose (supra) at 630 and 632; Bridgewater v Leahy (1998) 194 CLR 457; Australian Competition and Consumer Commission (ACCC) v Radio Rentals Ltd (2005) 146 FCR 292. At a minimum, a defendant seeking to establish a defence of unconscionable conduct must prove that the stronger party was sufficiently aware of the facts that would raise the possibility in the mind of a reasonable person that the defendant occupied a position of special disability or special disadvantage. In this case, the defendant had legal representation. There is nothing in the evidence which suggests sharp practice on the part of the plaintiff.

27. The second proposed defence is that of non est factum.  The first point to observe is that such a defence is incompatible with a defence of lack of mental capacity.  The essence of the doctrine of non est factum is that there is no true consent as the signing party did not intend to sign a document of that character or class: it is "not my deed".  The doctrine assumes capacity, albeit with explanation, to have an understanding of what the document actually means.  By contrast the defence of lack of mental capacity applies where a party lacks the capacity to understand the general nature of the transaction when it is explained: see Gibbons v Wright (1954) 91 CLR 423 at 437 – 438.

28. It was suggested in the defendant's submissions that the decision of the High Court in Petelin v Cullen (1975) 132 CLR 355 might be read as extending the plea of non est factum to those lacking mental capacity.  In fact, in Petelin v Cullen (supra), the High Court confirmed that to make out a non est factum defence, the defendant must show that he or she signed a document (at 360):

    "in the belief that it was radically different from what it was in fact and that … as against innocent persons, (the) failure to read and understand it was not due to carelessness …"

1. In this case there is nothing whatever to suggest that the heavy onus on a defendant to establish a non est factum defence could be discharged.  Once again the fact of legal representation is significant.  What, one might ask, is the point of legal representation but to have documents and commercial transactions explained to a party?  Here there is no basis to conclude that the nature and effect of the Sale Contract is radically or fundamentally different from that of the document the defendant believed or intended she was signing.  There is simply no evidence to that effect.

2. Finally, it is suggested that a defence of misleading or deceptive conduct might be available.  For that to be so there must be some representation on the part of the plaintiff that was misleading or deceptive or was likely to mislead and deceive.  There is nothing in the evidence which details any representations made by either the plaintiff or Mr Vincent Lombardo to the defendant.  There is evidence that discussions took place but there is very little said about the nature of those discussions.  Again, there is nothing in the evidence which could establish a triable issue on whether there was misleading or deceptive conduct on the part of the plaintiff.  For these reasons then, in my view, there is no defence to this claim.  The plaintiff is entitled to summary judgment.

3. Having said that, this case has caused me considerable disquiet.  The defendant's answer to the plaintiff's claim was a shambles.  What seems implicit in the way the defence put their case was that the defendant lacked the mental capacity to understand the transactions she entered into.  But if that defence was to be made good – and at this level it was only a matter which had to be arguable – some evidence of the defendant's mental capacity in and around the time when the documents were signed – that is, October 2004 – should have been produced.  The fact that it was not produced was a glaring oversight.

4. The defendant's case was deficient in other respects.  It would seem that the Land was sold to the plaintiff for an amount a good deal less than it would realise on today's market.  Mr Filippone says as much in his affidavit: see par 30.  But there was no evidence as to what the value of the Land per square metres was in October 2004.  If the defendant had have been able to establish that the Land had been sold at a gross undervalue, it would greatly have strengthened her position.  Once again, the decision not to lead evidence on that point was questionable.  Finally, there was the position of Mr Sorensen, the solicitor acting for the defendant when the transaction was concluded.  If there was any suggestion that the defendant did not understand the nature of the transaction, then evidence should have been provided from Mr Sorensen to support that contention.  If no evidence to that effect was available, then the contention should not have been made.  But to proceed with an argument that the defendant lacked mental capacity and not provide some evidence to that effect from Mr Sorensen was a gross oversight.

5. At the commencement of the hearing, I suggested to the parties that the best way to proceed with this case would be not to deal with the summary judgment application, but actually have a trial of the action.  Counsel for the plaintiff took instructions on that suggestion and not surprisingly, given the rock solid nature of its case, decided to proceed.  Counsel for the defendant showed no inclination to proceed to a trial.  When I put the possibility to him, he found a number of reasons for objecting to a speedy trial.  At no time did the defendant's counsel apply for an adjournment to attempt to bolster the defendant's evidentiary position.  That was so even when during the course of submissions it became apparent that there were evidentiary deficiencies in the case he was seeking to advance.

6. It is O 14 r 3(1) which allows judgment to be given for a plaintiff.  That rule does allow a court to decline to enter judgment if it is satisfied "that there ought for some other reason to be a trial of that claim".  I gave careful consideration to refusing the plaintiff's application in reliance upon that provision of the rule.  But ultimately I decided that there was no basis upon which I could do so.  The evidence in this case does nothing more than lead to a suspicion that the defendant lacked the mental capacity to properly understand this transaction.  But to act on the basis of that suspicion would render an injustice to a plaintiff who has done everything necessary to bring itself within the terms of the rule.  Nor after careful consideration was I satisfied that the incompetent way in which this case was handled by the defendant's solicitors was sufficient to refuse to enter judgment for the plaintiff.  To adopt that approach would have been to say in another way that I held a suspicion that the defendant might have a defence.

7. The judgment will date from the date of publication of these reasons.