Western Avenue Pty Ltd v Glushak

[2011] VCC 1351

IN THE COUNTY COURT OF VICTORIA Revised

Not Restricted

AT MELBOURNE
CIVIL DIVISION

COMMERCIAL LIST – EXPEDITED CASES DIVISION

Case No. CI-10-02200

WESTERN AVENUE PTY LTD	Plaintiff
v
PAUL GLUSHAK and GALINA GLUSHAK	Defendants

---

JUDGE:	HIS HONOUR JUDGE ANDERSON
WHERE HELD:	Melbourne
DATE OF HEARING:	30 September 2011
DATE OF JUDGMENT:	30 September 2011 (revised 3 October 2011)
CASE MAY BE CITED AS:	Western Avenue Pty Ltd v Glushak & Anor
MEDIUM NEUTRAL CITATION:	[2011] VCC 1351

REASONS FOR JUDGMENT

---

Catchwords:  Practice and procedure – Application to reinstate proceeding –
Judgment for possession following execution of settlement deed –
Whether deed and judgment should be set aside.

---

APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr J. Castelan	Wisewould Mahony
For the First Defendant	Mr B. Ryan	Brett R. E. Ryan
HIS HONOUR:

1           The present application is made by the first defendant by summons dated 16 September 2011 and seeks to set aside an order made by me on 9 November 2010.

2           The order was made by consent of the plaintiff and the two defendants and provided that the plaintiff be entitled to possession of the defendants’ property at Cooper Street, Essendon. The consent order was made following execution of a deed of settlement on 9 November 2010. The first defendant’s summons seeks also to reinstate the proceeding in order for the Court to set aside the deed of settlement and a variation of the deed executed on 12 November 2010.

3           The plaintiff’s claim, which was set down for trial on 8 November 2010, was a claim for monies owing by the defendants pursuant to mortgage advances in respect of the property and a further loan of money to the first defendant. The statement of claim sought possession of the land, the recovery of $510,417.31 and interest thereon pursuant to the mortgage and, against the first defendant, $94,902.05 together with interest. A notice of appearance was filed on behalf of the first defendant by Livaditis & Co. Lawyers and Consultants on 2 July 2010. A notice of appearance on behalf of the second defendant was filed by the same solicitors on 18 August 2010. The solicitors filed a defence on behalf of both defendants on 3 September 2010.

4           The first defendant was in prison between 2 September 2008 and a date in June 2011. On 8 and 9 November 2010, when the matter was listed for trial, the first defendant was brought to Court under a jail order and remained in custody whilst at Court. Initially the first defendant had been in prison on remand. At some stage he was dealt with for certain criminal offences for which he was sentenced to a period of imprisonment.

5 As a result of those offences, the Confiscation Act 2007 had application to the property at Cooper Street, Essendon and the property was subject to a restraining order made in Supreme Court proceeding SCI-2007-1608, initiated by the Office of Public Prosecutions. The Supreme Court proceeding under the Confiscation Act has not been concluded and the first defendant was granted leave on 8 July 2011 to make an exclusion application in relation to his interest in the property.

6           The consent order made by me on 9 November 2010 referred to the Supreme Court proceeding and the fact that a deed of settlement had been made between the parties on that day. The parties to the deed of settlement are the plaintiff, each of the defendants and two further persons, Annunziata Vella and Brendan Morganti, who apparently had an interest in the property pursuant to an unregistered mortgage to secure repayment of an advance of $135,000.

7           The deed of settlement provided for the plaintiff and each of the defendants to consent to an order for possession in respect of the property in the form of the order that was made by me that day. The order for possession was stayed until 31 August 2011, provided the defendants made certain payments to the plaintiff and to Ms Vella and Mr Morganti. There is no dispute that those payments have not been made. In default of the payment of the monies, the plaintiff was to be at liberty to sell the property and, from the proceeds of sale, specified payments would be made to the plaintiff and to Ms Vella and Mr Morganti.

8           The deed provided in clause 9 that “any residue from the proceeds of the sale shall

be paid: (i) into the Supreme Court in accordance with the provisions of section
77(A)(d) Transfer of Land Act 1958; (ii) as directed by the Director of Public

Prosecutions in accordance with the provisions of the Confiscation Act 1957”.

9           Clause 16 provided that “this deed is conditional upon the approval of the Office of

Public Prosecutions by 5:00pm on Tuesday, 16 November 2010, or such later date as the parties’ solicitors agree in writing. Failing such approval: (a) this deed shall be set aside; (b) the consent orders made by His Honour Judge Anderson on 9 November

2010 shall be set aside by consent; (c) the parties shall be entitled to rely upon all

rights which any of them had prior to signing this deed”.

10         After the deed was executed by the parties, the plaintiff’s solicitor spoke with Mr Hanger from the Office of Public Prosecutions who was involved in the Supreme Court confiscation proceeding. Mr Hanger indicated that he had read the deed of settlement and advised “that his office had no problem with the terms of settlement in

the deed, however, noted that paragraph 9 (ii) of the deed purported to allow the Director of Public Prosecutions to act extra judicially by directing residue from the

proceeds of the sale of the property“.

11         Mr Hanger suggested an amendment to rectify this matter. Subsequently, on 12 November 2010, a variation to the deed was executed, providing that “clause 9 (ii) of the deed is deleted in its entirety and replaced with the following:

“9(ii) If a further order is made under the Confiscation Act 1997, in accordance
with such further order”.

12         The variation to the deed was signed by Livaditis & Co. for and on behalf of the first and second defendants. When the defendant’s solicitors returned the deed of variation to the plaintiff’s solicitors on 12 November 2010, they noted, “We have

received advice by counsel that we do not require our client’s instructions to sign the variation, as it is simply giving effect to term 16 of the deed of settlement, namely the

approval of Office of Public Prosecutions (OPP)”. A copy of the variation to the deed
of settlement was sent to the defendants on 16 November 2010.

13         The first defendant submits that the order made 9 November 2010, the deed of settlement and, the variation to the deed of settlement should be set aside on a number of grounds:

a. The first defendant’s mother tongue is Russian and he executed the deed of settlement “whilst under stress and pressure and confined and constrained in

custody at the County Court [and] without a Russian interpreter being

present”;

b. It was the understanding of the first defendant when he executed the deed of settlement that the deed provided “that the plaintiff would not act upon and/or

execute the order until after the conclusion of the Supreme Court proceeding, after which I would be afforded a reasonable time in which to either refinance

or sell the property”;

c. Neither the first defendant nor his attorney provided instructions to Livaditis & Co. to execute the variation of deed of settlement on his behalf and the solicitors had not sought instructions from him or his attorney as to whether the solicitors should execute the document.

14         On 8 and 9 November 2010, the first defendant was in custody. He was brought to Court for the trial of the proceeding. He was represented by the solicitors who had acted on his behalf in the proceeding since at least 2 July 2010 and was represented

by the same counsel who had drawn the defence which was filed on 3 September
2010.

15         The first defendant swore an affidavit in support of this application on 16 September 2011. It was sworn before his present solicitor, Mr Ryan, who is now on the record and acting for him in this proceeding. The affidavit is sworn in the usual way without being sworn through an interpreter. The affidavit refers to the first defendant’s age of 79 and his native language. He says that although he understands “plain English” he has difficulty in understanding “legal language, particularly under the conditions he was being in custody on 8 and 9 November 2010”.

16         In the absence of further material, including some explanation as to why affidavit material is not available from his previous solicitor or counsel, I consider that the matters raised by the first defendant in this regard are insufficient for the Court to reinstate the proceeding for the purpose of determining the issue of whether the order

and the deed of settlement and variation should be set aside.

17 understanding
how the deed of settlement would operate and, particularly, whether he would have
time after the conclusion of the Supreme Court confiscation proceedings to refinance
or sell the property. The affidavit does not set out the basis of the first defendant’s

The second basis for the application is the “” of the first defendant as to application.

18         The third matter was the ground upon which the first defendant’s application has been argued today. It is clear that the first defendant did not sign the variation to the deed of settlement. It appears he was not consulted by his solicitors before the variation was executed by them on behalf of himself and the second defendant, although they were sent copies of all relevant documents on 16 November 2010.

19         The plaintiff submits that this is not a proper basis for the Court to grant the first defendant’s application for three reasons:

a.	The deed of settlement was “approved” by the Office of Public Prosecutions, although a minor amendment was made to clause 9(ii);
b.	The defendants’ solicitors had either actual or ostensible authority to execute the variation on behalf of their clients;
c.	The defendants were under a duty to sign the variation and, the first defendant is accordingly, precluded from relying upon any non-fulfilment of the condition requiring approval of the deed by the Office of Public Prosecutions.

20         Clause 9(ii) in the deed of settlement only had operation in circumstances where there was a residue remaining after the default by the defendants, the sale of the property by the plaintiff and the satisfaction of the indebtedness of the defendants to

the plaintiff and the unregistered mortgagees. Clause 9(ii) provided that in those
circumstances, the residue should, after having been paid into the Supreme Court, be
dealt with as directed by the Director of the Office of Public Prosecutions. The clause
made clear that such direction must be in accordance with the provisions of the
Confiscation Act.

21

The purpose of the variation was to clarify that the Director of Public Prosecutions residue of the sale proceeds could only be dealt with by a subsequent court order. In the circumstances, it was submitted by plaintiff’s counsel, Mr Castalan, that this was a “procedural error” and although the terms of clause 9(ii) were slightly amended, this had no effect on the deed as it applied between the plaintiff and the defendants.

22         However, that the fact that a variation to the deed was subsequently executed was an indication that the deed itself in the terms executed by the parties on 9 November 2010 was not “approved” by the Office of Public Prosecutions but required amendment in the terms of the variation executed on 12 November 2010.

23         The variation satisfied the Office of Public Prosecutions and the necessary “approval” required by Clause 16 of the deed was obtained by the nominated date of 16 November 2010.

24         The second submission by Mr Castalan relied upon a statement by Gibbs CJ and Murphy J in Legione v Hatley (1982) 152 CLR 406 at 421, to the effect that where solicitors have authority to act to complete a particular transaction, they have the ostensible authority of their clients to do what is necessary to achieve that purpose.

25         In the present case, Mr Castalan relied upon the part of clause 16 which provided that, “Each party shall do all things reasonably required of that party by any other party to obtain the said approval of the Office of Public Prosecutions”, and clause 14

which required that, “All parties to this deed shall do all things, including taking steps
and signing documents reasonably required to give effect to its terms”.

26         Mr Castalan submitted that in the circumstances, the execution of the variation to the deed of settlement was a matter in respect of which the first defendant had agreed or was obliged to have agreed and given effect to, by reason of the provisions of the

deed of settlement. This was the view taken by the solicitors, apparently on the
advice of counsel, which they referred to in the letter enclosing the variation which
they had executed on behalf of the defendants.

27         In the circumstances, I consider it appropriate to accept the plaintiff’s submissions that there has not been any sufficient basis shown by the first defendant to set aside the deed of settlement, the variation to the deed or the order for possession made on 9 November 2010. Accordingly, the first defendant’s summons will be dismissed.

- - -

Certificate

I certify that these 6 pages are a true copy of the reasons for decision of His Honour Judge

Anderson delivered on 30 September 2011 (and revised 3 October 2011).

Dated: 3 October 2011

Hannah Christensen

Associate to His Honour Judge Anderson