Xiao v Perpetual Trustees Victoria Ltd

[2012] VSCA 85

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S APCI 2012 0029

XIAO HUI YING
	Applicant
v
PERPETUAL TRUSTEES VICTORIA LTD (ACN 004 027 258)	First Respondent
and
REGISTRAR OF TITLES	Second Respondent
and
GAS BAN PTY LTD (FORMERLY) CAPITAL SECURITIES  (AU) ACN 099 360 675 (IN LIQUIDATION)	Third Respondent
and
BERNHARD ULRICH SEIFERT	Fourth Respondent
and
HARRY SZMERLING	Fifth Respondent

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JUDGES:	BUCHANAN and MANDIE JJA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	3 May 2012
DATE OF JUDGMENT:	3 May 2012
MEDIUM NEUTRAL CITATION:	[2012] VSCA 85
CASE MAY BE CITED AS:	Xiao v Perpetual Trustees Victoria Ltd & Ors
JUDGMENT APPEALED FROM:	Perpetual Trustees Victoria Ltd v Xiao [2012] VSC 65

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PRACTICE AND PROCEDURE – Whether leave to appeal should be granted from order dismissing application pursuant to Rule 49.02(2) of the Supreme Court Rules to set aside judgment.

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APPEARANCES:	Counsel	Solicitors
For the Applicant	Mr F Lim (solicitor)	Francis Lim
For the Second Respondent	Mr A T Strahan	Colin Biggers & Paisley
For the Third and Fourth Respondent	Mr A Schlicht	Simon Nixon
For the Fifth Respondent	Mr J Davis	Obst Legal

BUCHANAN JA:

1. I will ask Mandie JA to deliver the first judgment.

MANDIE JA:

1. By summons filed 14 March 2012 the applicant seeks a number of orders including a grant of leave to appeal in respect of certain orders and judgments made in the Trial Division and a stay of execution in relation to those orders and judgments.  The principal proceeding involved a claim by the plaintiff (‘Perpetual’) against the applicant as defendant for possession of a residential property situated at 18 Frances Avenue, Vermont (‘the Property’) pursuant to a mortgage from the applicant to Perpetual dated 1 June 2004.  On 14 December 2011, in the absence of the applicant, a counterclaim by the applicant in which she alleged that the mortgage and various associated documents did not bear her signature, and that the signatures thereon were a forgery, was dismissed.  On 15 December 2011, after a trial conducted in the absence of the applicant, judgment was entered in favour of Perpetual against the applicant for possession of the Property. 

1. By summons dated 5 January 2012 the applicant sought orders (and this application was heard by the same trial judge) that the orders and judgments made on 14 and 15 December 2011 be set aside.  This application was made pursuant to Rule 49.02(2) of the Supreme Court Rules which provides:

(2) The Court may set aside or vary any judgment, order or verdict obtained where a party is absent at the trial.

1. The application to set aside the previous orders and judgments was heard by the trial judge on 7 February 2012 and dismissed by him on 1 March 2012.[1]

   [1]Perpetual Trustees Victoria Ltd v Xiao [2012] VSC 65.

1. The applicant now seeks an extension of time to appeal from the orders and judgment made on 14 December 2011 and/or leave to appeal against the orders and judgments made on 14 December 2011 and 1 March 2012 and a stay of execution on the orders and judgments made on 14 and 15 December 2011 and 1 March 2012 until the determination of the appeal. 

1. The full procedural history is a lengthy one that need not be set out here.  It is sufficient to note that: on 21 November 2011 the applicant was granted an adjournment of the trial to 5 December 2011 on the grounds that she had recently terminated the services of solicitors, claimed to struggle with English and did not have an interpreter; on 5 December 2011 the applicant was represented by counsel for limited purposes and obtained an adjournment on medical grounds to 12 December 2011; on 12 December 2011 the applicant was represented by pro bono counsel and obtained an adjournment of trial to 13 December 2011, it being ordered that any further application for an adjournment should be supported by sworn evidence from a medical practitioner; on 13 December 2011, medical evidence not being available, the trial was adjourned to the following day; on 14 December 2011 the applicant was represented by pro bono counsel, a medical practitioner gave evidence as to the applicant’s condition but she herself gave no evidence and an adjournment was refused[2], shortly before lunch and that afternoon the applicant’s counterclaim was dismissed for non-appearance; the trial continued in the absence of the applicant on the following day and judgment was given for possession.[3]

   [2]Perpetual Trustees Victoria Ltd v Xiao [2011] VSC 680.

   [3]Perpetual Trustees Victoria Ltd v Xiao [2011] VSC 680.

1. On 15 December 2011 Perpetual called two witnesses who gave evidence to the effect that the applicant had signed the documents in question[4] and although the applicant might by then have obtained a report from a handwriting expert it was not in evidence and there was no evidence to rebut the evidence called by Perpetual,[5] (which evidence might otherwise have been susceptible to attack).  The judge said that the loan monies were to be disbursed to a company which apparently provided the money to another company but the applicant or her husband were directors of those companies.[6]  The judge added that there was an alternative basis for finding in favour of Perpetual, namely, that the applicant had ratified the actions involved in arranging the loan as there was much correspondence between the applicant and both the mortgage originator and broker which was sent to/from the applicant’s home address or an email address in her name such that ‘it would absolutely beggar belief’ to say that the applicant was unaware of the mortgage and received no benefit from it.[7] 

   [4]Perpetual Trustees Victoria Ltd v Xiao [2011] VSC 680 [26]-[28].

   [5]Perpetual Trustees Victoria Ltd v Xiao [2011] VSC 680 [29].

   [6]Perpetual Trustees Victoria Ltd v Xiao [2011] VSC 680 [31]-[33].

   [7]Perpetual Trustees Victoria Ltd v Xiao [2011] VSC 680 [37]-[43].

1. When the applicant came to apply to the trial judge for the setting aside of the orders and judgment made in her absence, she swore an affidavit in support on 5 January 2012.  In that affidavit, she attempted to explain her reasons for not appearing in court or obtaining trial representation on 14 and 15 December 2011.  She also deposed as to the merits of her defence and counterclaim.  The applicant said that she did not have any relatives in Australia except her husband and his family members.  She said that, in order to provide security for her in her old age and in recognition of the care that she had provided to her husband’s sister and his elderly mother, her husband had decided to transfer the Property to her in 2004.  She said that the solicitor engaged to act for them in the transfer had retained the original title.  She deposed that, without her authority, the solicitor had released the title to one Seifert of Capital Securities (Aust) Pty Ltd and that she had not signed the document authorising the solicitor to release the title to Seifert.  The applicant further deposed that she had been unaware until her husband informed her in the middle of 2009 that the title had been released to Perpetual as security against a loan.  She deposed that she now knew and understood from her husband that Capital Securities had applied for a loan on behalf of Ninety Eight Betabarb Pty Ltd from Perpetual and that her husband never spoke to her about Ninety Eight Betabarb’s affairs or his company business.  She further deposed that unbeknownst to herself she was made a director and shareholder of relevant companies.  She made reference to a number of other matters that were unknown to her.  Importantly, the applicant deposed that the two loan agreements and other documents relating to the loan from Perpetual were never signed by her and that she did not authorise anyone else to sign them.  She denied signing a number of other documents and also denied any knowledge of the communications which the judge had said amounted to a ratification by her of the relevant loan transactions.  The applicant further deposed that in November 2011 she engaged Mr Neil Holland, a handwriting expert, to examine the documents purportedly bearing her signature and his reports were exhibited to her affidavit.  She said that Mr Holland had concluded that the signature on the mortgage of the Property was not her signature and that, as for the other documents purportedly bearing her signature where Mr Holland had only been able to examine photocopies, Mr Holland had concluded that it was highly probable that the signatures were not written by her. 

1. In refusing to set aside the previous orders and judgment, the judge referred to authorities which establish that relevant considerations on such an application were the reason why the party had failed to appear when the case was heard, whether there had been any delay by the absent party in applying to set aside the judgment, whether there was a bona fide issue to be tried and whether the other party would be prejudiced by a new trial in any respect which could not be adequately compensated by a suitable award of costs and the giving of security. 

1. His Honour said that he proceeded on the basis that the applicant had raised bona fide issues which, if accepted, might give her a defence on the merits or might mean that her counterclaim might succeed.  His Honour said that the applicant had also raised bona fide issues about the merits of his reasoning relating to her having ratified the loan transactions.  His Honour further agreed that there had been no delay by the applicant in commencing her application for a new trial.  However, his Honour said that the most important matter to consider was the reason why the applicant had failed to appear at the trial.  In substance, his Honour decided that the applicant had demonstrated no good reason for failing to appear at the trial when she admittedly knew that it was to take place and was taking place on the dates in question.  His Honour further considered that there would be prejudice to Perpetual if her application were to succeed because the amount due under the loan transactions far exceeded the value of the Property and the applicant had no means to satisfy the excess (which would only increase as interest was running). 

1. It seems to me that the primary question which arises on this application is whether leave to appeal should be granted from the order made on 1 March 2012 dismissing the application to set aside the previous orders and judgment.  For the applicant to ultimately succeed in such an appeal, she would have to demonstrate that the discretion of the judge had miscarried.  The judge took into account relevant considerations and I am not able to detect any error in his Honour’s conclusion that the applicant had failed to demonstrate adequate reason for her absence at the trial. However, I think that it is strongly arguable that his Honour failed to give any real weight at all to the consideration that the applicant may have a bona fide defence on the merits.  Certainly, the judge assumed for the purposes of his decision that this was so but, by making that assumption, his attention was arguably deflected from the details of what was deposed to by the applicant in her affidavit sworn 5 January 2012.  If the contents of that part of her affidavit going to the merits of her defence are or may be true, then it is a very serious matter, notwithstanding the applicant’s delinquent procedural conduct and potential prejudice to Perpetual, to shut her out from a full hearing.  It is sufficiently arguable that the dismissal of the application to set aside judgment is so unjust as to give rise to an inference that the judicial discretion has miscarried. I therefore think that the decision of the judge and the correctness of the exercise of his discretion is attended by sufficient doubt as would justify a grant of leave to appeal and the refusal of leave would obviously cause substantial prejudice to the applicant. 

1. I also consider that there are exceptional circumstances such that a stay of execution should be granted on the judgment for possession. 

A stay would not cause further substantial prejudice to Perpetual, so far as appears, but a failure to grant a stay would result in the applicant’s loss of the residence transferred to her in the circumstances to which she has deposed.  It should not be assumed, if the property was sold, that the applicant could adequately be compensated therefor by a monetary sum, if the appeal and any subsequent new trial resulted in success for the applicant.

1. I do not think that any of the orders made by the judge in the absence of the applicant were attended by sufficient doubt as would justify a grant of leave to appeal and I would refuse that aspect of the application.  Further, I do not think that the applicant has any prospect of success in appealing (if she is so entitled) from the orders and judgment made in her absence and I would therefore refuse an extension of time for such an appeal. 

1. For the foregoing reasons, I would grant the applicant leave to appeal from the orders made on 1 March 2012 and further order that there be a stay of execution on the judgment for possession pending the determination of that appeal. 

BUCHANAN JA:

1. I agree.

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