Perpetual Trustee Co Ltd v Masswealth Pty Ltd
[2020] QDC 253
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- Unreported Judgment
- Perpetual Trustee Co Ltd v Masswealth Pty Ltd[2020] QDC 253
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Perpetual Trustee Co Ltd v Masswealth Pty Ltd[2020] QDC 253
Perpetual Trustee Co Ltd v Masswealth Pty Ltd[2020] QDC 253
DISTRICT COURT OF QUEENSLAND
CITATION: | Perpetual Trustee Company Limited v Masswealth Pty Ltd & ors [2020] QDC 253 |
PARTIES: | PERPETUAL TRUSTEE COMPANY LIMITED ACN 000 001 007 (Plaintiff) v MASSWEALTH PTY LTD ACN 095 571 501 AS TRUSTEE FOR THE MASSWEALTH FAMILY TRUST (First Defendant) AND ZOE TZIORAS MASSIS (Second Defendant) AND RESIMAC GROUP LTD ACN 55 095 034 003 (First Defendant by counterclaim) AND REQUIRED FINANCE PTY LTD ABN 76 909 843 413 (Second Defendant by counterclaim) AND ANTHONY D’ALESSANDRO (Third Defendant by counterclaim) |
FILE NO: | 3515 of 17 |
DIVISION: | Civil |
PROCEEDING: | Application |
ORIGINATING COURT: | District Court |
DELIVERED ON: | 17 September 2020 (ex tempore) |
DELIVERED AT: | Brisbane |
HEARING DATE: | 17 September 2020 |
JUDGE: | Porter QC DCJ |
ORDER: |
|
CATCHWORDS: | PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – ENDING PROCEEDINGS EARLY – SUMMARY DISPOSAL – where the Defendants approached the Second and Third Defendants by counterclaim to obtain finance – where the Second and Third Defendants sourced the finance through loans made by the Plaintiff – where the Defendants ultimately ended up in default of those facilities – where the Plaintiff brought proceedings for possession under the mortgage and judgment for the sum due on the loan facilities against the Defendants – where the Defendants have counterclaimed – where the Defendants consistently struggled to properly articulate their defences or causes of action – where the Defendants allege that they were at a special disadvantage to the plaintiff when taking out facilities and signing the documents – where the Defendants further allege the mortgage guaranteeing the loan agreement is in breach of the National Credit Code – where the Defendants have counterclaimed for negligence in brokering the new loan – where all Defendants by counterclaim apply to dismiss proceedings on the basis there is no real prospect of success |
LEGISLATION: | Uniform Civil Procedure Rules 1999 (Qld) r. 293 |
CASES: | Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 |
COUNSEL: | B A Sim (sol) for the Plaintiff Z Massis (self-represented) for the First and Second Defendant C J Conway for the First Defendant by counterclaim B W J Kidston for the Second and Third Defendant by counterclaim |
SOLICITORS: | Gadens Lawyers for the Plaintiff First and Second Defendant self-represented Dentons Australia for the First Defendant by counterclaim Sparke Helmore Lawyers for the Second and Third Defendant by counterclaim |
- [1]These proceedings arise out of dealings that occurred between the first defendant, Masswealth Pty Ltd, and the second defendant, Ms Zoe Massis, on the one hand, and Perpetual Trustee Company, Resimac Group Limited (formerly known as Homeloans), and Mr Anthony D'Alessandro and a company related to him called Required Finance Pty Ltd on the other.
- [2]They arise in these circumstances. In about 2007 Masswealth and its sole director, Ms Massis, needed to refinance certain facilities and properties in the Gold Coast area. They approached Mr D'Alessandro (who operated through a company with same name as the second defendant by counterclaim) to try to obtain the refinance.
- [3]I interpolate here that the second defendant by counterclaim is not the same entity as the corporate entity that operated with that name in 2007. The previous corporate entity was a trustee of a trust. It was removed as trustee, and the second defendant by counterclaim became trustee some years ago. Ordinarily, liabilities of a retiring trustee do not pass to the new trustee, and there is no reason to think that that ordinary position does not apply here. The consequence is that, as we will see, Ms Massis and Masswealth, in the current version of their defence and counterclaim, sued Mr D'Alessandro and a corporate entity using the name Required Finance now. That is not the entity with the liability which is alleged in the counterclaim, and for that reason alone the counterclaim against the second defendant by counterclaim needs to be dismissed. However, as will be seen, that is an irrelevant technicality as things have turned out.
- [4]As I have said, Masswealth and Ms Massis approached Mr D'Alessandro and his company to negotiate a refinance. He did that successfully by obtaining loan fund through the first defendant by counterclaim, known then under the name Homeloans (Homeloans). Homeloans' role in the finance industry was in the nature of a mortgage originator and mortgage manager. That is, it sourced loans funds, inter alia, from Perpetual and managed the loans once made, a not uncommon arrangement in a certain part of the finance world at the time and probably still now.
- [5]Homeloans, as I said, sourced the finance for Masswealth from Perpetual. The end result was that in about 2007 Perpetual, as lender and mortgagee, lent funds to permit the restructuring of the finance, paid out previous facilities, advanced new facilities and took a mortgage over a property at Varsity Lakes. Ultimately Masswealth ended up in default of those facilities, and Perpetual brought these proceedings in 2017 for judgment for possession of the property for breach of the mortgage, presumably under s. 78 of the Land Title Act 1994 (Qld), and for judgment for the sum due on the loan facilities and against Ms Massis as guarantor for those funds. Ms Massis and Masswealth have been vigorously defending those proceedings ever since.
- [6]To cut a long story short, Masswealth and Ms Massis have struggled to articulate pleadings which meet the minimum standard required for fairness to the other parties in the litigation and to articulate defences or causes of action known to the law. The defence and counterclaim has been struck out and re-pleaded on a couple of occasions. Most recently I struck it out but gave leave to re-plead.
- [7]When the matter came back before me about a month later a new pleading had not been filed. Over the objections of Ms Conway for Homeloans, I gave Masswealth and Ms Massis a further month or so to have another crack at producing a pleading, and one was filed on the 1st of September 2020.
- [8]There have been other parties as defendants to counterclaims brought by Masswealth and Ms Massis, but, thankfully, on this pleading I only have to deal with two groups of parties. One is Ms Conway's client, Homeloans, and the other is Mr D'Alessandro and his company Required Finance.
- [9]It is necessary for me to speak briefly to the background. The statement of claim from Perpetual, which, frankly, I do not think I have ever looked at, is presumably a straightforward one articulating a claim on a guarantee and for possession and sums due under the loan facility. None of that aspect of the claim has been disputed in the defence in any substantive way.
- [10]The current defence says these things: first of all, after setting out the background to the refinance, it deals with the financial difficulties that were faced by the company and Ms Massis in about 2007. They say that at the time they were having difficulties servicing existing loans, and to make the loan repayments they were forced to rent out another property, access superannuation and use credit cards. It then alleges that a finance application was produced by Mr D'Alessandro which was sent to Homeloans to refinance a loan over the Varsity Lakes property and a line of credit. That was his advice as to how to deal with these financial difficulties.
- [11]The defence contains is some criticism of the content of the loan application. Mr D'Alessandro is also criticised for not having told Ms Massis that the new facility would be for a higher interest rate, 4% higher, than the existing Varsity loan; that the defendants' monthly loan repayments would increase by about $1685 a month; that there was establishment costs for the new loan facility of some $6000, and that she would incur exit fees in leaving the first Varsity loan and the line of credit. There are other complaints about what was not disclosed about that refinance. She then alleges that Mr D'Alessandro, through his company Required Finance, approached Homeloans as a mortgage originator to obtain the loan; that Homeloans sourced the loan from Perpetual; that Mr D'Alessandro came to Ms Massis' workplace and attended to the execution of the relevant loan documentation and certificates; and that she executed those documents under some pressure.
- [12]Having cited those matters, under the heading the “Loan Transaction was Unconscionable”, the defendants allege that they were at a special disadvantage to the plaintiff when taking out facilities and signing the documents because they were in urgent financial need; there was a lack of assistance or explanation where that was necessary; that Mr D'Alessandro had given them misleading information, presumably failing to disclose to the defendants the problems with the refinanced loan I have already recited, and that there was inequality of bargaining power. It is to be noted there is no allegation that anyone from Perpetual or any agent of Perpetual knew of any of those matters.
- [13]The other point raised under the heading “The Loan Transaction Was Unconscionable” was that Perpetual was recklessly indifferent to facts which would indicate that the defendants were unable to protect their own interests because there were certain, what might be called glitches evident on the face of the loan application, the borrower's certificate and some calculations in the loan application.
- [14]I observe that those oddities, even if able to be identified in the documents, do not seem to me to be particularly alarming or unusual errors. Nonetheless the allegation of the defendants is that the fact of their special disadvantage and the oddities in the borrower's certificate and the loan application should have put the plaintiff on inquiry that the defendant could not pay the loan facility in accordance with its terms without substantial hardship and that the plaintiff took advantage of the defendants' vulnerability. No facts are pleaded which make good any of those conclusory allegations. That is, however, the first substantive basis upon which it is said that Perpetual is not entitled to the benefit of its registered mortgage and the loan agreement and to repayment of the loan, notwithstanding that the money was, in fact, advanced.
- [15]The pleading then proceeds to allege that the mortgage guaranteeing the loan agreement is in breach of the National Credit Code. I interpolate here that Ms Sim, who appeared as a solicitor advocate for Perpetual, directed my attention to s. 5 of the National Credit Code which identifies that it does not apply to loans to bodies corporate and, therefore, does not apply in this case. The defence then, with admirable frankness, admits, in effect, the balance of the allegations in the statement of claim, except to the extent it relies on the alleged non-compliance with the National Credit Code or unconscionability.
- [16]It then turns to the counterclaims. The counterclaim is against Mr D'Alessandro for negligence in brokering the new loan without warning of other options, the ancillary charges, most of which I have already discussed, and various other matters. It then alleges that Required Finance was vicariously liable for his breaches. It then alleges that if Mr D'Alessandro had not breached his duty of care various other matters would have happened, including that the First Defendant would not have incurred exit fees, loan establishment fees, the higher interest and so on, and because of entering into it, those various financial consequences flowed. There is also an allegation of unconscionable conduct under the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act) against Mr D'Alessandro arising out of the similar matters to the ones I have already stated that related to the bank.
- [17]It finishes with allegations against Homeloans and, indeed, Perpetual in this way: against Homeloans (in paragraph 18), that in introducing the first defendant to Homeloans for the purposes of Homeloans sourcing finance from the plaintiff, Required Finance was acting as an agent of Homeloans. No particulars or facts that make good that conclusory allegation are pleaded. And then in the circumstances of those matters, Homeloans is vicariously liable for Required Finance's negligence and unconscionable conduct. There isn't any evidence of the scope of any such agency that would extend to that conduct.
- [18]The same allegation is made against Perpetual on the basis that Homeloans was Perpetual’s agent in securing the finance and vicariously liable for Homeloans' conduct. It can be seen, therefore, that the counterclaim against Perpetual turns on the proposition that Homeloans in turn had Required Finance as its agent and the conduct complaint about Required Finance occurred within the scope of that agency. I note here there is no claim in general law in equity for equitable unconscionable conduct. The claims are advanced in respect of the ASIC Act for damages at law.
- [19]What we have, therefore, is a counterclaim against Homeloans, the mortgage originator, to use the language that is used, and against Mr D'Alessandro and Required Finance and against Perpetual. All of those parties have applied for summary dismissal of the counterclaim on the various bases articulated in their outlines and applications. I have concluded, somewhat to my surprise, given the initial view I had after reading the outlines, that those applications should be granted and the counterclaims should be dismissed.
- [20]I will start with Ms Conway's client, Homeloans. Her application was based on r. 293 UCPR as defendant to the counterclaim. All counsel, including Ms Sims, referred me to the cases in respect of that rule. They are well and truly burned into my head. In fact, it is the challenge of establishing on a summary basis that there is no real prospect of succeeding in a claim that has given me so much concern on these applications. However, I am satisfied that there is no real prospect of making out the claim against Homeloans.
- [21]Ms Conway had two arguments. Her first was there was no real prospect of establishing that even if Mr D'Alessandro did the things that were alleged against him that he did them as agent for Homeloans within the scope of any such agency. It is plain that the pleading of agency is defective. There is nothing obvious about the fact that Mr D'Alessandro, in filling out a finance application as a broker and approaching someone who had access to money to lend, would be acting as agent for the person he approaches as having access to money to lend. In fact, in circumstances where he is approached by Masswealth and Ms Massis, if one had to assume anything, it would be that he was their agent in the absence of the evidence of some kind of binder or exclusive agency agreement of some other similar arrangement. There is no hint of any such arrangement in the evidence anywhere.
- [22]It is up to the counterclaimant to identify a basis to think there is some real prospect that they will be able to establish that Mr D'Alessandro and his company were an agent of Homeloans (that is an evidential onus bearing in mind my conclusion in the last paragraph). As I said there is nothing in the pleading about it. No one could point me to any evidence about it. Ms Conway made the point that the transaction happened a long time ago – some 13 years ago. There had been at least some inquiry by Homeloans, if not the sort of inquiry that might meet the duty of disclosure, to try and find material that dealt with it. The material that was produced in Mr Hooper's affidavit for Homeloans was consistent with what a person with experience in these kind of transactions would think showed Homeloans in the position of the lender But difficulties with proving a negative (i.e. that Mr D'Alessandro and his company were not agents of Homeloans) is one of the difficulties of these things being raised for the first time 13 years later.
- [23]That should not conceal the fact that it was up to Ms Massis to produce some kind of evidence that would give me reason to think that an agency of the necessary kind existed here, and the pleading certainly does not do that, and no evidence that I could be taken to did that. Bearing in mind Ms Massis' self-represented status, I asked her if she was able to tell me from the bar table anything she could think of that might be sufficient to sustain the case that that the agency pleaded existed. Ms Massis referred to various dealings she had had with Homeloans, none of which, I should say, made me think that there would be an agency with the mortgage broker she was using. She spoke about Homeloans sending her statements, sending her correspondence, dealing with her application for a hardship relief and so on, which is exactly the sort of thing that a person acting as agent for the lender would do.
- [24]She then referred to the fact that she had a great deal of documentation that she had not been able to review in Melbourne, and that may well be so. However, the difficulty with the suggestion that something might be found in that material is that Homeloans’ application has already been adjourned on a couple of occasions, and even with the freedom to speak from whatever she could think of (and to her credit she did not appear to exaggerate things, she just told me what she could remember), Ms Massis could not point to anything that would give me any basis at all to think that Mr D'Alessandro and his then company were an agent of Homeloans. Given the history of this matter in which various claims have been formulated and reformulated against Homeloans since they were first brought into this last year, it seemed to me that in the absence of some reason to imagine that Homeloans had Mr D'Alessandro and his company as agent, that there was no real prospect of establishing that. For that reason alone I would have dismissed the counterclaim against Homeloans.
- [25]Ms Conway had another point, and it was a point shared by Mr Kidston's clients, Mr D'Alessandro and Required Finance, and indeed Ms Sim's client, Perpetual, as a defendant to the counterclaim. That was that both the claims against Mr D'Alessandro and his company were plainly statute barred. I had some difficulty with the idea that I would reach that conclusion on a summary basis today and, while reading the material, went back and refreshed my memory as to the observations in the majority judgment in Wardley Australia Ltd v Western Australia (1992) 175 CLR 514, including their Honours’ warning that this sort of matter should not be done on a summary basis except in the clearest cases. However, I am satisfied that the claims against Mr D'Alessandro and Required Finance are statute barred, and I am satisfied to the level of certainty required in the case of Mr Kidston's application identified in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125, and in the case of the others, to give summary judgment under r. 293, and I will explain why.
- [26]The claims against Mr D'Alessandro are the foundation of the claims against Homeloans and against Perpetual, because, as I have explained, their liability on the counterclaim arises under solely under the alleged agency. The claims against Mr D'Alessandro are for negligent advice in tort and for breaches of the ASIC Act both in terms of misleading and deceptive conduct and unconscionable conduct. The limitation provisions that are engaged impose limits of six years to commence proceedings after the causes of action arise under the Limitation of Actions Act 1974 (Qld) and accrue, I think, under the ASIC Act. Nothing much turns on the exact words used.
- [27]In this case the damage is economic loss and damage, and as Wardley makes clear, even if one would not have entered into an agreement or a contract or a loan but for misleading conduct or negligence, does not mean that loss is automatically suffered at the moment you enter into that transaction.[1] What is required, in broad terms, is some actual economic loss or damage flowing from the entry into the transaction that the plaintiff otherwise would not have suffered. That can require a careful analysis of what is said to be the plaintiff’s loss to identify those detriments which comprise loss and damage for the purpose of applying the statutory limitations provisions.
- [28]In this case, one can have a very high degree of confidence that on any view the limitations periods of six years long ago expired. That can be seen on the face of the pleadings, which I took some time to go through. What they identify in substance is that the loss and damage which is said to have flowed from the breaches included the exit fees from the previous finance facilities, the interest rate and interest repayments for the new finance facilities, and an establishment fee of some $6000. Those are concrete economic losses that involve expenses incurred that would not have been incurred but for the transaction that is said to have been induced by the result of the unconscionable conduct, the negligence or the misleading and deceptive conduct alleged. All of those losses happened at or about the time of entry into the new loan contract and time began to run, on any view, from around then.
- [29]A high level of confidence exists about the timing issue because these kinds of counterclaims were brought for the first time against Ms Conway's client in 2019 and against Mr Kidston's client in September this year, some 12 or 13 years after the events. I observe in general terms for delay of that kind involving a financial transaction said to have had immediate financial consequences, one would be surprised if the limitation periods were not engaged. But, in any event, it is not an impression. It is made quite clear from the pleading as to what loss is alleged and when it must have first arisen.
- [30]Bearing in mind Ms Massis' self-represented status, I asked her if she could explain to me in her own words what her complaint was about the losses that she suffered and, with admirable frankness, she explained exactly what was in her pleading. I cannot see any real prospect of any other kind of loss being bona fide pleaded in a counterclaim at this stage so many years after the event, and in those circumstances it is plain that on the case as put, and frankly adopted by Ms Massis orally when given an opportunity to expand on it, the claim against Mr D'Alessandro and his then company is statute barred, and therefore so is the claim against Homeloans, and therefore so is the claim against Perpetual as their liability it pleaded only as vicarious.
- [31]For those reasons each of the counterclaims against Mr Kidston’s and Ms Sim’s clients should be dismissed as statute barred, and that matter is another basis for the dismissal of the counterclaim against Ms Conway's client.
- [32]I have already dealt with the additional point, albeit of intellectual interest only, raised by Mr Kidston in respect of the Required Finance not being the company that Mr D'Alessandro was using back at the time of these events but, as I have said, that is moot the given the outcome of the other points.
- [33]So there only remains to tidy up some of the other matters that were before me. There were two. One was Perpetual's claim for judgment on their claim for sums due under the loan agreement and for the possession under the mortgage. For reasons that I do not think I need to go into, I have adjourned that application for judgment on the claim to next Friday.
- [34]I think it worth recording, though, that, as I said, Ms Sim is quite correct that the National Credit Code does not apply. The only current pleaded defence is the unconscionability argument. It seems on its face to be weak. It is liable to be struck out because it does not claim any knowledge or any basis, therefore, for the allegation of taking unconscionable advantage of those disadvantages even if they would amount to such, but bearing in mind the challenges Ms Massis had, and the short service of the Perpetual application, and the consequences for her of me entering judgment, I am going to adjourn that application for judgment on the claim, as I said, to next Friday at 9:30am.
- [35]Ms Massis also has an application. That is court document 62. That seeks orders against Perpetual and the defendants by counterclaim. The easiest way to deal with that application is:
- (a)To dismiss the application as it applies to the first defendant by counterclaim, Ms Conway's client, and the second and third defendant by counterclaim, Mr Kidston's clients; and
- (b)To otherwise adjourn the balance of the application to next Friday at 9:30am as well.
- [36]The balance of the application seeks a dismissal of the plaintiff's claim. To the extent that is said to be based on the counterclaim that obviously is no longer a basis for the dismissal of that claim. If Ms Massis wants to point to some other reason that Perpetual’s claim should be dismissed, she will have to deal with that next Friday. That is it.
- [37]I will briefly deal with the shortening of time for service for applications of the Second and Third Defendants by counterclaim and Perpetual on the counterclaim. Those applications were short served by a day or two. I did make a direction that any applications be made returnable today but that did not permit applications to be short served.
- [38]I also make this observation, when are dealing with a litigant in person, represented parties ought, despite the time limits in the rules, try to give the litigant in person as much time as possible to prepare. It is helpful if outlines in writing are provided well before a hearing. Copies of the material on the day should be available for the litigant in person if it looks like the litigant in person does not have the material, (which was done today between the parties). I say this because when a judge is dealing with a litigant in person, especially with applications with enduring consequences like summary dismissal, the Judge needs to be confident that he or she has met the duty the law imposes on a trial judge to ensure, so far as is possible, consistent with the rights of the other side and the Judge’s obligation not to become an advocate for one party, that there is a fair hearing. That is more easily concluded if represented parties give litigants in person plenty of time to read outlines, to read material and so on. This is not a criticism or the represented parties’ conduct today. It is just an observation as to good practice.
- [39]Notwithstanding that, there was an explanation for the late service of Mr Kidston's client's material, because they were served with the sealed copy of the pleading that brought them into this case for the first time less than a week ago. I nonetheless was concerned about proceeding against a litigant in person or permitting that to occur when she had been short served, especially when Ms Massis had so much on her plate at the hearing and so much was given to her at the last minute.
- [40]Mr Kidston persuaded me to kick the can down the road and have a look at the basis for the argument before adjourning the short served applications. Having done so, it seemed to me that no injustice was done to Ms Massis by permitting the applications for dismissal of the counterclaim to go forward, mainly because the fundamental point and the point on which both applications by the late-serving applicants succeeded (the limitations issue) was the also raised by Ms Conway on her client’s application, which had been on foot for months. Further, it did not seem to me that there was any even real prospect of the counterclaim being made good on the agency point, which favour Perpetual but was also raised by Ms Conway.
- [41]However, I thought it was a little unfair to press ahead with the summary judgment on the plaintiff's claim on short service, and for that reason I should make an order abridging time for service of Mr Kidston's client's application but for Perpetual’s application, I abridge time only to the extent it related to dismissal of the counterclaim against Perpetual.
Footnotes
[1] See pages 527 to 530 of the CLR generally.