Lindsay & Schneider v Kneipp[2022] QDC 34

DISTRICT COURT OF QUEENSLAND

Introduction

1. [1]
   On the 18^th of June 2021 Denis Bonar Lindsay and Dianne Mary Schneider (the Applicants) filed a claim in this Court naming Wendy Guinevere Heidi Kneipp as the Defendant, hereinafter, (the Respondent). The Claim was in these terms:

The Plaintiff claims:-

1. $249,493.30 as a debt due and owing under the loan agreement.
2. $57,745.76 for interest on the debt from 26 July 2018 to 18 June 2021 plus such further interest as may accrue until the debt is paid.
3. Legal costs on the indemnity basis pursuant to the loan agreement.

2. [2]
   Thereafter there was an application seeking orders for substituted service, which order was made followed by service being affected and on the 16^th August 2021 a Notice of Intention to Defend and a Defence was filed. Shortly thereafter, a Third Party Notice was filed by the Respondent claiming against the 3^rd Party, Giudes & Elliot (A firm), relief in the following terms:

The Defendant claims against the third party the following –

1. Declaration that the Third Party indemnify the Defendant against all claims by the Plaintiff;
2. Damages for negligence or breach of contract;
3. Interest under s 58 of the Civil Proceedings Act 2011 (Qld); and,
4. Costs.

3. [3]
   Following these steps an amended Statement of Claim and an amended Third Party Notice were filed before the current application under consideration was filed on the 4^th November 2021. The orders sought were as follows:

TAKE NOTICE that the plaintiffs are applying to the Court for the following orders:-

1. Pursuant to rule 375(3) of the Uniform Civil Procedure Rules 1999 (Qld) (UCPR), that the name of the second named plaintiff be amended to DIANNE MARY SCHNEIDER.
2. Pursuant to rule 292 UCPR, that the plaintiffs have summary judgment against the defendant for the whole of their claim.
3. That the defendant pay the plaintiffs’ costs of this application and the proceeding on an indemnity basis in a sum to be fixed by the court, or in the alternative to be assessed.
4. Such further or other order as this honourable court considers necessary.

4. [4]
   Supporting the application was an Affidavit under the hand of the applicant, Schneider and an Affidavit under the hand of Lindsay which adopted the information contained in the Affidavit of Schneider. Additionally, in support of the Application were two Affidavits by Steven John Tapiolas relating to matters arising with respect to the costs claimed.
5. [5]
   The Respondent filed an Affidavit in response to the Application for summary judgment on the 7^th December 2021, and I heard oral submissions in respect of the Application on the 13^th December 2021.
6. [6]
   The substantive application is brought pursuant to Rule 292 of the Uniform Civil Procedure Rules 1999 (Qld) (UCPR). Though there is also the application pursuant to Rule 375(3) of the UCPR to correct a misnomer in the name of the female Applicant. I was advised quite properly by counsel for the Respondent that there was no issue with an order to correct the spelling of the female Applicants name and I intend to make such an order.
7. [7]
   Rule 292 provides for summary judgment for a Plaintiff and is as follows:

1. (a)
   A plaintiff may, at any time after a defendant files a notice of intention to defend, apply to the court under this part for judgment against the defendant.
2. (b)
   If the court is satisfied that –

   1. the defendant has no real prospect of successfully defending all or a part of the plaintiff’s claim; and
   2. there is no need for a trial of the claim or the part of the claim;

the court may give judgment for the plaintiff against the defendant for all or the part of the plaintiff’s claims and may make any order the court considers appropriate.

8. [8]
   From the Plaintiff’s perspective, the factual background to the proceeding’s is concisely put in paragraphs 7-9 of the outline of argument provided. That outline is as follows:

(7)  In this proceeding, the plaintiffs seek to recover $249,493.30 that they advanced to the defendant pursuant to two written loan agreements that were prepared by the defendant’s solicitors, at the defendant’s request, together with interest and costs.

(8)  The money loaned by the defendant was used to pay her legal fees and costs in two sets of Supreme Court proceedings she was involved in.

(9)  The defendant granted security for the loans by way of a registered mortgage over her property at Rollingstone.

9. [9]
   The arguments relied upon by both the Applicants and the Respondent relate to the appropriate test to be applied in respect of whether summary judgment should be granted. The Plaintiff argues that the test to be applied is as Williams J (as he then was) confirmed in Deputy Commissioner of Taxation v Salcedo [2005] 2 QCA 227 (Salcedo). In Salcedo, the Court held that the test to be applied was set out in Swain v Hillman [2001] 1 All ER 91. Counsel for the Applicants summarised the elements in their outline as follows:

   1. (a)
      the Court must apply the ordinary meaning of the words in rule 292;
   2. (b)
      the Court should not seek to use other language to attempt to define the plain meaning of the wording in the rule; and
   3. (c)
      summary judgment will not be obtained as a matter of course and if the respondent to the application establishes some real prospect of succeeding at trial, then the application must fail.
10. [10]
    Interestingly, Counsel for the Respondent, though referring to another case, Gray v Morris [2004] Qd R 118, acknowledge that the rules should be applied by reference to their clear and unambiguous language - - - but that a Court must keep in mind why the interests of justice, usually require the issues to be investigated at trial. The Court noted that the High Court in Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87 at 99 indicated that

“the power to order summary or final judgment is one that should be exercised with great care and should never be exercised unless it is clear there is no real question to be tried.”

11. [11]
    Such statements as to the law, however they may be expressed, reflect the view of Chesterman J (as he then was) in Jessup v Lawyers Private Mortgages Ltd [2006] QSC 3, there His Honour said:

“If summary judgment is not to work injustice it must be limited to those cases where it can be seen that a plaintiff or defendant, as the case may be, could not succeed at a trial of the action. It is only where a trial can be seen to be pointless that a judgment should be entered summarily.”

12. [12]
    Ultimately, the issue for determination here is whether the case for the Respondent could not succeed at a trial of the action. It is not an impossible requirement to overcome, otherwise there would be no point to the rule or to the power available, but it does require, as has been stated, “the power … is one that should be exercised with great care.”^[1]
13. [13]
    The Applicants argue that there is a proper basis for the summary judgment to be ordered. In the Applicant’s outline they detail, quite reasonably the Respondent’s arguments as to why, the admitted loan agreement, and mortgage should be considered void or unenforceable. Those points are drawn from the defence as follows:

11.  The defendant admits both loan agreements and the mortgage, but says that they are void or unenforceable because:

a. the plaintiffs acted unconscionably because they:

i. did not verify the defendant’s ability to repay the money loaned to her;

ii. knew or ought to have known the defendant had a limited financial capacity to repay;

iii. knew or ought to have known the defendant was not a party to the second set of Supreme Court proceedings and that those proceedings would not result in any financial or other benefit to the defendant;

iv. continued to advance monies when the defendant was not aware of the escalating amount being lent to her and failed to keep the defendant informed of the amount lent;

14. [14]
    As has been noted, the Respondent, has brought Third Party proceedings against her Solicitors but that does not preclude summary judgment in appropriate circumstances. See Greig & Anor v Commissioner of Taxation & Anor [2010] QSC 247 where summary judgment by the plaintiff was granted against the defendant, notwithstanding the fact of third party proceedings by the defendant against the third parties.
15. [15]
    The Applicant’s position can be summarised as follows insofar as arguing why summary judgment should be given:

The plaintiffs should be given summary judgment for the whole of their claim because:

1. (a)
   the plaintiffs have shown they lent the money to the defendant pursuant to two loan agreements, clear in their terms, that are admitted by the defendant;
2. (b)
   it is not controversial that the defendant has not repaid the plaintiffs;
3. (c)
   the factual basis for unconscionability alleged by the defendant is incapable of constituting such;
4. (d)
   the defendant does not say how the “implied or express obligation” alleged arose, and further does not say how a breach of any such obligation, as a matter of law, renders the loan agreements “void or unenforceable”;
5. (e)
   the defendant does not say how the plaintiffs’ obligation to ensure she received independent legal advice arises, or how the absence of such advice renders the loan agreements “void or unenforceable”;
6. (f)
   further, the allegation that the defendant did not receive independent legal advice is a nonsense in circumstances where she was legally represented by Giudes and Elliot and had them prepare the loan documents for the plaintiffs to sign;
7. (g)
   event if the defendant’s lawyers did breach their duty of care to her because they failed to ensure the funding was proportionate or reasonable, etc, that is a claim by the defendant against her solicitors that does not involve the plaintiffs. The allegation that the plaintiffs were negligent or complicit in the solicitor’s negligence because they failed to assess the defendant’s prospects of success in the Supreme Court proceedings, is not pleaded in a way that establishes a maintainable cause of action;
8. (h)
   the defendant’s defence is a desperate and ill-considered attempt to avoid repaying money the plaintiffs lent to her in good faith at a low rate of interest (4.8%);
9. (i)
   in these circumstances, the defendant has no real prospect of successfully defending the plaintiffs’ claim and there is no real need for a trial and;
10. (j)
    The fact of the third party proceedings between the defendant and Giudes and Elliot is no impediment to summary judgment being granted to plaintiffs.

16. [16]
    Just as succinctly, the Respondent’s position is put in the outline as to why the application for summary judgment should be dismissed:

It is respectfully submitted that for the reasons outlined below the application should be dismissed because:

1. (a)
   There are triable issues with respect to the making of the agreements and the interpretation of the agreements that should be tested by cross examination;
2. (b)
   There are triable issues with respect to the calculation of the debt that should be properly tested by more appropriate witnesses and cross examination;
3. (c)
   There are similar questions of fact and law to be determined as between the plaintiffs and defendant and the defendant and the third party that should be dealt with at a final hearing and not summarily;
4. (d)
   The defendant has capacity to pay and the plaintiffs have pleaded that they have the benefit of a registered mortgage over the defendant’s property.^[2]
5. (e)
   It cannot be said that the defendant’s defence is so without merit that it has no real prospect of defending the plaintiff’s claim.

17. [17]
    As I have indicated, the issue for determination in this matter is whether there is a real question to be tried. In my assessment it is one of those rare occasions where, on the material, noting particularly the admissions and acknowledgements, proceeding to trial would be a pointless and expensive exercise.
18. [18]
    The moneys have been lent by the Applicants to the Respondent pursuant to loan agreements which were clear in their terms and which were prepared by the legal representatives of the Respondent. What may or may not have been in the background of the instructions and advices between the Respondent and her legal representatives in no way effects the validity of the loan agreements.

19. [19]
    Triable issues there may be between the Respondent and her legal representatives as raised in the Third Party notice but that in no way effects the legitimacy and enforceability of the loan agreements, in the terms set out in the loan agreements as between the Applicants and Respondent.

20. [20]
    The moneys owed have been called for by the Applicants and the Respondent has not repaid the Applicants. The amounts owed pursuant to advances made is clearly calculated and the interest claimed, subject to the time that has passed since the application was heard, is easily calculated in accordance with the terms of the loan agreements.

21. [21]
    Any argument put with respect to the actions of the Applicants is fanciful. To be frank, I was particularly concerned with what appears to be a divergence between the terms of the defence as filed and the submissions made in respect of this application. The defence suggests some failure on the part of the Applicants to enquire and satisfy themselves as to the Respondents limited financial capacity and yet the outline suggests that the application should be dismissed, in part because the Respondent has the capacity to pay.

22. [22]
    Any suggestion as to unconscionability must fail. As was submitted, ‘the nub of unconscionability involves a stronger party taking advantage of another party who is at a special disadvantage, for their own unfair benefit.’.^[3] Nothing could be further from the facts here.

23. [23]
    Conduct which might be seen as amounting to unconscionability has been variously expressed as demonstrating,

“a high level of moral obloquy on the part of the person said to have acted unconscionably”,^[4] “irreconcilable with what is right or reasonable”^[5] and as including “bullying and thuggish behaviour, undue pressure and unfair tactics, taking advantage of vulnerability or lack of understanding, trickery or misleading conduct”.^[6]

24. [24]
    As is argued quite reasonably for the Applicants, is that they were never in a superior position or hold greater bargaining power nor could it be said that the Respondent suffered any special disadvantage that affected her ability to make a judgement about whether to enter into the loan agreements. It was her solicitors, upon her instructions, who drew those loan agreements.
25. [25]
    They did not take advantage of the Respondent and as was submitted, ‘they did not nothing more than lend money to a friend that needed it, had asked for it and had her solicitors prepare the documentation for that purpose.’^[7] Of particular significance and telling in respect of the rejection of any suggestion of unconscionability is the fact that the loan agreement only charges the respondent interest at the rate that the applicants were paying to their own bank. There was no benefit to the Applicants.
26. [26]
    Counsel for the Applicants noted the real distinction between this case and those where there were findings of unconscionable behaviours. As was noted, Jams 2 Pty Ltd & Ors v Stubbings (No 3) [2019] VSC 150, Elkofairi v Permanent Trustee Co Ltd [2002] NSWCA 413 and Perpetual Trustees Aus Ltd v Schmidt & Anor [2010] VSC 67, all involved institutional or professional lenders, who prepared loan agreements and were responsible for the loan application process. None of that was present here.
27. [27]
    Any argument relating to unconscionability fails when such matters are considered and similarly the Respondent’s other arguments fall as being unrealistic and unsustainable. An argument regarding an obligation to keep the respondent advised about the loan balance or to ensure that the respondent obtained indepedant legal advice are nonsensical in light of Giudes and Elliot being the solicitors for the Respondent.
28. [28]
    To argue, as the Respondent does, that the application for Summary Judgment should be dismissed, because it cannot be said on that the Respondent’s defence is ‘so without merit’ that it has no real prospect of success, flies directly in the fact of the findings that I have made.
29. [29]
    Summary Judgment is not granted easily, but it is not impossible. If there is a prospect of succeeding at trial then the application for Summary Judgment could fail, but that is not the situation here. The existence of third party proceedings is no impediment to summary judgment being given. As such, the orders of court will be:

1. That the plaintiffs have leave to correct the misnomer in the female plaintiff’s name from “Diane Mary Schneider” to “Dianne Mary Schneider”
2. That the plaintiffs have summary judgment against the defendant in the sum of $249,493.30 and that the defendant pay interest on the amount ordered by summary judgment from 26^th July 2018 until the debt is paid calculated in accordance with the interest rate prescribed in the loan agreements
3. That the defendant pay the costs of the plaintiff in terms as agreed pursuant to the loan agreements and failing agreement to be taxed in accordance with the terms of the loan agreements.