Can I obtain leave to defend an application for summary judgment for possession (part 2)?

  • Author : Bill Stark - 01-09-2014

Further to my post about summary judgment for possession, the Honourable Justice Ginnane (of the Supreme Court of Victoria) in ANZ Banking Group Ltd v Loftus [2014] VSC 342 was called upon to decide an appeal from an order for summary judgment granted by an Associate Justice in a claim by a mortgagee for possession of a security property.

ANZ sued Mr Loftus ("the defendant") among other things for possession of a property given as security for the loans. 

The defendant denied signing the mortgage in his defence. 

On 2 April 2014, an Associate Justice granted summary judgment in favour of ANZ.  A solicitor appeared for the defendant at the hearing of the summary judgment application. However, no affidavit in opposition was filed on his behalf. 

Ginnane J notes (at paragraph 13) that in her reasons, the learned Associate Justice observed:

 

In the course of the hearing I directly asked Mr Loftus’ solicitor why an affidavit had not been filed on behalf of Mr Loftus. The Court was informed that Mr Loftus’ solicitor had some concerns about Mr Loftus in that she thought he may have an acquired brain injury and that this presented difficulties in terms of Mr Loftus being able to attend to give instructions and to prepare such an affidavit. This is an extremely serious matter that was put before the Court. Mr Loftus is legally represented and yet no material has been put before the Court. There was no application for an adjournment for more time so that an affidavit could be filed by Mr Loftus.

At paragraph 17, Justice Ginnane also notes:
    The Associate Justice in reaching her decision stated:

Having considered the evidence and heard submissions, I do not consider Mr Loftus has any real prospect of success. It was open to Mr Loftus to put some material before the Court and he failed to do so. In circumstances where he makes an allegation of fraud, it is incumbent on Mr Loftus to put some evidence to substantiate the allegation or that demonstrates there is at least a question to be tried.

The defendant terminated the solicitor's retainer and appealed to a Judge of the Trial Division against the order granting ANZ summary judgment. 

At the hearing of the appeal, the defendant was represented by duty counsel under the Victorian Bar scheme. He sought to rely upon an affidavit prepared and sworn by him which was not before the Associate Justice. 

In his affidavit, the defendant:

  1. explained why there was no affidavit before the Associate Justice.  He alleged that he met with his solicitor to give instructions for an affidavit and it was agreed that the solicitor would send a draft to him.  However, he swore that he did not receive a draft affidavit from his solicitor and he did not do anything further because he thought his solicitor had everything under control;
  2. swore that he did not have a brain injury; and
  3. set out his version of events concerning the ANZ loans and denied ever signing a mortgage.

In respect of comments regarding a brain injury, the two counsel appearing on the appeal for the defendant informed Ginnane J that they had not seen evidence of a brain injury in their contact with him. 

One of the grounds of appeal from the decision of the Associate Justice was that the amended defence and particulars disclosed a triable issue and should be taken to have been filed and served on a “proper basis”, having regard to s 18 of the Civil Procedure Act 2010 and the obligations that it imposed on persons to whom the overarching obligations applied in responding to allegations that were made in a proceeding.

Justice Ginnane rejected those submissions. At paragraph 28, he went on to find:

Mr Loftus was in essence making an allegation of fraud against the ANZ.  Whatever may be the position in respect of other defences,[1] in my opinion, a defence of fraud must usually be supported by an affidavit setting out details of the defence.[2]  This is a case in which that was required.

The question of whether to allow the new evidence

In considering whether to allow the new affidavit, Ginnane J referred to rule 77.06.9(3) which gives the court power to receive further evidence on appeal on questions of fact by affidavit.  Justice Ginnane also referred to Clark v Stingel [2007] VSCA 292 in which the Court of Appeal set out the principles upon which the Court will grant leave to introduce fresh evidence upon an appeal.  In that case, it was held that leave should be given only if:

  • by the exercise of reasonable diligence such evidence could not have been discovered in time to be used in the original trial;
  • it is reasonably clear that if the evidence had been available at the trial, and had been adduced, an opposite result would have been produced; and
  • the evidence proposed to be adduced is reasonably credible.

The defendant's affidavit and the affidavits of ANZ concerning the relevant facts were in conflict.

Justice Ginnane decided that where there are disputed questions of fact, those disputes are best resolved at trial after hearing oral evidence of witnesses. 

When applying s 63 of the Civil Procedure Act 2010, the Honourable Ginnane J was of the view that the defendant had real prospects of defending ANZ’s claim because his version of events may be accepted.

Justice Ginnane concluded that it was reasonably clear that if Mr Loftus’ evidence had been before the Associate Justice, summary judgment would not have been granted.

Justice Ginnane also relied on the fact that the judgment was not obtained after a full hearing at trial; it was obtained on a summary judgment application which is made on affidavit. 

The case was therefore distinguished from Clark v Stingel where further evidence was sought to be introduced at an appeal after a full trial.  The principle of finality of litigation was stronger after the completion of a trial than at an application for summary judgment.

The interests of justice were also viewed by the Honourable Ginnane J as an important factor when considering the admission of new evidence on appeal.  Relying on the defendant's account of his dealings with his solicitor and the solicitor's failure to file an affidavit or seek an adjournment to enable an affidavit to be filed, Ginnane J allowed the defendant to use his affidavit.

In the result, the appeal was allowed on the basis of the new evidence filed, because the defendant had established that he had real prospects of defending ANZ’s claim; it was therefore a proceeding that should go to trial.

The case is a good example of the circumstances where leave to defend will be granted to a defendant where a mortgagee is seeking possession of a security property.

There were credible allegations of fraud: the defendant swore that he had not signed the mortgage in question, the mortgage was witnessed by an employee of the bank and the defendant's lawyer had asked the bank to produce the original mortgage for examination. The bank only provided a copy.

Counsel and solicitors in Victoria will be aware that the making of a false allegation of fraud amounts to professional misconduct. Therefore, making such an allegation will be rare and will only be made by lawyers on proper instructions. As a result, if such an allegation is made by a lawyer, the court will take it seriously. In this case, the allegation was made by the defendant himself after he terminated the services of his lawyer.

About the Author

Bill Stark

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