New South Wales Supreme Court CITATION : Westpac Banking Corporation v Mark Baranov & Ors [2002] NSWSC 1029 CURRENT JURISDICTION: Common Law Division FILE NUMBER(S) : SC 11156 of 2002 HEARING DATE(S) : 29 October 2002 JUDGMENT DATE : 1 November 2002 Westpac Banking Corporation (Trading as Bank of Melbourne) (Plaintiff) v Mark Baranov (First Defendant) PARTIES : Antonia Margaret Formica (Second Defendant) City Hub Development Pty Limited (Third Defendant) Barancon Pty Limited (Fourth Defendant) Anthony Puharich, Anita Puharich, Victor Puharich and Stephanie Puharich (Fifth Defendant) JUDGMENT OF : Master Malpass Mr D R Pritchard (Plaintiff) COUNSEL : Mr L J Aitken (First, Second, Third and Fourth Defendants) N/A (Fifth Defendant) Corrs Chambers Westgarth (Plaintiff) SOLICITORS : Morgan Lewis Alter (First, Second, Third and Fourth Defendants) Conway MacCallum (Fifth defendant) CATCHWORDS : Monetary judgment - summary relief - was memorandum incorporated into mortgage and other defences and cross-claims - certificate and quantum of judgment. LEGISLATION CITED : N/A CASES CITED : N/A DECISION : See Paragraph 19. IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION Master Malpass FRIDAY 1 NOVEMBER 2002 11156 of 2002 Westpac Banking Corporation(Trading as Bank of Melbourne) v Mark Baranov & Ors JUDGMENT 1 Master: The proceedings were commenced by Statement of Claim filed on 24 April 2002. The first and second defendants are the registered proprietors of certain land known as 3 Arabella Street, Lane Cove (the property). They have been described as partners. The first defendant has been described as the principal of the third and fourth defendant. The fourth defendant is now a deregistered company. 2 An order made by Registrar Robinson, added the parties which are described as the fifth defendant as parties to the proceedings. These parties have entered into a contract to purchase the property. It appears that these parties may have been erroneously joined as defendants to the proceedings. Presently, they merely play a watching role. 3 In June 2000, the first and second defendants gave a mortgage of the property to National Australia Bank Limited. On 24 September 2000, the third defendant gave a guarantee of the liabilities and obligations of the first defendant. On 6 December 2000, the first and second defendants granted a mortgage over the property in favour of the plaintiff. The earlier mortgage was discharged. On 6 June 2001, the financial accommodation extended to the first and second defendants was increased from $2,100,000 to not exceeding $2,410,000. 4 On 24 September 2001 additional accommodation not exceeding $675,000 was granted to the first and second defendants. This was also expressed to be done on the security available under the mortgage (together with the further security of an unregistered mortgage). 5 It appears that a dispute arose as to interest rates. This led to the first defendant stopping making payments of interest under the mortgage. 6 On 26 July 2002, the plaintiff filed a Notice of Motion. It sought inter alia a judgment in possession for the property and a monetary judgment. The Notice of Motion was specially fixed for hearing on 29 October 2002. At the commencement of the hearing, by consent, summary relief in respect to the claim for possession was granted. As there was dispute as to the claim for the monetary judgment, a hearing of that matter then took place. In relation to it, relief was not being sought against the second and fourth defendants. 7 The plaintiff sought to rely on two affidavits sworn by Mr Busuttil (a bank manager) and a tender of certain documents. Counsel for the defendants objected to paragraph 4 of the affidavit sworn on 28 October 2002 together with the annexed Statement of Account referred to therein (the annexure). He also objected to the admission of the tendered documents. After lengthy argument paragraph 4 (together with the annexure) was allowed to be read and the tender of the documents was rejected. Mr Busuttil had been required to attend for cross-examination. However, ultimately, he was not cross-examined. The defendants rely on an affidavit sworn by the first defendant. He had also been required to attend for cross-examination. Again, ultimately he was not cross-examined. 8 The annexure is dated 28 October 2002 and certifies that from the books and records of the plaintiff, the amount owing under the mortgage, due and payable to it, is $3,326,980. It also certifies that interest continues to accrue on the said amount at the current daily rate of $1,555 per day. 9 The mortgage has been described as being in short form. For present purposes, the relevant provision reads as follows:- "I/we have read a copy of filed memorandum number 5481313 (the 'Memorandum'). It forms part of this mortgage." Largely, what are said to be the provisions of the mortgage are to be found in the memorandum. It contains what purports to be an "all moneys" provision. The defendants contend that the question of whether or not the memorandum forms part of the mortgage is a triable issue. 10 For the purposes of this application, the plaintiff has conceded that prior to what was said in his affidavit the first defendant had not read a copy of the memorandum. 11 The first defendant is a company director and appears to be a man of commercial experience. His evidence is that the negotiations leading to the granting of the mortgage were conducted on his behalf by his accountant (Mr Kestelman) and by Mr Till on behalf of the plaintiff. He says that he met Mr Till for the first time at his accountant's office on a Friday evening in November 2000. The meeting took place at 6.00 pm. His accountant was present. They all had a drink. He signed the mortgage documents. Further he said that Mr Till did not explain any aspect of the mortgage except to tell him the loan principal, the interest rate and the monthly repayments. In or about September 2001, he received a copy of a blue document entitled "Memorandum of Common Provisions General Conditions Booklet – Business Version 11". A copy of that document is an annexure to his affidavit. He said that he received a copy of the Memorandum of Mortgage Registered Number 5481313 on or about 19 February 2002. Also, he says that at no time until the matter was discussed with his lawyers did he understand the way in which the plaintiff contended that the registered memorandum operated. 12 A Defence and Cross-Claim has been filed on behalf of the first, second and third defendants. Paragraph 4 of the Defence pleads specific matters which are put forward by way of defence. The Cross-Claim repeats (b) and (c) thereof and raises claims pursuant to the Trade Practices Act, the Fair Trading Act and the Contracts Review Act. Paragraph 2 thereof alleges material which is relevant only to the second defendant. 13 Submissions were conducted on the basis that there were three issues joined between the parties. These appear in the written outline of submissions of the plaintiff. 14 The first issue was said to be a matter of construction. The defendants look to the failure on the part of the plaintiff to give a copy of the memorandum to the first defendant at the time of the execution of the mortgage (see paragraph 4 (b) (ii) of the Defence). As I understand the submission, in some way it is said that by not reading the memorandum it was not then incorporated into the mortgage. In my view, the construction suggested by the defendants is untenable. It seems to me that the terms of the short form of mortgage unambiguously make the memorandum a part of the mortgage. The terms do not require the plaintiff to give a copy of it to the mortgagor. The statement as to having read a copy of it has the character of an admission, acknowledgment or representation made by the mortgagor to the mortgagee which identifies the subject memorandum. In my view, what is put by the defendants is untenanble. 15 The second matter arises from what is pleaded in paragraph 4 (b) (ii) of the Defence. It purports to be a denial that the mortgage was given in consideration of and thus able to secure any and all financial accommodation and advances given by the plaintiff to the first and second defendants. This matter excited but limited argument. Again, I regard what is put forward by the defendants as being untenable. 16 The third matter arises out of what is pleaded in paragraph 4 (c) of the Defence. It is alleged that the attempted incorporation of the terms of the common memorandum was in the circumstances unconscionable and liable to be set aside in equity in that it contained terms which a layman would be unlikely to expect to be contained in such a document without the contents of it being fully explained to him. This matter was also the subject of limited argument. In my view, the evidence fails to provide the support needed to make it arguable. It is not even said that that the first defendant did not understand the nature and effect of an all moneys mortgage. Accordingly, it is also untenable. 17 Finally I turn to the question of the quantification of the amount in respect of which judgment is sought. The annexure is a written statement by a representative of the plaintiff as to the amount owing under the mortgage. As such, the memorandum provides that it is sufficient evidence unless it is proved to be wrong. It has not been proved to be wrong. Indeed, there has been no challenge to the quantification made by it (inter alia the opportunity to challenge Mr Busuttil was not taken). 18 It is well established that summary relief is only granted in what may be described as clear cases. The onus rests with the party seeking summary relief. In my view, that onus has been discharged in this case. I am satisfied that the Defence and Cross-Claim do not give either the first defendant or the third defendant a triable issue. 19 Accordingly, I am satisfied that the plaintiff is entitled to a monetary judgment. It is only sought against the first and third defendants. I will direct entry of judgment against them in the appropriate amount following the delivering of this judgment. The first and third defendants are to pay the costs of the application for the monetary judgment. I reserve the question of the other costs of the application. ********** Last Modified: 11/04/2002 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.