Samootin v. St. George Bank Limited [2003] NSWCA 32

New South Wales Court of Appeal

CITATION : Samootin v. St. George Bank Limited [2003] NSWCA 32 HEARING DATE(S) : 14 February 2003 JUDGMENT DATE : 14 February 2003

JUDGMENT OF : Stein JA at 1, 36; Hodgson JA at 2 DECISION : Application dismissed with costs.

CATCHWORDS : APPEAL - Summary dismissal - Whether leave to appeal should be granted. PARTIES : Alexandra Samootin - claimant St. George Bank Limited - opponent FILE NUMBER(S) : CA 40600/02 COUNSEL : Claimant self-represented Mr. S. Burchett for opponent SOLICITORS : Solicitor for St. George Bank, Sydney for opponent

LOWER COURT Supreme Court - Equity Division JURISDICTION : LOWER COURT ED2446/02 FILE NUMBER(S) : LOWER COURT Windeyer J JUDICIAL OFFICER :

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 406002/02 ED 2446/02

STEIN JA HODGSON JA

Friday 14 February 2003 SAMOOTIN V. ST. GEORGE BANK LIMITED Judgment 1 STEIN JA: I will ask Hodgson JA to deliver the first judgment of the Court in this application. 2 HODGSON JA: On 12 April 2002, in proceedings No.1973 of 2001 Samootin v Shea & Ors., Master McLaughlin made the following orders: 1. Order that, if the Plaintiff commences any proceedings in this Court against St George Bank Limited related to the subject matter of the present proceedings, the summons in those new proceedings be made returnable before Justice Palmer in the Expedited List on 7 June 2002. 2. Direct the Plaintiff to file and serve all her affidavits in chief by 4pm on 22 May 2002, and that the Fifth Defendant file and serve all affidavits in reply by 4pm on 19 June 2002- 3. Order that the notice of motion filed by the Plaintiff on 11 April 2002 be otherwise dismissed. 4. Order that the costs of the aforesaid notice of motion be costs in the proceedings. 3 On 29 April 2002 the claimant, Alexandra Samootin, commenced proceedings No.2446 of 2002 against the opponent, St George Bank Limited, by a document entitled "Notice of summons Pursuant to Orders of Court made on Friday, 12 April 2002", claiming the following orders: 1. That in November 1997 the St George Bank Limited was involved in transferring the home and monies ($263,309.79) of the Shea/Samootin marriage/relationship into the possession of Mr Peter John Deans, under company titles of Shea Dealite Pty Ltd (now known as Loan Design Pty Ltd [ACN 080 650 568]) and S R Deans Pty Ltd [ACN 000 604 624], in order to defraud her out of the possession her home and her marital monies without her authorisation and knowledge. 2. An order that the St George Bank be joined as a party to the proceedings 1973/01. 3. An order that the contracts drawn up over the two properties 24 and 26 Oxford Falls Road, Beacon Hill, be declared void. 4. An order that the mortgages to the St George Bank Limited over the properties 24 and 26 Oxford Falls Road, Beacon Hill, be rescinded. 5. An order that the amount of $263,309.79 be restored back into M/s Alexandra Samootin's home at 26 Oxford Falls Road, Beacon Hill. 6. An order that Alexandra Samootin be declared as the rightful registered owner of her home to the Land Titles Office, Queens Square Sydney. 7. An order that M/s Samootin be permitted to take out a loan for the balance of the purchase price of the property 26 Oxford Falls Road, Beacon Hill, NSW, 2100, i.e. $101,691.21 (the purchase price in October 1997 being $365,000). 8. That the costs be paid by the defendant. 4 On 7 June 2002, the opponent brought a notice of motion seeking the following orders: l. The Summons be summarily dismissed or struck out in whole or in part pursuant to Part 13, rule 5 or Part 15, rule 26 or Part 65, rule 5. 2. Alternatively or in addition the affidavit of Alexandra Samootin in support be struck out in whole or in part pursuant to Part 65, rule 5. 3. Costs. 5 That notice of motion was heard by Windeyer J on 17 June 2002, and decided by him on that day. His Honour ordered that the proceedings No.2446 of 2002 be dismissed with costs. The claimant seeks leave to appeal from that decision. 6 I will commence with an outline of the circumstances that lie behind these proceedings and applications. 7 On 28 October 1997, the claimant obtained a cheque for $226,809.79 from her solicitor, Miss Wagner, being the settlement proceeds from the sale of a house in Mona Vale, jointly owned by the claimant and her ex-husband, Mr Shea. The claimant then paid that cheque into a bank account of Mr Shea. 8 It seems that the proceeds of sale of the Mona Vale house also included a deposit of about $36,500, but it is not entirely clear exactly how that money was dealt with. 9 The claimant says that the arrangement between herself and Mr Shea was that these proceeds of sale were to be used in the purchase of a house property 26 Oxford Falls Road, Beacon Hill in their joint names. The claimant and Mr Shea in fact moved into that house in November 1997, and the claimant has lived there ever since. 10 However, that property was in fact purchased in the name of a company, Shea Dealite Pty Limited, apparently owned by Mr Peter John Deans; and it was purchased by that company, together with the adjoining property, 24 Oxford Falls Road, with the assistance of a loan of $610,000 from Advance Bank Australia Limited, now represented by the opponent. 11 Security for that loan was given by a mortgage on 24 and 26 Oxford Falls Road, and also on another property 33A Oxford Falls Road, this being a property owned by Mr Deans or interests associated with him. 12 It appears that the purchase price of these properties was $370,000 for 24 Oxford Falls Road and $365,000 for 26 Oxford Falls Road, making a total of $735,000. The claimant says that most or all of the proceeds of sale of the Mona Vale house were used in that purchase, and she put caveats on the titles of numbers 24 and 26 Oxford Falls Road in February 1998. 13 According to the claimant, in about the middle of 1998 Mr Shea agreed that she should have the benefit of whatever interest he had in these properties; and there is in evidence a document apparently provided by Mr Shea to his solicitors, which contains the following statement: My position now is that I am willing to negotiate a settlement with the Court's assistance whereby Alex can have all shared and joint land property which is in my name, but not including my present vehicle, which is the subject of a hire purchase agreement, nor my personal possessions, except for the sum of $20,000, which I am seeking from this property settlement. 14 It appears that by December 1998 a sum of a little over $600,000, plus an overdraft of about $36,000, was owing on the security of the properties. However, in March 1999 33A Oxford Falls Road was sold; and it appears that from the proceeds of sale about $420,000 was paid off the mortgage in March 1999. We are informed by Mr Burchett, who appears for the opponent, that the amount owing on the security of this mortgage is now about $230,000. 15 The claimant brought the proceedings 1973 of 2001 in the Equity Division against Mr Shea, Mr Deans and Shea Dealite Pty Limited, alleging fraud and seeking orders inter alia having the effect of giving her the benefit of her interest in the proceeds of sale of the Mona Vale home, and an entitlement to what she regards as her home, namely, 26 Oxford Falls Road, Beacon Hill. 16 It appears that there was an application made in those proceedings to join the opponent in those proceedings, returnable on 25 May 2001, which was not pursued. On 22 June 2001, the claimant filed a notice of motion in those proceedings seeking to join the opponent and Miss Wagner, which again apparently was not pursued. A further notice of motion to join those parties was made on 28 November 2001; and on 15 October 2001, Registrar Berecry gave leave to join Miss Wagner, but did not grant the application in relation to the opponent. It is not entirely clear whether he addressed that application. 17 On 26 November 2001, there was a further notice of motion to join the opponent, which was heard by Master Berecry on 25 February and apparently refused. That led to the application before Master McLaughlin, that resulted in to the orders made on 12 April 2002, which I referred to earlier. Those orders led to the commencement of these proceedings, as I have mentioned earlier. 18 Windeyer J gave the following reasons for his decision to dismiss these proceedings: HIS HONOUR: In this matter the defendant seeks an order that the summons be dismissed pursuant to Part 13 Rule 5 or, alternatively, other relief is sought, but it is not necessary to go into that. 2 The plaintiff, Mrs Samootin, by a document called notice of summons is seeking an order, first, that the St George Bank be joined as a party to proceedings 1973/01. She has made other applications to achieve that result which have failed. She cannot bring that application again in these proceedings. 3 Secondly, she claims an order that the contracts for the sale of two properties at Beacon Hill be declared void. That relief is at least some of the relief which she is seeking in the other proceedings and, therefore, should not be the subject of new proceedings here. 4 Next, she seeks an order that mortgages to the defendant bank be rescinded. While that may be an inappropriate expression, I will deal with it as if there was a claim that the mortgages be declared void or set aside. 5 There is, then, a claim that she be declared to be the rightful owner of her home which is a property at 26 Oxford Falls Road, Beacon Hill. 6 It seems clear from the affidavit of the plaintiff that what she is endeavouring to do is to set aside certain transactions on the grounds that they were transactions with intent to defraud her of her prior interest in a particular property, and that, as a result of the fraud, her former husband and another person, Mr Dean, have benefited. 7 There is, then, apparently, some attempt to connect St George Bank Limited to that fraud, on the basis, as I understand it, that it lent monies on the security of properties without complying with the terms of its own internal documents relating to approval of mortgage loans. In other words, what Mrs Samootin wishes to do is to have the court find that she was deprived of her share of monies produced from the sale of a former matrimonial home, that other properties were purchased without her being one of the purchasers, that the bank advanced monies to the purchasers, and as the purchasers obtained their interest through fraud, the bank is some way connected with that fraud. 8 The document commencing the proceedings would have to be struck out, in any event, because there can be no doubt that this claim would have to be fully pleaded. The question, though, is whether or not the proceedings should be dismissed, on the basis that they are doomed to fail. 9 On the best evidence which Mrs Samootin has, there is nothing which would go to establish that the bank had any knowledge of the fraud. What Mrs Samootin ought to be doing is pursuing her claim which she has in the expedition list against her former husband and Mr Dean and I think Shea Delight Pty Ltd. If she is successful in that, then she will obtain some measure of relief. 10 I am satisfied that the present proceedings cannot succeed. It is probably not correct to say that they are an abuse of process because the other applications were made in the other proceedings to join the bank without any evidence. There is still no evidence which would support such a joinder. In those circumstances, I order that the proceedings be dismissed with costs. Exhibits can be returned. 19 The proceedings 1973 of 2001 have now progressed towards a hearing, and are presently fixed for hearing for five days, to commence on 24 March 2003. As I understand it, the caveats previously lodged by the claimant over the properties 24 and 26 Oxford Falls Road have been replaced by injunctions, and it appears that Mr Deans and his company are applying to have those injunctions lifted, with a view to dealing with the properties. 20 The claimant seeks leave to appeal to this Court, on the following grounds: 1. That His Honour incorrectly stated that "It seems clear from the affidavit of the plaintiff that what she is endeavouring to do is to set aside certain transactions on the grounds that they were transactions with intent to defraud her of her prior interest in a particular property, and that, as a result of the frauds her former husband and another person, Mr Dean, have benefited. 2. There is, then, apparently, some attempt to connect St George Bank to that fraud on the basis, as I understand it, that it lent monies on the security of properties without complying with the terms of its own internal documents relating to approval of mortgage loans. In other words, what Mrs Samootin wishes to do is to have the court find that she was deprived of her share of monies produced from the sale of a former matrimonial home, that other properties were purchased without her being one of the purchasers, that the bank advanced monies to the purchasers, and as the purchasers obtained their interest through fraud, the bank is some way connected with that fraud." 3. His Honour should have considered all relevant factors of the complex case. 4. The relevant facts of the case are as follows. The claimant and her ex-husband, Mr C G Shea, had sold their former home at 82 Waterview Street, Mona Vale, which was in joint tenancy. On 22.10.97, the claimant and Mr C G Shea had given instructions to M/s Wagner, solicitor, Northern Beaches Legal Service to purchase the property, 26 Oxford Fails Road, Beacon Hill, in joint tenancy. On 24.10.97, unknown to the claimant, the solicitor, M/s Wagner, had drawn up the first contract in Mr Shea's name. The claimant and Mr Shea moved into 26 Oxford Falls Road, Beacon Hill, under licence on 24.10.97. Settlement date was set for 15.11.97. On 25.10.97, unknown to the claimant, Mr Shea had agreed with a Mr Peter John Deans to purchase, in their joint names the properties, 24 and 26 Oxford Falls Road, Beacon Hill, utilising the sale monies from the claimant's and her ex-husband's former home, the net proceeds of which were $261,809.79. 5. Unknown to the claimant a second contract in the name of Shea Dealite Pty Ltd had been drawn up over her home at 26 Oxford Falls Road, Beacon Hill, on 7.11.97. Shortly afterwards, in November 1997, a contract in the name of Shea Dealite Pty Ltd had been drawn up over the property 24 Oxford Falls Road, Beacon Hill. 6. Unknown to the claimant and Mr C G Shea but known to the St George Bank Limited, the two properties were purchased for the benefit of Mr Peter John Deans and the companv S R Deans Pty Ltd with the proceeds from the sale monies from the former matrimonial home of the claimant and her ex husband. (S R Deans Pty Ltd is the shareholder company of Shea Dealite Pty Ltd.) Mr Deans and Mr David Mack are listed as the shareholders of S R Deans Pty Ltd. Mr David Mack is a solicitor and had worked for the firm, Mallesons Stephen Jaques. The claimant's ex-husband had signed mortgage documents with the St George Bank Limited having being lead to believe by the St George Bank Limited that he was a purchaser and owner of the two said properties and that he was an equal shareholder with Mr Deans in the company S R Deans Pty Ltd. 7. When the claimant's ex-husband found out in about June/July 1998 that he did not own the two said properties, he told the claimant that he was not paying any mortgage monies to the St George Bank Limited, as he had been "deceived" by the Bank into the belief that he was the owner and equal share holder of the properties, that he had purchased on behalf of the claimant and himself. The claimant's ex-husband had told her that he was not going to pay for something that he did not own. To the claimant's knowledge her ex-husband has not paid the St George Bank Limited any mortgage monies over the said properties. It was at about in June/July 1998, the claimant's ex-husband had discussions with her concerning the two said properties. The ex-husband told the claimant that he was agreeable to let her have all his interests in the two said properties, and that she could do what she liked with the two said properties. The ex-husband had told the claimant that he would write a letter to his solicitor, Mr Joel Hubbard, telling him that he had transferred all his interests in the two properties to the claimant. The claimant agreed to the proposal. The claimant's husband then wrote a letter to his solicitor stating that he had transferred all his interests in the two properties, 24 and 26 Oxford Falls Road, Beacon Hill, to the claimant. The claimant's ex-husband gave her a copy of this letter. The claimant told her ex-husband that she was going to try to get her home and monies back into her possession. The claimant's husband agreed with her proposal. 8. His Honour should have found that the St George Bank Limited had been engaged in conduct that was misleading and deceptive when the Bank gave the impression to the claimant's ex-husband that he was a purchaser and a shareholder of the two properties, 24 and 26 Oxford Falls Road, Beacon Hill, and induced the claimant's ex-husband to sign mortgage documents for properties that he did not own, but were purchased with the monies owned by the claimant and her ex-husband. 9. His Honour should have found that the claimant's ex-husband had transferred his interests in the two properties, 24 and 26 Oxford Falls Road, Beacon Hill, to her, giving her further legal rights to claim "possession" of her assets that she was wrongfully deprived of. 10. His Honour wrongly concluded that the claimant's ex-husband was one of the purchasers of the said properties and had benefited from the purchase of the two said properties. 11. His Honour wrongly concluded that the claimant is seeking "some measure of relief". 12. His Honour should have given weight to the fact that the claimant is seeking to have the mortgage and contracts drawn up over 24 and 26 Oxford Falls Road, Beacon Hill, declared void ab initio. The claimant is seeking to have the monies from the sale of the former matrimonial home returned to her, namely $261,809.79; the claimant is seeking to have the $261,809.79 being utilised as a deposit/payment for her home that she lives in, namely 26 Oxford Falls Road, Beacon Hill; the clamant is seeking to have a mortgage drawn up for the balance of the monies, namely $98,190.24, bringing the total monies up to the purchase price as at $365,000 on 24.10.97 of the property 26 Oxford Falls Road, Beacon Hill. 13. It was open to His Honour to find that the claimant had made an application to join the St George Bank Limited to the proceedings, pursuant to the Supreme Court Rules Pt 8, r8. Supreme Court Act 1970 S63). 14. It was open to His Honour to take note that the Supreme Court Act 1970 S63 makes reference to joining all involved parties to the matter in dispute. 15. It was not open to His Honour to find that the claimant, after the St George Bank Limited has been joined to the proceedings 1973/01, is making an application to the Court to have the case transferred to the Federal Court of Australia, New South Wales District of the Registry. 16. It was not open to His Honour that the claimant is making an application to have the matter concerning the St George Bank Limited, M/s Giselle Wagner, Northern Beaches Legal Service; Loan Design Pty Ltd, S R Deans Pty Ltd, heard under the Trade Practices Act, Section 51AA, 52, 80, 94(2), 87(IA), 87(1CA). 17. That there is available evidence additional to the evidence before His Honour, Mr Justice Windeyer, namely the evidence set out in the affidavit of Alexandra Samootin sworn 26.9.02 (Amended affidavit supporting amended Summary of Argument); and the affidavit of Alexandra Samootin sworn on 29.11.02, a Statement of Claim signed by the claimant on 14.7.02, which was not available at the hearing and which justifies the setting aside of His Honour's judgment. 21 The claimant is also seeking orders to the effect that the hearing of proceedings 1973 of 2001 not proceed on 24 March 2003, with a view to those proceedings being dealt with together with the proceedings against the opponent Bank. She is also seeking some provision from this Court for the continuation of injunctions, although it would seem that both these matters should not be dealt with by this Court without some notice being given to the other parties involved in 1973 of 2001. 22 The grant of leave to appeal as sought in this application is a matter of discretion, and very often is dealt with without any attempt to consider the merits of the proposed appeal. However, in this case I think it is appropriate to look briefly at the merits of the proposed appeal. 23 The claimant submits that Windeyer J was in error in finding that the proceedings could not succeed. In reliance on the evidence before Windeyer J and further evidence presented before us, it is submitted that there is documentary evidence suggesting that the Bank was guilty of misleading conduct under s 52 of the Trade Practices Act, in that it knew that the property in question was being purchased with money provided by Mr Shea and the claimant, and with money advanced on the security of a mortgage guaranteed by Mr Shea, and was being put into the name of a company in which Mr Shea had no interest, yet the Bank, knowing of these things, did not advise Mr Shea. It is put that there is evidence suggesting that Mr Shea was misled, and that it was not necessary to show that there was an intention in the Bank to mislead him. 24 The claimant also relied on hearsay evidence suggesting that an officer of the opponent may have participated in fraudulently putting false information to the opponent; and it is submitted that if this had not happened, then the transaction would not have gone ahead, and the claimant would not have lost her money. 25 The claimant submits that the action should be allowed to proceed against the Bank, and that arrangements should be made that it be heard together with her other proceedings, so that all issues could be dealt with together as required by s.63 of the Supreme Court Act and Pt.8 r.8 of the Supreme Court rules. 26 As noted earlier, the grant of leave to appeal is discretionary. I would say at the outset that, even if leave were granted in this case, I would not be minded to make an order with a view to ensuring that these proceedings were heard together with proceedings No.1973 of 2001, which are set down for hearing to commence on 24 March 2003. I think this would, in effect, by a back door reverse the effect of the failure of previous applications to join the Bank in those proceedings. 27 Furthermore, even if the claimant made out an entitlement to some relief against the Bank, in my opinion it would not in any significant way affect her claims in proceedings No.1973 of 2001. 28 Her claim in those proceedings is based on the application of her one-half of a sum of about $263,000, and could justify recovery of that amount and interest on it, or property acquired by that amount together with any increase in the value of that property. The claimant may also be entitled to ensure that similar relief is given in favour of Mr Shea, whether on the basis that he has agreed that she should have his entitlement, or alternatively so that this could be available for a claim by her against him under the Family Law Act or otherwise. 29 As matters stand, if the claimant does show that she has in effect been defrauded by Mr Deans and his company, there is available to satisfy her claim the two properties, 24 and 26 Oxford Falls Road, which are now worth probably in the vicinity of $1 million, and are subject only to a mortgage of about $230,000 to the Bank. 30 I note, incidentally, that the present proposal by Mr Deans and his company, which he wishes to give effect to by removing the injunctions, is to refinance the mortgage in a way that would leave 26 Oxford Falls Road unencumbered. It seems to me it may be that, if this proposal went ahead, that would mean that the property in which the claimant has the main interest would be available to be disposed of as the Equity Court in the other proceedings sees fit, without regard to any outside mortgage on it. 31 It seems to me that, in those circumstances, the obtaining of relief against the Bank is in no way necessary or even in any significant way relevant to the relief claimed by the claimant in the other proceedings. 32 I would make one further comment on the other proceedings. I am not aware of the precise applicable pleadings in the other proceedings, but it has been suggested that they have been brought on the basis of fraud. I would make the comment that, if Mrs Samootin proves that her money and her husband's money has been used to purchase property, then, even without proof of fraud, that could entitle her to an interest in the property on the basis of a resulting trust; and I would expect that that would be a matter that would be dealt with in those other proceedings. It may be desirable that a copy of this judgment be provided to the defendants in those proceedings, so that the possibility of relief being sought on that basis will not take them by surprise. 33 Turning now to the actual relief which the claimant wishes to obtain from the Bank, it seems to me that, insofar as the claimant wishes to rely on alleged misleading conduct, in particular conduct said to mislead Mr Shea, the evidence is extremely tenuous. On one view of it, at most it shows that Mr Shea had an expectation that he would have an interest in a company, and the other person involved in the company did not take the appropriate steps to ensure that he had that interest. In any event, even if it were shown that Mr Shea was misled, it seems to me that this would not be enough to deprive the Bank of an entitlement to recover its money that has been put into the purchase of a properly, unless it were shown that some loss had resulted. At present it seems the indications are to the contrary, namely, that the money put into the properties in question has resulted rather in a capital gain. 34 Similar comments, I think, are applicable to the claim that an officer of the Bank was involved in misleading the Bank. Again, the evidence is tenuous in the extreme, but again, it seems to me, that there would be a significant remedy against the Bank only if the provision of the money and the purchase of the property had led to some loss. 35 In all the circumstances, I do not think a ground is made out to grant the discretionary remedy of leave to appeal from Windeyer J's decision; and for those reasons I propose that this application be dismissed with costs. 36 STEIN JA: I agree with Hodgson JA, with his reasons and the order which he proposes. This means that I need add little. 37 It has not been shown that there was any error by Windeyer J in his judgment of 17 June 2002 in which he dismissed the proceedings. It appears to me that the claimant simply does not have the evidence to support a claim against the opponent of the nature which she has outlined to the Court. 38 I would strongly recommend that Ms Samootin consider seeking assistance from the New South Wales Bar Association under its pro bono scheme with regard to the proceedings due to commence in the Equity Division on 24 March 2003. 39 As I have said, I agree with the orders proposed by Hodgson JA. The Court will now make these orders. **********