PERPETUAL TRUSTEES VIC LTD v BODIROZA [2009] NSWSC 861

New South Wales Supreme Court

CITATION : PERPETUAL TRUSTEES VIC LTD v BODIROZA [2009] NSWSC 861

HEARING DATE(S) : 9 December 2008

JUDGMENT DATE : 28 August 2009

JUDGMENT OF : Hulme J at 1

I publish these reasons DECISION : I stand the matter over to Tuesday 24 November 2009 at 9.30am for mention I grant libety to the parties to approach my associate for the fixing of a further date for hearing (and if that is done and the parties consent, to vacate 24 November 2009 mention)

PARTIES : Perpetual Trustees Victoria Limited - Plaintiff Slavica Bodiroza - Defendant

FILE NUMBER(S) : SC 13071/2007

COUNSEL : Mr A Rogers - Plaintiff Ms M Tibbey - Defendant

SOLICITORS : Kemp Strang Bozinovska & Co

- 37 - IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

RS HULME J

Friday, 28 August 2009

PERPETUAL TRUSTEES VICTORIA LIMITED v Slavica BODIROZA

JUDGMENT 1 RS HULME J: The Defendant is the owner of land at 7/118 Elizabeth Drive Liverpool, being the land contained in CT Folio Identifier 7/SP12051. Pursuant to mortgage number 939257, dated 24 January 2003, the Plaintiff is the mortgagee of that land having, on or about that date, lent the Plaintiff a sum of $160,000 that was employed by the Plaintiff in the purchase of the property for the sum of $200,000. 2 The Plaintiff claims that as at 19 February 2007 the Defendant was in default in an amount of $2,887.22 on account of "principal, interest and fees" that had not been paid when due, and that she further failed to comply with a default notice served on 27 February 2007. By an Amended Statement of Claim filed on 27 October 2008, the Plaintiff claims:- (i) An order for possession of the land, or alternatively (ii) An order for restitution in the sum of $160,000 and (iii) Interest. 3 In fact the Plaintiff's payment records show that the Defendant made her first payment of interest on 24 February 2003. On the following day, the payment was dishonoured and she thus fell into default. A payment in March 2003 was also dishonoured although the Defendant seems to have substantially made up the 2 dishonoured payments later in March. Other dishonoured payments occurred in January and May 2004 and in a number of months of 2005 and 2006. However the extent of the default at any one time seems not to have exceeded about $1,500 until June 2006. It fluctuated for some time above and below this figure until November 2006 when it reached about $2,500 from which time it never reduced below that amount. By June 2007 it reached $10,000. There were then some payments but in July 2007 it was $8,000 after which it has increased because of both non-payment of interest and legal fees. 4 In the Defence filed the Defendant indicated reliance on the Contracts Review Act and a number of the provision of the Consumer Credit Code. However, at the time of trial, it was only the first of these that was relied upon. 5 In opposition to the Defendant's claim the Plaintiff sought to rely on, inter alia, a number of documents said to have come into existence prior to the advance of the money and execution of the mortgage. The circumstances in which those documents came into existence were in issue as was the question whether what purports to be the Defendant's signature on a number of the documents is really hers. For reasons not readily understandable in light of such a challenge to the documents, the parties were content to rely on, with some exceptions, photocopies. However, that was the form of the evidence and I must do the best I can with it. 6 Additional complications arose because of the multiplicity of intermediaries who were involved in the effecting of the original transaction between the Plaintiff and the Defendant. It is convenient to outline these and their roles at this stage. 7 The Plaintiff is the trustee of a number of trusts from which funds are lent to persons wishing to borrow. At the time with which I am concerned, the decision as to whether any particular application for a loan should be granted was made by a wholesale finance company, Challenger Mortgage Management Pty Ltd, previously known as Interstar Wholesale Finance Pty Ltd and Interstar Securities (Australia) Pty Ltd. It will be convenient to refer to this company as "Challenger" and "Interstar". Mr Wort, a senior officer of Challenger agreed that Challenger acted as the agent for the Plaintiff and gave evidence that Challenger's practice involved the receipt of loan applications forwarded by "a loan originator" or broker. 8 Howard Pacific Finance Pty Ltd (hereinafter referred to as "Howard Pacific") was such a loan originator and offered mortgage broking services. There were lengthy "Mortgage Management" and "Loan Origination and Mortgage" Agreements between Challenger and Howard Pacific that came into evidence. Mr Wort said that he was aware that mortgage originators sometimes had loans introduced to them by other mortgage brokers. 9 That happened in this case. Indeed, there were 2 intermediaries or brokers between the Defendant and Howard Pacific. The mortgage broker who actually saw the Defendant was a Mr Milan Vlasic. Although Mr Vlasic initially said that he forwarded the Defendant's application for finance to Howard Pacific, it became clear that he in fact sent it to another company Anagold Pty Ltd and that Anagold then communicated with Howard Pacific. 10 The evidence indicates that, so far as the transaction the subject of these proceedings is concerned, the person who acted as, or on behalf of, Anagold was an Anastasia Sourlas. A Company Search reveals that, until April 2000, she had been the sole director and secretary of that company although from that time those roles were taken over by a Mr Ornelas. What practical difference, if any, that made to the day to day operations of Anagold was not the subject of evidence. At all relevant times Ms Sourlas was however the sole director and secretary of another company Anatax Pty Ltd that carried on business from the same address as Anagold, viz 14 King St, Warrawong. Anatax carried on business under the name of Master Tax Service. 11 Warrawong is a place some little distance south of Wollongong. Howard Pacific carried on business in Wollongong. The Plaintiff lived at 11 Idress Place, Edensor Park, a suburb near Liverpool. 12 The course of events and documentation that occurred between the initial meeting between Mr Vlasic and the Defendant and the Plaintiff's advancement of funds, though not entirely clear, is of significance in the case and must be referred to. 13 According to the Defendant, she was awarded some $42,000 in consequence of some accident in which she was involved. She then saw some solicitors Stoikovich Banfield Macri about buying a home unit. Mr Novakovic of that firm told her to find a unit. She approached an estate agent and did so. She was aware that $42,000 was not enough to pay for the unit and approached the solicitors to obtain more, telling them she was a pensioner. They told her to obtain a statement from the Social Security Department showing the extent of her pension and then they would arrange for a broker to see her. 14 Mr Vlasic then called. According to the Defendant she showed him the Social Security statement. He said that he did not need to see that but did need to know how much money she had in the bank. Although her evidence was not all consistent on the topic she seems to have shown him a bank statement evidencing the $42,000 and then he gave her some paperwork to sign in a number of places. According to the Defendant, Mr Vlasic did not tell her the nature of the documents she was signing. However, she gave evidence to the effect that the solicitor who organised for Mr Vlasic to come told her that when a broker came she was supposed to sign papers in relation to her loan. Mr Vlasic also told her she was supposed to sign something for the loan. 15 Mr Vlasic who had little or no memory in respect of some aspects of the particular transaction gave evidence that he commenced business as a mortgage broker in February 2002 and in about November 2002 attended the home of the Defendant where he spoke to her in Serbian. His contact with her was probably inspired by a call from Stoikovich Banfield Macri and he probably phoned the Defendant prior to the one occasion on which he saw her. He said that she had told him she wanted to buy a property for herself and her son and in which she was going to live. She said that she had some money for a deposit and when asked how she could service the loan said that she was working as an artist. Mr Vlasic could not recall whether the Defendant showed or faxed any documents to him regarding her income or assets or capacity to repay. Neither could he recall whether he knew that the Defendant was in receipt of Centrelink payments. Mr Vlasic said he helped the Defendant to complete a Howard Pacific Finance application form and perhaps one or two forms for other potential lenders. He asked her also to sign a form in relation to the Privacy Act and, in his affidavit of 5 May 2008, said that, "As I recall, the documents of Ms Bodiroza were sent to Howard Pacific Finance." These may also have included an application for a First Home Buyer's grant. 16 Mr Vlasic said that it was his usual practice to translate a mortgage finance application for to a client if that client spoke Serbian but little or no English and to tell those seeking loans words to the effect:- "You realise that the property will be in your name but you cannot dispose of it or do other things with it without the consent of the mortgagee. Your minimum monthly repayment will be based on the indicative interest rates. If interest rates increase, so will your repayments. Can you re-service the loan? Your repayments will be likely to be… if you think that you will be making good money from this property by selling it in one year, you may be disappointed. Don't expect the market to go up, because it may not happen. The property market may even fall in the short term, but in the long term properties do go up." 17 Mr Vlasic said that he did not receive any payment from Mrs Bodiroza for arranging her loan but believed that he received some from the Plaintiff or Howard Pacific or, when regard is had to later evidence he gave, Anagold. The amount was 0.6% of the money lent. He did not notice any ill health either physical or mental in Mrs Bodiroza. He said that a few months after the transaction she rang him many times and said words to the effect that she had some plans to buy some town houses, possibly with someone else, and asked if she could get a further loan and what the repayments would be. Mr Vlasic said that he had no recollection of the figures discussed. 18 In evidence, Mr Vlasic retreated from his statement that he had sent documents to Howard Pacific, saying that he sent them to an organisation or a company named Anagold, that he seems to have thought was associated with Howard Pacific. Asked if the documents were sent to anyone in particular, he mentioned Anastasia Sourlas and Kylie. 19 At one time Mr Vlasic said that Anagold was a close associate of Howard Pacific. This description was objected to and struck out although there was no objection later when Mr Vlasic described Anagold as "part of Howard Pacific". Mr Vlasic went on to say that he did not know how they were organised. Mr Vlasic was not asked why he sent documents to Anagold rather than Howard Pacific. 20 Mr Vlasic agreed in cross-examination that anyone borrowing $160,000 who was on Social Security and with no other apparent source of income might have difficulty in servicing the loan. He said that he would have asked as to the Defendant's income but had no recollection of her response beyond that she said she was an artist. He had the impression that she was in receipt of more than merely Social Security payments but in the witness box he seemed quite unsure. He agreed with counsel for the Plaintiff that he would not have organised the loan if the Defendant had told him that her only income was Centrelink payments. 21 On the other hand, when counsel for the Plaintiff put to Mr Vlasic that it was his invariable practice to obtain information from a person regarding his or her finances when they were seeking to obtain a loan, Mr Vlasic replied:-