Supreme Court New South Wales Medium Neutral Citation: Shannon v Shannon & D & W Shannon Pty Ltd v Shannon [2013] NSWSC 608 Hearing dates: 21 May 2013 Decision date: 21 May 2013 Jurisdiction: Common Law Before: Davies J Decision: 1. In the matter of Dallas August Shannon v Geoffrey Anthony Shannon I enter a judgment for $12,885,383 being principal and interest to date. 2. I order the Defendant to pay the Plaintiff's costs of the Motion and the proceedings. 3. In the matter of D & W Shannon Pty Limited v Geoffrey Anthony Shannon, I enter judgment for the Plaintiff for the sum of $8,916,052.74 being principal and interest to date. 4. I order the Defendant to pay the Plaintiff's costs of the proceedings. Catchwords: PROCEDURE - application for summary judgment - defences not properly verified - affidavit not sworn by defendant - defendant in default - defences not properly certified under s 347 Legal Profession Act 2004 - effect of lack of proper certificate. Legislation Cited: Legal Profession Act 1987 Legal Profession Act 2004 Uniform Civil Procedure Rules Cases Cited: Groth v Audet [2006] NSWCA 48; (2006) 65 NSWLR 388 Category: Interlocutory applications Parties: Re Matter 2013/117170: Dallas August Shannon (Plaintiff) Geoffrey Anthony Shannon (Defendant) Re Matter 2013/123931: D & W Shannon Pty Ltd (Plaintiff) Geoffrey Anthony Shannon (Defendant) Representation: Counsel: G Dilworth (Plaintiff) K Tang (Solicitor for the Defendants) Solicitors: Mark M Morris, Solicitor (Plaintiff) Blueprint Law (Defendants) File Number(s): 2013/117170 & 2013/123931 Judgment 1These are two related proceedings where judgment is sought by reason of the Defence filed in each. 2In the proceedings of Dallas August Shannon against Geoffrey Shannon the proceedings commenced by the filing of a Statement of Claim on 16 April 2013 claiming a debt as a result of moneys loaned to the Defendant in the sum of a little under $13 million, together with interest. 3In the second proceedings D & W Shannon Pty Limited commenced similar proceedings on 22 April 2013 against Geoffrey Shannon seeking a debt arising from moneys lent to him in the amount of about $8.5 million. 4In the proceedings commenced by Dallas Shannon a Defence was filed on 29 April 2013 which admitted the loans and the failure to repay but pleaded as a substantive defence that the loans were never repayable because all of the advances reverted to gifts. There are no particulars in relation to this so-called reversion. 5The defence in the proceedings commenced by D & W Shannon Pty Limited admitted the loan and the failure to repay, but pleaded as a substantive defence that the default rate of interest of 20 per cent per annum was a penalty and is therefore illegal. 6In both cases, the Defence contained a certificate in these terms: I certify under s 347 of the Legal Profession Act 2004 that there are reasonable grounds for believing on the basis of provable facts and a reasonably arguable view of the law, that the defence to the claim for damages in these proceedings has no reasonable prospects of success. (emphasis added) 7That certificate in each case was so extraordinary that it first prompted a telephone call from the solicitor for the Plaintiff to the solicitor for the Defendant, Mr McClelland, where the solicitor for the Plaintiff asked Mr McClelland, "Did you mean to sign the certificate as it reads or is there a typographical error and 'no' should be deleted?" Mr McClelland replied, "The certificate is correct. In my view the defence has no reasonable prospects of success." 8Mr McClelland then wrote in each case to the solicitor for the Plaintiff saying that he was instructed to accept the Notice of Motion for summary judgment within an abridged time and he would arrange for a Sydney agent to attend Court on their firm's behalf. The letter went on to say this. "We confirm that in our view the defence in these proceedings does not have reasonable prospects of success. We further confirm that we do not hold instructions to seek an adjournment to replead the defence." 9Somewhat inconsistently, the affidavit in each case verifying the defence was sworn not by the Defendant but by Mr McClelland, who said he was the solicitor for the Defendant and was authorised to make the affidavit. He provided an affidavit in the usual form asserting that the allegations of fact in the defence were true and that the allegations of fact that were denied were untrue and after reasonable inquiry he did not know whether or not the allegations of fact that were not admitted were true. 10In these circumstances and because the Plaintiff is elderly and in ill-health, Motions were brought urgently seeking summary judgment of the claims set out in the Statement of Claim. 11Mr Tang has appeared as agent for the solicitors for the Defendant but only to inform me that whilst he did not consent to the orders being made, he had nothing to say in opposition to them. 12The Plaintiff argues that because the certificate under s 347 does not comply with what is contained in s 347, the result is that the defences in each case should not have been accepted for filing. Section 347 would certainly suggest that that is so. 13However, that does not result in the defences being a nullity nor liable to be struck out on that account alone: Groth v Audet [2006] NSWCA 48; (2006) 65 NSWLR 388 at [34]. In his analysis of the provisions of the earlier equivalent of s 347, that is s 198 of the Legal Profession Act 1987, Tobias JA (with whom Mason and Basten JJA agreed) said at [33] that it may be appropriate in the circumstances where no certificate in accordance with that section was given to stay the proceedings until the matter is rectified. 14In the present case there is a clear indication that the Defendant does not intend to make any amendments to the defence filed. 15If there is any doubt about whether it is appropriate in those circumstances to strike out the defence, there is another more solid basis on which that can be done. Rule 14.23 UCPR provides in sub-rule (2) that the party's pleading must be verified by affidavit. Rule 16.2(1)(b) includes within the definition of being in default for the filing of defence the situation where the Defendant fails to file any affidavit verifying his or her defence in accordance with any requirement of these rules. 16Rule 35.3 sets out who it is that must swear an affidavit to verify any pleading that is required to be filed. Although this rule uses the word "may" I do not consider that the use of the word is merely facultative but, in its context, a requirement who, in any of the listed cases, is required to verify the pleading. In the case of a personal Defendant who is not under any incapacity the affidavit must be verified by that Defendant. 17The failure to do so in the present case means therefore that the Defendant is in default of filing a defence in accordance with the rules. That enables the Plaintiff to obtain a default judgment against the Defendant in both cases. 18In addition, in relation to the defence which pleads that the advances reverted to gifts, the absence of any proper pleading of an agreement or arrangement that would justify that conclusion together with the intention of the Defendant not to amend the defence mean that defence does not disclose a proper defence and should therefore be struck out. 19In relation to the defence in the proceedings brought by the company concerning the penalty interest, that defence on its face is arguable, but the failure of the Defendant to verify the defence in accordance with the Rules means that the defence should not be allowed to stand. 20In those circumstances I consider, on the basis of the affidavit evidence of the Plaintiff and Mr Murphy the Plaintiff's accountant read on this application, that there is no arguable defence to the claims made. It is appropriate therefore judgment should be given to the Plaintiff in both matters. 21Accordingly, I make these orders: 1.In the matter of Dallas August Shannon v Geoffrey Anthony Shannon I enter a judgment for $12,885,383 being principal and interest to date. 2.I order the Defendant to pay the Plaintiff's costs of the Motion and the proceedings. 3.In the matter of D & W Shannon Pty Limited v Geoffrey Anthony Shannon, I enter judgment for the Plaintiff for the sum of $8,916,052.74 being principal and interest to date. 4.I order the Defendant to pay the Plaintiff's costs of the proceedings. ********** 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. Decision last updated: 29 May 2013