Supreme Court New South Wales Medium Neutral Citation: Bendigo and Adelaide Bank Limited v Gorczynski [2015] NSWSC 1280 Hearing dates: 25 August 2015 Date of orders: 25 August 2015 Decision date: 25 August 2015 Jurisdiction: Common Law Before: McCallum J Decision: Application for referral to pro bono panel adjourned to 11 September 2015 pending further hearing inter partes. Catchwords: PROCEDURE – civil – application for referral to pro bono panel – whether application appropriate or necessary – overriding purpose Legislation Cited: Civil Procedure Act 2005 (NSW) Real Property Act 1900 (NSW) Trustee Act 1925 (NSW) Uniform Civil Procedure Rules 2005 (NSW) Category: Procedural and other rulings Parties: Bendigo and Adelaide Bank Limited (plaintiff/) Peter F Gorczynski (defendant/applicant) Representation: Solicitors: Applicant self-represented File Number(s): 2009/293542 Publication restriction: None Judgment – ex tempore 1. HER HONOUR: These proceedings came before me as duty judge this morning upon the referral by the registrar of a notice of motion, filed on 18 August 2015, by which the defendant, Mr Peter Gorczynski, seeks a referral to the pro bono panel for legal assistance. By prayer 1 in the notice of motion, Mr Gorczynski sought to have the motion dealt with on an urgent ex parte basis. 2. Upon hearing that the only relief sought was referral to the pro bono panel, my initial impression was that it was appropriate (or at least not inappropriate) to hear the application ex parte since such a referral is not a matter that concerns the plaintiff. After hearing from Mr Gorczynski, I have determined that the more appropriate course before determining his application for referral to the pro bono panel is to hear from the plaintiff as to the matter in respect of which Mr Gorczynski seeks legal assistance. I have reached that conclusion having regard to my mandatory obligation under the Civil Procedure Act 2005 (NSW) to seek to give effect to the overriding purpose of facilitating the determination of the real issues in the proceedings in a manner that is just, quick and cheap. 3. The issue in respect of which Mr Gorczynski seeks legal assistance may be summarised as follows. In the proceedings, the plaintiff, Bendigo and Adelaide Bank Limited, sought possession of a property previously owned by Mr Gorczynski over which the bank held a mortgage. The bank was successful in obtaining an order for possession and, in due course, the property was sold. 4. By settlement statement dated 17 May 2010, the bank's legal representative, Gadens Lawyers, confirmed that settlement of the sale had taken place on 14 May 2010 and that there were surplus funds held in Gadens' trust account in the amount of $21,224.97. The letter asserted that, "The amount of surplus funds may vary if there are any outstanding amounts still due and payable to our client." It may be noted that, as at 14 May 2010, the mortgage securing any debt payable to the bank was discharged. 5. It follows, I think, that any alleged debts incurred after that date could not, as a matter of law or logic, be secured by the mortgage. I say that noting and acknowledging that the bank has not been heard on that issue. In any event, Mr Gorczynski sought return of the proceeds of the sale. 6. The bank was, at that point, on notice of a competing claim by an entity of the name of Lindzman Investments Pty Limited following the filing of a caveat on the title, allegedly in respect of a writ issued on 26 November 2008. In the face of a dispute between Mr Gorczynski and the bank as to the fate of the proceeds of sale in those circumstances, in due course, Mr Gorczynski filed a notice of motion in court on 31 May 2010 seeking various declaratory relief in respect of the proceeds and an order preventing the bank from paying the surplus proceeds into court, seeking rather that the surplus proceeds be paid to him. 7. The motion came before Hidden J on 9 June 2010. At that stage, Mr Gorczynski was represented by a barrister who had accepted a previous referral to the pro bono panel. There is no transcript of the proceedings on that date. However Mr Gorczynski took notes according to which the bank, represented by Ms Prenter of Gadens, sought an order to pay the surplus proceeds into court under the Trustee Act 1925 (NSW). Some of the references to provisions of that Act recorded in Mr Gorczynski's notes are confusing to me but I would understand the application to have been brought pursuant to s 95 of the Trustee Act 1925 (NSW). 8. Plainly enough, the application was related to the proceeds of sale notified to Mr Gorczynski in the settlement statement to which I have referred. Subsequent correspondence reveals that the fund was, later, more than the sum stated in that statement (perhaps due to the accrual of interest). A letter dated 16 December 2014 from Gadens to Holding Redlich (then representing Mr Gorczynski pro bono) suggests that as at some point in 2010, following the settlement of the sale, the total amount held in Gadens' trust account was $22,349.67. 9. In any event, returning to the application before Hidden J, Ms Merkel of counsel, then appearing pro bono for Mr Gorczynski, is recorded in Mr Gorczynski's notes as having indicated his consent to an order that the proceeds of settlement be paid into court. The agreed premise of that joint approach appears to have been that Mr Gorczynski could then pursue the dispute with Lindzman to argue whether Lindzman had any entitlement to the money, but that the bank, as it was put by Ms Prenter, would "then be out of the proceedings". 10. Orders were duly made by Hidden J in the following terms: 1. Pursuant to r 25.3 of the Uniform Civil Procedure Rules 2005 (NSW) that the surplus proceedings of the sale be paid into court. 2. Reserve liberty to the parties to apply. 1. His Honour did not otherwise determine the notice of motion filed by Mr Gorczynski. The orders were made on 9 June 2010. When funds were later paid into court, the payment appears to have been accompanied by an affidavit sworn on 23 August 2010 by Ms Prenter, who had appeared before Hidden J. Her affidavit annexed correspondence between Gadens and various parties including Mr Gorczynski. In one letter, dated 20 May 2010 (which, it may be noted, was written before the application determined by Hidden J), Gadens wrote to Lindzman and to Mr Gorczynski in the following terms: "The amount in our trust account is approximately $20,000. Please note though this amount will be reduced by our client's legal expenses in ascertaining the proper disbursement of the surplus funds. It is in the interests of all parties that there be no dispute about the disbursement of the surplus funds." 1. No legal basis was cited for the contention that the proceeds of sale then held on trust by Gadens could be applied to meet legal expenses incurred after the completion of the sale of the security property. In accordance with s 58(3) of the Real Property Act 1900 (NSW), that fund was then held (subject to the priorities which come first and second, in accordance with the section) on trust for Mr Gorczynski. 2. Ms Prenter's affidavit also annexed a letter dated 2 August 2010 (which, it may be noted, was after Hidden J had, at the request of the bank, ordered that the proceeds of settlement be paid into court) in the following terms: "To the extent that you continue to maintain your claims against our client, our client has a contingent liability for the costs of defending those claims which, pursuant to the terms of the mortgage, form part of our client's mortgage debt. Accordingly, our client is entitled to retain a portion of the surplus funds in respect of its contingent liability for the future costs of defending your claims as part of the mortgage debt. In this regard, we are instructed to retain the sum of $5,000 from the surplus funds. Accordingly, we invite you to agree to the claims as against our client being dismissed so that the full surplus proceeds of sale can be paid into court." 1. Two matters may be observed about those contentions. First, the writer appears to have overlooked the fact that, as at the date of the letter, the mortgage had been discharged. It is difficult to see how, as at that point in time, it could accordingly secure a future contingent liability. Secondly, as already noted, by that date, Hidden J had already, at the request of the bank, ordered that the proceeds of sale be paid into court. It is difficult to see how there could be any impediment to compliance with that order in the terms implied in the last sentence set out above. 2. Ms Prenter's affidavit annexing that correspondence stated at para 25, "The plaintiff wishes to deposit the balance of the surplus funds in the amount of $16,836 into this court pursuant to the order made by Hidden J on 9 June 2010." So far as the material before me reveals, however, no application was made at any point to vary the order made by Hidden J, which attached to the whole fund (whether that be the amount of $21,224.97 identified in the settlement statement dated 17 May 2010, the amount of $21,836 inferentially identified in Ms Prenter's affidavit sworn 23 August 2010 or the amount of $22,349.67 which may be calculated on the face of Gadens' letter dated 16 December 2014, annexure F to Mr Gorczynski's affidavit dated 15 May 2015). 3. So far as the material before me reveals, the proceedings do not appear to have come before the court again since the hearing before Hidden J (until a hearing earlier this year to have the discounted fund paid out to Mr Gorczynski). Mr Gorczynski explains in his affidavit (sworn 10 August 2015 in support of his application for a further referral to the pro bono panel) that due to his financial position and ongoing health issues caused by the stress of many years of litigation, he found himself unable to cope with any more legal matters following the bank's failure to comply with the orders of Hidden J and did not, at that point, take any further step in relation to his notice of motion dated 28 May 2010. He explains that in the intervening period, he suffered from severe reactive depression and it was not until 2014 that his health improved to a point where he could resume the prosecution of his unfinished proceedings. 4. The application before me today, as already noted, is an application for a further referral to the pro bono scheme. Before determining whether to make that referral, it seems to me that the appropriate course is first, to hear from the bank and Gadens as to why the order of Hidden J was neither complied with in terms, nor the subject of any application for variation. Upon hearing from the bank and Gadens on that issue, I will be in a position to determine whether a further referral to the pro bono panel is necessary or appropriate. 5. Accordingly, the order I propose to make today is to stand Mr Gorczynski's application for referral to the pro bono panel over part heard before me to 11 September 2015. In the meantime, I will ask my associate to provide a copy of this judgment to Gadens and to notify them that the proceedings are listed inter partes on that date. 6. It should be understood that I will call upon the bank on that date to address the question whether the entire fund of settlement proceeds should have been paid into court and to that end would expect the bank to be represented and ready to address that issue on 11 September 2015. ********** 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: 07 September 2015