Supreme Court New South Wales Medium Neutral Citation: Catalyst Provisional Lending Pty Ltd v Tsiamoulis [2020] NSWSC 246 Hearing dates: 2 & 17 March 2020 Date of orders: 17 March 2020 Decision date: 17 March 2020 Jurisdiction: Common Law Before: Davies J Decision: Defendant's Notice of Motion dated 17 February 2020 applying for pro bono assistance is granted in the following terms: 1. Pursuant to Part 7, Rule 36 Uniform Civil Procedure Rules 2005 (NSW) the Defendant is referred to the Registrar for referral to a barrister or solicitor on the Pro Bono Panel for legal assistance limited to: a. advice as to whether the Defendant has an arguable defence to case brought by the Plaintiff; b. advice as to whether the Defendant has a reasonably arguable cross-claim against brokers and/or solicitors who acted for her on the present loan; and c. drafting of any defence and/or cross-claim the Defendant is found to have. Catchwords: LEGAL AID – pro bono assistance – claim for possession of land – where defendant was guarantor and mortgagor for loans to companies of her son – where defendant was an old-aged pensioner - where defendant's reading and writing skills in English lacking - son now bankrupt – where defendant authorised son to act on her behalf in the proceedings – undesirability of son conducting proceedings for defendant – limited referral for advice and drafting of pleadings Legislation Cited: Uniform Civil Procedure Rules 2005 (NSW) r 7.36 Cases Cited: FPM Constructions v Council of the City of Blue Mountains [2005] NSWCA 340. Heath v Greenacre Business Park Pty Ltd [2016] NSWCA 34; Neale v Commonwealth Bank of Australia Ltd [2015] NSWCA 136 Texts Cited: Nil Category: Procedural and other rulings Parties: Catalyst Provisional Lending Pty Ltd (Plaintiff) Zacharenya Tsiamoulis (Defendant) Representation: Counsel: No appearance - excused (Plaintiff) Stanley Tsiamoulis (Defendant) Solicitors: Summer Lawyers (Plaintiff) Unrepresented (Defendant) File Number(s): 2019/220092 Publication restriction: Nil Judgment 1. The defendant applies by notice of motion filed 17 February 2020 for referral to the Registrar for a referral to a solicitor or barrister for the provision of pro bono legal assistance pursuant to rule 7.36 Uniform Civil Procedure Rules 2005 (NSW). The defendant has hitherto appeared by her son on an authority given by her to him. The Court has granted him leave to appear. 2. When the motion came before me on 2 March 2020 it was clear that the affidavit in support did not deal adequately or at all with the matters set out in rule 7.36(2). In particular, the means of the defendant and the nature and complexity of the proceedings were not dealt with in that affidavit. I adjourned the proceedings to today so that that material could be supplied. The defendant has again appeared by her son and relies on an affidavit that she swore on 13 March 2020. 3. Two things became apparent from that affidavit. The first is that the defendant's son is an undischarged bankrupt. That makes it entirely inappropriate for him to be permitted to appear for his mother in the proceedings. The second thing is that the affidavit says that the defendant's English writing and reading skills are lacking. When I asked the defendant's son about these matters, it became clear that the affidavits that have been sworn by the defendant, and email correspondence which my associate has received over the period of time I have been case-managing these proceedings, have in fact all been written and prepared by the defendant's son. I have serious concerns about the extent of the defendant's knowledge and understanding of the proceedings and what is taking place within them. 4. The evidence before me discloses that the defendant's sole income is derived from the aged pension, being $933.40 per fortnight. In addition, the defendant's son, who resides with her, receives a carer's payment of $1,065.30 per fortnight. The affidavit goes on to say that the combined monthly household income is $4,330, and total monthly expenses for the defendant are $2,850.35. The affidavit says that leaves $1,479.65 in surplus funds, but that matter does not factor in the added monthly expenses of the defendant's son. 5. Contrary to what I advised the defendant's son on the previous occasion the motion was before me, details of those expenses were not set out in the affidavit. He informs me from the bar table that those expenses are about one thousand dollars per month. I note in passing that that leaves a monthly surplus of close to $500. 6. As far as the complexity of the matter is concerned, it appears that there have been a series of loans commencing in November 2014. There are related proceedings in the Court commenced by the Perpetual Corporate Trust Limited v Tsiamoulis (2019/208376). Those proceedings involved a loan from La Trobe Financial Services part of which I am informed went to repay an earlier mortgage to the ANZ Banking Group over the defendant's property in Chester Hill. The plaintiff in those proceedings apparently has a first registered mortgage over the property. Those proceedings are effectively stayed by reason of a complaint the defendant has made to the Australian Financial Complaints Authority in August 2019. 7. Subsequent to that loan there have been a series of loans from the present plaintiff commencing 11 June 2015. Two of these loans were made to a company of which the defendant's son was the director and effective owner, Zeneth Culture Pty Limited. As with the present loan, the defendant was the guarantor and mortgagor. Those loans appeared to be paid out at various times. 8. Prior to the loan on which the present proceedings are brought made on 9 March 2018, as varied on 14 June 2018, the defendant's son was made bankrupt on 31 August 2017. That seems to have brought about the formation of another company, Zechal Pty Ltd, and the defendant was made the director. That was done, it would seem, because the defendant was bankrupt and could not be the director of a company. The defendant's son claims that the incorporation of that company and the loan to it, was brought about by the plaintiff to avoid the provisions of the National Credit Code. 9. Part of the monies borrowed under the present loan as varied was used to pay out a prior mortgage to the extent of $71,311. That prior mortgage was to a company called 67 Ewers Pty Limited in respect of a loan to Zeneth Culture. The effect of that is that the defendant became the effective guarantor and mortgagor of funds which had been lent for the benefit of the son's company. 10. The defendant's affidavit says that the amount that she actually received from the loan before it was varied was some $38,777. When the loan was varied it appears that the defendant actually received another $70,000, with the remainder being used to pay fees and prepaid interest, some of which may have been capitalised. 11. The claim made on behalf of the defendant is that the plaintiff has engaged in predatory lending on the basis that it knew that the defendant was an old aged pensioner without the means of repaying the loan, except presumably on an asset basis and, in the circumstances, the loan should not have been made, and should not have been increased in the variation agreement. I note that the defendant appears to have had two separate lawyers acting for her when the loan was made and when the loan was varied, and also had brokers engaged in the matter. 12. In the same way as I have serious concerns about the defendant's knowledge and understanding of what is going on in the present court proceedings, I have serious misgivings about her knowledge and understanding of what has been happening, at least since November 2014 when the loan from La Trobe Financial Services was taken out in circumstances where the defendant has been a guarantor and a mortgagor for loans which were being used by her son's company. 13. I consider that, notwithstanding the other shortcomings of the application, a limited reference for pro bono assistance should be made. I note what has been said by Leeming JA in Neale v Commonwealth Bank of Australia Ltd [2015] NSWCA 136 at [3] to [6]. Very high demands are made on solicitors and barristers to provide pro bono assistance. It is for that reason that the Court needs to filter those cases which are referred to the Registrar for referral to those schemes. That is why the rules provide that the Court must have some understanding of both the means of the litigant and the nature and complexity of the proceedings amongst other things. 14. One of the other things to consider is the capacity of the litigant to obtain legal assistance elsewhere. I am satisfied, at least from the material provided in that regard, that the defendant is unable to obtain assistance elsewhere. I do not overlook the fact that earlier in these proceedings the defendant had a lawyer acting for her. 15. I intend to make a referral under r 7.36 for three reasons: first, because the defendant is, and has been, the guarantor and mortgagor in respect of loans made for the benefit of her son's companies; secondly, because I am far from satisfied that the defendant is fully aware of all that has occurred in relation to these loans, and all that is happening in the proceedings. Any information the defendant has derives from the son who appears to me potentially to have a conflict of interest with the defendant. Thirdly, it is highly inappropriate for an undischarged bankrupt to be appearing on behalf of a litigant in person. If it became necessary to make a costs order against the bankrupt, perhaps because of the way the litigation was conducted, any such order would be ineffective. Section 98(1)(b) is wide enough to encompass costs orders against third parties: Heath v Greenacre Business Park Pty Ltd [2016] NSWCA 34; FPM Constructions v Council of the City of Blue Mountains [2005] NSWCA 340. 16. Because of the demand on the pro bono schemes, the present referral will be only for two purposes. The first is for an advice as to whether the defendant has an arguable defence to the case brought by the plaintiff and, if so, for the drafting of any defence that the defendant is found to have. Secondly, the defendant's son intimates that claims may be brought against the broker or brokers and the solicitors who acted for them in relation to the loans. Something is vaguely mentioned about that in the defendant's affidavit. There are limited details in the affidavit about that matter. Since any such claims would in the first instance need to be brought as a cross-claim in the existing proceedings, the pro bono assistance in relation to advising on a defence will extend to the provision of advice about whether there are reasonably arguable claims against the brokers and/or the solicitors and, if so, for the drafting of any such cross-claim. 17. If the advice received from the solicitor or barrister involved is that there is a defence to the whole or part of the proceedings, it will be necessary for a further application to be made by the defendant if further pro bono assistance is sought. 18. The order I make therefore is that the defendant is referred to the Registrar of the Court for referral to a barrister or solicitor on the Pro Bono Panel for Legal Assistance pursuant to rule 7.36 Uniform Civil Procedure Rules 2005 (NSW). ********** Amendments 18 March 2020 - Typographical error on cover page. 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: 18 March 2020