Benz v P D Mortgage Services Pty Ltd [1999] QSC 47

IN THE SUPREME COURT OF QUEENSLAND Brisbane Before White J [Elizabeth Mina Benz v P D Mortgage Services Pty Ltd] BETWEEN: ELIZABETH MINA BENZ AND: P D MORTGAGE SERVICES PTY LTD (ACN 065 740 847) No. 61 of 1999 Applicant Respondent ACTION NO. 7788 of 1996 BETWEEN: AND: P D MORTGAGE SERVICES PTY LTD (ACN 065 740 847) ELIZABETH MINA BENZ REASONS FOR JUDGMENT - WHITE J Judgment delivered 15 March 1999 CATCHWORDS: Application for stay of execution - Order 45. Plaintiff Defendant Counsel: Mr R R Douglas QC, with him Ms K Downes ,for the respondent/plaintiff Mr J Howard as agent for the applicant/defendant. Solicitors: Deacons Graham & James for the respondent/plaintiff Hearing Date: 11 March 1999 [1999] QSC 47 -- 1 of 9 -- IN THE SUPREME COURT OF QUEENSLAND Brisbane Before White J [Elizabeth Mina Benz v P D Mortgage Services Pty Ltd] BETWEEN: AND: ELIZABETH MINA BENZ P D MORTGAGE SERVICES PTY LTD (ACN 065740847) No. 61 of 1999 Applicant Respondent ACTION No. 7788 of 1996 BETWEEN: AND: P D MORTGAGE SERVICES PTY LTD (ACN 065740847) ELIZABETH MINA BENZ REASONS FOR JUDGMENT - WHITE J Judgment delivered 15 March 1999 Plaintiff Defendant The respondent/plaintiff ("PDMS") obtained judgment against the applicant/defendant ("Ms Benz") on 23 December 1998 pursuant to an order made by Thomas J on 22 October 1996 which gave PDMS liberty to enter judgment for recovery of possession of land the subject of a certain mortgage and costs. His Honour had given Ms Benz leave to defend the action on an application for summary judgment on certain conditions which included the payment of a sum by way of interest each month to PDMS. In default of performing the conditions imposed his Honour gave liberty to PDMS to enter judgment in the registry. -- 2 of 9 -- 2. 3. 4. 5. 6. 2 Ms Benz carried out the conditions until December 1998 and on default judgment was entered. Ms Benz sought a review of the decision whereby a Deputy Registrar of this court entered the judgment. I heard that application pursuant to the Judicial Review Act in chambers on 2 February 1999 and gave judgment on 10 February 1999 dismissing the application for the reasons set out in the published judgment. PDMS appointed an agent in respect of the rent to be paid for lease of the convenience store and accommodation associated with the subject land. Payments have not been made as demanded. A writ of possession in respect of the subject land was issued out of this court on 15 February 1999. Notice has been given that the land is to be vacated by 19 March and in default eviction will occur on 20 March 1999. On 1 February 1999 Ms Benz filed a notice of appeal ostensibly against my order dismissing the application for a statutory order of review, but also seeking to stay the order of Thomas J made on 23 October 1996. In the meantime the Full Federal Court refused Ms Benz an extension of time within which to seek leave to appeal and dismissed her notice of motion on 19 February 1999 in respect of an action commenced by her in that court against PDMS concerning the same transaction being litigated in this court. Apart from any special leave application to the High Court from that decision all Federal Court proceedings involving these parties are at an end. On 9 March 1999 Ms Benz filed a notice of motion which seeks a stay of the execution of the writ of possession pending the hearing of the appeal or the trial of the action. The notice of motion has been filed in the judicial review application (no. 61 of 1999) but should be in the action (no. 7788 of 1996). That causes no difficulty as the files can be marked accordingly and cross referenced. -- 3 of 9 -- 7. 8. 3 A convenient chronology was tended by Mr R R Douglas QC, who appears for PDMS, on the occasion of the judicial review hearing (exhibit 2). It traces the history of the litigation in both Federal and Supreme Courts. Reference may also be made to my reasons for judgment in no.61 of 1999 of 10 February 1999 for further background. Before me on that occasion and on this application Ms Benz was represented by Mr John Howard, a business and personal partner, as her agent. On 2 February 1999 Ms Benz did not appear, a doctor's certificate indicating that she was too unwell to do so. On 11 March Ms Benz appeared but indicated that she did not feel able to speak on her own behalf and again Mr Howard spoke for her without objection from Mr Douglas. Neither Ms Benz nor Mr Howard are young and neither appeared in robust health. Mr Howard made his submissions which were essentially as to the merits of the dispute between Ms Benz and PDMS, clearly, sensibly and, if! may so, courteously. The submission is, in essence, that the stay of execution ought to be granted relying on Order 45 of the Rules, or on the merits of the case. In order to deal with this application the facts as alleged by Ms Benz may be summarised. In 1994 Mr Howard had development land at or near Caboolture and Ms Benz had shopping centre land. Each was subject to a registered mortgage. Mr Howard required a relatively modest sum to enable him to get the plans sealed and to obtain title deeds for the blocks. Ms Benz and Mr Howard entered into discussions with three local financiers who introduced them to people concerned with an entity known as Private Mortgage Finance Limited. An offer of loan was received from that company in September 1994 for $765,000 on terms which were accepted by Ms Benz and Mr Howard. There was also a proposal for a joint venture with a company Private Mortgage Lending Limited and although a document evidencing that agreement was apparently executed by the company and Ms Benz and Mr Howard nothing more has been raised in respect of it. -- 4 of 9 -- 9. 10. 11. 4 The subject mortgage was executed by Ms Benz in respect of her land for an advance of $205,000, which was also collateral security for the loan to Mr Howard, on 22 September 1994. Mr Howard executed his mortgage with PDMS in respect of a greater sum. Mr Howard said that he and Ms Benz protested at the change of mortgagee and allege some duress on the part of PDMS's agents to sign that mortgage document. Under the arrangement the existing mortgages were paid out - $105,000 to Ms Benz's mortgagee and $465,000 to Mr Howard's mortgagee. Ms Benz and Mr Howard allege that they received no, or virtually no, direct funds from PDMS of the $770,000 (I am not quite sure of the precise figure here, but nothing turns on it) which would have enabled the sub division to have been completed. It is alleged by Mr Howard that he had purchasers ready and willing and only required the stamping of the plans and obtaining title deeds to bring the development to completion. As best I can say there is alleged to be a short fall of$100,000 allegedly taken up in interest, commissions and secret commissions. There is said to be some evidence of this from the liquidator of Private Mortgage Lending Limited. The development was unable to be completed and accordingly the loan repayments could not be met by Mr Howard. Ms Benz and Mr Howard commenced proceedings int he Federal Court on 13 September 1996 seeking relief under the Trade Practices Act for breach of contract and fiduciary duty against PDMS. PDMS commenced its action in this court for recovery of possession of the land in no. 7788 of 1996 (against Ms Benz) and no. 7787 of 1996 (against Mr Howard) and filed summary judgment summonses in each action returnable on 22 October. The factual matters going to the merits to which I have referred above were, it seems, put to Thomas J on 22 October by counsel who appeared on behalf of Ms Benz and Mr Howard. There are no reasons before to doubt that his Honour accepted that these allegations raised a triable issue and gave leave to defend on conditions which included both Ms Benz and Mr -- 5 of 9 -- 12. 13. 5 Howard making repayments of interest under their respective mortgages. Judgment was entered against Mr Howard on 6 December 1996 in accordance with the provisions of his Honour's order and subsequently he was declared bankrupt. The Federal Court action was dismissed on 23 May 1997 by Drummond J substantially for gross failure to particularise the claim. Thereafter interlocutory steps followed that dismissal in the Federal Court and as I have mentioned, the Full Federal Court dismissed appeals on 19 February. As I have mentioned in my reasons for judgment in the judicial review application at p.8, Fryberg J gave judgment in P D Mortgage Services Pty Ltd v Marquart os no. 929 of 1997 on 29 August 1997 in a summary judgment application. He made adverse comments about one of the partners of Purvis Duncan, a director (as were other partners of the firm) ofPDMS and gave leave to defend. This appears to have activated Ms Benz to bring the application for review. On 29 December 1998 a counter claim was delivered in action no. 7788 of 1996 in the name of Howard Benz Cameron ("a partnership") as plaintiff against PDMS in part making the allegations submitted to me by Mr Howard for Ms Benz. As far as I can ascertain no defence has been entered to that counter claim. The counter claim has not been drafted or settled by a legally qualified person but by Donald Cameron. Mr Cameron was declared a vexatious litigant by the Court of Appeal on 5 March 1996. It appeared to me when I dealt with the statutory order of review from the material that Mr Cameron became involved with Ms Benz and Mr Howard towards the end of 1998. In a letter dated 7 December 1998 to PDMS's solicitors he wrote: "I have directed Elizabeth Mina Benz cease interest payments effective today's date ... " However, Mr Howard said before me that he and Ms Benz first had contact with Mr Cameron in 1994 and had signed some papers which he gave to them and had not seen him again until the end of 1998. Mr Cameron maintains that he entered into a partnership agreement with Ms Benz -- 6 of 9 -- 15. 16. 6 and Mr Howard in respect of the lands. The alleged agreement is dated 31 August 1994 and is signed by all three. The alleged agreement provides, after mentioning the land registered in the names of Mr Howard and Ms Benz: "In consideration of the said John Campbell Howard contributes his land and buildings to the joint venture partnership. The said Elizabeth Mina Benz contributes her land and buildings to the joint venture partnership and the said Donald Cameron contributes his management skills to the said joint venture partnership and all legal matters associated with the joint venture partnership and it is hereby agreed that the said Donald Cameron has the power to act for and represent both the said John Campbell Howard and the said Elizabeth Mina Benz." A letter dated 7 September 1994 and signed by Ms Benz, Mr Howard and Mr Cameron states: "We confirm your payment to us of $400 which entitles you to 1/s proprietorship in fee simple in the properties listed below for the purpose of developing the said lands for their highest and best use ... This will permit you to claim in any dealings with the properties if ever your interests need to be protected." A letter allegedly sent to Purvis Duncan dated 12 September 1994 by Mr Cameron stated inter alia: wrote: "John Campbell Howard and Elizabeth Mina Benz are handicapped and substantially disabled in understanding any contract. The writer has appointment with Power of Attorney. In effect both have signed all authority to the writer to approve and endorse all contracts associated with the Howard/BenzJCameron Partnership Agreement sub division and convenience store. Further, any contract not executed by this writer under the power to act granted on 31 August 1994 by my partners will have no binding or lawful effect upon the Partnership of Howard/BenzJCameron." By letter dated 30 November 1998 addressed to PDMS's present solicitors Mr Cameron -- 7 of 9 -- 17. 18. 7 "The writers legal interest in the subject land is 80% and at no time was enquiry sought by any mortgagee for inclusion as Mortgagor which my Partners encouraged." I should observe that Mr Cameron has commenced making direct communication with me in respect of these matters by way of facsimile transmission some have been sent to the solicitors for PDMS. PDMS, I am confident, has received from one source or another all communications which have been received by the court from Mr Cameron. Lest it be thought that Mr Cameron has embarked on these claims to an entitlement to the major part of the land the subject of the action without reference to Ms Benz (or Mr Howard), Ms Benz has sworn affidavits deposing to the arrangements between them at least from 5 January 1999. Further, the partnership and Mr Cameron's part in it is referred to throughout the written material prepared by Mr Cameron for Ms Benz and handed to the court by Mr Howard. A quite extraordinary situation then prevails, in as much as Ms Benz and Mr Howard commenced and prosecuted proceedings in the Federal Court and in this Court for over two years with numerous appearances and applications and without referring to Mr Cameron or his interest in their lands or their agreement that he must execute any documentation relating to those lands. The counterclaim sought to be prosecuted in no. 7788 of 1996 is brought in the names of a three person partnership, one member of which is a declared vexatious litigant who has not sought leave to commence proceedings and a declared bankrupt whose trustee has apparently not been informed of these proceedings. Ms Benz and Mr Howard were represented in the Federal Court by senior counsel and by junior counsel before Thomas J. Mr Howard submits that their solicitor, Mr Paul Clough, did not appear on the hearing before Thomas J on 22 October 1996 and their counsel, a Mr K Geraghty, had declined to accept their further instructions in his absence. These matters are not, in my view, sufficient to stay the operation of the writ of execution pursuant to Order 45 of the Rules or on -- 8 of 9 -- 21. 22. 8 any other basis. In broad terms Thomas J was aware of the allegations against PDMS which is why, it would seem, leave to defend was given. The conditions imposed, with respect to his Honour, were quite reasonable. Had Ms Benz (and I refer only to her as the application relates only to her) devoted her resources and energies to a defence and counterclaim in the action instead ofthe scattered interlocutory applications in this court and in the Federal Court she may have been ready for trial by now. The counter claim is still on foot. The link between the representations allegedly made (to Ms Benz and Mr Howard) about the provision of funds to complete the sub development by the representatives of Private Mortgage Lending Limited need to be pleaded if the pleading is to reflect the allegations which Ms Benz wishes to make in respect of PDMS. It appears to me that although Mr Cameron maintains that he is seeking to assist unrepresented litigants, his intervention in these proceedings has not been of assistance to Ms Benz. The orders are, dismiss the notice of motion. I will hear submissions as to costs. -- 9 of 9 --