Bendigo and Adelaide Bank Ltd v Gorczynski (No 2) [2015] NSWSC 1345 (22 September 2015)

Last Updated: 30 September 2015

Supreme Court New South Wales

Case Name:	Bendigo and Adelaide Bank Ltd v Gorczynski (No 2)
Medium Neutral Citation:	[2015] NSWSC 1345
Hearing Date(s):	18, 22 September 2015
Date of Orders:	22 September 2015
Decision Date:	22 September 2015
Jurisdiction:	Common Law
Before:	McCallum J
Decision:	Order that $5,253.10 be paid into court by the plaintiff within seven days. Defendant referred to pro bono panel for legal assistance
Catchwords:	TRUSTEES – payment into court – where order made on application of trustee that surplus proceeds of mortgagee sale be paid into court – where trustee later paid lesser amount into court after deducting costs without further application to the court – whether difference should be paid into court PROCEDURE – civil – application for referral to pro bono panel – where previous referral made – whether there are special reasons justifying a further referral – overriding purpose
Legislation Cited:	Uniform Civil Procedure Rules 2005 (NSW), r 7.36
Cases Cited:	Australia v New Zealand Banking Group Ltd v Mishra [2012] NSWSC 1333 Bendigo and Adelaide Bank Ltd v Gorczynski [2015] NSWSC 1280
Category:	Procedural and other rulings
Parties:	Bendigo and Adelaide Bank Limited (plaintiff/respondent) Peter F Gorczynski (defendant/applicant)
Representation:	Solicitors: Gadens Lawyers (plaintiff/respondent) Defendant/applicant self-represented
File Number(s):	2009/293542
Publication Restriction:	None

JUDGMENT

1. HER HONOUR: These proceedings came before me as duty judge on 25 August 2015 on the application of Mr Peter Gorczynski for a referral to the pro bono panel for legal assistance. The issue in respect of which Mr Gorczynski seeks legal assistance concerns his entitlement to a fund representing surplus proceeds of sale following the bank's exercise of its power of sale of real property mortgaged to it by Mr Gorczynski.
2. When the proceedings first came before me I took the view that, before considering the pro bono referral, there was an issue in respect of which I should hear from the bank and its legal representatives, Gadens, for the reasons stated in an ex tempore judgment given that day: see Bendigo and Adelaide Bank Ltd v Gorczynski [2015] NSWSC 1280.
3. In particular, I was concerned on that date that it appeared the bank, having obtained an order on its own application from Hidden J to pay the fund identified in evidence as “the surplus funds” into court, unilaterally determined to pay a smaller sum into court, ostensibly in exercise of an entitlement to deduct enforcement costs or future legal costs from the fund. It seemed to me that the bank ought, before purporting to exercise any such right, to have relisted the proceedings so as to vary the order made by Hidden J, rather than unilaterally deducting funds from the sum the subject of his Honour's order.
4. As contemplated in my earlier judgment, the proceedings were relisted before me, whereupon I heard submissions from Mr Lewin on behalf of the bank. Those submissions have not dissuaded me from my preliminary view that the order of Hidden J ought to have been complied with in terms; that is, the bank was expressly ordered on its own application to pay a nominated fund into court and that ought to have occurred.
5. It has been noted on behalf of the bank that the defendant has not presently made any application for relief against the bank, the application having come before me as the defendant's application for a referral to the pro bono scheme. I took the view, nonetheless, that it was appropriate for the Court of its own motion to ensure compliance with the order of Hidden J made on 9 June 2010.
6. Accordingly, I indicated that I proposed to order that the part of the fund held back unilaterally (evidently on the decision of Ms Prenter, who appeared for the bank on the original application) should now be paid into court and there should then be an argument in respect of that fund.
7. It appears there is now an issue as to whether the amount held back represented past enforcement costs or future legal costs it was anticipated would be incurred. Mr Lewin has indicated that it is his understanding that the amount held back represented past enforcement costs. That, however, is inconsistent with the content of a letter dated 2 August 2010 from Gadens to Mr Gorczynski, written after the order of Hidden J made 9 June 2010. In that letter Gadens said:

"In view of the Court taking the position that it was unable to determine that you hold an undisputed entitlement to the surplus funds without further ventilation of the position of the writ holder, it is clear that it was appropriate for our client to pay the disputed surplus funds into court. 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."

8. The letter proceeded to offer as an alternative that Mr Gorczynski consent to the claims against the bank being dismissed, in which event he was required to execute a deed of release.
9. Accordingly, there remains a dispute between the bank (and perhaps Gadens) on the one hand and Mr Gorczynski on the other hand as to the entitlement to that sum in the order of $5,000. It is not yet clear whether the bank claims an entitlement to that sum as representing past enforcement costs as at 2 August 2010 (contrary to the terms of Ms Prenter's letter) or contingent liability for future costs, as she described them.
10. If they were past enforcement costs, they ought to have been dealt with in the application before Hidden J determined on 9 June 2010 (cf r 55.9 UCPR). If they were future contingent costs of defending claims, the bank claims an entitlement to retain that sum evidently as being secured by the mortgage on the strength of the authorities referred to in a decision of Davies J in Australia v New Zealand Banking Group Ltd v Mishra [2012] NSWSC 1333.
11. It will be necessary, when this issue is determined, to consider whether those authorities apply in the case of a claim by a mortgagee for costs incurred after the settlement of the sale and apparent discharge of the mortgage. In the present case, the sale was completed in May 2010 and it was on that date that a crystallised sum was identified as the surplus proceeds of sale. A question will arise as to whether, from that date, the bank ought simply to have promptly paid those proceeds into court and then be out of the matter.
12. A question will also arise as to the extent to which the mortgage could from that date have continued to secure any "contingent liability for future costs" of the kind identified by Ms Prenter in her correspondence.
13. In any event, I determined when the proceedings were last before me that the appropriate course was first to require the bank to comply with the order of Hidden J by paying the withheld amount into court as his Honour had ordered and, secondly, for there to be a determination of the respective entitlement to that fund of the bank and Gadens on the one hand and Mr Gorczynski on the other hand with Mr Gorczynski having the benefit of the assistance of any barrister who might accept the referral under the pro bono scheme.
14. Mr Gorczynski's evidence in the proceedings has persuaded me that it is appropriate to make such a referral, notwithstanding the fact that he has previously enjoyed the benefit of a referral, the present issue being a narrow one which I think is likely to be of interest to barristers wishing to expand their experience or to give the benefit of their previous experience on this interesting and difficult question.
15. For those reasons, I am satisfied that there are special reasons that justify a further referral pursuant to r 7.36 of the Uniform Civil Procedure Rules 2005 (NSW). I would refer Mr Gorczynski to the registrar for referral to a barrister or solicitor on the pro bono panel for legal assistance. The kind of assistance in respect of which the referral is made is for advice and representation in relation to the issue of Mr Gorczynski's and the bank's respective entitlement to the fund to be paid into court today. It is agreed that the fund to be paid into court today, so as to give effect to the order of Hidden J and making allowance for a small amount in the order of $280 previously paid to Mr Gorczynski, is $5,253.10. I order that fund be paid into court within seven days.

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