Australian Executor Trustees Limited v Alexandre Pachkovski & Ors [2010] NSWSC 1089 (24 September 2010)

Last Updated: 27 September 2010

NEW SOUTH WALES SUPREME COURT

CITATION:
Australian Executor Trustees Limited v Alexandre Pachkovski & Ors [2010] NSWSC 1089


JURISDICTION:


FILE NUMBER(S):
2009/295053

HEARING DATE(S):
31 March 2010, 1 April 2010

JUDGMENT DATE:
24 September 2010

PARTIES:
Australian Executor Trustees Limited (Plaintiff)
Alexandre Pachkovski (First Defendant)
Violetta Primanzon (Second Defendant)
Grigoriy Primanzon (Third Defendant)

JUDGMENT OF:
Hidden J

LOWER COURT JURISDICTION:
Not Applicable

LOWER COURT FILE NUMBER(S):
Not Applicable

LOWER COURT JUDICIAL OFFICER:
Not Applicable



COUNSEL:
J Simpkins SC (Plaintiff)
Defendants (In person)

SOLICITORS:
Gadens Lawyers (Plaintiff)
Defendants (Self represented)


CATCHWORDS:
CONTRACT
loan secured by mortgage
applicable interest rate
allegation that loan contract altered by lender after signature by borrowers

LEGISLATION CITED:


CATEGORY:
Principal judgment

CASES CITED:


TEXTS CITED:


DECISION:
Plaintiff entitled to possession and recovery of amount owing.



JUDGMENT:

IN THE SUPREME COURT

OF NEW SOUTH WALES

COMMON LAW DIVISION

HIDDEN J

Friday 24 September 2010

2009/295053 Australian Executor Trustees Limited

v

Alexandre Pachkovski & Ors

JUDGMENT

1 HIS HONOUR: These are proceedings instituted by the plaintiff, Australian Executor Trustees Limited, for possession of land subject to a mortgage and the recovery of money owing under a loan agreement. There are three defendants, Alexandre Pachkovski and his two children, Violetta Primanzon and Grigoriy Primanzon. It is convenient to refer to the second and third defendants simply as Violetta and Grigoriy.

2 None of the defendants was legally represented at the hearing. Indeed, Violetta was not present because of the need to care for her children. However, Mrs Maia Primanzon, the wife of Mr Pachkovski and the mother of Violetta and Grigoriy, was in attendance. I allowed Mrs Primanzon to represent Violetta, for whom apparently she held a power of attorney. Moreover, she had knowledge of the events giving rise to the proceedings and gave evidence about them, and I allowed her to put the case on behalf of all three defendants in an address at the close of the evidence.

3 There is no need to examine the pleadings and, in particular, the issues raised by those filed on behalf of the defendants. As the matter unfolded at the hearing, there was only one issue which needed to be decided.

4 It was not in dispute that in July 2007 the parties entered into a loan agreement, whereby the plaintiff agreed to advance to the defendants an amount in excess of $2,000,000. The loan was secured by a mortgage, executed in the following month, over a property at Woollahra owned by the three defendants. Part of the amount advanced was used to discharge an existing mortgage over the property held by the National Australia Bank. It was also not in dispute that the defendants failed to make repayments of the loan when they fell due.

5 The only issue is the interest rate applicable to the loan. It was the defendants’ case that the rate appearing in the loan contract in evidence before me is more than that which was agreed. The contract shows a rate of 8.4% whereas, according to the defendants, the rate negotiated was 6.4%. The serious allegation was made that pages of the contract were changed after they had signed it.

6 The Woollahra property is a block of home units. At the relevant time it was apparently an investment property for the defendants. Units in it were leased, and the family lived elsewhere. The transaction with which I am concerned was initiated in March 2007 through a broker, Mr Michael Blier. He submitted the defendants’ loan application to Seiza Mortgage Company Pty Ltd. That company went into liquidation, and the application was pursued by Pepper Australia Pty Ltd, managing the matter on behalf of the plaintiff. The documentation, including the loan contract, was produced in the office of the plaintiff’s solicitors under the control of a paralegal, Mr Sam Zeitoune. Affidavits of Mr Blier and Mr Zeitoune were read in the plaintiff’s case, and both gave oral evidence.

7 It is convenient to deal with Mrs Primanzon’s evidence and to examine it in the light of the evidence relied on by the plaintiff. She was not a party to the loan contract or the mortgage, although she signed those documents on behalf of Violetta. Nevertheless, it is clear that she took an active part in the process of obtaining the loan. In her evidence she used the pronoun “we” when describing the activities of the defendants in that process. Some of what she said in evidence amounted to comment or argument about the merits of the case, but I shall have regard only to what she said about matters apparently within her own knowledge or understanding.

8 Put shortly, Mrs Primanzon’s evidence was this. If the loan application were successful, it was intended that some of the funds would be used for business investment purposes but most of the money would be used to renovate the Woollahra property, whereupon the family would move into it. The existing loan from the National Australia Bank, at an interest rate of 6.79%, would be paid out and the new loan would be at a lower interest rate appropriate for a home loan. It was this, she said, which was discussed with Mr Blier. The interest rate was to be .39% less than the National Australia Bank loan, that is, 6.4%.

9 This account cannot stand with the evidence of Mr Blier and the documents which he prepared on behalf of the defendants. In oral evidence, he said that he recalled that the purpose of the loan was to refinance the property, which was to be used for investment. In a document entitled “Loan application and summary for originators”, under a heading “Pricing details”, the “borrower rate” is shown as 8.45%.

10 In the loan application, signed by Mr Pachkovski and Grigoriy, and by Mrs Primanzon on behalf of Violetta, the amount sought is $2,800,000. Of that, $1,850,000 is said to be sought “to refinance a property to be used for investment purposes”. The balance, $950,000, is said to be for the purpose of acquiring “another investment property”. On the last page of the document there is a declaration, signed in the same way, that “the credit to be provided to me/us by the credit provider is to be applied wholly or predominantly (ie in excess of half the loan amount) for business or investment purposes (or for both purposes.)”

11 The copy of the loan contract which is in evidence shows, on the second page, an interest rate of 8.4% per annum. Provision is made for repayments over the first 2 years at lower rates, although interest continued to accrue at the rate of 8.4%. This provided the defendants with the benefit of lower repayments during that initial period, but it is of no moment for present purposes. The first page of the contract describes the loan account as “2 year Cashflow Manager Loan”, that expression also being used in the documentation prepared by Mr Blier. What it means is not entirely clear on the evidence, but I understand it to be an expression appropriate for a commercial loan.

12 The concluding pages of the contract bear the signatures of the three defendants, Mrs Primanzon again having signed it on behalf of Violetta. The contract, together with copies for each of the defendants to retain, had been posted by the plaintiff’s solicitors to the defendants at the address where they were then living, for signature and return.

13 Mrs Primanzon said that the contract in evidence was different from that which had been signed at that time. It is not clear from her evidence how many pages she says were changed. However, she claimed that on the first page the loan was described as “residential” rather than “Cashflow Manager”. She insisted that the interest rate was 6.4%, and she claimed that the second page of the contract in evidence, referring to the interest rate of 8.4%, was not in the document which was signed.

14 Mrs Primanzon has either misunderstood the terms of the contract, or has been prepared to make an allegation of serious fraud which is entirely without substance. Mr Zeitoune, understandably, had no independent recollection of the transaction but, from the solicitors’ records, was able to say that he had proceeded in accordance with his usual practice. The contract, with copies, was forwarded to the defendants and, in due course, returned to him bearing their signatures. He then signed the document on behalf of the plaintiff and attended to settlement of the loan.

15 In his affidavit he denied having changed any pages in the contract, or being aware of anyone else having done so. In oral evidence, under cross-examination by Mrs Primanzon, he said firmly, “... we don’t do that. I don’t change pages in the contracts.” Mr Zeitoune, like Mr Blier, impressed me as an honest and reliable witness. Mrs Primanzon’s evidence that the contract had been changed after it was signed is not credible, and I reject it.

16 It was Mrs Primanzon’s evidence which was relied on by the defendants on the issue of the interest rate. I should record that Grigoriy also tendered in his own case copies of three letters he had written to the plaintiff’s solicitors in July and August, 2009. These relate to arrangements he sought to make for repayment of the loan, and they have no bearing upon the matter in contest.

17 It follows that the plaintiff is entitled to possession of the property, and to recover the sum outstanding in accordance with the loan contract. There will need to be an up to date calculation of that amount before judgment can be pronounced. If necessary, I shall hear the parties on costs.

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LAST UPDATED:
24 September 2010