Jin v St George Bank [2013] NSWSC 291

The guarantor brought a claim against the bank to have the mortgage and guarantee set aside on the grounds that they were forgeries and/ or alternatively on the grounds of the Contracts Review Act.

The guarantor was a Chinese/ Australian businessman unable to speak or read English without the assistance of a translator. The judge noted the following about the expert evidence filed by the guarantor:

Dr Strach’s findings in relation to the six questioned signatures were that they were not written by Mr Jin. The degree of Dr Strach’s conclusiveness was of the highest category. Dr Strach found the questioned signatures to be “so fundamentally different that the writer of the specimens is considered to be incapable of writing the questioned material”, this being what Dr Strach described as a “definite negative conclusion”.

The bank repeatedly breached the timetable to file rebuttal expert evidence. Nevertheless, they proceeded on the basis that the signatures were not forgeries. Finally, on the first day of the trial they sent a solicitor to inform the court that they submitted to any orders (conceded it was a forgery) save as to costs and took no further part in the trial.

As expected the court found the mortgage was a forgery. On the issue of costs, the bank argued that it should not have to pay the costs of the borrower because:

  • The merit of the claim between the guarantor and the bank had not been determined, thus there was no successful or unsuccessful party.
  • It acted reasonably in defending the claim initially.
  • At least one of the declarations made by the Court should not have been made because it was wrong.

The Court rejected these arguments and held that the bank was to pay the guarantor’s costs of the litigation up to and including the day it submited to the orders of the court and the costs of an incidental to determining the issue of costs.

The Court found the reasons for the bank submitting to the orders of the court had no bearing on the issue of costs. Similarly, that reasonableness in defending a claim is not a basis to refuse a successful party an order for costs (as opposed to an order for indemnity costs for example).

The Court held that having declined to appear to put any argument on the merits of the claim at hearing, the lender was not entitled to do so at the time of the costs issue. It found that the bank had understood the orders sought and expressly agreed to abide by the result, so it could not argue the merits at the costs hearing, or suggest the Court should have constructed a case for it in its absence.

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