Australia and New Zealand Banking Group Ltd v Whitehall

Supreme Court of NSW|2020-05-05|Before: Darke J, Mr J

Introduction

The plaintiff, Australia and New Zealand Banking Group Ltd ("ANZ"), commenced these proceedings by Statement of Claim filed on 20 November 2018. The named defendants are Nathaniel Whitehall, Tania Woodman, and the Registrar-General. The only Defence has been filed by Ms Woodman. The Registrar-General has filed a submitting appearance. It seems that Mr Whitehall, who became bankrupt in July 2017, has not been served. He and Ms Woodman are, or were, a married couple.
The principal relief sought by ANZ is a declaration that it is entitled to be subrogated to the rights of Permanent Trustee Company Ltd ("PTCL") pursuant to a registered mortgage in favour of PTCL (AJ201817) over a property in Ellis Lane. Ms Woodman is the registered proprietor of the property.
In short, ANZ claims a right of subrogation on the basis that in October 2016, in making a loan to Mr Whitehall which was to be secured by a registered mortgage over the property, it paid the amount outstanding to PTCL under its mortgage, being an amount of almost $984,000, but has not been able to have its mortgage registered as intended.
Ms Woodman resists the claim of ANZ by her Defence filed on 31 October 2019.

Summary of salient facts

In about November 2014, Ms Woodman borrowed money from PTCL pursuant to a loan agreement. Repayment of the loan was secured by a mortgage in favour of PTCL over the Ellis Lane property. The PTCL mortgage secured, inter alia, a principal sum of almost $980,000.
On about 20 February 2015, Ms Woodman became the registered proprietor of the property and the PTCL mortgage (AJ201817) was registered.
On 10 October 2016 ANZ entered into a home loan agreement with Mr Whitehall pursuant to which ANZ agreed to provide credit of approximately $1,060,000. It was a term of the agreement that a registered mortgage over the Ellis Lane property be provided to ANZ. On the same day, Mr Whitehall executed a mortgage to ANZ over the Ellis Lane property.
Settlement of the loan occurred on 14 November 2016. The settlement occurred as part of a transaction whereby Mr Whitehall was to purchase the Ellis Lane property from Ms Woodman. However, Ms Woodman alleges that Mr Whitehall forged her signature on various documents in relation to that transaction, about which she says she had no knowledge. She says that at about that time she and Mr Whitehall were negotiating a property settlement, and she was anticipating that she would thereby become the owner of the property unencumbered by other interests. Ms Woodman further says that she had no dealings with ANZ at that time.
The funds advanced by ANZ on settlement of the loan included an amount of $983,927.80 that was paid to PTCL. ANZ alleges that it made that payment on the basis that it would receive a registered mortgage over the property. The payment discharged all amounts that were owing to PTCL pursuant to its mortgage. At the settlement, ANZ received from PTCL the Certificate of Title and a Discharge of Mortgage form in respect of the PTCL mortgage. ANZ also received a Transfer form in respect of a transfer of the property from Ms Woodman to Mr Whitehall, and various Withdrawal of Caveat forms.
ANZ thereafter attempted to register its mortgage, but was unable to achieve registration. It appears that there were irregularities with some of the documents, including a discrepancy between Ms Woodman's signature as it appeared on the Transfer and as it appeared on the PTCL mortgage. Later, one of the caveators, Zina Three Pty Ltd, asserted that it had not in fact provided any Withdrawal of Caveat form.
The position remains that ANZ has not been able to achieve registration. Ms Woodman is still the registered proprietor, and the mortgage to PTCL remains registered on the title.
There is evidence that about $1.126 million is owing to ANZ on the loan to Mr Whitehall.

Submissions concerning application for summary judgment

ANZ accepted that in order to succeed on its application for summary judgment there must be evidence of the facts upon which its claim is based, and it must show that Ms Woodman's defence is clearly untenable such that it cannot possibly succeed (see General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129-130). It was submitted that the Court may determine questions of law on such an application if satisfied that the point is clear.
ANZ referred to authorities concerning the principles of subrogation in a situation where a third party pays the amount owing on a mortgage with the intention of itself obtaining security over the property. These authorities included Highland v Exception Holdings Pty Ltd (in liquidation) (2006) 60 ACSR 223; [2006] NSWCA 318 at [94]-[113] and Taleb v National Australia Bank Ltd (2011) 82 NSWLR 489; [2011] NSWSC 1562 at [69]. It was submitted that it is a settled legal principle that a lender will be entitled to subrogate to the rights of a prior secured creditor where: 1. the lender has paid out the prior creditor, with the expectation that the lender would obtain security; and 2. the lender has, for some reason, not received the security bargained for.
ANZ submitted that insofar as Ms Woodman appeared to raise a defence (for example, by not admitting that ANZ made the payment to PTCL in the expectation that it would obtain a registered mortgage over the property; or by stating that no wrongdoing was alleged against her), it was untenable. It was put that the fundamental difficulty facing Ms Woodman is that on any view she received the benefit of the funds advanced by ANZ, because those funds discharged a debt that was previously secured over the property. It was submitted that this circumstance meant that there was no arguable defence available to Ms Woodman, as she would be unconscionably profiting were she to be relieved of an obligation to pay ANZ the amount it paid.
In her submissions, Ms Woodman also referred to the principles concerning summary judgment as set forth in General Steel Industries Inc v Commissioner for Railways (NSW) (supra) at 129-130, as well as to Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87 at 99.
Ms Woodman opposed ANZ's application on three specified grounds, namely: 1. there are triable issues of law and fact; 2. the proceedings against Mr Whitehall should be heard; and 3. the defence enables ANZ to know in advance the case it must establish. The third ground is relevant only to the alternative claim for striking out parts of the Defence.
The triable issues were said to be: 1. ANZ's entitlement to subrogation in circumstances where: 1. ANZ has not dealt with Ms Woodman and has no contractual or other relationship with her; 2. ANZ has been careless in its dealings giving rise to the proceedings; and 3. Ms Woodman has not acted unconscionably in any way; and 1. the possibility that Ms Woodman would have obtained unencumbered ownership of the property.
Whilst not clear, it appears that the carelessness alluded to may be "carelessness in detecting or otherwise preventing the [alleged] fraud" of Mr Whitehall. It is suggested that as a result of the alleged fraud and this carelessness, ANZ was unable to register its mortgage (see submissions at paragraph 3). Ms Woodman then referred to Highland v Exception Holdings Pty Ltd (in liquidation) (supra), in particular the statement made by Santow JA at [113] that: Indeed subrogation could hardly allow the lender to be so lax as to take actions which lose the security bargained for and then find salvage in the security earlier discharged.
Ms Woodman submitted that the possibility that, had ANZ not dealt with Mr Whitehall, she might have obtained unencumbered ownership of the property following a property settlement, was itself a triable issue, relevant to the proportionality and fairness of the relief sought by ANZ.
Ms Woodman then submitted that where there are multiple parties, the desirability of having all parties heard generally precludes the giving of summary judgment. In this regard, reference was made to NRMA Insurance Ltd v AW Edwards Pty Ltd (1995) 11 BCL 200 where Kirby P (as his Honour then was) stated: As many cases illustrate, the detailed facts of the precise relationship between the parties may well be important in discerning the extent of any duty of care which the claimant can establish in relation to the opponent. The proximity relationship necessary for such a duty, would depend, especially in a case such as the present, upon a full understanding of the dealings between the parties.
Finally, Ms Woodman submitted that her defence was not so obviously untenable that it could not possibly succeed. She noted that it was not a case of a knowing receipt of the benefit of a loan; it was put that in the present case she cannot have acted unconscionably because she had no dealings with ANZ and was not aware of an intention on its part to obtain security over the property.

Proposed amended defence

The Defence filed by Ms Woodman contains numerous non-admissions. Nevertheless, Ms Woodman accepts, for the purposes of the present applications, the accuracy of the summary of dealings and events set forth in paragraphs 2 to 19 of the Statement of Claim. Those are the facts that ANZ relies upon to support the subrogation claim which is asserted in paragraph 20 of the Statement of Claim. The Defence otherwise contains some positive assertions, including that Ms Woodman did not sign any documents in relation to a sale or transfer of the property to Mr Whitehall; that her signature was forged on documents relating to the transaction that settled on 14 November 2016; and that no wrongdoing is pleaded against her.
The proposed Amended Defence is centred upon the answer to paragraph 20 of the Statement of Claim. Instead of the bare denial of paragraph 20, Ms Woodman proposes to amend the response to read: As to paragraph 20 of the Statement of Claim, the second defendant: refers to and repeats paragraphs 8, 10 and 15 above; and says that, because the plaintiff was careless and lax in its dealings with the first defendant, the plaintiff has no entitlement to the relief claimed against the second defendant. Paragraphs 8, 10 and 15 of the Defence contain the positive assertions referred to above which concern the signing (or not signing) of documents.
It is also proposed to amend the answer to paragraph 21 (which claims an alternative form of relief, namely, a charge over the property). Instead of the bare denial of paragraph 21, Ms Woodman proposes to amend the response to read: As to paragraph 21 of the Statement of Claim, the second defendant refers to and repeats paragraph 20 above. A similar amendment is proposed for the answers to paragraphs 31 and 33 of the Statement of Claim. Paragraph 31 asserts that, upon being subrogated to the PTCL mortgage, Mr Whitehall's defaults in failing to make repayments under the ANZ loan agreement constitute defaults under the terms of the PTCL mortgage. Paragraph 33 contains the general assertion that, in the premises, ANZ is entitled to the relief claimed.

Submissions concerning application to amend

Ms Woodman submitted that leave should be granted to make the amendments so as to permit the real issues in dispute to be determined. She submitted that the allegation that ANZ was careless and lax in its dealings with Mr Whitehall raises a real question as to ANZ's entitlement to the relief claimed against her. It was put that even if the amendments were not allowed, the existing defence says enough about ANZ's dealings with Mr Whitehall to constitute an allegation of careless and lax conduct.
ANZ submitted that the application to amend should be dismissed because: 1. the proposed Amended Defence does not properly plead any allegations against ANZ, is embarrassing and, if allowed, would be liable to be struck out; and 2. even if some allegation of the kind alluded to in the proposed Amended Defence was properly pleaded, it would still not disclose any arguable basis upon which Ms Woodman could succeed in defending the claim.
As to (a), ANZ submitted that the allegation was not particularised, and the referenced paragraphs do no more than allege that Ms Woodman did not sign any documents in relation to the sale of the property. It was submitted that no substance was given to the bare allegation of carelessness and laxness, and no triable issue is disclosed. Accordingly, it was put that the proposed amendment is embarrassing, such that it would be liable to be struck out.
As to (b), ANZ submitted that the portion of the judgment of Santow JA in Highland v Exception Holdings Pty Ltd (in liquidation) (supra) that is relied upon by Ms Woodman does not in any event provide an arguable basis to resist ANZ's subrogation claim. It was submitted that Santow JA was there concerned with a case where a lender obtained the bargained for security but then lost it due to its own careless conduct. ANZ submitted that Highland v Exception Holdings Pty Ltd (in liquidation) (supra) does not call into question the principle that it is not relevant that a lender's failure to obtain the bargained for security is attributable to its own negligence (see Cheltenham & Gloucester plc v Appleyard [2004] EWCA Civ 291 at [39]).

Determination

It is logical to deal first with the application to amend. The substance of the proposed amendment is an allegation that ANZ was careless and lax in its dealings with Mr Whitehall. No particulars are given. The nature of the allegation means that particulars would be required in order to comply with UCPR r 15.1. Without particulars, ANZ would be unable to identify how and in what way it was said to be careless and lax. I agree with the submissions of ANZ that no substance is given to the allegation and, further, that the allegation is embarrassing and would be liable to be struck out. In these circumstances, it would not be appropriate to grant leave to allow the Defence to be amended to raise the allegation. The Notice of Motion filed by Ms Woodman on 31 March 2020 will be dismissed with costs.
I turn now to the application for summary judgment.
UCPR r 13.1(1) provides: (1) If, on application by the plaintiff in relation to the plaintiff's claim for relief or any part of the plaintiff's claim for relief - (a) there is evidence of the facts on which the claim or part of the claim is based, and (b) there is evidence, given by the plaintiff or by some responsible person, that, in the belief of the person giving the evidence, the defendant has no defence to the claim or part of the claim, or no defence except as to the amount of any damages claimed, the court may give such judgment for the plaintiff, or make such order on the claim or that part of the claim, as the case requires.
In the present case, the filed pleadings, the acceptance by Ms Woodman of the accuracy of the matters summarised in paragraphs 2 to 19 of the Statement of Claim, and the evidence adduced by ANZ, leave little doubt that r 13.1(1)(a) is satisfied. Paragraph 5 of the Affidavit of Jenny Luu satisfies r 13.1(1)(b).
It is well settled that the power to give summary judgment, thereby terminating proceedings without a final hearing on the merits, is one that must be exercised sparingly, and with exceptional caution (see General Steel Industries Inc v Commissioner for Railways (NSW) (supra) at 129; Fancourt v Mercantile Credits Ltd (supra) at 99; Webster v Lampard (1993) 177 CLR 598 at 602-3; Spencer v Commonwealth of Australia (2010) 241 CLR 118; [2010] HCA 28 at [24]). The power should only be exercised in the clearest of cases, where there is a high degree of certainty about the ultimate outcome if the matter were allowed to go to trial (see Agar v Hyde (2000) 201 CLR 552; [2000] HCA 41 at [57]; see also Spencer v Commonwealth of Australia (supra) at [24] and [53]). ANZ accepts the burden of these principles but contends that Ms Woodman has no tenable defence to its subrogation claim.
The equitable doctrine of subrogation is applicable to a variety of circumstances (see Bofinger v Kingsway Group Ltd (2009) 239 CLR 269; [2009] HCA 44 at [6] and [90]). As stated by Millett LJ in Boscawen v Bajwa [1996] 1 WLR 328 at 335: The equity arises from the conduct of the parties on well settled principles and in defined circumstances which make it unconscionable for the defendant to deny the proprietary interest claimed by the plaintiff.
That statement of Millett LJ was cited with approval in Bofinger v Kingsway Group Ltd (supra) at [94].
The payment out of prior securities is one of the well-recognised areas in which the doctrine of subrogation operates (see J D Heydon, M J Leeming and P G Turner, Equity: Doctrines and Remedies, 2015, LexisNexis Butterworths at [9-040]).
It was stated by the Privy Council in Ghana Commercial Bank v Chandiram [1960] AC 732 at 745 that: It is not open to doubt that where a third party pays off a mortgage he is presumed, unless the contrary appears, to intend that the mortgage shall be kept alive for his own benefit.
In Cochrane v Cochrane (1985) 3 NSWLR 403 Kearney J, after referring to the above principle, stated (at 405): This principle is based on equity's concern to prevent one party obtaining an advantage at the expense of another which in the circumstances of the case is unconscionable. Hence, there is a common thread running through the relevant cases to the effect that the conscience of the mortgagor should be affected so as to cause the mortgage to be kept alive. This is illustrated in the text book examples first, of a third party not being entitled to a right by way of subrogation where he simply lends the money on an unsecured basis to the mortgagor who then uses such funds to pay off the mortgage; and secondly, of a third party being so entitled where he advances the money to pay out the mortgage on the understanding that security would be provided for such advance upon the mortgage being paid out.
The case advanced here by ANZ is of the same character as the second of the text book examples referred to by Kearney J.
In Burston Finance Ltd v Speirway Ltd (in liquidation) [1974] 1 WLR 1648 Walton J said (at 1652): What is the basis of the doctrine of subrogation? It is simply that, where A's money is used to pay off the claim of B, who is a secured creditor, A is entitled to be regarded in equity as having had an assignment to him of B's rights as a secured creditor…It finds one of its chief uses in the situation where one person advances money on the understanding that he is to have certain security for the money he has advanced, and, for one reason or another, he does not receive the promised security.
In the Court of Appeal decision in Cheltenham & Gloucester plc v Appleyard (supra), Neuberger LJ referred to the above statement of Walton J (at [25]). In the course of a discussion of the principles of subrogation, his Lordship continued (at [35] and [39]): Fourthly, a classic case of subrogation is that described by Walton J in Burston Finance at 1652B-D, cited above. The reasons that a lender's anticipated security may not have been forthcoming so that he has sought to invoke subrogation are various. Examples include the lender's ineptitude (as in Burston Finance), the lender being misled (as in Banque Financiere and in Boscawen), the borrower being an infant (as in Thurstan v Nottingham Building Society [1903] AC 6), and the borrowing being ultra vires the borrower (as in Re Cork and Youghall Railway Co (1860) LR 4 Ch App 748). … Eighthly, the fact that the lender's failure to obtain the security he bargained for was attributable to his negligence is irrelevant. It does not prevent him from claiming subrogation - see per Lord Hoffmann at 235E-G in Banque Financiere. The effect of that observation was probably impliedly to disapprove observations of Walton J in Burston Finance at 1657C and F. However, Walton J was concerned with a case where the lender obtained the security, but negligently failed to protect himself by registering it, whereas in Banque Financiere the lender's negligence was in failing to check that he had obtained the security.
In Highland v Exception Holdings Pty Ltd (in liquidation) (supra) Santow JA referred to a divergence between Australian and United Kingdom law as to the doctrinal basis of subrogation. This was a matter latter taken up by the High Court in Bofinger v Kingsway Group Ltd (supra) at [85]-[98] where the Court emphatically rejected the notion, prevalent in England, that the equitable doctrine of subrogation should be seen as a restitutionary remedy designed to prevent unjust enrichment. However, Santow JA (with whom Giles and Hodgson JJA agreed on the issue of subrogation) referred at [105]-[106], with apparent approval, to the statements of Neuberger LJ that are set out above (see Aged Care Services Pty Ltd v Kanning Services Pty Ltd (2013) 86 NSWLR 174; [2013] NSWCA 393 at [59] per Gleeson JA).
At [107]-[110], Santow JA went on to discuss the facts in Cheltenham & Gloucester plc v Appleyard (supra), and two other English cases, Burston Finance Ltd v Speirway Ltd (in liquidation) (supra) and Capital Finance Co Ltd v Stokes [1969] 1 Ch 261. In Cheltenham & Gloucester plc v Appleyard (supra) the lender who had paid out the first mortgage was not (at least for a time), able to achieve registration of its intended mortgage at the Land Registry. It was held that as the lender obtained merely an equitable charge it had not obtained the bargained for security. The claim for subrogation was allowed (see at [69]-[71] and [75]). At [75] Neuberger LJ repeated the point that negligence or carelessness on the part of the lender is not a factor taken into account when considering its claim for subrogation "at least where the negligence relates to the obtaining of the security".
In both Burston Finance Ltd v Speirway Ltd (in liquidation) (supra) and Capital Finance Co Ltd v Stokes (supra), the lender obtained the bargained for security, but later failed to register the charge under the Companies Act 1948 (UK), with the consequence that the charges were void against a liquidator and a receiver respectively.
At [110]-[113] Santow JA proceeded to apply the principles of subrogation to the case at hand. His Honour held (at [111]) that subrogation was not available because the security obtained by the lender was precisely what it bargained for, and only subsequently failed by reason of the operation of s 267 of the Corporations Act 2001 (Cth). At [112] Santow JA stated: …The lender and chargee in such circumstances, having obtained all the security bargained for, is himself the author of that security failing. Such a lender cannot have resort to the doctrine of subrogation to extricate himself from the consequence of his own failure to comply with s 267. That is the context in which Santow JA made the statement at [113] that is sought to be relied upon by Ms Woodman, namely: Indeed subrogation could hardly allow the lender to be so lax as to take actions which lose the security bargained for and then find salvage in the security earlier discharged.
In my opinion, the context makes it clear that the statement at [113] refers to actions on the part of a lender which cause bargained for security to be lost; it does not refer to actions which cause bargained for security to be not obtained in the first place.
In the present case it is clear that ANZ dealt with Mr Whitehall throughout on the basis that any loan made to him would be secured by a registered mortgage over the Ellis Lane property. That is shown by the terms of the home loan agreement and also by the steps taken by ANZ leading up to and including the settlement of the loan on 14 November 2016. Those steps involved preparation for a settlement at which ANZ would pay the amount owing on the PTCL mortgage and receive from PTCL the Certificate of Title and a Discharge of Mortgage form.
A registered mortgage over the property was, in terms of the authorities on subrogation, the bargained for security, but it was not obtained by ANZ. ANZ advanced funds which enabled the existing mortgage to be paid out, but did not receive the promised security.
This is a well-recognised situation where the doctrine of subrogation operates. It operates on the basis that it would be unconscionable for the mortgagor, who by dint of the lender's payment has obtained the benefit of being relieved of its secured obligation, to deny the lender's claim to have the security kept alive for its own benefit (see Cochrane v Cochrane (supra) at 405; Highland v Exception Holdings Pty Ltd (in liquidation) (supra) at [102]-[103]). An example of the operation of the principle is found in the decision of Bryson J (as his Honour then was) in Challenger Managed Investments Ltd v Direct Money Corporation Pty Ltd (2003) 12 BPR 22,257; [2003] NSWSC 1072 at [50]-[52] and [56]-[59] - the case is also reported at (2003) 59 NSWLR 452, but not on this aspect).
The principle operates notwithstanding the fact that there are no dealings between the lender and the mortgagor. This is shown by cases such as Chetwynd v Allen [1899] 1 Ch 353 and Butler v Rice [1910] 2 Ch 277, which are referred to in Banque Financiere De La Cite v Parc (Battersea) Ltd [1999] 1 AC 221 at 232.
Moreover, as explained earlier, it is not relevant that the failure to obtain the bargained for security is attributable to negligence on the part of the lender (see Banque Financiere De La Cite v Parc (Battersea) Ltd (supra) at 235 and 242-3; Cheltenham & Gloucester plc v Appleyard (supra) at [39]; Highland v Exception Holdings Pty Ltd (in liquidation) (supra) at [106]). Ms Woodman has not clearly identified the asserted carelessness or laxness on the part of ANZ, whether in her existing pleading or otherwise. However, even if conduct of that nature had occurred and caused the bargained for security to not be obtained, it would not stand in the way of ANZ's subrogation claim. Again, this is a case where the bargained for security was not obtained, not one where it was obtained but subsequently lost due to negligence on the part of the lender.
Further, it is not necessary to show that the mortgagor has been guilty of any wrongdoing or misconduct (see Banque Financiere De La Cite v Parc (Battersea) Ltd (supra) at 235 and 243). Rather, the entitlement to subrogation rests upon the notion of an unconscionable denial of the lender's claim to the benefit of the prior security.
Finally, I do not accept that the possibility that Ms Woodman might have obtained unencumbered ownership of the property through a property settlement with Mr Whitehall raises a triable issue that is relevant to whether ANZ has made out its case for subrogation. Apart from the fact that it is not a matter raised in either the existing Defence or the proposed Amended Defence, I do not see how this possibility could give rise to any defence to the subrogation claim. It is not explained why this possibility was or is precluded by the transaction which involved ANZ paying out the PTCL mortgage. Further, I do not see how this matter could go to the "proportionality and fairness" of the relief sought by ANZ. The relief sought arises in circumstances where the payment made by ANZ to PTCL has relieved Ms Woodman of a secured obligation to PTCL. The remedy afforded by the principles of subrogation is designed to put ANZ in a secured position in relation to the repayment of that money, but not so as to disadvantage Ms Woodman. The relief sought would mean that instead of the amount owed to PTCL being secured over the property, the same amount would become secured over the property for the benefit of ANZ.
For the above reasons, I do not accept that Ms Woodman has raised any triable issue that goes to ANZ's entitlement to subrogation.
Neither do I consider that summary judgment should be withheld because it would be desirable to have a hearing of all the cases as between the parties to the proceedings. In particular, the strength of ANZ's case against Ms Woodman, which is based upon clearly established (or admitted) facts that bring it within one of the well-recognised areas where the doctrine of subrogation operates, is not affected by any case ANZ may have against Mr Whitehall under the home loan agreement. The present situation is quite unlike that found in NRMA Insurance Ltd v AW Edwards Pty Ltd (supra), where the existence or extent of a duty of care alleged by the claimant against the opponent could be affected by facts established in the hearing of the claimant's cases against other parties.
In my opinion, notwithstanding that the power to give summary judgment is to be exercised sparingly and with exceptional caution, it is appropriate to give summary judgment in favour of ANZ against Ms Woodman. For the reasons set out above, I regard the case for subrogation as a clear one, where ANZ would be certain to succeed were the matter to go to trial in the ordinary way. Ms Woodman has not shown that there exists a triable issue of fact or law which gives rise to an arguable defence. Even if some negligence on the part of ANZ caused it to fail to obtain its bargained for security, that would not amount to a defence to the subrogation claim. In my view, Ms Woodman's Defence, and even a defence amended so as to raise a properly formulated allegation of carelessness or laxness on the part of ANZ, cannot possibly succeed. To require the case to proceed to a final hearing would be futile, and would subject the parties to unnecessary costs.
It is not necessary, in these circumstances, to consider ANZ's alternative claim for the striking out of parts of Ms Woodman's Defence.
As for the form of relief, a declaration will be made to the effect that ANZ is entitled to be subrogated to the rights of PTCL pursuant to registered mortgage AJ201817 to secure payment to it of the sum of $983,927.80. ANZ also claims interest on that sum. It is appropriate that interest be paid. In this regard, ANZ accepts that interest should run at the lowest of the rates pursuant to ANZ's intended mortgage, the PTCL mortgage, or as prescribed for the purposes of s 100 of the Civil Procedure Act 2005 (NSW).
ANZ also seeks ancillary orders, including an order for possession of the property, albeit that in view of the current pandemic it accepts that any such order should be stayed for a period so that Ms Woodman does not suffer undue hardship. I would not be inclined to make any order for possession at this stage. It seems to me that it would be premature to do so. Upon ANZ establishing its entitlement to subrogation, Ms Woodman ought be given a reasonable opportunity to pay the amount that would then be secured to ANZ, or come to some other arrangement with ANZ, before facing the prospect of enforcement action. There seems to be no reason why costs should not follow the event.
I will give the parties the opportunity to agree upon the form of orders to be made, including in relation to interest. As I have said, the remedy afforded by the principles of subrogation is designed to put the lender in a secured position in relation to the repayment of the money it advanced to pay the amount owing under the prior security, but not so as to disadvantage the mortgagor. If agreement is not reached on the form of orders within 14 days, the parties should within a further 7 days serve and provide to my Associate brief written submissions (supported if necessary by evidence of interest rates). The Court will then proceed to finalise the matter on the papers.

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: 05 May 2020

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