Australian and New Zealand Banking Group Limited v Bechara

Notice of default 11Paragraph 17 of the second defendant's proposed amended defence denies that he received the notice dated 22 February 2013 upon which the plaintiff relies. Paragraph 17 of the statement of claim is in these terms: "17 Notice of the plaintiff's intention to exercise its right to possession was given by notice dated 22 February 2013 in terms which required the first defendant and the second defendant to remedy the default specified in the notice within 31 days after service of the notice." 12The second defendant does not take issue with the form of the notice that the plaintiff says that it served. His contention is that he did not ever receive it. The plaintiff's response to that contention is to say that it was not obliged to establish that the notice of default was received by the second defendant, but only to establish that it conformed with obligations imposed upon it by the terms of the mortgage or by the provisions of the Consumer Credit Code if applicable. 13Part 11 of the mortgage is headed "HOW TO GIVE A NOTICE UNDER THIS MORTGAGE". Clause 11.2 provides as follows: "11.2 Notices to me ANZ may give me a notice or demand regarding this mortgage: (a) by handing it to me; (b) by leaving it at my address; (c) by posting it in a pre-paid envelope to me at my address; or (d) in any other way that the law allows. A notice or demand by ANZ will be taken to have been given and received: (a) if it is left at my address - when left; or (b) if it is posted to my address - when it would be delivered in the ordinary course of post but in any event not later than 6 days after it was posted. This applies even if the letter is returned undelivered. ... In this clause, 'my address' means any of the following: (a) the address of the property; (b) the address shown in this mortgage as my address; or (c) the address that the person signing the notice, demand or certificate believes (from the address for me that ANZ has recorded in its books) is my most recent address." 14In support of its contention that the notices of default were properly served upon the second defendant, the plaintiff relies upon the affidavits of Phillip Leto and Bich Thai, each sworn on 14 August 2013. These affidavits were read without objection and neither deponent was cross-examined. 15It is not disputed that the second defendant's current address is 18 Herberton Street, Hunters Hill and that it was his address from a period commencing some time before 22 February 2013. Ms Thai deposes in effect to the fact that on 22 February 2013 she sent a default notice and a notice pursuant to s 57(2)(b) of the Real Property Act 1900 by post to the second defendant at that address "being the address of the place of residence last known to [her] for" the second defendant. It is not suggested or submitted that I should not or cannot accept that material as evidence establishing that the plaintiff complied to the extent necessary with the service requirements of its mortgage. I am satisfied that the plaintiff served a default notice upon the second defendant as required by clause 11.2 of the mortgage in the way described by Ms Thai in her affidavit. 16The plaintiff has provided detailed submissions in defence of the second defendant's contention that the Consumer Credit Code regulates the mortgage and that the plaintiff was in a series of respects relevantly in breach of its provisions. Given the second defendant's current position, however, it is unnecessary to deal with those submissions. It is sufficient for present purposes to observe that even assuming that the Code applied to the loan, there is no requirement relating to service of notices to be found in it that is dissimilar in a relevant respect to the corresponding provisions of the mortgage. I was not taken to any provision of the Code by the second defendant in support of the proposition that the current proceedings were invalid or prone to be stayed or dismissed or were somehow otherwise liable to be set aside for want of compliance by the plaintiff with a statutory obligation to establish service in a way going beyond what the plaintiff has established in fact, including provisions dealing with the form or content of any such notice. 17I am satisfied in the circumstances that the plaintiff is entitled to an order for possession of the property and ancillary orders. These are referred to below. The second defendant has submitted that there is, or may be, a dispute between him and the plaintiff with respect to the amount owing by the defendants to the plaintiff and that I should refrain in such circumstances from entering judgment for the amount claimed by the plaintiff. The details of that dispute are scant and the genuineness of the second defendant's concerns are difficult to assess. The plaintiff remains bound at all times as a mortgagee properly to account to the defendants as mortgagors following upon a sale of the mortgaged property pursuant to a power of sale. The entry of judgment for a specific sum does not foreclose the defendants' right to require that the plaintiff conform to that obligation. It seems to me that, in the absence of some unequivocal or at least arguable case suggesting that the plaintiff's arithmetic is wrong, I do not consider it to be appropriate to decline to enter judgment for the amount claimed.

The cross-claim 18The second defendant maintains that whatever be the outcome of the plaintiff's notice of motion, his cross-claim should live to see another day in this Court. The first defendant opposes that course, and contends that the document is incapable of withstanding scrutiny either as a proper pleading or as a viable cause of action and should be disposed of entirely and without further delay. 19The proposed amended cross-claim is a document beset with obvious difficulties. For presently relevant purposes, the claim is for damages, an unparticularised indemnity and costs. Paragraphs 1(c1) and following are in these terms: "(c1) The cross defendant deceived the cross claimant by knowingly and falsely representing, orally and by conduct, to the cross claimant, prior to 14 August 2006, that the proposed refinance by the plaintiff was just for the aforesaid private family home unit occupied by the cross claimant and the cross defendant and their [son]...at the property ('the representation'). (c2) The cross defendant knew and intended that the cross claimant trusted the first defendant. The cross defendant knew and intended that the cross claimant relied on the representation to the cross claimant's detriment. (c3) In reliance on the cross defendant's representation, and at the request of the cross defendant, the cross claimant on 14 August 2006 attended at a branch office of the plaintiff for the purpose of meeting with an officer, employee or agent of the plaintiff who was and is known to the first defendant/cross defendant, but was a person who the cross claimant had not met before and did not know. Both the cross defendant and the cross claimant attended the branch office and the officer, employee or agent of the plaintiff requested the second defendant/cross claimant to sign documents which were witnessed by the said representative, agent or employee of the plaintiff. The second defendant/cross claimant was not afforded the opportunity of seeking legal advice in relation to the document he signed nor was he advised in relation to the nature of the document he signed. In reliance on the cross claimant's [sic] representation, the cross defendant [sic] signed the documents believing, wrongly, that the cross defendant's representation was true, and that the cross defendant and cross claimant were just refinancing their private home unit. (c4) The cross claimant was unaware that the aforesaid documents that he signed on 14 August 2006 at the plaintiff's bank at the cross defendant's request purported, in actuality, as the cross defendant knew and intended, in deception of the cross claimant, to be investment borrowings and mortgage for the cross defendant's own business purposes, purporting to use the security of the home unit. (c5) The cross claimant would not have signed the aforesaid documents if he had not been deceived by the cross defendant's false representation on which the cross claimant relied to his detriment." 20The balance of the cross-claim appears, despite its length and duplications, to include only one other claim. Doing the best I can, that claim appears to be that the defendants at one time came to an agreement that the first defendant would be the breadwinner and that the second defendant would remain at home and care for their son. It was apparently a term of that agreement that the first defendant would make and maintain payments of principal and interest that were due to the plaintiff but that she failed to do so. That is said to have resulted in the plaintiff becoming entitled to retake possession of the property and to have increased the rate at which interest could be charged. The second defendant contends that as a result, he is worse off than if the mortgage payments had been made in a timely and regular way. He looks to his former wife to make up the difference. 21No particulars of the first claim are provided. To the extent that the true position is revealed in the evidence before me, it seems that the refinance of the property was indeed entirely for residential or domestic purposes and that the interest rate charged by the plaintiff was lower than that charged by the outgoing mortgagee. The proposed cross-claim does not in terms suggest or allege that the second defendant's loss was his share of a higher commercial rate of interest, or that he suffered some other additional or different loss. There is in fact no reference to interest rates at all. The first defendant is left, as I am left, to speculate about precisely what loss the second defendant is alleged to have suffered. It is difficult to conceive of any other character of loss that could have been sustained but none is identified. The reference on two occasions in the quoted paragraphs to the detriment allegedly suffered by the second defendant is wholly without content and is not something to which the first defendant ought to be required to respond. 22The second claim is novel in my experience. Whatever may be its ultimate strengths or weaknesses, the loss that the first defendant claims to have suffered is neither adequately characterised nor clearly particularised. If in truth the second defendant seeks some form of account or contribution from his former wife as a co-owner or joint mortgagor, he has not pleaded such a case. 23The first defendant seeks orders pursuant to UCPR 14.28. No relief is sought pursuant to UCPR 13.4. In making that observation I should not be taken to express a view that the proposed amended cross-claim is, or would have been, liable to be dismissed as frivolous or vexatious or because it fails to disclose a reasonable cause of action or because it is otherwise an abuse of the process of the Court. I am satisfied, however, that the cross-claim should be struck out in its currently proposed form and that the second defendant should be given an opportunity to replead it. In so saying, I would also not wish to be taken as encouraging the second defendant to avail himself of that opportunity or to be suggesting that any amended cross-claim that might ultimately materialise would necessarily be immune from attack pursuant to UCPR 13.4 in due course. Counsel for the first defendant characterised some final disposition of the cross-claim as merciful, and it is not possible to be entirely without sympathy for that attitude. 24The first defendant may in fact upon further reflection and with good advice decide that the cross-claim is not worth pursuing. That is not a matter to which I need to refer. It is evident to me that the cross-claim is the very real bi-product of the breakdown of the relationship between the defendants and that as is so often the case, the economics of conducting litigation are either intentionally or unintentionally ignored or masked by other emotions more powerful than financial self preservation. The costs incurred in this litigation are undoubtedly disproportionate to the merits of the competing claims. 25In this last respect I note that the first defendant has sought an order for security for costs against her former husband. She relies upon UCPR 42.21(1)(e) that requires her to establish that the second defendant is suing on his cross-claim not for his own benefit but for the benefit of some other person and that there is reason to believe that he will be unable to pay her costs if ordered to do so. Whatever may be the position in relation to the second aspect of the relevant paragraph, I am not satisfied that the first defendant has established the first. 26In support of the contention that the second defendant is in fact suing for the benefit of some other person, the first defendant contends that he is indebted to a number of people, including her, and that the proceedings are in reality being conducted for the benefit of creditors. She relies in that respect upon obiter comments to be found in the reasons of Penfold J in Hughes v Janrule Pty Ltd [2011] ACTCA 15 at [164] as follows: "[165] First, as already noted, I am satisfied that where a lawyer is appropriately providing services on a no-win no-fee basis, the plaintiff must generally be assumed to have a substantial interest in the proceeding that is separate from the lawyer's interests in whatever fees the lawyer stands to receive for professional services. This is quite different from the position where the interest of shareholders or creditors of a corporation is in getting access to the benefits of whatever claim is being made by the corporation." 27The first defendant argued that her former husband's position was no different to that of an insolvent corporation conducting litigation for the benefit of creditors. The first defendant contends that the second defendant in such circumstances has no interest in the proceedings by reason of his financial position and is therefore not suing for his own benefit. 28For my part I would be slow to conclude that a party suing to recover money that may be used to satisfy the claims of creditors, even if wholly to be paid for their benefit, was necessarily not suing for his or her own benefit. The concept of what is a benefit is not to be confined to purely financial or monetary terms. An individual may often, if not always, have an interest in paying his or her debts that transcends the bare interests of the creditors in receiving payment. Maintenance of a reputation as a reliable participant in the mercantile world is an obvious and unique benefit to a plaintiff suing as an individual. There is an equally obvious mutual benefit in the discharge of financial obligations in such circumstances. The fact that a collateral advantage may coincidentally be secured for creditors does not thereby disqualify a litigant as a person suing for his or her own benefit as well. 29Although I have considerable sympathy for the circumstances that have provoked the application, I decline to make an order for security for costs.

Orders 30The parties have helpfully provided me with competing versions of the orders for which they respectively contended. I have had regard to those. I consider that the following orders should be made:

1. Grant leave to the second defendant to file in Court an amended defence dated 12 August 2013 in the form of exhibit "A" and an amended cross-claim dated 12 August 2013 in the form of exhibit "B".
2. Order that the amended defence and amended cross-claim be struck out pursuant to UCPR 14.28.
3. Pursuant to UCPR 13.1 direct the entry of judgment for the plaintiff against the first defendant and the second defendant for possession of the whole of the land in folio identifier 4/SP1684 known as and situate at 4/18 Church Street, Hunters Hill.
4. Pursuant to UCPR 13.1 direct the entry of judgment for the plaintiff against the first defendant and the second defendant for $507,991.72.
5. Grant leave to the plaintiff forthwith to apply for the issue of a writ of possession of the property referred to in order 3 above.
6. Stay execution of any such writ as may be issued up to and including noon on Friday 13 September 2013.
7. Restrain the plaintiff up to and including noon on Friday 13 September 2013 by itself, its servants or agents or howsoever otherwise from selling or agreeing to sell or dispose of the property referred to in order 3 above to any purchaser other than the second defendant otherwise than with the consent of the second defendant.
8. Grant liberty to the second defendant, if so advised, to file within 7 days any proposed further amended cross-claim upon which he proposes to rely.
9. Make no order as to the costs of the first defendant's notice of motion filed on19 July 2013 or the second defendant's notice of motion filed in Court on 13 August 2013.
10. Grant liberty to apply in respect of the implementation or enforcement of these orders on 48 hours' notice.

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: 16 August 2013