Balanced Securities Ltd v Oberlechner [2007] NSWSC 80 | Case summary

2 Events have overtaken all but the first of the orders sought. Nevertheless the defendant pursues his claim to the first order, with consequential relief in relation to the second. 3 It is convenient now to set out, so far as I can discern it, the history of the proceedings. A short chronology is appended to written submissions provided on behalf of the plaintiff (Balanced Securities Pty Ltd). What it contains is largely uncontroversial, and is supported by the evidence. I am prepared to act upon it as accurate. I do not propose to refer to every event in the course of the litigation; it is sufficient to limit the references to those relevant to the issues which arise in the determination of the defendant's application. 4 On 13 September 2005 the plaintiff agreed to advance to the defendant a sum of about $460,000. The loan was secured by mortgages over two properties - one in Goulburn Street, Darlinghurst, and one in Old Sackville Road, Wilberforce. The latter, which is the residential home of the defendant and his family, is the subject of these proceedings. 5 The defendant defaulted in his obligations under the mortgage. Appropriate steps having been taken, on 12 April 2006 the plaintiff issued a statement of claim, seeking possession of the Wilberforce property and the issue of a writ of possession. 6 The plaintiff experienced difficulties in serving the statement of claim. As a result, and acting on the affidavit of Derek Raymond Hilliard (a solicitor acting for the plaintiff), on 12 July 2006 a registrar of this court made an order for substituted service. The order permitted service to be effected by affixing a copy of the statement of claim, together with a copy of the order and an explanatory letter, to the front door of the Wilberforce property. On 20 September 2006 service was thus effected. 7 On 18 October 2006 the Darlinghurst property was sold, and the net proceeds applied to the reduction of the defendant's debt. 8 On 16 November 2006 the plaintiff filed a notice of motion seeking judgment for possession of the Wilberforce property, and on the same day judgment was entered. The plaintiff was granted leave to issue a writ of possession. Execution of the writ of possession was initially arranged to take place on 11 December 2006, but this did not then occur (for reasons that need not be explored); it was rescheduled to take place on 9 January 2007. On 27 November 2006 the Sheriff issued a notice to vacate the Wilberforce property and this was also affixed to the front door of the premises. 9 On 29 December 2006 the defendant sent by facsimile to the solicitors for the plaintiff an unsealed copy of the notice of motion the subject of the present judgment, the terms of which are set out in paragraph 1 above. The matter was listed before the Vacation Judge, Adams J, on 2 January 2007 and re-listed, for hearing, on 5 January 2007. On that day Adams J made the following orders: "1. The application is adjourned to 29 January 2007 in the Applications List on the condition that the sum of $20,000 is paid to the mortgagee plaintiff within seven days of today's date, namely by the close of business on 12 January 2007. 2. Failing payment, the stay is automatically dissolved. 3. Payment is to be made to Messrs TressCox Lawyers by delivery of a bank cheque in the said sum to level 20, 135 King Street, Sydney. 4. The mortgagee is to provide a full statement of account, including legal costs, within seven days. 5. The defendant is to pay the plaintiff's costs." 10 The defendant did not make payment of $20,000 by 12 January 2007. Accordingly, pursuant to the orders, the stay ordered in paragraph 1 lapsed at close of business on that day. 11 On 11 January 2007 the defendant sent by facsimile to the solicitors for the plaintiff a letter relevantly in the following terms: "I note my obligation pursuant to the orders of 5 Jan 07 by Justice Adams to provide a bank cheque in the amount of $20,000 to Balanced Securities Ltd. In several discussions with Mr Steve Hodges from Balanced Securities over the past days I expressed that I may have a short delay in obtaining those funds by that day. I have every intention to comply with such order but unfortunately I find myself in a position that I cannot obtain clear funds to issue a bank cheque by 12/1/07. I would like to request your patience and understanding in regards to this delay. I will pay the amount as early as possible in the course of next week and in any event before the return date of the motion on 29 January 2007. Please advise the writer on 0424855371 of your position in this regard, and I note my notice of motion filed on 5 January 2007 is returnable by 29 January 2007. I give all and every undertaking that the $20,000 payment will be made BEFORE that date and sincerely apologise for the delay and seek your understanding and cooperation. …" 12 On 23 January 2007 the Sheriff entered and took possession of the property. 13 On 24 January 2007 the defendant notified the plaintiff that the matter had been further listed in this court on the following day, 25 January 2007. By its legal representatives, the plaintiff appeared. There was no appearance for the defendant. The court made no order. 14 On 29 January 2007, in accordance with the orders made by Adams J, the matter came again before the duty judge, this time Buddin J. On that occasion the defendant produced a bank cheque in the sum of $20,000. The defendant denied that possession had been effected. Buddin J directed that the plaintiff serve evidence confirming the execution of the writ of possession and gave further directions concerning the service of evidence. Buddin J stood the proceedings over to 12 February 2007. The defendant handed the bank cheque to the plaintiff's legal representatives, who undertook that they would hold, but not deal with, it, and that no further steps would be taken to market or sell the property until the return date on 12 February. 15 This is the background to the proceedings which took place on 12 February. On that date the defendant pursued his application that default judgment be set aside. 16 Inter alia, the defendant now claims that he never received notice of the statement of claim, nor of any other documentation relevant to the proceedings. In effect, he seeks to go behind the order for substituted service made by the registrar on 12 July 2006. He provided affidavit evidence from himself and his wife to the effect that neither had received "any legal documents" in relation to the property; however they had received the Sheriff's "Notice to Vacate" which had been attached to the front door, on or about 24 December 2006. 17 Although there is no appeal against the order for substituted service, I considered that, if it could be shown that such an order was made irregularly, or improperly, or on false or incorrect evidence, then that may in some way be relevant to the real question in this application, namely, whether the default judgment ought to be set aside. Accordingly, I permitted the defendant to cross examine Mr Hilliard, the deponent of the affidavit on the basis of which the order for substituted service was made. That cross examination having occurred, I saw no reason to question the validity of the order, nor the propriety with which it was sought and made. 18 In any event, for reasons which appear below, the circumstances in which that order was made have only peripheral relevance to the true issue. 19 What needs to be established in an application to set aside default judgment was spelled out in Ex parte Vigilant Finance (NSW) Pty Ltd, Re Cameron Smith (1964) NSWR 1282, per Herron CJ, and adopted by Street ACJ (with whom Hardie and Glass JJA agreed) in Reinehr Industrial Lease and Finance Pty Ltd v Jordan, unreported, 4 June 1974. There are three components: · an explanation for the failure to defend at the appropriate time; · a good (arguable) defence on the merits; · that it is in the interests of justice to allow the proposed defence to be litigated. 20 Although, as Reinehr makes clear, it is not necessary that a defendant establish that the proposed defence will or must succeed, it is necessary to determine the question having in mind the competing interests of the parties - on the one hand, a plaintiff who has, properly, legitimately and regularly obtained judgment, and on the other, a defendant who has been deprived of an opportunity to advance what might be a legitimate defence. 21 In this case the plaintiff has been attempting to enforce its rights since April 2006. For various reasons, including the difficulty in locating the defendant, it has encountered delays. That consideration would be far from conclusive if the evidence established that the defendant had available to him a fairly arguable defence. However, although the defendant has quite effectively educated himself in the relevant legal issues, he has made no attempt to prepare a draft defence, nor even orally to formulate the nature of such a defence. When specifically asked (by me) what defence he would propose to present if permitted to do, he was more than somewhat equivocal. He alluded to a 19% interest rate specified in the contract of loan, but immediately and frankly acknowledged that that was the default interest rate; he (rather tentatively) suggested that this might be perceived as unfair. He made passing reference to the Contracts Review Act 1980 but stopped far short of asserting that he had any arguable defence or cross-claim under that legislation. 22 I was under the distinct impression that the defendant was well aware that the Contracts Review Act availed him not at all and that, other than hoping for more time to obtain sufficient funds to make the necessary payments, he had no defence at all to the plaintiff's claim. When asked how he proposed, if permitted to do so, to make payments under the mortgage, he said that he could sell property such as a motor vehicle. 23 The defendant has been given every opportunity to advance any argument in support of his application. He was permitted to go well beyond what would ordinarily be seen as matters relevant to an application of this nature. He focussed almost exclusively upon his assertion that he had never been served with the relevant documentation, and sought, obliquely, to challenge the order for substituted service. He did not address at all (other than as I have set out above) the question of a defence to the plaintiff's claim. 24 No basis has been established for an order setting aside the default judgment. 25 The defendant's notice of motion is dismissed. I order the defendant to pay the plaintiff's costs of these proceedings.

Balanced Securities Ltd v Oberlechner

At a glance

Court

Decision date

Before

Source

Judgment (12 paragraphs)

Parties

Cited By (11)