Bendigo and Adelaide Bank Limited v Tombs and Anor

Bendigo and Adelaide Bank Limited v Tombs and Anor - [2010] NSWSC 1427 - NSWSC 2010 case summary — Zoe

[12]

Recent History of Proceedings 3 Before moving to the issues to be determined, it is appropriate to say something about the recent history of the proceedings. 4 The Statement of Claim was filed on 31 July 2009. For reasons to which I will come, in due course, there was a delay in the Plaintiff pressing that claim. However, a document entitled Defence and Cross-claim was filed by the Defendants on 3 September 2010. 5 The matter came before Registrar Bradford on 29 September 2010. Mr Tombs appeared in person on that occasion, and the Plaintiff was represented by Mr O'Brien of counsel. Consistent with the Possession List Practice Note, the Registrar on that day listed the matter for a Judicial Directions Hearing before me on 23 November 2010. That period of time was longer than is usually provided for. It allowed the parties a further opportunity to consider their positions before the matter came before me. 6 On 13 October 2010, Mr Tombs filed a Notice of Motion seeking that the proceedings be struck out upon grounds arising from the alleged non-service upon the Defendants of notices under s.57(2)(b) Real Property Act 1900, and also a claim that, associated with the alleged non-service of those notices, the Plaintiff had waived its rights in certain respects. 7 On 25 October 2010, the Plaintiff filed the present Motion seeking summary judgment and summary dismissal of the Cross-Claim. 8 On 18 November 2010, there was filed in the registry by Mr Tombs a document entitled "Reply and Defence and Cross-Claim". No leave of the Court was granted for the filing of that document which, in one significant respect, purported to differ from the Defence and Cross-Claim previously filed. 9 On 23 November 2010, the day scheduled nearly two months earlier, the Judicial Directions Hearing came before me. Mr Tombs did not appear but a friend of Mr Tombs, Ms Fulwood (who is not a lawyer) came at his request and provided the Court with an affidavit of Mr Tombs sworn 22 November 2010. It raised, amongst other things, a dental treatment issue which affected Mr Tombs' health at that time. 10 There was, in effect, a request by Ms Fulwood that the matter be stood over to (what was described as) the next call over. The Court was informed that, prior to 23 November 2010, the Plaintiff had put Mr Tombs on notice of the terms of the Possession List Practice Note, and that application would be made by the Plaintiff to progress the litigation in the way envisaged in that Practice Note. 11 The Court had no prior notice from Mr Tombs that he was not to attend on 23 November 2010. Included in the affidavit provided to the Court that day was an indication that he had sought legal aid several days prior to that date. I determined to stand the matter over until Thursday 25 November 2010, and Mr Tombs was informed that the Motions which were before the Court would be heard on that day, and that there was an expectation that he attend. 12 When the matter came before me on 25 November 2010 Mr Tombs initially did not appear, but he did appear after some delay. The Court was informed that Mr Tombs had sought legal aid and Mr Passfield, the duty solicitor, appeared and made application for a further adjournment for Mr Tombs. The Plaintiff opposed that application against the background which I have recited. However, I determined to adjourn the matter until 30 November 2010, upon the basis that this would permit the Legal Aid authorities an opportunity to consider Mr Tombs' case, and hopefully to appear for him given what Mr Passfield indicated may be the position. 13 The Court was assisted by the intervention of Mr Passfield, and I acknowledge the valuable service provided to litigants in the Possession List through the Legal Aid duty solicitor scheme. 14 On 29 November 2010, the Court received an email from Mr Passfield indicating that Mr Tombs had declined assistance from Legal Aid and they were unable to represent him. The email indicated that Mr Tombs had elected not to be represented by Legal Aid, and this was so irrespective of whether he was eligible for legal aid. 15 On 30 November 2010, the matter came before me for hearing. I was at that time hearing bail applications. I proceeded to hear the application and, at the conclusion of the hearing, the proceedings were adjourned until today for judgment.

[13]

The Indicative Offer Letter 16 I should indicate one further matter before turning to the merits of the application. On 30 November 2010, Mr Tombs appeared in person. He informed the Court that he was prepared to agree to "consent orders". Some explanation was offered as to what he meant by this. It became apparent from submissions made by Mr O'Brien and by Mr Tombs, and from a letter handed up by Mr Tombs from BC Mortgage Services Pty Ltd dated 29 November 2010, that what Mr Tombs was indicating was that he had an offer to refinance which would allow him to, as he saw it, pay out the debt. Thus, he argued, he would consent to a process which allowed this to occur. 17 It was submitted for the Plaintiff that Mr Tombs was not offering to pay out the debt, in the sense of tendering the money due under the loan or paying it into Court, in a manner which is well known in this jurisdiction as a means by which a defendant can seek to not only discharge the indebtedness to a plaintiff, but also bring the litigation to a practical conclusion. 18 The letter from BC Mortgage Services Pty Ltd is an indicative offer to advance to Mr Tombs the sum of $260,000.00. I note that the claim of the Plaintiff, calculated as at today, totals principal and interest in the sum of $264,231.95. 19 The indicative offer reveals that there are a number of significant qualifications to it. Amongst those is clause 27 which states, "It is a condition that the Borrower's Accountant must provide a letter stating that in the Accountant's opinion, the borrower can afford to pay the interest under the loan and can make arrangements to repay the principal at the end of the term". 20 There are other aspects of the letter as well which indicate that it is, as it states, an indicative offer. Whether Mr Tombs can satisfy the requirements to obtain the finance referred to in the indicative offer remains an open question. 21 It is sufficient to observe at this point that this type of letter is not uncommon in Possession List proceedings. Sometimes the indicative offer can be acted upon and refinancing can occur, sometimes it cannot. But the only effective offer or act which Mr Tombs can make to bring the proceedings to an effective end is to tender the money outstanding to the Plaintiff or to pay it into Court. This letter does not, on any view, indicate that Mr Tombs is in a position to do that now, nor that he will be in a position to do so in the near future. If it turns out that he can, then of course he can seek to pay out the debt to the Plaintiff. The law is clear, that even after a plaintiff takes possession of a property for the purposes of exercising the power of sale, a defendant may obtain an injunction restraining the mortgagee from exercising the power of sale if the amount of the mortgage debt (if it is not in dispute) is paid or (if the amount is disputed) the amount claimed by the mortgagee is paid into Court: Inglis v Commonwealth Trading Bank of Australia (1972) HCA 74; 126 CLR 161 at 164-169; GE Personal Finance Pty Ltd v Smith [2006] NSWSC 889 at [17]. 22 I have made these observations about the indicative offer because there may be some lingering uncertainty in Mr Tombs' mind with respect to its status. What I have just said constitutes my understanding of the law and the status of this letter with respect to the proceedings. I note that Mr Tombs is in Court at present, and no doubt has taken on board what I have just said in that respect.

[14]

Plaintiff's Application for Summary Judgment and Summary Dismissal of Cross-Claim 23 I turn now to the application for summary judgment by the Plaintiff and for summary dismissal of the Cross-Claim. 24 The applicable principles on a summary judgment application are clear. Before a Court will give summary judgment to a plaintiff, it is necessary for the Court to reach a high level of satisfaction that the order should be made. The principles are well known - a very clear case is required before summary judgment is granted and the power to order summary judgment should be sparingly employed: Dey v Victorian Railway Commissioners [1949] HCA 1; 78 CLR 62 at 91; General Steel Industries Inc v Commissioner of Railways (NSW) [1964] HCA 69; 112 CLR 125 at 129; Webster v Lampard [1993] HCA 57; 177 CLR 598 at 602-3; and Cosmos E-C Commerce Pty Ltd v Bidwell and Associates Pty Ltd [2005] NSWCA 81 at [37]-[38]. 25 As I have said, the Plaintiff seeks both summary judgment on its claim and summary dismissal of Mr Tombs' Cross-Claim. The principles which I have recited are applicable to both those types of applications, and it is for the Plaintiff to demonstrate that the orders sought ought to be made, bearing in mind the demanding standard required by the law. 26 The pleadings and the evidence before the Court on the application reveal that there was a mortgage entered into between the Plaintiff and the Defendants, a loan was advanced and there has been default under the loan. Those aspects of the Plaintiff's claim are clearly established, and indeed are not denied. 27 There are a number of particular matters which are relied upon by way of Defence or Cross-Claim by Mr Tombs. I am referring to Mr Tombs by name, bearing in mind that he is effectively both Defendants. He is the First Defendant in person, and he is the Second Defendant as the Administrator of the Estate of his late wife, Ms Williams. When I refer to Mr Tombs, it may be taken that I am referring to the Defendants because, as a matter of practical reality, before the Court he is both.

[15]

The s.57(2)(b) Real Property Act 1900 Issue 28 I have mentioned that the Notice of Motion of Mr Tombs filed on 13 October 2010 sought the striking out (or dismissal) of the proceedings because of what was said to be the non-service of notices under s.57(2)(b) Real Property Act 1900. 29 The evidence before the Court establishes that notices, for the purpose of that provision and s.80 Consumer Credit Code, were issued on 10 February 2009. The notice directed to Mr Tombs was served upon him by post at his last known residential address (namely, the subject property) in a manner that satisfies the requirements of s.170(1)(b) Conveyancing Act 1919. I note that service in accordance with that provision extends to notices required under the Real Property Act 1900 as well: s.170(2A) Conveyancing Act 1919. 30 Unfortunately, Mr Tombs' wife died in 2007. The evidence reveals that the Plaintiff was aware, by February 2009, that Ms Williams was deceased, but was uncertain as to the position with respect to probate or administration of her Estate. In those circumstances, notices including a notice under s.57(2)(b), were sent to the Public Trustee. I am satisfied that provision of the notices to the Public Trustee was appropriate, and an appropriate means of service because of s.61 Probate and Administration Act 1898. The evidence reveals both the sending of the notices, and their receipt, by the Public Trustee. 31 I note, in any event, that Mr Tombs and his late wife were joint tenants of the subject property so that upon her death, as the sole surviving joint tenant, Mr Tombs became the sole beneficial owner of the property by right of survivorship: McCoy v Caelli [2010] NSWSC 1233 at [58]. 32 In addition, the Defence and Cross-Claim filed by Mr Tombs on 3 September 2010, in paragraph 1, admitted paragraphs 1 to 9 of the Plaintiff's Statement of Claim. Paragraphs 8 and 9 of the Statement of Claim pleaded that notices had been given to the Defendants on 10 February 2009, and that there had not been payment made within the specified period in accordance with the notices. 33 Thus, before the Court on this application is evidence of service upon both Defendants, and an admission in the Defence and Cross-Claim put on by Mr Tombs on 3 September 2010, that there had been such service and non-compliance with the notices. 34 I have mentioned that, on 18 November 2010, Mr Tombs filed in the registry a document entitled "Reply and Defence and Cross-Claim", in which notably there was a denial of paragraphs 8 and 9 of the Statement of Claim which, of course, was entirely inconsistent with the original Defence and Cross-Claim. If it was necessary to reach the point where Mr Tombs needed leave to withdraw this admission, there would be a significant hurdle lying in his way. The admission was made in response to a simple and clear statement that notices had been given and there had been a failure to comply. This was not a situation where an admission had been made of some complex legal concept, such as an admission of a breach of duty. Rather, there was an assertion that notices had been given and a failure to comply with them, and there was an admission that this was correct. 35 The principles with respect to an application for leave to withdraw admissions have been considered in many cases, and are helpfully summarised in the decision of Harrison J in NM Rural Enterprises Pty Ltd v Rimanui Farms Ltd [2010] NSWSC 969 at [9] and following. It is sufficient to say that if it was necessary to determine such an application, then Mr Tombs would have a major problem. However, in my view the evidence clearly demonstrates service on both Defendants, and that resolves the question in a manner which means that there is no arguable defence, nor any proper basis for Mr Tombs to seek to strike out or summarily dismiss the Plaintiff's claim. 36 I note, in any event, that service of a notice under s.57(2)(b) Real Property Act 1900 is not a precondition to the bringing of proceedings seeking possession for mortgage default. The notice relates to the exercise of the power of sale: Suncorp-Metway Ltd v Nam Property Holdings Pty Ltd [2010] NSWSC 1078 at [41]. Thus, even if there was a basis for Mr Tombs to contend that there had been non-service of the notices, it is not something that would entitle him to defend the proceedings, let alone have them dismissed in accordance with his Notice of Motion. 37 There is some flavour of an argument in Mr Tombs' documents that the Plaintiff could not enforce its mortgage over the property by reason of his wife being deceased at the time of service of the notice of default. From what I have said, however, that is a flawed argument. There was service on the Public Trustee in accordance with s.61 Probate and Administration Act 1898. In any event, Mr Tombs well knew the position and he was the sole surviving joint tenant, so that he was the sole beneficial owner of the property. 38 In accordance with the stringent test which I have outlined at [24] above, I am satisfied that to the extent to which Mr Tombs seeks to rely upon the service of the statutory notice as a defence to the claim for possession in these proceedings, there is no possibility that he could succeed at a final hearing on that aspect, with the result that summary judgment is justified with respect to that issue.

[26]

46 Thus, by 8 April 2010, there was an agreement in those terms which contained a number of clear conditions that certain things be done by specified dates. There was express provision in the agreement that the entry by the Plaintiff into the agreement did not constitute waiver of its rights. 47 It is submitted by Mr O'Brien, and I accept the submission, that the terms of this agreement constitute a form of indulgence extended to Mr Tombs in the circumstances that existed. The proceedings had been on foot since 31 July 2009, there was clear default established with respect to the period prior to then and s.57(2)(b) notices had issued and been served. In effect, the terms of the 25 March 2010 agreement involved the Plaintiff staying its hand with respect to the recovery proceedings, upon the basis that Mr Tombs took the identified steps contained in the agreement. Mr Tombs agreed expressly that he would do these things. 48 The difficulty for Mr Tombs is that some of these things were done, but some were not. In a letter dated 20 July 2010 from a representative of the Plaintiff, Mr Tombs was informed that he had not met the conditions of the arrangement in a number of respects. Firstly, the Plaintiff had been advised that the subject property was not completed to a standard that would enable the property to be marketed as at the date of the letter. Secondly, although a Sales Agency Agreement had been provided, the Plaintiff understood that the property had not, to that point, been marketed. Thirdly, the Plaintiff had not received an unconditional sales contract by 9 July 2010. The letter went on to say that, as Mr Tombs had not complied with the terms of the agreement, the Plaintiff did not consent to extend time for him to sell the secured property, and intended to proceed to enforce its rights under the terms and conditions of the mortgage and that legal action would proceed. 49 Thereafter, the Statement of Claim was served and the steps taken in the litigation occurred, which I have already mentioned. 50 In the Defence and Cross-Claim, Mr Tombs asserts that the original agreement has been overtaken by what he described as a "substituted agreement", being the agreement to which I have referred although he then contends there was some verbal variation. He acknowledges that he did not comply with the written agreement. The Defence and Cross-Claim filed on 3 September 2010 asserts, at paragraph 5, in a way that seeks to invoke the doctrine of frustration, that Mr Tombs was prevented from completing the agreement by forces outside his control including: "(a) Inclement weather;

[30]

51 The Defence and Cross-Claim sought, amongst other things, a declaration that the Plaintiff and Mr Tombs had entered into a substituted agreement varying the pre-existing one, which was seemingly the agreement contained in the letter of 25 March 2010, but said to have been modified in some way, although to what end is not clear. A somewhat vague and nebulous proposition is asserted by Mr Tombs, bearing in mind that the background to all of this was a clear default under the mortgage and the entry into what was a quite clear agreement, with things to happen by specified dates and the Plaintiff making it entirely clear there was no waiver and, if there was non-compliance, the Plaintiff would move to enforce its rights. It is submitted by the Plaintiff that is exactly what it has done. 52 I accept the submissions of the Plaintiff that the entry into the agreement of 25 March 2010 did not constitute a waiver of a power of sale, or an estoppel of the Plaintiff's right to enforce the mortgage on default. As I have said, there was an express statement within the agreement on this issue. 53 To the extent that Morton v Suncorp Finance Limited (1987) 8 NSWLR 325 sheds light on the waiver issue, it tends to support the Plaintiff, not Mr Tombs. This is a situation where there was a form of indulgence granted by way of the agreement reached after the intervention of the FSO, but with the Plaintiff's position always being entirely clear. The evidence clearly demonstrates that the Defendants did not comply with the agreement and, having breached the agreement, I accept the submission of the Plaintiff that the Defendants cannot in good conscience set up an estoppel against the Plaintiff enforcing its rights under the mortgage. 54 I accept the submission of the Plaintiff that the agreement, which expressly precluded waiver, prevents Mr Tombs from asserting reliance on an interpretation which, in any event, is not identified in the pleadings as a ground of estoppel. I accept that what occurred here was effectively nothing more than an indulgence, where the Plaintiff remained entitled to enforce the rights which existed at the time when proceedings were commenced in this Court, which continued to exist. 55 Insofar as there is reliance upon the form of frustration identified, being the five matters to which I have made mention at [50] above, I accept the submission of the Plaintiff that factors (a) to (c) (being inclement weather, illness and hospitalisation of the appointed builder and repeated white ants and termite infestation) are risks inherent in building work. Factors (d) and (e) (being new and unforeseen works required by the appointed sales agent as necessary for the sale of the property; and new and unforeseen Council requirements introduced before Council would give approval to the renovation work done to date) were expressly contemplated by the terms of the agreement, namely that the work had to be completed to a standard that would permit the marketing of the property for sale and that Council approval was required. 56 In my view, none of these matters constitute an arguable Defence or an arguable Cross-Claim which Mr Tombs can press against the Plaintiff in the context of these proceedings. 57 In summary, the Plaintiff has established that a loan was entered into between the Plaintiff and the Defendants, that there is default under the loan, that a mortgage was utilised to secure the loan over the subject property, that s.57(2)(b) notices issued and were served on the Defendants, that although there was an agreement reached on 25 March 2010 (which, if complied with by Mr Tombs, may have brought these proceedings to a practical end because the property would have been sold by Mr Tombs in co-operation with the Plaintiff), Mr Tombs did not comply with the terms of the agreement, there is no waiver, there is no estoppel and to the extent to which the doctrine of frustration can have any application, it does not in my view assist Mr Tombs. 58 The point has been reached where, applying the stringent test which I have referred to at [24] above, the Plaintiff has demonstrated an entitlement to summary judgment on its Claim and an entitlement to summary dismissal of the Cross-Claim. There is no possibility of the Defence or the Cross-Claim succeeding. There is no serious issue in the proceeding which can be raised by Mr Tombs to resist the claim for relief by the Plaintiff. 59 Accordingly, I am satisfied that the Plaintiff has demonstrated an entitlement to relief. I propose to make a number of orders as a result. 60 I make the following orders:

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