Birch v National Australia Bank Limited; Campbell v Illawarra Golf Club Pty Limited

The effect of Mr Birch not being a party to the 2011 proceedings 8An order for possession and a writ of possession operate in rem and therefore, unless set aside, are binding on Mr Birch. I raised with Mr Spencer, who appeared on behalf of the Bank in the 2013 proceedings, and who had appeared on behalf of the receivers in the 2011 proceedings, whether the 2011 proceedings were properly constituted since Mr Birch, the registered proprietor, was not a party and would be bound by the order and the writ, unless they were set aside, although he had not been heard. 9Mr Spencer referred me to transaction documents, including a so-called "Stand-still Deed" which was entered into in around May 2010, relevantly between Mr Birch, Ms Tarrant and the Bank, clause 8 of which provided: Tarrant and Birch's Acknowledgment Sandra Tarrant and Christopher Birch acknowledge that (a) the Financier [the Bank] is entitled to enforce the Illawarra Securities against them and that they have by this deed requested the Financier to forebear from enforcing the Illawarra Securities for the Standstill Period. (b) by signing this deed they consent to the Financier having judgment against them for possession of the Illawarra Properties and agree not to take any steps to defend and will consent to judgment against them in any proceedings commenced by the Financier in any Court of competent jurisdiction seeking amongst any other relief, judgment for possession of the Illawarra Properties; and (c) acknowledges that this deed may be produced as evidence of their consent to judgment in proceedings to be commenced by the Financier for possession of the Illawarra Properties or any part thereof and will include in their notice of appearance a statement to the effect in accordance with Rule 6.11 of the Rules that the Guarantors submit to the making of all orders sought by the Financier and the giving or entry of judgment in respect of all claims made by the Financier in respect of the Illawarra Properties. 10Mr Spencer submitted that, having regard to clause 8, it was not necessary for the Bank to join Mr Birch as a party since the Bank was, relevantly, Mr Birch's agent. He contended that, commonly, orders for possession are sought against those who are actually in possession, as opposed to those, such as Mr Birch who, as registered proprietor has a prima facie right to possession, but is not in actual possession and does not seek to exercise his right to possession. Although Mr Spencer was unable to find an authority for the proposition that a registered proprietor is not a necessary party to proceedings for possession of land, he submitted that such persons were not invariably joined. He cited Olde v Metro Surf Australia Pty Limited [2012] NSWSC 618, an application by receivers against companies in occupation of certain premises in respect of which the receivers sought possession. Windeyer AJ referred at [9] and [10] to the circumstance that the receivers were, under a deed of appointment, agents of the mortgagors and not the mortgagee. Mr Spencer submitted that the receivers were, in the present case, agents of the mortgagors. He contended that, if it were the case that proceedings for possession of property were not properly constituted unless the registered proprietors were joined, one would have expected Windeyer AJ to require them to be joined in that case. 11Mr Spencer also relied on Yeshiva Properties No 1 Pty Ltd v Lubavitch Mazal Pty Ltd (No 2) [2003] NSWSC 752 in which Gzell J considered the provisions of Pt 7 r 8(1) of the Supreme Court Rules which was the predecessor to UCPR r 6.8 and which, although expressed in different terms, was to a similar effect. His Honour said at [12] and [14]: The purpose of the rule is to provide occupiers of land the subject of proceedings for a judgment for possession with the opportunity to assert any rights they may have. In this case, the commonality of directors between the plaintiffs in the proceedings before Young CJ in Eq and the applicants before me meant that the applicants were well aware of the proceedings and, if they had wished to assert rights stemming from their occupancy, they had the opportunity to be joined in those proceedings . . . In these circumstances the protection afforded to occupiers by the Supreme Court Rules 1970, Pt 7 r 8 was superfluous. The applicants were already aware of the nature of the proceedings and the impact that a successful judgment on the cross claim would have. 12I do not regard either Olde v Metro Surf or Yeshiva Properties as determinative of the issue. Although Mr Birch made certain contractual promises in the Stand-Still Deed, he may seek to argue that he is not bound to fulfil those promises, which could give rise to an issue to be tried. The Deed is therefore not necessarily a complete answer to any dispute between Mr Birch and the Bank and does not, in my view, deprive him of a right to be heard against the making of a possession order against his property. 13I am not concerned to decide whether the receivers ought, when they commenced the 2011 proceedings or at some later stage, to have joined Mr Birch, or, indeed, the larger question whether proceedings for possession are properly constituted if registered proprietors are not joined as parties. It is sufficient for present purposes to say that, with the benefit of hindsight, it would have been preferable if the receivers had joined Mr Birch as a party in the 2011 proceedings since, in that event, he would have been bound by the order for possession and the ensuing writ, or, alternatively, if he had been entitled an order setting aside the mortgage and the Stand-still Deed, no such order would have been made and no such writ would have issued. 14The difficulty that arises from the circumstance that Mr Birch was not a party to the 2011 proceedings is that he could move to set aside the writ and the order for possession, on the basis that, as far as he was concerned, they were made ex parte: Taylor v Taylor (1979) 143 CLR 1, at 4; see also Finance Corporation of Australia Limited v Bentley (1991) 5 BPR 11,833 (Kirby P, Mahoney and Handley JJA). As was said in Chappuis v Filo (1990) 19 NSWLR 490 at 512 by Priestley and Handley JJA: If the procedure adopted by the Court has unwittingly deprived the second respondent of his right to be heard, without any fault on his part, and if he has been prejudiced by these orders he would have the right to apply to have these orders, which so far as he was concerned were pronounced ex parte, set aside: see Taylor v Taylor (1979) 143 CLR 1. 15The law in this area was summarised by Brereton J in Mizzi v Reliance Financial Services Pty Limited [2007] NSWSC 37 at [81] as follows: In this state, UCPR r 6.23 provides that proceedings are not defeated merely because of the misjoinder or non-joinder of any person as a party to the proceedings. This rule authorises the determination of issues in proceedings despite the non-joinder of a party [Finance Corp of Australia Ltd v Bentley (1991) 5 BPR 11,833; BC9102015 (Mahoney JA, Handley JA agreeing)]. Thus if a person who would have been an appropriate party has not been joined, the court may proceed to determine the rights of the parties actually before the court, but a person who has not been joined and is affected by orders made in the proceedings, will be entitled to apply to have them set aside [Taylor v Taylor (1978) 143 CLR 1 at 4; Finance Corp of Australia Ltd v Bentley; Chappuis v Filo (1990) 19 NSWLR 490 at 512]. 16It is questionable whether Mr Birch can be said to have been deprived of his right to be heard without any fault on his part when he knew of the 2011 proceedings, gave evidence in them and failed to file his statement of claim in the 2013 proceedings in any timely way which would have allowed the proceedings to be heard together. Arguably, he was given an opportunity to be heard but failed to avail himself of that opportunity. 17However, to leave the 2011 proceedings concluded, and to proceed to determine the 2013 proceedings, would create an undesirable situation since the order and the writ could potentially be set aside on Mr Birch's application. It is not necessary, for present purposes, to determine whether the allegations made the 2013 proceedings, if established, and subject to the Stand-still Deed, might have amounted to a defence to the receivers' claim for possession, on the basis of the Contracts Review Act 1980 (NSW) (Commercial Banking Co of Sydney Limited v Pollard [1983] 1 NSWLR 74 at 77-78 per Rogers J), or otherwise. A denial of natural justice is, in itself, a reason to set aside an order.

Appropriate orders 18I stood the matter over for further mention before me on 16 April 2014 in order that the parties could consider the form of orders that ought be made to rectify the difficulty referred to above. Mr Spencer submitted on that occasion that it was not necessary that Mr Birch be added as a party to the 2011 proceedings, for the reasons set out above in the summary of his submissions. However, he provided a minute of draft orders, in case I decided that the preferable course was to do so. Mr McQuillen, who appeared for Mr Birch, did not ultimately oppose the orders set out in the draft minute, although he submitted that I should proceed to hear the Bank's motion for summary dismissal and that the orders were not necessary. He was not instructed to give any undertaking that Mr Birch would not move to set aside the order for possession or the writ of possession. 19In all the circumstances I consider that the preferable and most prudent course is to order that Mr Birch be added as a defendant in the 2011 proceedings and to order that his statement of claim in the 2013 stand as a defence and cross-claim in the 2011 proceedings. This will also have the effect of joining the Bank to the 2011 proceedings as a cross-defendant. The Bank has undertaken to inform the Sheriff that the writ is not to be executed until further notice. The orders which I made on 16 April 2014 will have the effect that all issues between the parties can be determined in the one proceedings and the potential that the order or the writ could be set aside on Mr Birch's application at some future date on the basis referred to in Taylor v Taylor will be removed.

Proceedings: 2011/382861

1. Order that Christopher Brian Birch be joined as a further defendant (namely, the fifth defendant) in these proceedings (the 2011 proceedings) and grant leave to the plaintiffs to file a further amended statement of claim that incorporates the joinder.
2. The statement of claim filed by Mr Birch in proceedings 2013/282086 (the 2013 proceedings) on 18 September 2013 stand as Mr Birch's defence and cross-claim in the 2011 proceedings.
3. Direct Mr Birch to serve any proposed amended defence to the further amended statement of claim and any proposed amended cross-claim in the 2011 proceedings on or before 12 May 2014.
4. The notice of motion filed by the defendants in the 2013 proceedings on 5 November 2013 be treated as if it had been filed in the 2011 proceedings.
5. Grant leave to the plaintiffs to amend the motion referred to in order 4 above, and direct that any such motion be filed and served by 19 May 2014, together with any evidence in support of the notice of motion.
6. Direct Mr Birch to file and serve any evidence in opposition to the motion by 26 May 2014.
7. Note that the effect of these orders is to incorporate the statement of claim in the 2013 proceedings into the 2011 proceedings as a defence and cross-claim.
8. Order the 2011 proceedings and the 2013 proceedings to be heard together.
9. Stand the 2011 proceedings and the 2013 proceedings over for directions on Tuesday 27 May at 9.15 am before me.
10. Grant liberty to the parties to apply on 72 hours notice.
11. Costs reserved.
12. Note that the Bank agrees to notify the Sheriff not to have the writ of possession actioned and that the Bank will notify the sheriff accordingly.

Proceedings 2013/282086:

1. The 2013 proceedings be stood over to Tuesday 27 May at 9.15 am before me.
2. The 2013 proceedings be heard together with the 2011 proceedings.
3. The parties have liberty to apply on 72 hours notice.
4. Costs reserved.

Amendments 10 July 2014 - typographical error on coversheet 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: 10 July 2014