Commonwealth Bank of Australia v Dariusz Adam Gaszewski & anor

LEGISLATION CITED : Civil Procedure Act 2005 (NSW), s 94 Uniform Civil Procedure Rules 2005 (NSW), rr 10.14(3), 29.7

CASES CITED : Savage v Norton [1908] 1 Ch 290

Commonwealth Bank of Australia (plaintiff) PARTIES : Dariusz Adam Gaszewski (first defendant) Anna Maria Gaszewski (second defendant)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

2373/06 Commonwealth Bank of Australia v Dariusz Adam Gaszewski & anor JUDGMENT (ex tempore) 1 HIS HONOUR: On or about 18 November 2004 the defendants, whom I shall call the Gaszewskis, applied to the plaintiff, whom I shall call the Bank, for a housing loan in the sum of $1,440,000 to assist in their purchase of Unit 4/38 Queenscliff Road, Queenscliff from Sugil Pty Limited. In connection with that application, the defendants executed an Acknowledgement and Consent, Nomination to Receive Notices and Proof of Identity Details dated 1 October 2004, a Direct Debit Request dated 30 November 2004, and a Contract Authority - Home Loan Investment dated 30 November 2004. 2 As a result of their application, the Bank offered the Gaszewskis a housing loan and sent them a Consumer Credit Contract Schedule. The Contract Schedule explained that it contained the particulars of the consumer credit facility which the Bank was offering the Gaszewskis, and that the contract was made up of the Schedule and the Bank's Usual Terms and Conditions (UTC) for Consumer Mortgage Lending. The Usual Terms and Conditions provide, by clause 3.2, that the borrower's obligations under the contract are to be secured by the security stated at item K in the Schedule, which must be in the form or forms required by the Bank and, by clause 3.4, that if the security is not in existence at the date of the contract, the borrowers agree to give the Bank such security. 3 Particular K in the Schedule describes the security as "Registered mortgage over the property situated at 4/38 Queenscliff Road, Manly". The Schedule provides: Your acceptance: When you sign this schedule, you accept our offer, as set out in the Schedule and the UTC and acknowledge that any security stated at item K extends to cover your obligations under the contract. 4 The Schedule was signed by Mr and Mrs Gaszewski, in the presence of a bank officer as witness, apparently on 23 December 2004. 5 The transaction was settled on 24 December 2004, when the Bank advanced a total of $1,434,003 by a series of bank cheques, and received the Certificate of Title to the property, a stamped transfer from the vendor to the Gaszewskis, and a discharge of mortgage from the outgoing mortgagee. The Bank had, by then, received a form of mortgage over the property signed by the second defendant, Mrs Gaszewski, and apparently witnessed by a son of the Gaszewskis, whose signature also appears as witness in the space intended for execution by the first defendant, Mr Gaszewski. When the matter was settled on 24 December 2004, the absence of Mr Gaszewski's signature passed unnoticed. As a result, the bank has been unable to register its mortgage. It seems that Sugil provided vendor finance in the sum of $170,000, and Sugil has lodged a caveat based on an unregistered mortgage over the property. Since 14 November 2005, the Bank has endeavoured, by correspondence and telephone calls to the Gaszewskis and to the conveyancers who acted for them on the transaction, to obtain Mr Gaszewski's signature to the mortgage, without success. 6 These proceedings were instituted by summons filed on 18 April 2006, initially returnable on 26 May 2006. As a result of difficulty in effecting service of the proceedings the Bank, by motion filed on 2 June 2006, applied for an order pursuant to Uniform Civil Procedure Rules 2005 (NSW), r 10.14(3), and on that application a Registrar ordered that, in lieu of personal service, the summons, notice of motion and principal supporting affidavit of John Lee be deemed to have been served on the defendants on 31 May 2006. In compliance with the Registrar's Order, a copy of that Order and notice that the documents were delivered into the defendants' letterbox on 31 May 2006, was sent to the Gaszewskis at 101 Crown Road, Queenscliff on 2 June 2006. 7 On 2 June 2006 the Bank's solicitor sent the Gaszewskis a letter at the 101 Crown Road address, notifying them that the proceedings had been adjourned to the Expedition List on Friday 16 June 2006, when the Bank intended to ask the court for judgment. On 14 June 2006, the Bank's solicitor left a message on a telephone number for the Gaszewskis notifying them that the proceedings were before the court the following Friday, namely, 16 June 2006. The matter was called on 16 June 2006 at 10.17am, when there was no appearance for either defendant, whereupon it was stood over for hearing today. 8 On 22 June the Bank's solicitor sent, by prepaid post to the defendants at 101 Crown Road, Queenscliff, a letter notifying them that the matter had been fixed for hearing on 3 July 2006, on which date the Bank intended to seek the orders set out in the documents previously served. At 11.35 on the morning of 30 June 2006, the Bank's solicitor telephoned the telephone number which he had for the Gaszewskis, again encountering (as he had previously) a voice mail inviting him to leave a message, and he left a message reminding that the application was to be heard on Monday next, 3 July. 9 There has been no response to any of the attempts to communicate with the Gaszewskis. Both defendants were called outside the court this morning, when there was no appearance by or for them. 10 I am satisfied that the proceedings have been served in accordance with the order for substituted service and that the defendants, and in particular Mr Gaszewski, have proper notice of the hearing today. In those circumstances, the court may, pursuant to UCPR r 29.7, proceed with the trial generally, or so far as concerns any claim for relief in the proceedings. The plaintiff is entitled to prove its claim, so far as the burden of proof lies on the plaintiff, but is limited to the matters pleaded. 11 The provisions of the loan documentation to which I have referred establish that, in the events which have happened, the Gaszewskis are bound to give the Bank a mortgage in the form required by the Bank. The Bank has tendered a mortgage in the form which it requires, which appears to be its current standard form, and which is the form already executed by Mrs Gaszewski. 12 I make the following orders:

Declare that, pursuant to the Consumer Credit Contract Schedule and the Usual Terms And Conditions For Consumer Mortgage Lending (copies of which are respectively annexures D and E to the affidavit of John Lee sworn on 13 April 2006), the first defendant Dariusz Adam Gaszewski is bound to execute a mortgage over the land situate at 4/38 Queenscliff Road, Queenscliff in the State of New South Wales and comprised in Folio Identifier 4/SP73911 in the form a copy of which is annexure K to the affidavit of John Lee sworn 13 April 2006 ("the Mortgage").

Declare that the plaintiff is entitled to have the obligation referred to in Order 1 specifically performed and carried into execution.

Order that within seven days of service on him of these Orders in accordance with Order 4, the first defendant execute the Mortgage.

Order that for the purpose of Order 3 (but not for the purpose of any application for contempt), notice of these Orders may be sufficiently served by hand delivery to the letterbox at 101 Crown Road, Queenscliff in the State of New South Wales of a sealed copy of these Orders under cover of a letter addressed to each of the defendants at that address. 13 Civil Procedure Act 2005 (NSW), s 94, provides that if any person does not comply with an order directing the person to execute any conveyance, contract or other document, the court may order that the document be executed by such person as the court nominates for that purpose. Although non-compliance with the order is a precondition to such an order, and although it is established that such an order should not be made merely because of an anticipated refusal to execute a document, the order may be made if the circumstances demonstrate the probable futility of any proper request [Savage v Norton [1908] 1 Ch 290, 297]. 14 In my view, the circumstances here demonstrate the probable futility of any proper request, and I am prepared to make such an order, conditioned on proof of non-compliance with the order, requiring execution of the mortgage. 15 I therefore make the following further orders:

Order, pursuant to Civil Procedure Act 2005 (NSW), s 94 that upon the plaintiff filing an affidavit by its solicitor proving service of these Orders in accordance with Order 4, and that the first defendant has not complied with Order 4, the Mortgage be executed by the Registrar in the name and on behalf of the first defendant.

Reserve liberty to apply on three days' notice in the event of any difficulty arising in the implementation of Orders 3, 4 and 5.

Order that the First Defendant pay the Plaintiff's costs of the proceedings. 8. Direct that these Orders be entered forthwith. **********

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