Commonwealth Bank of Australia v Goater

Judgment 1This is a very unfortunate matter. The proceedings commenced on 23 October 2012 seeking possession of two parcels of land in Frome Street, Moree. 2The Second Defendant, Terence Goater is the registered proprietor of those properties. Mortgages were given over those proprieties to secure two loan agreements. The first was an overdraft of $50,000 provided to the First Defendant on 6 December 2006 and the second was an agreement for a loan of $290,000 to both Defendants on 13 June 2007. 3There was a demand for repayment made on May 2012 and when that was not met by repayment, proceedings commenced on 23 October as I have said. It does not appear, for reasons which are not clear, that the Statement of Claim was served immediately. 4On 24 October 2013, the Defendants lodged a complaint to the Financial Ombudsman Service that led to an agreement between the bank and the Defendants. The agreement included repayments to the Plaintiff and, arguably, some obligations by the Defendants to pay off arrears of Council and water rates due to the local Council, Moree Council. 5The Plaintiff made an inquiry of the Council in relation to the repayment arrangement that was said to be in place. The Plaintiff was informed by an email at 6 November from a Suzie Treloar of the Council, that although the Defendants had paid the agreed sum of $500 per month for arrears of council rates, they had not complied with the obligation to pay off their arrears of water rates. It was this failure that caused the Plaintiff to reactivate these proceedings. 6The Statement of Claim was served separately on each of the Defendants on 30 January 2014 and the Statement of Claim and the Notice to Occupiers, was served on the properties the day before. Although the defences were due twenty-eight days after 30 January, an extension of time was granted and those defences were to be filed by 6 March 2014. 7Until very recently, the Defendants had a person by the name of John Humphries, who is a financial counsellor, acting for them on a pro bono basis. 8The evidence discloses that as late as 6 March, each of the First and Second Defendants asserted that they swore an affidavit verifying a defence in Moree and that each of those defences was faxed to a fax number in the Supreme Court that had been apparently provided to Mr Humphries by an officer in the Court. There is an affidavit from each of the persons who witnessed the signature of the Defendants on what are described in each case as a Supreme Court document. 9There is evidence of a Defence sworn by the First Defendant, Mrs Goater having been faxed to the Court on 6 March, at 1404 hours. There is no evidence of a Defence on behalf of the First Defendant apart from Mr Goater's affidavit that he swore an affidavit in support of such Defence and saw that it was faxed to the Court. 10The Defence that arrived at the Court does not appear to have come to the attention of the person responsible for filing. The result was that the bank, having applied prior to 6 March for default judgment, was given default judgment on 7 March. On one view, the judgment against Mrs Goater might be said to have been irregularly entered by reason of what appears in rule 4.10 UCPR. But on the evidence before me, and without disbelieving anything Mr Goater says, it cannot be said that there has been any irregular entry of judgment against Mr Goater because no sworn Defence by him has been able to be located. 11In any event, Mr Humphries and/or the Defendants became aware that default judgment had been entered and they became so aware on or about 14 March. A writ of execution issued on either 17 or 20 March to enforce that judgment for possession and that writ was executed on 13 May. 12In the meantime, there is evidence of the attempts made by Mr Humphries to locate lawyers for the Defendants who would either act on the basis of a provision of Legal Aid or would be prepared to act pro bono for them. 13On 30 April 2014, the Defendants sent a Notice of Motion to the Court with supporting affidavit by post. It appears that fees were not paid for the filing of that motion and the Defendants applied for fees to be waived. The fee waiver form was ultimately sent to the Defendants on 12 May. 14The Notice of Motion that is before me is dated 13 May and appears to have been faxed from Moree Local Court just after 1 o'clock on 13 May. That of course was the day that the sheriff was due to execute the writ. The Notice of Motion seeks that the default judgment be set aside, that the Defendants have 28 days to file a defence and that the Court grant a stay of an enforcement until the motion to set aside the judgment is determined. 15The Defence which was forwarded to the Court on 6 May by the First Defendant says this: 1. I do not believe I am in default under the loan agreement. 2. CBA acted on the basis the letter from Moree Council was not accurate in that the letter stated no payments had been made to Moree Council towards water rates when almost $6,000 had been paid since September 3, 2013. 3. To the extent that any rates were in arrears was due to the CBA freezing funds in the account thus stopping the account being paid. 16I understand the thrust of that defence to be that, contrary to what was advised to the bank by the council, the water rates were paid in accordance with the arrangement with the council. Mr Humphries has annexed to his Affidavit of 21 May 2014 what appeared to be screen dumps in relation to what is said to be the payment of water rates. That might provide some prima facie evidence that payments of $500 were made, although there seem to be some anomalies about dates in some of those documents. 17The problem which the Defendants face in this matter is that the writ of execution has now been executed and the Defendants have been put out of their property. 18In Perpetual Limited v Kelso [2008] NSWSC 906, a similar situation arose. Johnson J said at [15]: A further argument advanced by the Defendants is that they seek to be allowed in to defend the proceedings upon arguments identified in the affidavit where it is said that the loan contract is, in various respects, unfair and unjust. In my view, the fact that the writ of possession has been executed and the Plaintiff has taken possession of the subject land means that, as a matter of law, it is too late for the Defendants to be seeking to be let back in to defend the proceedings. 19In JP Morgan Trust Australia Limited v Bridge [2013] NSWSC 668, Harrison J was dealing with the position where a mortgagor had been evicted from the premises but had regained possession. The issue there was whether the Plaintiff was entitled to be restored to the possession that it had been given as a result of the execution of the writ. 20In the course of holding that the Plaintiff was so entitled and that a writ of restitution should issue, Harrison J quoted, with approval, what Johnson J had said in Kelso at [15]. He said further at [21]: Mr Bridge is...a legal stranger to the land even though he has committed a trespass and moved himself back. He is still a registered proprietor of the property and has retaken possession but he has no right to do so. The validity of the judgment that supported the issue of the writ of possession that saw him out of the property cannot now be contested. 21Mr Hill, who appears for the Defendants on the present application, has sought to distinguish JP Morgan, particularly on the basis that a mortgagor in that case did absolutely nothing before judgment and the writ to enforce the judgment was executed. However, that does not seem to me to be a matter that distinguishes that decision. 22What Johnson J enunciated in Kelso was a principle of law. Once the judgment has been executed, the matter is at an end and it is not possible for the Defendants, against whom the judgment has been given and executed, to contest the basis of the judgment whether it was given by default or otherwise. Such a view is entirely supported by the principle of finality which governs judgments of the Court. 23It is a very unfortunate for the Defendants in the present case that they find themselves in this position. I do not believe, however, that I am able, under the law as it now stands, to make any order which enables them now to challenge the judgment of the Court. The principle of finality prevents the matter from being reopened. All that can happen, as Johnson J pointed out in Kelso, is that the Defendants will be in a position to ensure, and can do so by action if necessary, that the Plaintiff appropriately sells the property under the rights that are given to it pursuant to the provisions of the Real Property Act 1900 (NSW). 24In any event, the evidence discloses that the Defendants have not acted with any real sense of urgency in the matter. The chronology is this. 25On 27 November 2013 the Bank wrote to the Defendants asserting a breach of the FOS agreement. They were given 7 days to rectify the default failing which the Bank would continue with enforcement action. 26The Statement of Claim was served personally on 30 January 2014. 27Mr Humphries, who had assisted the Defendants in negotiating the FOS agreement, said that he was rung by Mr Goater on about 26 February 2014 "telling him about a letter he received from the Commonwealth Bank in November 2013". Mr Humphries asked for all documents to be sent to him but the Statement of Claim was not sent. Mr Humphries phoned Mr Goater on several occasions over the ensuing days to get a copy of the Statement of Claim. Mr Goater said he had misplaced it. It was eventually sent to Mr Humphries on about 4 March 2014. Mr Humphries prepared a Defence and emailed a copy to the Defendants on the morning of 6 March 2014. 28The matters in paragraphs [25] to [27] above were not mentioned by the Defendants in their affidavits. Mr Goater said only: 2. On or around 3 March 2014, I recall Mr Humphries phoning to say that Shirley and I needed to file a Defence and he said he would prepare it and send it by email. There was, accordingly, no explanation for the failure of the Defendants to act in any way after the service of the Statement of Claim until the call to Mr Humphries on 26 February. In Balanced Securities Ltd v Oberlechner [2007] NSWSC 80 Simpson J said at [19] that before a judgment could be set aside there needed, first, to be an explanation for the failure to file a Defence by the appropriate time. There is no such explanation here. 29On 14 March 2014 Mr Humphries was informed by Gadens, the Bank's solicitors, that default judgment had been entered and that they were instructed to issue a writ of possession. Mr Humphries so informed the Defendants. 30On 20 March 2014 the Court advised Mr Humphries that the Defendants needed to file a Notice of Motion to set aside the judgment. Mr Humphries so advised the Defendants on that day. He told them he would speak to a lawyer. The earliest time an appointment could be made with a lawyer was apparently 17 April. On that day Mr Humphries and Mrs Goater met with the lawyer. They said that the lawyer finalised the Notice of Motion and Affidavit at the meeting. 31The next recorded event occurred on 30 April when Mrs Goater attended at the East Moree Post Office, signed the Notice of Motion and swore the affidavit before a Justice of the Peace. She then posted the documents to the Court but without, it would seem, a filing fee. There is no explanation for the delay between 17 and 30 April although I acknowledge that Easter and Anzac Day intervened. Those holidays do not, however, fill the gap. 32Although neither Mr nor Mrs Goater mentions it in their affidavits they must, by about 17 April have received a notice from the sheriff that he would be attending on 13 May to take possession. In the ordinary course, such notices are sent approximately 6 weeks in advance. Neither Mr nor Mrs Goater mentions such a notice in their affidavits although it is clear from Mr Humphries' affidavit of 19 May that he had been told by the Defendants that eviction was scheduled for that day. The sheriff's notice was not put in evidence by or on behalf of the Defendants. 33Presumably because no filing fee was paid in respect of the Notice of Motion the Court advised that the Defendants needed to sign an application to have the fee waived. There was no evidence of why such a fee waiver was necessary. The evidence disclosed that the Defendants continued to operate their business during this period. 34The Defendants say that they posted the fee waiver form to the Court on 6 May. Mr Humphries said that he phoned the Court every day to see if the fee waiver form had been received. On Friday 9 May Mr Humphries said it was suggested to him that he email a copy of the fee waiver form to the Court. He said that he did so but the email attached to his affidavit does not show what time it was sent. Mr Humphries then says that he phoned the Court at 6.00pm on 12 May to say that the Defendants were to be evicted the next day and that he had heard nothing from the Court. 35There was no explanation for why Mr Humphries waited until 6.00pm to ring the Court, a time when it could scarcely be expected that anyone would be available to assist, and on the day before the eviction was due. No explanation has been given by anyone on the Defendants behalf why there was not any further attempt to obtain legal advice or assistance given the imminence of the eviction. 36Even putting these matters aside those appearing for the Defendants were not able to point to any power in the Court to reinstate their possession of the property in circumstances where the writ has been executed. Mr Hill suggested that the faxing of the Defence meant that the Court had no jurisdiction to enter judgment nor to issue the writ. I do not accept that submission. Even if the entry of judgment against Mrs Goater was an irregularity the Court did not act without jurisdiction. As noted earlier, there is no sufficient evidence demonstrating that a defence was filed for Mr Goater who is the registered proprietor of the land. 37For those reasons, the Notice of Motion is dismissed.