Commonwealth Bank of Australia v Tarrant & Hawkins

Judgment 1These proceedings commenced on 8 September 2010 seeking possession of land at 61 Myola Road, Newport and judgment for a monetary sum of a little over $1.5 million against the Defendants. 2The proceedings arose from the provision of $1,430,200 by the Plaintiff to the First Defendant pursuant to an Agreement of 20 April 2009. Prior to settlement of the loan the land had been owned as joint tenants by the First and Second Defendants who were husband and wife. The land had previously been mortgaged on 22 December 2006 to Statewide Investments Ltd in consideration of an advance of $1,330,000. On 24 July 2009 Ms Tarrant's then solicitors wrote to the Plaintiff directing that the sum of $1,400,000 from the amount being advanced be paid to Statewide Secured Investments Limited. On settlement of the Plaintiff's loan the land was transferred solely into the name of Ms Tarrant. She is the principal borrower. 3There is no dispute that Ms Tarrant has defaulted under the Loan Agreement and the mortgage by failing to make repayments when due. On 22 March 2010 the Plaintiff issued the First Defendant with a notice pursuant to s 57(2)(b) Real Property Act 1900. The Second Defendant unconditionally guaranteed the payment of the Plaintiff's loan. 4Shortly after the Statement of Claim was filed it was ascertained that the Second Defendant was an undischarged bankrupt, a sequestration order having been made against him on 18 June 2010 in the Federal Magistrates Court. He has not been served with the proceedings but has, nevertheless sought to appear from time to time. He informed me that his interest was as the carer of a young boy who resides in the property three days each week. The Second Defendant resides in the property on those three days also. 5As at 9 September 2011 Ms Tarrant was indebted to the Plaintiff in the sum of $1,674,304.95. No doubt that amount has increased during the last 6 months. Ms Tarrant has apparently been attempting to sell the property which is estimated to be worth about $1,400,000. There will obviously be a shortfall if the sale occurs for about that price. 6On 25 March 2011 the Plaintiff brought a Notice of Motion for summary judgment. On the same day Ms Tarrant filed a Notice of Motion seeking leave to file an Amended Defence in the proceedings. These Motions were heard by Harrison AsJ. Her Honour delivered judgment on 20 September 2011 where she dismissed the Plaintiff's Notice of Motion but granted leave to Ms Tarrant to file an Amended Defence that pleaded relief sought under the Contracts Review Act 1980 within 14 days. 7Ms Tarrant failed to file an Amended Defence within the 14 day period stipulated. The Amended Defence was in fact filed on 16 February 2012 although how that was allowed to happen is not clear. 8The matter came before Senior Deputy Registrar Howard on 11 October 2011. Consent Orders were made which required Ms Tarrant to serve any affidavit evidence by 8 November 2011. 9Ms Tarrant did not serve any affidavit evidence in accordance with the orders of the Court. 10On 18 October 2011 a sequestration order was made against her. The trustee was notified of these proceedings and has indicated that he does not intend to defend them. 11The matter first came before me on 17 February 2012. By that stage the Plaintiff had filed a further Motion seeking judgment for possession and, in the alternative, that the Amended Defence filed by Ms Tarrant should be struck out. 12I was informed that Ms Tarrant had a solicitor, Mr Pope, acting for her but he was unavailable for some or all of the day on 17 February 2012. Accordingly, I stood the proceedings and the Plaintiff's Motion over to 21 February 2012 by consent. 13When the matter came before me on that day Mr Pope appeared for Ms Tarrant. I raised with Mr Pope the fact that Ms Tarrant was an undischarged bankrupt and asked what right she or anyone on her behalf had to appear. Mr Pope suggested that she might have some rights as an occupier separate from her rights as a mortgagor and owner but he needed to take advice about this matter. He also informed me that Ms Tarrant had applied to set aside the sequestration order and that that would be heard in the Federal Court in about May 2012. 14I granted Mr Pope a short adjournment to enable him to obtain advice about her status. 15When the matter came before me again on 28 February 2012 Mr Pope announced that he had given notice of an intention of ceasing to act. Ms Tarrant was present and she proceeded to appear for herself. She effectively sought a stay of the proceedings until after her appeal against her sequestration order had been determined. I endeavoured to obtain from Ms Tarrant the basis upon which she was applying to set aside the sequestration order. She mentioned that one ground was that the Petitioning Creditor had amended its petition on the day of the hearing when she was not present. I could not ascertain any other information about the proposed appeal. 16However, since that date Ms Tarrant has forwarded to my associate her Notice of Appeal to the Federal Court together with a document described as "Concise Statement of Issues on Appeal". I shall return to these documents presently. 17On 28 February Mr Collins wished to proceed on the Plaintiff's Notice of Motion which appeared, in substance, to be a further application for summary judgment, but based on the fact that Ms Tarrant was not entitled to appear to argue any defence in the matter. Mr Collins fairly pointed out to me that even if the Amended Defence filed 16 February 2012 was struck out on the basis that Ms Tarrant had no right to file it either because it was filed long out of time or because she was an undischarged bankrupt at the time, or both, her earlier defence had never been struck out. 18The Defence originally filed by Ms Tarrant (without apparently any assistance from a solicitor) was filed 29 November 2010. In substance it seems to suggest that she relied on representations made to her by the Second Defendant and a solicitor who acted for both of the Defendants, acted under her husband's undue influence, and that she, being not experienced in commercial matters, did not really understand what she was entering nor the documents she was executing. It might be thought that, in substance, she was relying on a Contracts Review Act type defence although that Act was not mentioned in the Defence. It was no doubt for that reason, when she obtained legal representation, that the application was made to amend the Defence to plead the Contracts Review Act expressly. 19As I have mentioned, Ms Tarrant sought, in effect, that there be a stay of the present proceedings until her appeal against her sequestration order has been determined. She provided me with almost no assistance to enable an understanding of how the setting aside of the sequestration order would impact upon the present proceedings. In such circumstances, and to avoid making a peremptory decision, I have had to make my own enquiries through an understanding of other litigation with which Ms Tarrant been involved to provide some background to the present matter and explain why it might be that the setting aside of the sequestration order will make a difference. 20It is clear that Ms Tarrant has been involved in the litigation that led to the making of the sequestration order over a period of years. Statewide Secured Investments Limited (the prior mortgagee) obtained a judgment against her made by Adams J in May 2009. She sought to set that judgment aside and that application was refused by Garling J - see Statewide Secured Investments Limited v Hawkins [2011] NSWSC 144. Ms Tarrant sought leave to appeal to the Court of Appeal from Garling J's refusal. That leave was refused - see Tarrant v Statewide Secured Investments Limited [2011] NSWCA 248. 21I assume, although it is not clear, that proceedings in the High Court for what Ms Tarrant describes "Leave to Appeal" referred to in her affidavit of 10 February 2012 are proceedings by way of an application for special leave to appeal from the refusal of the Court of Appeal to grant leave to appeal against Garling J's decision. In her affidavit Ms Tarrant says that the High Court proceedings were adjourned generally by Hayne J on 14 December 2011 to allow her appeal against the making of the sequestration order to be determined. 22It would have to be said that the chances of anyone obtaining special leave to appeal from the refusal of the Court of Appeal to grant leave to appeal from a decision that refused to set aside a judgment not entered by default is remote in the extreme. 23Further, it is noteworthy that one defence that Ms Tarrant said she wished to raise to the claim by Statewide Securities bears a remarkable resemblance to the defences she has raised in her existing defence in these present proceedings. Garling J discussed whether in the Statewide proceedings she had an arguable defence based on those matters and concluded that she did not. He said the circumstances were very different from those referred to in cases such as Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447, Garcia v National Australia Bank Ltd (1998) 194 CLR 395 and Yerkey v Jones (1939) 63 CLR 649. He noted in particular that the Statewide transaction was for the benefit of Ms Tarrant as well as Mr Hawkins. So much appears to be the case in relation to the loan in the present proceedings because, as Garling J makes clear (if it were not already) that the present loan was used in its entirety to pay out the Statewide loan. In fact, Garling J noted that there was a small shortfall still owing to Statewide. 24Such a circumstance raises very significant problem for Ms Tarrant in the present case in any reliance she has on a defence under the Contracts Review Act 1980 because of the principle derived from Collier v Moreland Finance Corporation (1989) 6 BPR 13, 337. In the circumstances where Ms Tarrant can no longer assert that the prior loan from Statewide was unjust it is difficult to see why the Collier principle would not apply which would result in Ms Tarrant having to give credit for the entire amount of the loan that was paid to Statewide. The result would be that her Contracts Review Act defence in the present case would fail. 25As best I can glean from the slight material in Ms Tarrant's affidavit of 10 February 2012 I infer that if she is successful in getting the sequestration order set aside she will then be able to enforce some default judgment she claims to have against Statewide for $2,305,000 obtained on 12 July 2011. Presumably the monies obtained from execution on that judgment would be used to pay out the Plaintiff in the present case. No other details about this judgment are given, nor how it fits in with the judgment that Statewide obtained against her for a greater amount in May 2009. 26The Notice of Appeal against the making of the sequestration order contains seven grounds of appeal. They appear to be in two categories. The first relates to an amendment to the petition which was allowed by the Federal Magistrate. The second ground concerns what is said to be the Magistrate disregarding the appeals in the Statewide proceedings. 27The complaint about the amendment to the petition concerns the correct date upon which judgment was given by Adams J. The matter is more fully discussed in the judgment of Garling J and on the leave application by Basten JA in the Court of Appeal. 28I have read the document headed "Concise Statement of Issues on Appeal". It appears to consist of written submissions by Ms Tarrant in relation to each of the grounds of appeal. Nothing stands out to me suggesting that there is any strong likelihood that Ms Tarrant will be successful on her appeal. However, I am not in any position to make a full assessment of the likely success of the appeal. 29Even if I assume that the sequestration order will be set aside the paucity of evidence about how that will impact the present proceedings together the failure to explain adequately or at all why the Amended Defence and the affidavit evidence were not filed and served in accordance with this Court's orders leads me to the view that the indulgence which Ms Tarrant now seeks from the Court for a stay of the present proceedings should be refused. 30The present proceedings have been on foot for some 18 months. It appears to be conceded by Ms Tarrant that no amounts have been paid to the Plaintiff since default occurred about 2 years ago. 31Section 56 Civil Procedure Act 2005 mandates a just, quick and cheap resolution of the real issues between the parties. Any further hearing on a Notice of Motion for Summary Judgment is likely to stand in the way of such a resolution. It is arguable that, whilstever there is a defence on file that raises, in substance, matters that might be thought to be unjustness of the contract or unconscionability, summary judgment cannot be given even in the absence of an appearance from Ms Tarrant who has no standing to appear. 32In my opinion, there should be a final hearing of the present matter. The Plaintiff's Notice of Motion filed 10 January 2012 does not in its expression appear to be confined to summary judgment. That hearing will also deal with the issue of any application for a stay of execution (if an order for possession is made at such a hearing) that should be made at that time. That means that there should be available at such a hearing evidence about the likely value of the property and the amount now owing to the Plaintiff. Any evidence about the time it would take for those living in the premises to locate elsewhere should also be available. It would be appropriate to permit the First and Second Defendants to address the Court on any question of a stay if they are occupiers of the property. 33Accordingly, I make the following order: (1) Refuse the First Defendant's application for a stay. (2) Order that the proceedings be heard on a final basis on a date to be fixed.