Commonwealth Bank of Australia v Tarrant & Hawkins

Judgment 1This is the final hearing of proceedings which were commenced seeking against the First Defendant possession of land at 61 Myola Road, Newport, and claiming a monetary sum. The Plaintiff now moves seeking only possession of the land. There is no appearance for the First Defendant. 2The background to the matter is largely contained in my judgment of Commonwealth Bank of Australia v Tarrant [2012] NSWSC 165 given on 5 March 2012. 3The First Defendant was bankrupted on 18 October 2011. Because the First Defendant is an undischarged bankrupt she has no legal interest or right to defend the proceedings. That right has passed on the making of a sequestration order to her trustee in bankruptcy. 4The evidence before me indicates that on 7 November 2011 the solicitors for the Plaintiff wrote to Mr Paul Leroy, the First Defendant's trustee in bankruptcy, giving him information about the present proceedings. They asked him if he could confirm in writing by 18 November if he intended to take any steps in the proceedings on behalf of the bankrupt's estate. 5Mr Leroy wrote on 18 November 2011 advising that he would not be taking any action in relation to the proceedings. He pointed out in that letter that the First Defendant had filed an appeal in relation to the granting of the sequestration order which at that time was to be heard on 8 February 2012 in the Federal Court. I have detailed more information about that appeal in my earlier judgment. 6The Plaintiff loaned the sum of $1,430,000 to the First Defendant pursuant to an agreement of 20 April 2009. Of that sum, $1,400,000 was paid to a prior mortgagee. The balance was paid in legal fees and to the Office of State Revenue. The loan was secured by a mortgage dated 30 March 2009. There is evidence before me that at least by March 2010 the First Defendant had defaulted in the payment of instalments due to the Plaintiff under the loan. 7On 22 March 2010 the Plaintiff issued a s 57(2)(b) notice to the First Defendant asserting that arrears of $59,118 were owing to the Plaintiff. The First Defendant was required within 31 days of service of that notice to remedy the default. The evidence is that the default was not remedied. 8Clause A21 of the memorandum AC58503U (incorporated into the mortgage) provided that the mortgagor would be in default if she did not pay on time any amount owing. The clause further provided that if the mortgagor was in default the mortgagee would give a notice specifying the default and requiring the default to be remedied within at least 30 days of the default. The clause further provided that if such a notice was given and the default was not remedied in that time one of the remedies available to the Plaintiff would be to take possession of the property. 9As I have said, the evidence is that the default was not remedied and, accordingly, under the terms of the Memorandum the Plaintiff is entitled to possession of the land. 10The evidence discloses that the current amount due under the terms of the loan agreement and the mortgage is $1,771,747.66. 11The evidence further establishes that a Notice to Occupier was duly served at the property at 61 Myola Road, Newport. 12When the matter was before me on an earlier occasion the person who is named as the Second Defendant in the proceedings, David Charles Hawkins, appeared. Mr Hawkins had previously been made bankrupt, and the Plaintiff did not proceed against him. Mr Hawkins advised me that he had an interest in the outcome of the proceedings because he had the care of a minor who resided in the property. Other information provided to me demonstrated that Mr Hawkins himself resides in the property a number of days per week in any event. 13Mr Hawkins was present in Court at the hearing but I explained to him that, in the absence of his having any legal right to defend the proceedings, he was not permitted to take part in the hearing of the bank's claim for possession. I told him that he would be allowed to address the Court in the event that an issue of any stay of a writ of possession needed to be determined. 14The Plaintiff has established its right to possession. Although the First Defendant had, before her bankruptcy, filed a Defence which might be thought to have raised, in substance, the Contracts Review Act 1980, the judgment of Harrison As J (referred to in my earlier judgment) effectively held that that Defence was not properly pleaded. In any event, as I have said, the First Defendant's trustee does not appear to advance that Defence. There was, of course, the immediate problem with it that, in circumstances where almost the entirety of the present loan was used to pay out a prior mortgagee, the principle in Collier v Morlend Finance (1989) 6 BPR 13,337; [1989] ANZ ConvR 515 would operate to mean that there was a strong likelihood the First Defendant would need to repay the amount so applied. 15The order I make, therefore, is that there will be judgment for the Plaintiff for possession of the property at 61 Myola Road, Newport. 16The Bank applies for the issue of a writ of possession to enforce the judgment of the Court. The bank accepts that, by reason of time periods that are involved and the notice that is required to be given by the Sheriff before the writ can be executed, the writ will not in fact be executed until 9 May 2012. 17Mr Hawkins addressed me on why a longer period should be given. He sought a further two week period or a little more to take the execution of the writ up almost to the end of May 2012. He indicated that this period was needed to provide him time to make adequate arrangements to relocate from the Myola Road property, bearing in mind the difficulties associated with his young son and the necessity, by reason of moving from the premises, to change schools. 18I note also that the appeal against the First Defendant's sequestration order is to be heard by the Federal Court on 4 May 2012. Some reliance was placed on this. 19I asked Mr Hawkins what difference the setting aside of the sequestration order would have by the Federal Court. He informed me that in the first instance such a result would enable the special leave application in the High Court to be revived. If that were so, he said, certain other matters would flow from it which might involve a revival of the default judgment that the First Defendant has obtained against State Wide (the prior mortgagee), and ultimately might mean that monies would come to the First Defendant which would enable the present Plaintiff to be paid out. Some of these matters that Mr Hawkins informed me about were discussed in the judgment of Garling J to which I have made reference in my earlier judgment at [20]. 20No monies have been paid by the First Defendant or on her behalf since the default, a period of a little over two years ago. One of the matters that may provide justification for a stay, as highlighted by Johnson J in GE Personal Finance v Smith [2006] NSWSC 889 is the payment by the mortgagor of monies towards indebtedness to the mortgagee. 21There is evidence before me that a drive-by appraisal of the worth of the property on 20 March 2012 assessed its value in the range of $1,325,000 to $1,425,000. 22Mr Hawkins, during the course of addressing me, informed me that there had been attempts to sell the property at the end of last year when the property was thought then to be worth about $1,700,000. He accepts that the worth of the property has diminished since that time. 23As I indicated earlier, the amount outstanding to the bank at the present time is in excess of $1,700,000. 24Bearing in mind the matters that I set out in that judgment, it ought to have been apparent to the First Defendant and to Mr Hawkins that it would be necessary for them to make other arrangements in terms of their residency at the Myola Road property. My judgment in that matter was delivered on 5 March 2012. Mr Hawkins says that the six week period from now is too short a time to make the necessary arrangements. It seems to me that, in effect, the time ought to be calculated from about 5 March and possibly before that time. 25In my opinion, in all the circumstances, the period to 9 May 2012 is an adequate period in which a stay should be granted for execution of the writ. If circumstances change significantly, as a result of the appeal against the sequestration order, it would be open to the First Defendant on the presentation of proper evidence to make an application for a further stay at that time. 26Leave is given to the Plaintiff to issue a writ of possession. Such writ is not to be executed before 9 May 2012.