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Judgment

1. JUDGMENT of the COURT delivered by BASTEN JA: The applicants, Brent Robert Pearsall and the company controlled by him, Frog Swamp Pty Ltd, borrowed considerable sums of money from the respondent, apparently for the purposes of property development. The advances were secured by mortgages over land owned by one or other applicant. Proceedings were brought by the respondent alleging default in the terms of the loans and seeking possession of the secured properties, for the purpose of exercising the power of resale.
2. Judgments were entered by default and the securities sold. Those steps were taken in two sets of proceedings in the Common Law Division Possession List being matters 2012/214000 and 2012/214016. In the first matter, judgment was entered by default for possession and for a debt in the amount of some $215,000, on 3 October 2012, now three years ago. In the second matter, judgment was given in default in an amount of a little over $1.3 million on 30 January 2013, now some two years and nine months ago. On 26 May 2014, the applicants filed motions in each matter seeking to set aside the default judgments.
3. The motions came before Garling J on 18 September 2014. For reasons which are not disclosed in the material before this Court, and which have only a limited relevance (to be noted shortly) judgment was delivered dismissing the motion in each matter on 12 June 2015. From those orders, the applicants seek leave to appeal.
4. The issues can be identified briefly. First, each motion raised one specific defence and separate matters which were pleaded by way of set off and cross-claim. Secondly, the applicants bore a heavy burden in persuading the primary judge that they should have leave to reopen the default judgments in circumstances where default occurred in full knowledge of the fact of the proceedings and, it would seem, with acceptance that the properties would have to be sold to pay off the loans. Indeed, the applicants negotiated the release of one property so that the corporate applicant could manage the sale itself.
5. The first proposed defence depended upon the proposition that the respondent was not the creditor. That, it was said, was because the benefit of the loans had been assigned by the respondent to another entity, Banksia Mortgages Ltd.
6. Each of the matters now relied upon in support of that proposition was addressed by the primary judge at [90]-[95]. The judge was satisfied that, far from the evidence demonstrating an assignment, it tended to support a contrary conclusion.
7. He noted, first, that there were no transactional documents evidencing a conveyance or assignment of legal rights: the mortgages were registered in the name of the respondent and remained so at all relevant times. That was accepted by counsel for the applicants. Secondly, the correspondence received by the applicants at the time of the alleged assignment indicated that an amalgamation of the respondent and what was known as "Banksia Financial Group" had resulted in the loans being "managed by" the entity, Banksia Mortgages Ltd. [1]
8. The applicants relied upon an affidavit filed on behalf of Statewide which was said to support the conclusion that there had been an assignment of the loans. Although the affidavit by Ms Staines, a credit manager for another company in the group, Banksia Securities Ltd (Receivers and Managers Appointed) stated that each of the loans "was transferred to Banksia", she also described the loans as being on the same terms and conditions as before, but "managed by" Banksia Mortgages Ltd. As the trial judge noted, the detailed explanation of the internal group arrangements indicated no reason for an actual assignment of legal rights. Further, there was affidavit evidence filed in support of the motions for default which supported the view that the respondent was entitled to bring the proceedings in its own name, a point not addressed on this application.
9. In oral submissions, counsel for the applicants relied heavily on loan statements prepared within the Banksia Group. These show that an account held by the respondent was closed and the outstanding balance was recorded within accounts opened in the name of Banksia Mortgages Ltd.
10. There was a process described as amalgamation of the corporate entities. What was involved in that process as a matter of legal change is not clearly revealed on the evidence. What is clear is that no notice of assignment in those terms was provided to the applicants but it is asserted that there was, as a result of whatever had occurred, no money owing to the respondent. It was conceded that the mortgages remained registered in the name of the respondent but it was submitted that they secured nothing. Rather, a new entity (which had no security at all) was the appropriate recipient of the loan repayments. Nevertheless, the applicants were indebted to Statewide under mortgages which were not assigned. That is clear from the documentation and tends to support the view that the debts were not legally assigned to Banksia.
11. The submissions in this Court have failed to demonstrate that there was any reasonably arguable basis upon which it could be said that the trial judge was wrong in dismissing this proposed defence.
12. The second matter relied upon involved factual allegations of misleading and deceptive conduct and unconscionable conduct. These allegations were said to give rise to an equitable set off in an amount which exceeded the respondent's claim.
13. In substance, the alleged representations were that certain amounts paid by the applicants to the respondent (or Banksia) were in some way to be available for redrawing, or were paid on the understanding that steps would not be taken to sell the properties.
14. While the primary judge did not dismiss the possibility that the applicants might have an arguable cross-claim, he was not persuaded that, given the long delay, the appropriate course was to set aside the default judgments and allow the filing of the cross-claim and the defences, rather than leaving the applicants to commence fresh proceedings in relation to the claims noted and further claims that certain properties were sold at an undervalue. The applicants seek to challenge this approach on the basis that the judge should have been satisfied by the explanation for the lengthy delay.
15. The material relied upon with respect to delay was double-edged. It did demonstrate that the applicants were taking some steps between the time the proceedings were commenced by the respondent and the time when the notices of motion were filed seeking to set aside the default judgments. It also demonstrated that the applicants acted at all times in full knowledge of the primary concerns now sought to be agitated. However, the trial judge was entitled to reject the chronology as not providing a sufficient explanation of the delay. As will be explained, that material does not provide reasonable prospects of the court interfering with the discretionary, evaluative judgment.
16. Further, the written submissions stated, without any explanation, that the claim that the property had been sold at an undervalue was the subject of a separate proceeding in the Supreme Court. That is common ground. It suggests that little if any prejudice will have been suffered as a result of the refusal of leave to reopen and file a cross-claim so far as it concerns that aspect of the matter.
17. There is also an indication that proceedings might be filed with respect to the other matters sought to be raised by way of defence and cross-claim. Certainly no clear basis has been indicated for rejecting that possibility. Again, the inference is that the applicants have suffered no real prejudice through a refusal of the application.
18. The explanation for the delay asserted two factors. The first was that the individual applicant, Mr Pearsall, was unable to defend the proceedings for lack of funds. He said that all available funds had gone to paying down the loans. The second factor was his belief that the value of the properties exceeded the amount outstanding on the loans. He therefore considered an orderly sale process to be appropriate.
19. These factors, taken together, suggested that the reason why proceedings were not defended was because the applicants were indeed indebted to their lender and had no defence. Not only was the explanation not one which would support the setting aside of the judgments but it would militate against it. Furthermore, the explanation did not deal in detail with the period following the sale of the properties, nor was there evidence as to the change in circumstances which permitted the applicants to commence proceedings when they sought to do so in May 2014. Indeed, the evidence went further and indicated that Mr Pearsall was well aware of all the factors now sought to be relied upon in the proposed defence and cross-claim before the properties were sold.
20. One matter which was addressed in oral submissions which was not dealt with by the trial judge was the possibility that the defence and cross-claim might extend beyond those matters which had been pleaded in the draft document and might address other matters raised by Mr Pearsall in his affidavit. There was no reason why the trial judge was required to rely upon matters which had not been pleaded in the document which was before him, nor is it clear that there is any further matter which gives rise to a possible defence which could not now be raised by way of fresh proceedings as already discussed.
21. The substantive claims sought to be raised by way of defence and cross claim as pleaded amounted to three, namely: 1. refusal of Banksia to allow interest to be capitalised; 2. failure to allow the applicants to draw down further amounts against revaluations of the securities, and 3. failure to allow the applicants to redraw a sum of $500,000 paid to the respondent on 4 June 2008.
22. There was no challenge to the contractual basis for the steps taken by the respondent, nor was there any documentation of the key representations, some of which appear to have been made more than six years ago. No explanation was given as to why separate proceedings might not have been commenced in relation to these issues, had the applicants wished to pursue them in a timely fashion. Accordingly, no reasonable prospects of success in the proposed appeal were demonstrated.
23. Finally, there is the question of the stay sought in the summons. On the basis that leave to appeal is not granted, the stay is not available. Curiously, however, no evidence was proffered as to the financial positions of the parties, although it was suggested in answer to questions from the Court that the amount outstanding may be in the order of $370,000.
24. There is one further issue which was not relied upon by the applicants and does not affect the reasoning in this judgment. It was the proposition identified at [100] by reference to the decision of Davies J in Commonwealth Bank v Goater [2] that once a judgment has been executed, it is not possible for the defendants "to contest the basis of the judgment whether it was given by default or otherwise."
25. During the period that the judgment in this matter was reserved, this Court dealt with an appeal in Goater, explaining that the principle relied upon by the trial judge in that case was fallacious. [3] The point is not material to the outcome of this application because the applicants' case is by way of resistance to the enforcement of the outstanding judgments and did not relate to setting aside the orders for possession.
26. For the reasons given, the summons seeking leave to appeal should be dismissed. The applicants must pay the respondent's costs in this Court.