Ex parte Aala (2000) 204 CLR 82[2000] HCA 57
Waller v Hargraves Secured Investments Ltd (2012) 245 CLR 311
Judgment (2 paragraphs)
[1]
Judgment
Introduction
By way of a summons of 20 December 2016, Mr Paul Gooley and Mrs Susan Gooley (the plaintiffs) seek judicial review of a certificate issued by the NSW Rural Assistance Authority (the Authority) pursuant to s 11(1) of the Farm Debt Mediation Act 1994 (NSW) (the Act). Although a submitting appearance was entered by the Authority as the first defendant, the second defendant, George & Fuhrmann (Holdings) Pty Ltd (GFH), opposed the making of the orders.
For the following reasons, the application of the plaintiffs must be rejected.
Background
The background of the matter may be shortly stated.
In March 2011, the plaintiffs entered into a loan by way of a trading account with GFH for an amount of up to $450,000 (the loan), the terms and conditions of which were not reduced to writing. At the time, the plaintiffs were farming land in the area of the Murray-Darling basin region within New South Wales. There was no security granted by the plaintiffs to GFH with respect to the loan.
The plaintiffs failed to repay the loan in accordance with its conditions. In December 2012, GFH sought immediate repayment of the loan. Thereafter in 2013, GFH commenced proceedings against the plaintiffs in the District Court of New South Wales.
On 24 October 2014, the plaintiffs and GFH agreed to compromise those proceedings. The parties entered into a Deed of Settlement and Release (the Deed) whereby the plaintiffs would pay funds to GFH. The Deed included the giving of security by the plaintiffs to GFH by way of a charge over two farming properties of the plaintiffs.
On the same day that the Deed was executed, short minutes of orders were signed by the solicitor for GFH and the solicitor for the Gooleys. That document was annexed to the Deed.
The Deed required that the plaintiffs make payments of $15,000 on or before 21 November 2014, and $252,000 on or before 24 October 2015 to GFH.
On or about 24 October 2015, the plaintiffs defaulted under the Deed, in that they did not pay the latter amount to GFH.
On 9 November 2015, GFH applied for judgment in the District Court of New South Wales, less the $15,000 already paid by the plaintiffs pursuant to the Deed.
On 11 November 2015, orders were entered in favour of GFH and against the plaintiffs in the District Court of New South Wales. In their entirety, they were as follows:
1. Judgment for the plaintiff [that is, GFH] in the sum of $414,948.11 less $15,000 already paid, totalling $399,948.11;
2. Order for interest to accrue on the amount of the judgment at the rate specified by UCPR r 36.7, from 24 October 2014 to date;
3. The cross-claim [that is, of Mr and Mrs Gooley] is dismissed;
4. The defendant [sic; that is, Mr and Mrs Gooley] is to pay the plaintiff's costs of the proceedings on the ordinary basis.
Subsequently, GFH took steps to enforce that judgment debt. Those steps included, in February 2016, the issuing of a garnishee order to a third party, Suncorp-Metway Ltd (trading as Suncorp Bank), pursuant to r 39.34 of the Uniform Civil Procedure Rules 2005 (NSW). $2,085.05 was obtained by GFH from Suncorp Bank pursuant to the garnishee order.
Later, on 12 August 2016, a mediation took place, pursuant to s 9 of the Act, between GFH and the plaintiffs.
In due course, a certificate was issued by the Authority in accordance with s 11(1) of the Act, to the effect that a satisfactory mediation had taken place. It is that certificate that is impugned in these proceedings.
Submissions of the plaintiffs before me
The point now made by counsel for the plaintiffs is simply that, at the time of enforcement of the judgment debt by way of the garnishee order, no mediation pursuant to the Act had taken place.
It was said that s 8 of the Act requires creditors to refrain from taking enforcement action in respect of a "farm mortgage" until they have provided farmers an opportunity to mediate the dispute. That submission was founded on the following sections of the Act:
3 Object
The object of this Act is to provide for the efficient and equitable resolution of farm debt disputes. Mediation is required before a creditor can take possession of property or other enforcement action under a farm mortgage.
4 Definitions
…
default, in relation to a farm mortgage, means failure to perform an obligation that, under the terms of the mortgage, is a ground for enforcement action.
Note. Examples of default on the part of a farmer include failure to pay the principal, interest or other money the payment of which is secured by a farm mortgage; failure to keep the property subject to the farm mortgage insured; and failure to submit financial statements required by the creditor.
…
enforcement action, in relation to a farm mortgage, means taking possession of property under the mortgage or any other action to enforce the mortgage, including the giving of any statutory enforcement notice, or the continuation of any action to that end already commenced, but does not include:
(a) the completion of the sale of property held under the mortgage in respect of which contracts were exchanged before the commencement of this Act, or
(b) the enforcement of a judgment that was obtained before the commencement of this Act.
…
farm mortgage includes any interest in, or power over, any farm property securing obligations of the farmer whether as a debtor or guarantor, including any interest in, or power arising from, a hire purchase agreement relating to farm machinery, but does not include:
(a) any stock mortgage or any crop or wool lien, or
(b) the interest of the lessor of any farm machinery that is leased.
…
6 Enforcement action in contravention of Act void
Enforcement action taken by a creditor to whom this Act applies otherwise than in compliance with this Act is void.
…
8 No enforcement action until notice of availability of mediation given
(1) A creditor to whom money under a farm mortgage is owed by a farmer must not take enforcement action against the farmer in respect of the farm mortgage until at least 21 days have elapsed after the creditor has given a notice to the farmer under this section.
(2) Notice to the farmer is to be in writing in a form approved by the Authority (informing the farmer of the creditor's intention to take enforcement action in respect of the farm mortgage and of the availability of mediation under this Act in respect of farm debts).
(3) This section does not apply if a certificate is in force under section 11 in respect of the farm mortgage concerned.
…
10 Enforcement action postponed to allow for mediation
(1) Once a farmer has given a creditor a notification in accordance with section 9 requesting mediation, the creditor must not take enforcement action in respect of the farm mortgage concerned unless a certificate is in force under section 11 in respect of the farm mortgage.
(2) This section does not invalidate any statutory enforcement notice or other process given, served or executed in order to fulfil a condition precedent to the taking of any enforcement action, but operates to prohibit the taking of the action concerned, or the enforcement by a court or tribunal of any such process, except as provided by section 11 (6).
11 Certificate that Act does not apply to farm mortgage
(1) The Authority must, on the application of a creditor under a farm mortgage, issue a certificate that this Act does not apply to the farm mortgage if:
(a) the farmer is in default under the farm mortgage, and
(b) no exemption certificate is in force in relation to the farm mortgage, and
(c) the Authority is satisfied that:
(i) satisfactory mediation has taken place in respect of the farm debt involved, or
(ii) the farmer has declined to mediate, or
(iii) 3 months have elapsed after a notice was given by the creditor under section 8 and the creditor has throughout that period attempted to mediate in good faith (whether or not a mediation session or satisfactory mediation took place during that period).
…
In short, on the thesis that GFH was enforcing a "farm mortgage" (as defined in s 4 of the Act) and had failed to provide the plaintiffs with notice of the mediation prior to taking enforcement action (in accordance with s 8 of the Act), it was said by counsel for the plaintiffs that GFH had not acted in compliance with the Act, and therefore the enforcement action was void (pursuant to s 6 of the Act).
Counsel submitted that enforcement of the judgment debt of 11 November 2015 by way of the garnishee order was indeed enforcement of a "farm mortgage", because the judgment debt was "inextricably linked" to the creation of the Deed, which itself included a "farm mortgage", as defined, by way of the security given by the plaintiffs over the two farming properties. Reference was made by counsel to the decision of the High Court of Australia in Waller v Hargraves Secured Investments Ltd (2012) 245 CLR 311; [2012] HCA 4 (Waller v Hargraves), and to the decision of Manousaridis J of the Federal Circuit Court in Heywood v Sharpe (No 2) [2015] FCCA 355 (Sharpe No. 2).
In summary, it was said that the certificate given by the Authority was invalid, for the simple reason that there had been enforcement of a "farm mortgage" by GFH by way of the issue of the garnishee order, without compliance with the mandatory pre-conditions to such action contained in the Act.
Finally, it was submitted that the straightforward remedy that I would provide would be to quash the certificate with the effect, it was said, that the whole process of mediation should start again.
Determination
I respectfully do not accept the basal proposition of counsel for the plaintiffs. In other words, I do not accept that, in enforcing the orders of the District Court on 11 November 2015, GFH was enforcing a "farm mortgage" as defined in the Act.
As can be seen from the terms of the orders actually made by the Court, the charge placed over certain property of the plaintiffs was no part of the judgment. Rather, it was merely an event contemporaneous with the signing of the short minutes of order, many months beforehand in October 2014, that led to the making of orders by the Court in November 2015.
In other words, I respectfully consider that the basal proposition of counsel for the plaintiffs erroneously conflates two entirely separate events: on the one hand, the entry of certain orders by the District Court; and, on the other hand, a non-curial event that occurred, months before, between the parties.
It is true that, in Waller v Hargraves, Heydon J (with the agreement of all other justices of the High Court of Australia) spoke of the fact that, in certain circumstances, enforcement of a loan (which does not, of itself, attract the provisions of the Act) will be so inextricably bound up with enforcement of a related mortgage (which does attract the provisions of the Act) as to itself attract the Act. But that cannot be the case here: as I have said, orders of courts and events relating to them that form part of the context of the making of these orders are, to my mind, two entirely different things.
Separately, as I have said, reliance was placed by counsel for the plaintiffs upon the judgment of Manousaridis J in Sharpe No. 2. In particular, it was said that the following portion of that judgment supports the submissions of the plaintiffs:
[59] …On the proper construction of the Consent Orders, Mr Sharpe [the debtor] was obliged to pay the Judgment debt on 16 November 2012, but only if Mr Sharpe did not tender payment to Mr Heywood [the creditor] of $60,000 by 15 October 2012 or $70,000 by 15 November 2012.
[60] The arrangement created by the Consent Orders is in substance the same as the arrangement that was created by the mortgage and third loan agreement that were considered in Waller. As with the farmer in Waller, Mr Sharpe agreed to pay a certain amount of money by a certain day - $90,000 on 16 November 2012, unless Mr Sharpe paid $60,000 by 15 October 2012 or $70,000 by 15 November 2012. As with the farmer in Waller, Mr Sharpe also gave a farm property as security for the payment of that amount. And, finally, like the mortgage in Waller, the Consent Orders in effect provided that if Mr Sharpe were not to make the payment by the specified day - 16 November 2012, unless Mr Sharpe paid $60,000 by 15 October 2012 or $70,000 by 15 November 2012 - the creditor, Mr Heywood, would have the right to sell Mr Sharpe's farm property and use the proceeds of sale (subject to prior encumbrances) to pay the Judgment. It follows, therefore, that the relevant "farm mortgage" in the case before me is the express and implied terms of the agreement constituted by the Consent Orders.
A number of things may be respectfully said about that judgment.
The first is that, although the judgment has a persuasive force, a judge of the Federal Circuit Court does not sit above me in the judicial hierarchy, and accordingly his Honour's judgment is not strictly binding upon me.
The second is that, in Sharpe No. 2, the court orders that were made commanded the payment of a particular sum to the creditor, and explicitly noted the creation of a charge over the land of the debtor farmer to secure the judgment debt. That in turn directly replicated the terms of short minutes that were agreed between the parties on the same day that the court orders were made. The charge noted as securing the monetary judgment for a specific sum was found to be a farm mortgage as defined by the Act, and it was found to be inextricably linked with the court orders.
Here, in contrast, the orders of the District Court say nothing at all about any security that could be characterised as a "farm mortgage." Indeed, they do not even note such a thing: as I have said, they appear verbatim at [11] of this judgment. In other words, one can readily differentiate the court orders in Sharpe No. 2 that founded the analysis of his Honour, and the orders under consideration here.
The third is that, if (contrary to my understanding) it truly be the case that his Honour was saying that, in all cases, a security that falls within the Act, and that in some way forms part of the context of the court orders, has the effect that enforcement of these orders thereafter is within the confines of the Act, I would respectfully decline to follow such a determination.
In short, I am not satisfied that GFH is enforcing a farm mortgage as defined by the Act. Rather, I consider that GFH is enforcing a judgment debt entered by consent. For that reason, I consider that the Act has no application. The result of that is that non-compliance with the Act provides no basis for impugning the certificate as invalid. That is the primary reason, why, in my view, the application must fail.
Ancillary analyses
Acquiescence and other factors
If I be wrong in the entirety of the preceding analysis, I would nevertheless decline to provide the relief sought. That is because the evidence establishes that, at the time of the mediation of 12 August 2016, the plaintiffs had already had the benefit of the assistance of a solicitor in the proceedings; so much is clear from the Deed of 24 October 2014, and the short minutes of order of 9 November 2015.
Thereafter, the parties engaged in the time, trouble, and expense of a mediation. In accordance with what was said by Fullerton J in Bratic v Motor Accidents Authority of New South Wales [2010] NSWSC 1244, I consider that their acquiescence in that process, as a factor informing my discretion as to whether they should subsequently be permitted to impugn that process, powerfully argues in the negative. Furthermore, as the High Court stated in Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82; [2000] HCA 57, when a court is exercising its remedial jurisdiction it must address:
[53] …(T)wo separate questions. The first is whether the officers of the Commonwealth in question acted in want of or in excess of jurisdiction. The second is whether prohibition should not issue, having regard to the delay, waiver, acquiescence or other conduct of the prosecutor, in the course of the administrative proceeding or in other relevant circumstances.
In the circumstances, if I be wrong and the enforcement of the judgment debt by GFH by way of the garnishee order was indeed the enforcement of a farm mortgage, I would nevertheless refuse relief in my discretion as a result of the "delay, waiver and acquiescence" of the plaintiffs in maintaining this attack on the process of mediation, which occurred as long ago as 12 August 2016. In particular, it is significant they took no point founded upon the Act asserting that the mediation was invalid prior to that process taking place.
Futility
Finally, if I be wrong in my first ancillary analysis, I would nevertheless decline to make the orders sought. That is because, on all of the evidence placed before me, not least of which is the failure of the plaintiffs to comply with their obligations under the Deed, and the failure of the mediation conducted over 9 months ago, I am satisfied that any further mediation of this matter would be utterly fruitless.
Conclusion
In summary, I decline to make the orders sought for the following reasons.
First, the certificate is not unlawful because it is not contrary to the Act. What is being enforced is a judgment of the District Court of New South Wales, not a farm mortgage.
Secondly, the plaintiffs acquiesced in the process now sought to be impugned.
Thirdly, ordering further mediation of this matter, in light of its history, would be futile.
Costs
Neither party submitted that costs should not follow the disposition of the summons of the plaintiffs.
Orders
I make the following orders:
1. The summons of 20 December 2016 is dismissed.
2. The plaintiffs, Mr Paul Gooley and Mrs Susan Gooley, must pay the costs of the defendant, George & Fuhrmann (Holdings) Pty Ltd, of the proceedings before me.
[2]
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Decision last updated: 23 June 2017