Hammond v JP Morgan Trust Australia Pty Limited

Judgment 1TOBIAS JA : On 12 December 2008 Latham J gave summary judgment pursuant to UCPR r 13.1 for possession of land owned by the appellant in Folio Identifier 132/xxxxxxxx and known as xxxxxxxxxxxxx, Faulconbridge (the land). Her Honour ordered that a Writ of Possession issue but lie in the Registry until 4pm on 12 January 2009 and at the expiration of that period the writ be executed. The orders were entered on the same day as they were made. 2On 24 August 2009 this Court granted the appellant leave to appeal against her Honour's decision. For the reasons which follow, in my opinion the appeal should be allowed. 3The respondent's claim for possession was based on monetary defaults under a first registered mortgage (the mortgage) given by the appellant to the respondent securing a loan upon the land in the total amount of $486,000 (the loan). It was conceded that the loan went into default and that a default notice dated 18 February 2008 was issued pursuant to s 57(2)(b) of the Real Property Act 1900 (NSW) and s 80 of the Uniform Consumer Credit Code (the default notice). The default notice was served on 22 February 2008. 4On 22 April 2008 the respondent filed a Statement of Claim in the Common Law Division of the Court in which, after reciting the loan, the mortgage and the default notice, pleaded that the amount payable by the appellant to the respondent pursuant to the default notice had not been paid. 5On 25 August 2008, the appellant filed a defence in which she denied that she had failed to comply with the default notice and further alleged that an arrangement had been entered into with the respondent for payment in respect of the default. The outcome of the present appeal turns on that aspect of the defence. 6The default notice identified arrears of $14,725.30 and required payment thereof within 31 days of receipt of the notice which, as I have indicated, was served on 22 February 2008. Accordingly, the 31 days expired on 25 March 2008. The amount referred to in the default notice was not paid by that date. It needs to be noted that the default notice under the heading " How to Pay " provided that payment could be made by BPAY, Biller Code 31336. This was the wrong biller code in respect of the appellant's account with the respondent. The correct biller code was 485318. The relevance of this will become apparent. 7Prior to the expiry of the default notice the appellant's husband (Mr Hammond), who was corresponding on her behalf due to his wife's indisposition, apparently sent a fax to Mr Mukesh Naiker who was an officer of Challenger Mortgage Management Pty Ltd (Challenger), the manager of the respondents mortgage with the appellant. There is no issue with respect to Mr Naiker's authority regarding the correspondence that subsequently occurred between Challenger and the appellant and/or Mr Hammond. 8As I have indicated, the default notice of 19 February 2008 alleged arrears of interest in the sum of $14,725.30. By 20 March 2008 there had been two further defaults in the payment of interest totalling $8,309.54. Accordingly the total arrears then owing was $23,034.84. On that date Mr Hammond sent a fax to Mr Naiker apparently requesting a moratorium on the payment of interest. The fax was not in evidence. Mr Naiker responded by email on the same day, stating that the request for a moratorium had been declined. The email continued in the following terms: "I can confirm our solicitors have instructions to proceed to issue a statement of claim which will allow you 28 days to rectify the default and/or refinance the facility by the expiry of the legal notice (Approximately 30 April 2008). Please keep me informed for of your process (sic) as after the Statement of Claim has expired challenger would be seeking to apply for default judgment and a writ for possession." No doubt the reference to 28 days related to the period within which, upon service of the Statement of Claim upon her, the appellant was required to file a defence. It is noteworthy that this email was sent prior to the default notice expiring. 9Mr Hammond responded to that email on 1 April 2008 referring to a conversation the previous Friday between himself and Mr Naiker. The email stated as follows: "We are seeking to have funds released from trust to pay the outstanding arrears. Could you please provide a letter stating the arrears that need to be paid so that we can provide it to the trustee." 10On 8 April 2008, Mr Naiker wrote to the appellant, relevantly, in the following terms: "On behalf of J P Morgan Trust Australia Ltd, we advise that you are in breach of your loan agreement due to payment arrears. To rectify this, we request that you BPAY the amount of $23,034.84 within seven (7) days." 11The seven days referred to in the letter of 8 April 2008 expired on 15 April 2008. The amount referred to in the letter was not paid by that date. On the other hand, in an email to Mr Naiker dated 17 April 2008 Mr Hammond stated to that he had just received confirmation that funds can be released from trust and that they would be BPAY'd to the account to pay arrears. He further stated that he would get written confirmation from the trustee shortly. 12Mr Naiker did not respond to that email. He did not communicate to Mr Hammond that it was too late for the funds to be paid as the seven days referred to in his letter of 8 April 2008 had expired two days previously without payment being made. In fact, payments totalling $23,034.84 were BPAY'd to the respondent on 22 April 2008 by the trustee to which Mr Hammond had referred in his emails. However, the trustee BPAY'd the amount to the biller code referred to in the default notice rather than the correct biller code which had been identified in the letter of 8 April 2008. It would appear that this error was discovered by Mr Hammond on or about 30 April 2008 when he emailed Mr Naiker stating that he had spoken to the trustee and that the funds had been released from two accounts on 22 April 2008 and he then nominated two receipts. However, he advised that the trustee had used the biller code in the default notice when making payment as a consequence whereof the payments were returned to the source account on 28 April 2008, although ultimately they were received by the respondent on 7 May 2008. 13On the same day, 30 April 2008, a conversation took place between Mr Hammond and Mr Naiker to which the latter referred in an email of the same date that stated as follows: "I can confirm the funds have been returned to the source account on 28/04/2008 by our finance department. I have spoken to our solicitors at Kemp Strang and have confirmed the incorrect Biller code 31336 was referenced on the notice dated 19/02/2008. Please note the letter sent on 08/04/2008 from this office confirming the arrears had the correct details and note that payment on 15/04/2008 for the amount of $4,473.70 was not made and the required amount now to rectify the default is $27,508.54." 14Some seven days previously a bona fide attempt had been made to pay the respondent the sum of $23,034.84 in accordance with the letter of 8 April 2008, albeit 7 days late. 15It is on the basis of the foregoing history of the matter that the appellant alleges that an arrangement was entered into between the parties whereby, in effect, upon the payment of the arrears of $23,034.84 the respondent would waive the terms of the default notice and, in particular, would not take any further action thereon to enforce the respondent's rights under the mortgage. 16Although it may or may not be relevant, it would appear that no further interest payments were made subsequent to 7 May 2008. This notwithstanding, on 8 September 2008 the respondent's solicitors forwarded a letter to the appellant marked "Without Prejudice" but which was admitted into evidence without apparent objection before her Honour, indicating that the solicitors had been instructed that their client, the respondent, wished to discontinue the proceedings instituted by them on 22 April 2008 and enclosing a Notice of Discontinuance for review and execution by the appellant. The Notice of Discontinuance provided that the proceedings be discontinued upon terms that the appellant was to bear her own costs and that the listing date of 25 September 2008 be vacated. The appellant refused to sign the Notice of Discontinuance because, so she alleges, she or her husband were informed that the respondent would charge to their mortgage account the costs it had incurred in instituting the proceedings to the date of the Notice of Discontinuance. 17By Notice of Motion filed on 29 September 2008, the respondent sought summary judgment in respect of its Statement of Claim. Affidavits were filed by both sides, the relevant parts of which are contained the correspondence to which I have already referred. 18The matter came before her Honour on 12 December 2008 in which Mr Hammond appeared on behalf of the appellant and Mr Newton of counsel appeared for the respondent. Mr Newton outlined the facts leading to the issue of the default notice and then, at the bottom of page 2 of the transcript of the proceedings before her Honour, stated that the respondent had offered to discontinue the action and re-issue a fresh default notice but that that offer had been refused and as a consequence of that refusal the application for summary judgment had been filed. 19The appellant contended that everything had been done to remedy the default when the $23,034.84 referred to in the letter of 8 April 2008 had been paid on 22 April 2008 and that it was no fault of the appellant that the money had been BPAY'd to the wrong biller code. This is clearly so. It was contended that the original default notice was therefore remedied, although in truth it would appear that the appellant was asserting that the payment of $23,034.84 and its acceptance by the respondent in all the circumstances amounted to a waiver of the respondent's rights to pursue enforcement action as a consequence of the issuing of the default notice. 20At page 4 of the transcript her Honour advised Mr Hammond that the problem he faced, whatever had happened in the past, was that there was affidavit evidence that supported the respondent's contention that the appellant was still in default and that that default had not been remedied. This, apparently, was a reference to the fact that there had been no interest payment since 7 May 2008. Further down the same page her Honour said that although it would appear that the respondent was prepared to draw a line under the earlier transactions, the problem now seemed to be that there had been further default. The following exchange then occurred between her Honour and Mr Hammond: "HER HONOUR: Mr Hammond, you are still in default. SECOND DEFENDANT: That's not relevant to the defence. HER HONOUR: I'm sorry but it is because whatever happened in relation to that notice of default, as I said before, that's now water under the bridge. We are dealing with the defaults that have occurred. ... That's the only thing that interests me." 21Submissions were then made to her Honour that payments had not been made in accordance with the time limits set forth in the correspondence to which I have referred. Her Honour then stated (at the bottom of page 6 of the transcript) that the respondent was perfectly within its rights to insist upon the remedy it sought for, as Mr Newton had pointed out, the default had occurred regardless of what conversations had taken place about the nominated bank account. 22Mr Hammond then asserted that he believed that the actions of the respondent's agent were binding on it and that both he and Mr Naiker had negotiated in good faith to remedy the default. Her Honour said that that was too late to which Mr Hammond responded that the delay that resulted in the payment being too late was the fault of the respondent in that they had provided an incorrect biller code for the BPAY deposit. Her Honour responded that in any event that was outside the expiry period, a reference, I think, to the period of grace in the default notice which expired on 25 March 2008. 23After some further discussion, her Honour informed counsel for the respondent that she proposed to make the orders sought in the respondent's Notice of Motion subject to the writ of possession lying in the Registry for a period of one month. It is important to note that she did not give any reasons for her decision. That of itself was an error. Her reasons can, therefore, only be divined from the exchanges in the transcript between her Honour and the parties. Furthermore, to the extent to which her Honour's decision was based upon the default of the appellant with respect to the payment of interest after 7 May 2008, she asked herself the wrong question. 24The issue before her Honour and this Court is not whether it can be established that an arrangement was entered into between the parties whereby upon the payment of the sum of $23,034.84 the respondent waived any rights it had as a consequence of the service of the default notice, but whether the appellant's defence based on that allegation was untenable within the meaning of the relevant principle articulated by Barwick CJ in General Steel Industries Inc v Commissioner for Railways (1964) 112 CLR 125 at 129. There the Chief Justice noted that there was a need for exceptional caution in exercising the power to enter summary judgment. His Honour referred with approval to the statement of Dixon J in Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91 where his Honour said: "A case must be very clear indeed to justify the summary intervention of the court to prevent a plaintiff from submitting his case for determination in the appointed manner by the court with or without a jury." 25At [130] the Chief Justice also agreed with the observations of Latham CJ in Dey that great care must be exercised to ensure that under the guise of achieving expeditious finality, a plaintiff is not improperly deprived of his opportunity for the trial of his case by the appointed tribunal. He then stated that for the power to be exercised, it is necessary to demonstrate that the case of the party against whom summary judgment is sought is so clearly untenable that it cannot possibly succeed. 26Mr Newton in oral argument on the appeal analysed the relevant emails and the letter of 8 April in order to persuade us that on their true construction they did not contain an unconditional representation that the respondent would not enforce or otherwise waive its rights if the arrears were not paid on time. These arguments may have force on a final determination of the issues raised by the appellant's defence. They do not convince me, however, that the argument to the contrary advanced by Mr Hammond can properly be described as untenable. 27In my opinion, the defence raised by the appellant based upon the documentation to which I have referred, does not meet that very high threshold required to justify the entry of summary judgment. In my view the appellant is entitled to a trial of the defence which has been raised and her Honour was in error in entering summary judgment which had the effect of depriving the appellant of her day in court. 28For the foregoing reasons I would propose the following orders: (a)Appeal allowed. (b)Set aside the orders made by Latham J on 12 December 2008 and in lieu thereof order that the Notice of Motion for summary judgment filed by the respondent on 29 September 2008 be dismissed. (c)The respondent to pay to the appellant the amount of out of pocket expenses of the type that would have been recoverable as disbursements if the appellant had been legally represented and that the appellant has actually and reasonably incurred concerning the Notice of Motion filed on 29/9/08, the summons for leave to appeal and the appeal. 29CAMPBELL JA : I agree. 30MACFARLAN JA : I agree also.