Henderson v Capita Mortgage Pty Ltd

JUDGMENT

1. MEAGHER JA: By a notice of appeal filed on 4 April 2022, the appellant, Douglas Henderson, seeks to set aside orders made by Fagan J on 22 December 2021 and 4 February 2022 in proceedings brought by the respondent, Capita Mortgage Pty Ltd (Capita Mortgage) as plaintiff (Capita Mortgage Pty Ltd v Henderson [2021] NSWSC 1689 (J)).
2. The orders made on 22 December 2021 were: 1. Judgment for the plaintiff against the defendant in the sum of $277,525.71, together with interest on that amount at the rate prescribed under the Uniform Civil Procedure Rules calculated from 1 December 2021. 2. Declare that the plaintiff holds an equitable mortgage over the whole of the land comprised in Lot 1 Deposited Plan 203488 and in Lot 3 Deposited Plan 562399, both parcels being at Broken Hill, Parish of Picton, County of Yancowinna. 3. The cross-claim is dismissed. 4. Direct that the plaintiff file and serve within 21 days a current valuation of the land at Broken Hill referred to in the declaration of the Court made this day, such valuation to be sworn or affirmed by an appropriately qualified land valuer. 5. Upon the valuation being filed and served in accordance with the direction in order (3), the plaintiff may apply for the proceedings to be relisted for the purpose of the parties being heard as to further final orders with respect to judicial sale.
3. The primary judge held that on 13 January 2015, Capita Finance Pty Ltd (Capita Finance) had advanced funds by way of loan to Mr Henderson under a Letter of Offer agreement, the terms of which included that the loan be secured by a registered first mortgage over Mr Henderson's property located at Cornish Street, Broken Hill (the Broken Hill property). His Honour also held that on 31 January 2017 Capita Finance assigned the benefit of that debt to Capita Mortgage, and that written notice of that assignment had been given.
4. In the underlying proceedings, Capita Mortgage sought judgment in respect of the outstanding loan amount (said to be $277,525 as at 30 November 2021) and possession of the Broken Hill property. The primary judge rejected the first basis on which that relief was said to be justified, namely that Capita Mortgage was entitled to judgment and possession as transferee of a registered second mortgage of that property given by Mr Henderson to Capita Finance. His Honour held that mortgage had been fraudulently altered (by changing the name of the mortgagee to Capita Finance) and then lodged for registration, and accordingly was void and unenforceable. However, he upheld Capita Mortgage's entitlement to enforce the underlying assigned debt and agreement for mortgage in the Letter of Offer. Accordingly, on 4 February 2022, orders were made for the possession and judicial sale of the Broken Hill property.
5. There are two motions before the Court for resolution.

Mr Henderson's motion and affidavits in support

1. The first is Mr Henderson's notice of motion dated 31 May 2022 which was emailed to the Court of Appeal Registrar, but not at that time filed. That motion amended Mr Henderson's earlier motion filed on 6 May 2022 and sought the following orders. The amendments are underlined: 1) Orders to stay judgement orders, stay of decision of Fagan J dated 22nd of December 2021 and 4th of February 2022. Pending an appeal with a fair trial. 2) Orders stay judgement orders to finalise new Legal representation and appeal assistance. To Amend Notice of Appeal and file appeal book 3) Order to of Judgement orders appeal to proceed for a fair trial the appellant seeks leave for a trial by jury. 4) Orders for the subpoenas of the plaintiff itemised accounts with dates and information to investigate civil penalty provisions under the NCCP Act 2009 and amounts claimed by the claimant. 5) Orders for the stay of Judgement orders this is a serious injustice disadvantaging the appellant home and business without a fair trial in the court contravening Sect 29 Magna Carta, The universal declaration of human rights and other civil penalty provisions. 6) Orders for leave for the subpoenas for Kevin John Morgan to produce new evidence of grammar and itemised accounts of the claimant's loan, security documents and legal fees
2. Mr Henderson's application and argument on 6 June 2022 proceeded by reference to that amended motion. Paragraphs 1, 2 and 5 seek or include an order that execution of the money judgment and orders providing for the sale of the property be stayed pending the determination of the appeal. The remaining relief sought does not arise for consideration if Mr Henderson's existing notice of appeal is struck out, which is Capita Mortgage's alternative application. Whether there is any basis for issuing subpoenas in the appeal would fall to be considered in the light of any amended grounds of appeal.
3. By a separate email to the Registrar of 31 May, Mr Henderson provided a further version of his first notice of motion which did not include the amendments underlined above, but did add further paragraphs numbered 7 to 10. That motion was not sought to be filed or relied on in the hearing on 6 June 2022.
4. Mr Henderson has filed three affidavits which he sought to read in support of his amended motion. They are: (1) an affidavit filed on 5 April 2022 of 29 pages, which appears to have been sworn on 28 February 2022; (2) an affidavit sworn on 9 May 2022 of 8 pages which also contains numbered attachments from pages 9 to 171. That affidavit was filed on 11 May 2022; and (3) an affidavit sworn on 30 May 2022 of 5 pages which was sent to the Registrar by email on 31 May. Mr Henderson sought to rely on that affidavit, and accordingly should have leave to file it.
5. With exceptions which are inconsequential, none of these affidavits sets out in admissible form factual material relevant to whether there should be a stay of execution pending any appeal. Each contains argument and narrative directed to alleged conduct of the respondent and its related entities concerning the initial lending transaction and subsequent conduct of the proceedings, as well as narrative directed to the decision and reasoning of the primary judge. For that reason, I rejected the admission into evidence of each of the three affidavits. At the same time I indicated to Mr Henderson that they would be read and treated as submissions and arguments he made in support of the relief claimed in his amended motion.

Capita Mortgage's motion and affidavits in support

1. Capita Mortgage's amended notice of motion was filed on 26 May 2022. The underlined parts were additions to its original motion filed in early April 2022. The substantive orders sought are: 1. Order under rule 51.41 of the Uniform Civil Procedure Rules 2005 (NSW), or alternatively under rule 13.4 of the UCPR or the Court's inherent power, that the appeal be dismissed. 2. In the alternative to paragraph 1: a. order under rule 51.50(1) UCPR that the appellant give security as the Court thinks fit, in such a manner that the Court directs, for the respondent's costs of the appeal; and b. order under rule 51.50(2A) UCPR that the appeal be dismissed should the appellant fail to comply with any order to give security for costs: c. the whole, or alternatively part, of the notice of appeal be struck out; and d. leave to file an amended notice of appeal be subject to such conditions as the Court considers appropriate. 3. The appellant pay the respondent's costs of the motion.
2. Capita Mortgage filed three affidavits, being two affidavits of Mr Taylor, its solicitor, the first sworn on 5 April and the second on 27 May 2022, and an affidavit of its sole director, Mr Boyd, sworn on 11 May 2022. The exhibit to Mr Taylor's affidavit of 5 April 2022 included a copy of a relatively current valuation of the Broken Hill property by a registered valuer as being $250,000. That evidence was directed principally to Capita Mortgage's application for security for costs of the appeal which, by reference to its written submissions, were sought in an amount of $20,000.
3. None of those affidavits was read on the basis that if the existing notice of appeal were struck out, and leave were given to Mr Henderson to file an amended notice of appeal (as sought), and an order made in respect of the costs of the existing notice of appeal, the question of security for costs of the appeal would not arise unless an amended notice of appeal were filed.
4. It is convenient first to consider Capita Mortgage's application to dismiss the appeal and, in the alternative, to strike out the notice of appeal.

Application to dismiss appeal or strike out notice of appeal

1. The "appeal grounds" in the current notice of appeal take the form of narrative statements and do not comply with Uniform Civil Procedure Rules 2005 (NSW) (UCPR) r 51.18, which requires that they briefly state the grounds of appeal and the material factual findings that Mr Henderson contends the primary judge should or should not have made.
2. For example, grounds 1 and 2 are expressed as follows: 1) For the record I Douglas Henderson the appellant protests my and those of all Australians, their, legal and political rights within the Commonwealth of Australia, that there is only one crown and one queen, available at law, and that is expressed within said foundation law at the preamble and second clause 2) The appellant contends the current administration of the executive, legislative and judicial powers of Australia, under the crown of Australia and Queen of Australia do not comply with the laws of the commonwealth and because of that condition there are no courts within Australia to find remedy
3. These and many of the other grounds of appeal, as well as statements made in Mr Henderson's affidavits and submissions, indicate that he, like the applicants in cases such as Wichman v Pepper Finance Corporation Limited [2019] NSWCA 195 and K Sheridan v Colin Biggers & Paisley [2019] NSWSC 528, does not regard himself as bound by laws of the Commonwealth and State Parliaments or the exercise of judicial power by federal and state courts.
4. The 50 paragraphs in his notice of appeal under the heading "appeal grounds" may be summarised as follows: 1. The Supreme Court of New South Wales lacked jurisdiction, and the matter should have been referred to a criminal court (paras. 1-8, 10, 22, 31, 32); 2. The primary judge's orders are null and void, pursuant to the Constitution or on unspecified grounds (paras. 7, 13, 15, 22, 30); 3. Capita Mortgage and the primary judge have committed criminal offences including perjury, fraud and conspiracy (paras. 8-9, 11-12, 14, 16-17, 22, 32-38, 40-43, 47-50); 4. Capita Mortgage committed fraud, perjury and unconscionable conduct in breach of the National Consumer Credit Protection Act 2009 (Cth) and Australian Securities and Investments Commission Act 2001 (Cth) (paras. 18-21); 5. Mr Henderson was denied procedural fairness, including by not being lawfully served with orders, not being present in court for delivery of orders, court documents being served one day before the hearing, requests for subpoenas of documents not being allowed, and witnesses being rejected by the Court (paras. 15, 24-29); and 6. Mr Henderson did not sign a contract or security documents, or agree to the terms of the loan or security (paras. 39, 44-46).
5. On their face the complaints of lack of jurisdiction and constitutional invalidity and the allegations of criminal conduct against Capita Mortgage and the primary judge are misconceived, baseless and liable to be struck out as vexatious and an abuse of process. So too are the allegations of material irregularities, fraud and denial of procedural fairness in the conduct of the proceedings below.
6. The more orthodox allegations of unconscionable conduct and misleading or deceptive conduct (which depend upon the efficacy of laws of the Commonwealth and State Parliaments) are addressed by the primary judge at some length (see J[46]-[83]). None of the grounds directed to that part of his Honour's reasoning or his conclusion as to the existence of an agreement to grant security, identifies any error of fact or otherwise.
7. As to the suggestion that Mr Henderson did not sign any formal contract or security documents, it was not in dispute at the trial that on 13 January 2015 he signed the Letter of Offer made by Capita Finance which contained the terms of the loan and his agreement to grant a mortgage over the Broken Hill property to secure its repayment (see J[20]-[24], [86]-[87]).
8. Because of its many deficiencies, the notice of appeal should be struck out. However the appeal should not be dismissed in circumstances where Mr Henderson seeks and should be given the opportunity to propound an amended notice of appeal with the benefit of legal assistance. Capita Mortgage did not seriously contend otherwise.
9. During exchanges in the oral argument, Mr Henderson asked for a period of 30 days in which to make such an application, and counsel for Capita Mortgage accepted that this was a reasonable period to enable that application to be made.
10. Any amended notice of appeal might also include an application for the extension of time for the filing of a notice of appeal (UCPR r 51.16(3)). Such an extension is required because the material date in relation to the principal judgment was 22 December 2021 (UCPR r 51.2). Although Mr Henderson filed a notice of intention to appeal, it was filed after the time for doing so, 18 January 2022 (UCPR, r 51.8). Accordingly it did not operate to extend the time for filing the notice of appeal (UCPR rr 51.9 and 51.16(1)(b)), which was to be filed by 18 January 2022, but was not filed until 4 April 2022 (UCPR, r 51.16(1)(c)).
11. As the initial notice of appeal is to be struck out, Mr Henderson should pay Capita Mortgage's costs thrown away in consequence of that order, those costs to be assessed on the ordinary basis.
12. The making of that order removes the need to consider Capita Mortgage's application for security for its costs of the appeal. Those costs, to the extent that they have been occasioned solely in response to the notice of appeal, are to be paid by Mr Henderson. Whether such further costs will be incurred will depend on the outcome of any application of Mr Henderson to file an amended notice of appeal.

Mr Henderson's application for a stay of execution

1. In response to this application, Capita Mortgage submits that the appeal has no real prospects of success, and that Mr Henderson has not demonstrated a proper basis for a stay which would be fair to both parties (as to which see Port Macquarie-Hastings Council v Diveva Pty Ltd t/as Mid Coast Road Services [2017] NSWCA 4 at [29]).
2. In the absence of a notice of appeal which lays out the respects in which the primary judge's reasoning is challenged, it is difficult to form a view as to its prospects of success. However, what is tolerably clear is that Mr Henderson's principal complaint is as to the amount claimed as due to Capita Mortgage, and in particular the amount due for interest and costs.
3. Where, as here, the subject of the stay application is an order enforcing a mortgage security, the relevant principle is that referred to by Campbell JA in Kowalczuk v Accom Finance Pty Ltd [2007] NSWCA 225 at [6]: [6] On an application for stay of an order to enforce a mortgage security a similar principle often applies to that articulated in Inglis v Commonwealth Trading Bank of Australia (1972) 126 CLR 161, whereby a sale could not be injuncted by a mortgagor unless the mortgagor either repays all principal and interest claimed by the mortgagee - not the amount admittedly owing - or else pays that amount into Court. There is, however, a long recognised exception to that principle, whereby the amount claimed is not required to be paid into Court or paid to the mortgagee where the existence of a power of sale itself is under attack: Harvey v McWatters (1948) 49 SR (NSW) 173.
4. In Harvey v McWatters (1948) 49 SR (NSW) 173 at 176, Sugerman J described the principle applied in Inglis v Commonwealth Trading Bank of Australia (1972) 126 CLR 161; [1972] HCA 74 as being applicable only where "there is no dispute that the power of sale is presently exercisable but there is a dispute about the amount due or a challenge to the mode in which the mortgagee proposes to exercise this power".
5. Although Mr Henderson maintained before the primary judge that the debt obligation created by the terms of the Letter of Offer was void or unenforceable, he did not contend that he had not signed and returned that Letter of Offer. Nor do the existing grounds of appeal show that the primary judge's conclusion as to the equitable mortgage and right to sell the property is challenged. Rather, Mr Henderson's affidavit of 9 May 2022 suggests that his real dispute is with respect to the interest and costs claimed by Capita Mortgage. Paragraph 10 of that affidavit proposes, in return for a stay of execution to enable the value of disputed "interest and legal fees" to be determined, that an amount of $220,000 be paid on an interim basis.
6. In argument, Capita Mortgage indicated that it would agree to a stay of execution of the judgment if an amount of $170,000 was paid into Court or otherwise provided by way of security. Mr Henderson's position in response was that he would not accept that any money was "lent" or offer to pay any amount into Court as security for a stay of execution.
7. Notwithstanding this apparent change of position on the part of Mr Henderson, I propose to proceed on the basis that there is not shown to be a substantial issue as to the existence of a power of sale or right to exercise it. The existence of the loan and security agreement was not in contest before the primary judge, and the proposal in Mr Henderson's affidavit is consistent with that continuing to be the position.
8. Accordingly, there should be an order for a stay of execution upon Mr Henderson paying into Court or otherwise providing security for an amount of $170,000, which is less than the amount claimed as owing in July 2015 (J[29]).

Remaining matters in issue

1. There remains the question of the costs of the two motions. Whilst Capita Mortgage has had success in relation to the principal questions - whether the appeal should be dismissed or the notice of appeal struck out, and whether there should be an unconditional stay of execution - it did so partly as a result of the positions taken by Mr Henderson with respect to the amendment of the notice of appeal and the payment of money in return for a stay of execution. In the circumstances, making some allowance for those concessions, Mr Henderson should pay 50% of Capita Mortgage's costs of the two contested motions.

Orders

1. In the result, I make the following orders: 1. Direct that the appellant (Mr Henderson) have leave to file his amended notice of motion dated 31 May 2022 and that the copy emailed to the Registrar be treated as the filed copy of that motion. 2. Direct that the copy of the affidavit of the appellant sworn on 30 May 2022 and emailed to the Registrar on the following day be treated as the filed copy of that affidavit. 3. Order that the notice of appeal filed on 4 April 2022 be struck out. 4. Order that the appellant pay the respondent's (Capita Mortgage) costs thrown away in consequence of order 3. 5. Direct that any application of the appellant for leave to file an amended notice of appeal and any affidavit in support of that application be filed no later than 27 July 2022. 6. Order that execution of the judgment entered on 22 December 2021 and the orders made on 4 February 2022 be stayed on condition that on or before 27 July 2022 the appellant pays into Court an amount of $170,000 or otherwise provides security in that amount. Unless the Court otherwise orders, in the event that there is no application in accordance with order 5 or in the event that any such application is made and dismissed, the stay of execution should terminate on the later of 27 July 2022 or the date on which the application is dismissed. In the event that such an application is made and is successful, unless the Court otherwise orders the stay of execution is to continue until the final determination of any appeal. 7. Order that the appellant pay 50% of the respondent's costs of the appellant's amended notice of motion dated 31 May 2022 and the respondent's amended notice of motion filed on 26 May 2022. 8. Otherwise dismiss each of the motions in order 7.

Amendments 01 July 2022 - Order (6) amended under slip rule on 29 June 2022 to specify time for posting security. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 01 July 2022