Hester v Commonwealth Bank of Australia

JUDGMENT

1. THE COURT: The applicant, Mr Hester, was the registered proprietor of land in Hamlyn Terrace, NSW ("the Property"). The respondent, the Commonwealth Bank of Australia, brought proceedings in the Possession List seeking possession of the Property and leave to issue a writ of possession. The applicant seeks leave to appeal from a decision of Lonergan J of 19 December 2019, in which her Honour granted leave to the respondent to move for default judgment and entered judgment for the respondent for possession of the Property: Commonwealth Bank of Australia v Hester [2019] NSWSC 1842. Default judgment was entered on the basis that the applicant's Defence was struck out on 3 October 2019 and he did not file a further Defence by 31 October 2019 as her Honour had directed or at all.
2. On about 20 January 2020, the applicant served a Notice of Intention to Appeal on the respondent. However, the applicant did not take any step to challenge or set aside the default judgment of Lonergan J until 13 February 2023, when he filed the Summons seeking leave to appeal. That was more than three years after the date of the judgment he now wishes to challenge. Accordingly, whether the orders of the primary judge are properly classified as interlocutory or final, the applicant requires an extension of time: see rr 51.10 and 51.16 of the Uniform Civil Procedure Rules 2005 (NSW) ("UCPR"). The applicant acknowledged at the hearing that he required an extension of time. This Court will treat the Summons as including an application for the requisite extension.
3. The principles governing an extension of time are not in doubt: Jackamarra v Krakouer [1998] HCA 27; (1998) 195 CLR 516 at [4] (Brennan CJ and McHugh J). In Tomko v Palasty (No 2) [2007] NSWCA 369; (2007) 71 NSWLR 61 Basten JA (Hodgson and Ipp JJA agreeing) identified four factors of general relevance: (1) the length of the delay; (2) the reason for the delay; (3) whether the applicant has a fairly arguable case; and (4) the extent of any prejudice suffered by the respondent to the application.
4. The applicant bears the burden of persuading the Court that there are proper grounds to grant an application for an extension of time: Nanschild v Pratt [2011] NSWCA 85 at [44] ("Nanschild"). For the reasons outlined below, the applicant has not discharged that burden in the present case. It follows that leave to extend time should be refused.
5. At the commencement of the hearing, the applicant asserted that, by means of an instrument titled "General Power of Attorney of John Hester" dated 16 June 2023, that he had signed, he was appearing as "john and hester, and john hester" for the "estate" of John Hester. Although he sought to maintain that he was appearing as "john and hester", the Court indicated that it would proceed on the basis that he was the applicant and was making submissions on his own behalf in support of his application.

Background to the application

1. On 28 March 2019, the respondent commenced proceedings against the applicant by Statement of Claim, seeking possession of the Property, leave to issue a writ of possession, judgment against the applicant in the sum of $255,312.49 owing under two loan agreements plus interest, and charges and expenses in accordance with those agreements and the mortgage. As is required by r 14.23 of the UCPR, the Statement of Claim was verified by an officer of the respondent, Ms Long.
2. The applicant (who represented himself below and on this application) took issue with responding to the Statement of Claim in circumstances where he had not sighted the originals (or certified copies) of the documents on which the respondent relied. On 22 July 2019, he filed a Defence which did not admit that there were loan agreements or that any credit was advanced, denied that the respondent had any rights under the loan agreements to request repayment, denied any default, and denied the sum owing. The applicant also pleaded that it could not be confirmed that the respondent advanced credit to him in accordance with the agreements referred to without providing a "certified copy of the original document for verification as an authentic original document".
3. On 1 August 2019, the solicitor for the respondent provided the applicant with copies of various documents which were said to evidence the loan agreement, the mortgage, the default notice sent in August 2018 and the loan application form and statements of account covering July 2006 to May 2019. In a directions hearing conducted on 27 August 2019, the primary judge directed the respondent's solicitor to provide such further documents as were still in existence and that could be located by 10 September 2019. Her Honour also directed that the applicant file and serve an affidavit setting out any issues with the content of the documents provided by 1 October 2019.
4. The applicant did not file an affidavit by 1 October 2019. At a further directions hearing on 3 October 2019, the applicant was assisted by Michael Linnell, who was not a lawyer. Mr Linnell had prepared an affidavit dated 26 August 2019, in which he advanced a view that in the absence of original certified documents evidencing every aspect of the respondent's arrangements with the applicant, the applicant could not properly defend the matter and it could not continue. In the course of that directions hearing, the primary judge ordered that the Defence be struck out since an arguable or recognisable defence had not been disclosed. Her Honour granted leave to the applicant to file an amended or further Defence by 31 October 2019.
5. No amended or further Defence was filed. At the next directions hearing, on 18 November 2019, the applicant did not appear. In his absence, the primary judge declined to grant the application for default judgment that the respondent made on that occasion, and listed the matter on 2 December 2019. A copy of the reasons of her Honour refusing the application for default judgment was provided to the applicant and Mr Linnell by email.
6. On 2 December 2019, the respondent made a further application for default judgment and sought the Court's leave to enter judgment. The applicant appeared on that occasion, with Mr Linnell. The respondent's application for default judgment was made on the basis of the applicant's "default", relying on r 16.2(1)(c) of the UCPR which provides that a defendant is "in default … if the defendant, having duly filed a defence, the court orders the defence to be struck out".
7. By the time of the hearing before the primary judge, the applicant had filed three affidavits of Mr Linnell, "written submissions" which contained only an email from the applicant to Mr Lewin and an affidavit from the applicant together with three annexures, entitled "written submissions" but containing a number of documents. Although the primary judge found the documents difficult to understand, her Honour noted that the applicant reiterated his argument, based on Chapter 37 of the Banking Code of Practice, that he could not respond with a "true defence" until he was provided with "true and original documents" and "evidence to confirm that": [15]. Her Honour described the applicant's reliance on the Banking Code of Practice as involving a misunderstanding of its content. Having regard to s 56 of the Civil Procedure Act 2005 (NSW), her Honour concluded that the applicant was in default, the matters he raised did not form the basis of any defence at law, and the material the respondent had filed supported judgment on a summary judgment basis. It followed, in her Honour's view, that the respondent was entitled to default judgment: [18]-[20], [22]. Her Honour made the following orders: (1) Leave to the plaintiff to move for default judgment against the defendant. (2) Judgment for the plaintiff for possession of the whole of the land … at [XXX], Hamlyn Terrace, in the State of New South Wales.
8. On 12 October 2022, the respondent filed a notice of motion for leave to issue a writ of possession and for such writ to issue. An order issuing the writ was made on 17 October 2022. On 7 December 2022, the writ was executed.
9. Having filed the Summons on 13 February 2023, by notice of motion in this Court the applicant sought a stay of the judgment for possession, and to be reinstated in possession of the property pending the hearing of his application for leave to appeal from the default judgment. The application was heard and determined by Brereton JA, with his Honour delivering ex tempore reasons: Hester v Commonwealth Bank of Australia [2023] NSWCA 70. As the judgment of Lonergan J had been executed and implemented and it was no longer possible to stay it, Brereton JA treated the application before him as one for a writ for restitution pending the hearing of the application for leave, and for an injunction to restrain the respondent from exercising its power of sale in the interim: at [1], [4]-[5].
10. Brereton JA concluded that the application for leave to appeal had no prospects of success, such that the application for a writ for restitution should be refused. Firstly, an extension of time would be required for the leave to appeal application to be successful, and there was no satisfactory explanation for the three-year delay. Secondly, the availability of the alternative remedy of applying in the Common Law Division in the original proceedings to have the judgment set aside was, in itself, a complete answer to the application for leave to appeal. Thirdly, there was no genuine question of principle nor any apparent error of law or discretion, in circumstances where default judgment followed from there being no Defence: at [6]-[8].
11. In deference to a request made by the applicant that his Honour "set aside the rules in order to do justice", Brereton JA considered the application as if it were an application to set aside the default judgment: at [9]. His Honour did not consider the applicant's explanation for his failure to file a Defence reasonable or satisfactory, as it was based on a misconceived view that he could not do so until original documents were provided to him: [10]. His Honour again noted that the three-year delay had not been adequately explained: [11].
12. Additionally, Brereton JA did not consider that the applicant had demonstrated an arguable defence on the merits: at [12]-[22]. The applicant's issue with the Statement of Claim not containing original documents misconceived the nature of a Statement of Claim. His argument that there was "reasonable doubt" about the existence or enforceability of the loan referred to the wrong standard of proof, and in any event the alleged discrepancies on which the applicant relied were "on their face quite ordinary and unexceptional discrepancies, if they be discrepancies at all": at [17]. As to the applicant's argument that the loan was securitised and was therefore not enforceable against him, there was no evidence that the loan had been securitised. Even if it had been securitised, the rights of the respondent as against the applicant would not be affected, as no notice of any assignment was given to the applicant and the respondent remained the registered mortgagee: at [20]. His Honour also rejected the applicant's arguments as to the Corporations Act 2001 (Cth) not being in force and the unconstitutionality of amendments to Western Australian legislation.

The application for an extension of time

1. I have referred to the applicable principles and the factors that are generally considered above. An additional consideration in the present case that weighs heavily against granting an extension of time is that the applicant did not apply to set aside the default judgment under rr 36.15 or 36.16 of the UCPR. The existence of that alternative remedy, which Brereton JA considered in some detail in the dismissing the interlocutory application in April of this year, is a powerful factor against extending the time for the applicant to challenge the default judgment.

The delay and explanation for the delay

1. The delay in the present case is more than three years, which on any view is significant. As we noted above, on 20 January 2020 the applicant served a Notice of Intention to Appeal, which stated that he intended to commence appeal proceedings by 19 April 2020.
2. In his oral submissions, the applicant referred to material in the White Book in relation to a complaint that he lodged with the Australian Financial Complaints Authority ("AFCA") on 2 March 2020, in support of a submission that he was investigating other avenues of redress. However, by letter dated 7 April 2020, AFCA notified the applicant that the outcome he was seeking and/or the issues he had raised fell outside AFCA's rules. In his affidavit dated 14 March 2023, the applicant also referred to the COVID-19 pandemic as having "fractured" his "momentum", a point that he reiterated in his oral submissions. The applicant also submitted orally that his preparation of the materials that he filed in February 2023 had been impeded by the respondent having executed the writ of possession over the Property.
3. Although the applicant is not legally qualified, he sufficiently understood the appeal processes to prepare and serve the Notice of Intention to Appeal, which referred to an intention to commence proceedings by 19 April 2020. This undermines the force of his additional oral submission that he was not a lawyer and did not understand the processes that were involved. The applicant also submitted that he had been informed by the respondent that his case was "on hold", although he did not point to any material evidencing that submission. This was difficult to understand in circumstances where Lonergan J had ordered default judgment in favour of the respondent and the applicant had not applied pursuant to r 35.15 and 35.16 of the UCPR to set the judgment aside, nor had he ultimately filed any court process by way of challenging her Honour's decision.
4. Having regard to the extent of the delay in question, the explanation that the applicant has advanced is unsatisfactory.

The applicant's case is not fairly arguable

1. As was the case before the primary judge, the applicant's submissions in this Court, both in the Summary of Argument dated 14 March 2023 and the oral submissions, were directed largely at the documents that the respondent particularised in the Statement of Claim. The central point he advanced was that the respondent had not produced the originals of the documents referred to in the Statement of Claim, or certified copies thereof. He relied on Chapter 37 of the Banking Code of Practice, which refer to an individual's entitlement to a copy of what is described as "your documents". Acknowledging that Chapter 37 referred to a "copy of your documents", the applicant submitted orally that "your documents" meant that the documents had to be the originals. He accepted that the respondent had provided documents but submitted that there were inconsistencies between those documents and the documents referred to in the Statement of Claim, and an internal inconsistency in one of the documents as to the format of the page numbering, which gave rise to a real question as to their authenticity.
2. Relatedly, the applicant submitted that the original documents were "crucial", and their absence was "an indication that it was likely that the mortgage had been securitised", such that the respondent's right to enforce it was "forever lost". The applicant relied in this respect on a report that he obtained from an individual by the name of Andrew Lehman, dated 3 March 2020, which referred to the "Series 2007-IG Medallion Trust". The applicant did not rely on the report as evidence that his loan had been on-sold. Rather, as we understood his submissions during the hearing, he contended that the report raised questions as to whether the respondent had securitised his mortgage which could only be answered by obtaining the original documents, including the original title deed for the land. The applicant submitted that if the respondent had securitised his mortgage, that would involve it in a breach of the National Consumer Credit Protection Act 2009 (Cth), if not criminal conduct, pointing to a number of provisions of the Criminal Code Act 1995 (Cth).
3. The applicant submitted that he could not file what he described as "a true defence" when the documents that were relied on by the respondent had not been verified. He submitted that the primary judge denied him procedural fairness in striking out his Defence and not ordering the respondent to produce certified copies or to make provision for the applicant to view the originals. Although the applicant had presented material to her Honour in a number of affidavits, her Honour ignored that material and did not give him a sufficient opportunity to explain his arguments. This denial led to a situation where he could not lodge an expanded Defence in which he could question the documents. The applicant submitted that the primary judge did not offer him "due assistance" so as to ensure procedural fairness. He also alleged that the primary judge had predetermined the matter on 18 November 2019, when the applicant was not present.
4. The applicant also submitted in writing that there was a problem with the legal status of the respondent such that it could not bring proceedings and the primary judge had failed to consider this issue, constituting a further denial of procedural fairness.
5. The applicant's arguments misunderstood the nature of the application that was before the primary judge and the nature of an appeal from that judgment. The application for default judgment did not involve consideration of the merits of the respondent's claim. Rather, it was focused on the applicant's failure to file an amended or further Defence, after the primary judge had struck out his original Defence on the basis that it did not disclose an arguable defence at law.
6. It was no answer to this default to take issue with the documents to which the respondent referred in the Statement of Claim, including as to inconsistencies between the respondent's reference to the documents and the documents it provided to the applicant (which Brereton JA carefully considered in his Honour's reasons at [15]-[18]). As Brereton JA observed, the applicant's submissions in this respect involved a further misunderstanding, about the role of pleadings (at [10]): "…The plaintiff has filed a statement of claim making assertions of various material fact which it says entitles it to relief. A defendant is required in those circumstances to file a defence admitting, denying, or - where the matter is not within the defendant's means of knowledge - not admitting, the alleged facts. The fact that there are matters not within the knowledge of the defendant, or which he wishes to but has not yet investigated, is not a reason for not filing a defence…."
7. In her Honour's reasons, the primary judge referred to the applicant's position on the documents at [15], and to the part of the Banking Code of Practice on which he relied at [16]-[17]. Nonetheless, her Honour found that the applicant was in default and that the matters that he raised did not form the basis of any defence at law: at [18]-[20]. The applicant has not identified any error with her Honour's conclusion; and in the face of her Honour's acknowledgment of the applicant's central contention, his allegation of denial of procedural fairness is not sustainable.
8. The further submission that her Honour had pre-determined the matter is also without foundation, having regard to her Honour's reasons of 18 November 2019. It is apparent from those reasons that her Honour was not prepared to entertain the application in the absence of the applicant, and adjourned it to 2 December 2019 over the respondent's objection.

Prejudice to the respondent

1. Although Counsel for the respondent did not point to any particular prejudice flowing to the respondent, Counsel submitted that there was a question of general prejudice to the administration of justice, which we understood to refer to the general proposition that "the respondent to the application has a vested right to retain the judgment" which is proposed to be the subject of appeal: Jackamarra v Krakouer at [4]. We have given those submissions due weight having regard in particular to the extent of the delay.

Conclusion

1. Whether the extension of time is under r 51.10(2) or 51.16(2) of the UCPR, it should be refused. The Court makes the following order: 1. Leave to extend time to move on the Summons dated 13 February 2023 is refused with costs.

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