Hilton v Berkemeier

Judgment 1EMMETT JA: By summons filed on 2 October 2014, Mr Norman Hilton has applied for leave to appeal from orders made by Harrison J on 3 July 2014. On that day, Harrison J set aside orders made by Hislop J on 22 May 2009 and by Patten AJ on 5 August 2009. In order to put Harrison J's orders into context, it is necessary to say something very briefly about the proceedings.

Background to the Proceedings 2By deed of loan dated 6 December 2007, Mr Hilton advanced the sum of US$350,000, together with the sum of AUD$20,000, to Ms Isobelle Gidley and Mr Richard Shears as borrowers (the Borrowers). The loan was guaranteed by Mr Daniel Bickel and Ms Cynthia Berkemeier (together, the Guarantors). Ms Berkemeier is the respondent to the present application. 3The Guarantors provided security by way of an unregistered mortgage over a property in Douglas Street, Stanmore, which was owned by them as tenants in common (the Stanmore Property). The Borrowers defaulted. Mr Hilton then commenced proceedings against the Borrowers and the Guarantors by a statement of claim filed on 8 May 2008. An amended statement of claim was filed on 4 June 2008. 4Mr Paul Fordyce, a solicitor who had prepared the loan agreements on the instructions of the Borrowers, mistakenly filed a submitting appearance in Mr Hilton's proceedings on behalf of all four defendants, being the Borrowers and the Guarantors. On 2 July 2008, Mr Hilton moved the Court for judgment in the sum of $561,475 and a declaration that he had an equitable mortgage over the Stanmore Property. 5By notice of motion filed on 23 July 2008, all four defendants sought leave to withdraw their submitting appearances pursuant to r 12.5 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR), which provides that an active party may withdraw an appearance by leave of the Court. The application was supported by an affidavit sworn by Mr Fordyce in which he said that the submitting appearances had been filed in error. Ms Berkemeier and Mr Bickel also swore affidavits in which they said that they had never instructed Mr Fordyce to file a submitting appearance. 6The application to withdraw the submitting appearances had a somewhat chequered career before Hislop J. There were a number of occasions when the matter was listed before his Honour and was partially argued. At various times, Ms Berkemeier did not appear, although at other times she was represented by solicitors. 7Mr Hilton's attitude to the application to withdraw the submitting appearance was that it should be dismissed. Ultimately, on 22 May 2009, Hislop J ordered that the defendants' notice of motion for leave to withdraw the submitting appearance be dismissed with costs (Hilton v Gidley [2009] NSWSC 383). On the occasion when those orders were made, Ms Berkemeier was not present in court and was unrepresented. 8Subsequently, on 5 August 2009, the proceedings came before Patten AJ, on Mr Hilton's application seeking the entry of judgment for the sum of $678,614 against all defendants and a declaration that he had an equitable mortgage over the Stanmore Property. Mr Hilton also sought an order for possession of the Stanmore Property and an order for its sale. Patten AJ made orders to that effect on that day. When the orders were made on 5 August 2009, Ms Berkemeier was not present in court and was not represented. 9By notice of motion filed on 14 October 2013, Mr Hilton sought an order that, pursuant to leave granted on 5 August 2009, a writ of possession be issued in respect of the Stanmore Property. On 30 October 2013, a writ of possession was issued. Ms Berkemeier, who was an occupant of part of the Stanmore Property, was served with a notice to vacate. 10On 20 November 2013, Mr Hilton sought orders varying the orders made on 30 October 2013, including a vesting order with respect to the Stanmore Property. It appears that that application prompted Ms Berkemeier to file a notice of motion on 6 December 2013 seeking to set aside the judgment entered against her by Patten AJ on 5 August 2009 and to set aside the orders made by Hislop J on 21 May 2009. 11It appears that all parties were represented at the hearing before Harrison J on 2 and 3 June 2014 or were at least notified of the hearing. For reasons published on 3 July 2014, Harrison J: (1)Granted leave to Ms Berkemeier to appear in the proceedings for the purpose of opposing Mr Hilton's motion dated 20 November 2013. (2)Set aside the orders made by Hislop J on 22 May 2009. (3)Set aside the orders made by Patten AJ on 5 August 2009. (4)Directed Ms Berkemeier to file and serve any defence or other pleading upon which she intends to rely within 21 days. (5)Stood the proceedings over for further directions, including directions concerning the position of Mr Bickel. (6)Ordered that the costs of the application be Ms Berkemeier's costs in the proceedings. (7)Granted liberty to all parties to apply on 48 hours' notice. 12Because we do not have the motion of 6 December 2013 before us, it is not clear whether the orders made by Harrison J go beyond the orders sought by Ms Berkemeier in her motion. A further complicating factor is that, in the meantime, a sequestration order had been made in respect of the estate of Mr Bickel. Accordingly, any interest of Mr Bickel in the Stanmore Property vested in his trustee in bankruptcy. The trustee in bankruptcy was apparently represented before Harrison J but did not either oppose or support the orders sought on behalf of Ms Berkemeier.