Hubner v ANZ [1999] QCA 161

Court of Appeal (Qld)|1999-05-07|Before: Jersey CJ, Davies JA, Thomas JA, Mr P, Byrne J, Jones J

1 On 19 June 1997 a default judgment was given under the hand of the Registrar with the seal of the court affixed. It ordered that the plaintiff bank recover possession of a piece of land situated in Draper Street, Cairns. The judgment was against the appellants who were the mortgagors of the land under a registered mortgage.

2 The appellants made an unsuccessful application before Byrne J to set aside the judgment on 15 September 1997. His Honour dismissed the application, holding that the appellants had not shown that they had a defence on the merits to the claim made against them. Seven months later the appellants filed a further summons seeking to set aside the default judgment. On this occasion the appellants contended that the judgment of 19 June 1997 had been irregularly and improperly obtained, and that they were entitled to have it set aside ex debito justitiae. That application was in due course dismissed by Jones J on 28 May 1998 and that order is the subject of the present appeal.

4 But first it will be necessary to summarise the evidence that was placed before the learned chamber judge. The action was commenced by the bank against the appellants by means of a specially endorsed writ. In it the bank claimed recovery of possession of land as mortgagee. After some preliminary proceedings the appellants entered an appearance, but they did not deliver a defence within 10 days of the time limited for appearance. They would have been obliged to do so by Order 25 Rule 7 if the writ of summons was specially endorsed under Order 6 Rule 7. The question whether the writ of summons in this case was so endorsed, or whether (as the appellants contend) it could only have been specially endorsed under Order 6 Rule 11, is the central issue raised in this appeal, although there are other points which will be noticed later.

5 On 19 June 1997, the bank filed an affidavit proving service, entry of appearance and default by the appellants in delivery of a defence. It also presented a certificate that the action was not one to which Order 6 Rule 11B of the Rules of the Supreme Court applied. The Registrar then entered the default judgment.

6 Order 6 Rule 7 provides that in any action in which the plaintiff seeks to recover possession of any land, the writ of summons may be specially endorsed with particulars of the nature of the plaintiff's claim. Order 6 Rule 11 provides (inter alia) that in an action by a mortgagee or mortgagor, the writ of summons may be specially endorsed with a claim for various kinds of relief including sale, foreclosure and delivery of possession to the mortgagee. If the writ is so endorsed a default judgment such as that which was obtained here would not be available, as Order 6 Rule 11B provides that in any action in which the plaintiff claims any relief of the kind specified in Rule 11, no judgment shall be entered in default of appearance or of defence without the leave of the Court or a Judge. However, quite simply, the writ of summons was not endorsed under Order 6 Rule 11, the words pertinent to that rule not having been used.

7 Historically, claims for delivery of possession under Order 6 Rule 11 or its equivalent could only be brought as ancillary to claims for foreclosure or redemption. However, since amendments to the relevant rules[1], a writ may be specially endorsed by a mortgagee for delivery of possession without including a claim for foreclosure or other relief. It was submitted on behalf of the appellants that the only relief available to a mortgagee seeking possession is now under Order 6 Rule 11. However it seems to us that a mortgagee plaintiff desiring to obtain possession of land from a defaulting mortgagor is entitled to proceed under either Order 6 Rule 7 or Order 6 Rule 11, and that for the practical reasons mentioned by McPherson J in Metropolitan Permanent Building Society v McClymont[2], the preferred route of most mortgagees will be under Order 6 Rule 7.

8 If a writ is specially endorsed under Order 6 Rule 7, as on its face the present writ would seem to be, Order 31 Rule 7 permits the plaintiff to proceed as follows:

"In an action for the recovery of land, if any defendant does not, within the time allowed for that purpose, deliver a defence, the plaintiff may enter final judgment that the person whose title is asserted in the writ of summons shall as against that defendant recover possession of the land, with the plaintiff's costs of action, upon the production of a certificate by the solicitor for the plaintiff or, in the case of a plaintiff in person, of an affidavit that the action is not one to which order 6, rule 11B applies."

9 The material shows that the requirements of that rule were fulfilled in the material presented to the Registrar on 19 June 1997.

10 The right of a plaintiff mortgagee to proceed in this way, at least prior to the Land Title Act 1994 (Qld), is established by a number of Queensland authorities including Finance Allotments Pty Ltd v Young[3], Bank of New South Wales v Crow[4], Metropolitan Permanent Building Society v McClymont[5] and Suncorp Building Society v Chen[6].

11 The principal argument of the appellants was concisely stated by Mr Hubner in the proceedings before Jones J to the effect that when a mortgagee seeks possession of land it must go to a court or a judge, not a Registrar. It was submitted that section 78(2)(c)(i) of the Land Title Act 1994 ensures that in such matters the only recourse of a mortgagee is through a proceeding in a court by means of a judge or judges in open court of competent jurisdiction to obtain possession of the mortgaged lot.

12 Section 78 of the Land Title Act provides:

"(1) A registered mortgagee of a lot has the powers and liabilities of a mortgagee under the Property Law Act 1974, part 7.

(2) Without limiting subsection (1), but subject to the terms of the mortgage, if the mortgagor defaults under a registered mortgage, the mortgagee may-

(a) take possession of the mortgaged lot in a way that does not contravene the Criminal Code, section 70; or

(b) enter into possession of the mortgaged lot by receiving rents and profits; or

(ii) foreclose the right of the mortgagor to redeem the mortgaged lot; or

(iii) obtain an order of the court for the sale of the mortgaged lot.

(3) The powers in this section are in addition to other powers exercisable by the mortgagee." (Our emphasis).

13 The former section 60 of the Real Property Act 1861, which section 78 of the Land Title Act replaced, included the following:

"May bring action for ejectment or may foreclose right of redemption. Provided also that it shall be lawful for any registered mortgagee whenever any principal or interest money annuity or rent charge shall have become in arrear to bring an action of ejectment to obtain possession of the said land either before or after entering into receipt of the rents and profits thereof and either before or after any sale of such land shall be effected under the power of sale given or implied in such bill of mortgage and any such registered mortgagee shall be entitled by suit or other proceedings in equity to foreclose the right of the mortgagor to redeem the said mortgaged lands." (Our emphasis).

14 The appellants' submissions question the jurisdiction of a Registrar to enter such a judgment, and it may be inferred that they also challenge the capacity of the rules to enable such a power to be exercised.

15 It is convenient to commence examination of this issue by reference to the Judicature Act 1876 which confirmed the court's power to make rules of court. This was re-enacted by section 11 of the Supreme Court Act 1921 which provided for a rule-making procedure that has in substance been continued in Queensland ever since. Under that Act the Governor-in-Council (with the concurrence of two or more judges) was authorised to make "such rules of court as may be deemed necessary or convenient for regulating the procedure and practice of the Supreme Court".

16 In both the United Kingdom and in Queensland, and indeed in all the Australian states, rules of court were in place even before the Judicature Acts, providing for the entry of default judgments against defendants who did not appear within the times prescribed by the rules, or against defendants who did not deliver a defence within the prescribed time. Such rules reappeared with various amendments in rules made after the Judicature Act. In the United Kingdom the current rule permitting default judgments to be entered after non-delivery of a defence in claims for possession of land is Order 19 Rule 5 (formerly Order 27 Rule 7). In Queensland Order 31 Rule 7 has been in its present form since 14 December 1965. A similar rule preceded it, without the present requirement of a certificate that the action was not one to which Order 6 Rule 11B applies.

17 The history of the rule-making power in Queensland is set out in the judgment of Thomas J in Interchase Corporation Limited (In Liq.) v Grosvenor Hill (Queensland) Pty Ltd[7]. It is noted in the course of that history that in 1928 a statute was enacted giving the rules the same force and effect as the principal act. Again in 1991 the Supreme Court of Queensland Act provided (in section 104(1)) that rules of court "in force under an Act immediately before the commencement of this section" should continue to have effect as if the 1991 Act had not been enacted.

18 The validity of Order 6 Rule 7 and Order 31 Rule 7 in their present form is beyond serious question. It is further to be noticed that these rules do not substitute the Registrar as a judicial officer to perform any function which must be performed by a court or a judge. Rather, they confer a right upon the plaintiff in certain events to enter the judgment. The Registrar's role in entering judgment and the pre-requisites to the proper exercise of that power are spelt out in Order 31 Rule 7 and various rules in Order 44, including Rules 1, 3 and 5. The material shows that the power was exercised in this instance in conformity with the rules.

19 In our view when a mortgagor defaults under a registered mortgage, the mortgagee may bring an action which is the equivalent of an action of ejectment, and if it is brought in the Supreme Court the writ of summons may be specially endorsed under Order 6 Rule 7. Such a claim may be made whether or not there is an attornment clause in the mortgage - Metropolitan Permanent Building Society v McClymont, and Suncorp Building Society v Chen[8]. Those decisions were given in the context of section 60 of the Real Property Act 1861-1986 which governed the rights of registered mortgagees to bring actions of ejectment until 1994. Whilst the language of section 78 of the Land Title Act 1994 is slightly different, the relevant meaning is not. Section 60 of the Real Property Act recognised the right of the mortgagee "to bring an action of ejectment to obtain possession of the said land" while section 78 of the Land Title Act recognises the mortgagee's right to "obtain possession of the mortgaged lot...by a proceeding in a court of competent jurisdiction". An action for ejectment in the Supreme Court fulfils the requirement of the proceedings contemplated in both sections. An application to "recover possession of any land" under Order 6 Rule 7 likewise fulfils the requirements of both sections.

20 The appellants' submissions sought to place emphasis upon the words "by a proceeding in a court of competent jurisdiction" in section 78 of the Land Title Act, and to confine the "proceeding" to the act of the Registrar, erroneously identified by the appellants as supplanting the judicial authority of the court. Quite simply the proceeding in the court of competent jurisdiction was the present action. Any further steps in the conduct of that action taken in accordance with the rules of the Supreme Court were proceedings in a court of competent jurisdiction.

21 The argument based on lack of jurisdiction fails.

22 The same may be said in relation to the appellants complaint that they have been deprived of trial by a jury. This is not an absolute right and is regulated by statute and by the Rules of Court[9]. In a civil proceeding such a trial is obtainable only through compliance with the Rules of Court, and even then, in certain cases the court may dispense with such a mode of trial (compare Order 39 Rules 4-13).

23 A further submission was made that Order 6 Rule 12 (1) states that "special endorsements of writs shall be in the forms in schedule 1", but the submission failed to advert to the continuing words in the sub-rule "or in such similar form as may be applicable to the case". The submission proceeded that Order 6 Rule 7 required the allegation in the endorsement that the bank was the registered proprietor in fee simple. It is true that Form 72, which gives three examples of special endorsements for recovery of possession of land commences with one on behalf of a plaintiff who is the registered proprietor in fee simple of the land in question. Other examples suggested by the form are of a plaintiff in lawful occupation of the land, and of a landlord whose tenant has breached a covenant for repair. The prescribed forms do not purport to cover the field and are illustrative only. The right of a mortgagee to make such a claim according to the facts of the particular case is recognised by section 78 of the Land Title Act and by the cases mentioned in paragraph 10 above.

24 Another submission is to the effect that the order was contrary to the principles of the separation of powers doctrine and beyond the judicial power which was said to have been delegated under the Australian Constitution by sections 71 and 79. It was further submitted that the court (or Registrar) was exercising power pursuant to the Banking Act 1959 (Cth) because the plaintiff bank held a license under a Commonwealth Act. That is simply an erroneous assertion. No argument has been presented which comes close to showing that the powers that were exercised under the relevant Rules of Court were exercised inconsistently with the Australian Constitution.

25 The proceedings before Jones J were essentially based upon attempts to show that the default judgment had been improperly or irregularly obtained. No appeal had been brought against Byrne J's decision in which his Honour ruled that the appellants had failed to raise a defence on the merits. However paragraph 9 of Mr Hubner's affidavit filed in the proceedings below makes reference to "the guarantee that makes the defendants liable" and contains a number of assertions that are not properly comprehensible without further evidence or explanation. The oral argument before Jones J was punctuated with occasional references to other pending proceedings that would seem to have been in train between Mr Hubner and the bank. It is difficult to tell whether there was any serious attempt to re-litigate the question of showing a defence on the merits, but the record shows that counsel for the bank made his client's position clear that he would oppose the re-litigation of that issue and would confine his submissions to the propriety and regularity of the judgment which he conceded the appellants were entitled to raise for determination. The outline of argument on appeal and the further argument on appeal go beyond the material that was before the learned chamber judge. Seemingly there was an attempt to assert some impropriety on the part of the bank in dealings concerning a guarantee which is said to have triggered the default under the appellants' mortgage. All that can be said at this point is that if the appellants were attempting to reactivate the issue of showing a defence on the merits, and assuming in their favour that they were entitled at that stage to do so, the material they presented failed to achieve that objective.

[1] Such changes were made in the United Kingdom in 1936 and in Queensland in 1959.

[9] Matthews v General Accident, Fire and Life Insurance Corporation Limited [1970] QWN 37.

At a glance

Court

Decision date

Before

Source

Judgment (43 paragraphs)

Parties