Meagher JA, Bergin CJ, Adamson J, Hall J, Hamill J
Source
Original judgment source is linked above.
Judgment (6 paragraphs)
[1]
[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
[2]
Judgment
THE COURT: On 28 February 2014 the respondent, National Australia Bank Limited (NAB), obtained a judgment for possession of the applicant's property at Korora Basin, New South Wales (the Property). By motion dated 1 July 2015 the applicant sought a stay of execution of the writ of possession on the ground that he had an arguable defence to NAB's claim. The primary judge (Adamson J) dismissed that application, treating it also as an application to set aside the default judgment: National Australia Bank v McCarthy [2015] NSWSC 1040.
The application before the primary judge was the third application to set aside the default judgment. Each of the earlier applications was dismissed, the first by Hall J (National Australia Bank Limited v McCarthy [2014] NSWSC 1819) and the second by Hamill J (National Australia Bank v Warren Brian McCarthy [2015] NSWSC 731), on the basis that the applicant had failed to demonstrate that he had an arguable defence on the merits.
On 3 August 2015 the applicant filed a Notice of Intention to Appeal and a Summons Seeking Leave to Appeal. The application for leave to appeal was heard on 24 November 2015. The applicant was granted leave to appear by telephone. His application for leave to have the person to whom he referred as "Elder John", speak for him was refused. Mr DC Price of counsel appeared for NAB.
Before turning to the grounds relied upon by the applicant in support of the application for leave to appeal it is appropriate to outline the background to the relationship between the parties.
Background
In 2005 the applicant refinanced a loan or loans owed to St George Bank (totalling $753,540.11) via a structured loan from NAB. On 22 August 2005, the applicant granted to NAB a mortgage over the Property. The applicant subsequently defaulted under the loan agreements and sold various assets in 2006 and 2007 (including a forklift from his business, another property in Korora and a unit in Coffs Harbour), paying the proceeds to NAB. In 2008, NAB and the applicant agreed to restructure the balance of the loan.
In March 2009, the applicant sold a second unit in Coffs Harbour and paid the net proceeds to NAB. However, there remained a deficiency. On 26 September 2013, NAB served a notice of default on the applicant. By letter dated 20 November 2013, the applicant's then solicitors wrote to NAB foreshadowing proceedings to set aside the mortgage on the grounds of misleading conduct. On 7 January 2014, NAB commenced proceedings by statement of claim seeking judgment for possession and the sum of $683,069.85. No defence was filed and NAB obtained default judgment.
By notice of motion dated 5 March 2014, the applicant applied to have the default judgment set aside. That motion was heard by Hall J on 26 November 2014. On 19 December 2014 his Honour dismissed the motion on the basis that the applicant had not shown that he had an arguable defence. During those proceedings the applicant appeared in person with Elder John as amicus.
The applicant applied for leave to appeal from Hall J's judgment but ultimately did not pursue the application. On 24 February 2015 the applicant was granted an interim stay by the Court of Appeal as well as leave to issue a subpoena to NAB returnable on 16 March 2015. NAB produced documents to the Court on that date in answer to the subpoena.
The applicant again moved the Court by notice of motion dated 18 May 2015 to have the default judgment set aside. Hamill J dismissed this motion on 16 June 2015 on the basis that the applicant had failed to establish an arguable case on the merits. The applicant appeared before Hamill J via video link from Coffs Harbour and sought to be represented by Elder John. It was pointed out that there was some conflict of interest because the church of which Elder John is an elder lodged a caveat on the Property. However Hamill J allowed Elder John to act as a McKenzie friend.
[3]
The Judgment
The primary judge referred to the abovementioned background and the underlying transaction culminating in the notice of default being served on the applicant by NAB. The primary judge then referred to the additional evidence of the applicant's tax return for 2005, indicating a loss of $712; a forensic report dated 13 July 2014 from a firm of accountants; and a document from Aussie Home Loans dated 12 December 2013 confirming that it had refused an application to finance in 2005. Reference was also made to a projected cash flow document, related to the applicant's business, for the year ending 30 June 2006.
After setting out the history of the litigation, the primary judge correctly identified, with respect, the applicable principles and listed the six matters on which the applicant relied to establish an arguable defence on the merits (at [27]).
The first three of those matters were: (1) NAB ought not to have lent him money in 2005 because he had no, or insufficient, income to repay the loan; (2) his lack of income amounted to a special disadvantage; and (3) NAB engaged in "asset lending" and therefore should not be permitted to recover the outstanding loan monies. In respect of these matters the primary judge referred to the applicant's contention that it was unconscionable for a lender to lend money to someone whose income was such that repayments could not reasonably be met and in circumstances where default would necessitate the sale of that person's only asset. The primary judge was not satisfied that the evidence adduced supported these allegations so as to give rise to an arguable defence on the merits. Her Honour found that the evidence was largely to the contrary, referring to the applicant's ownership of three properties and a business with a substantial cash flow. Her Honour could find nothing in the evidence to suggest that the applicant was absolved from the responsibility of repaying the moneys that he had borrowed.
The fourth matter relied upon by the applicant to establish an arguable defence on the merits was that NAB created a false document in respect of his income knowing that he did not have income of the magnitude documented. The primary judge referred to the applicant's concession that the signature on the subject document appeared to be his and his allegation that a bank officer had copied his signature from other documents. Her Honour rejected that allegation as scurrilous, mischievous and unsubstantiated.
The fifth matter relied upon by the applicant was that NAB was in breach of the Code of Banking Practice. The primary judge concluded that this matter depended upon the earlier submissions and that the applicant had failed to identify an arguable basis for this proposition.
The sixth matter was that the doctrine of subrogation (by which NAB relied on defaults under the securities granted to St George as providing a separate basis for its claim to possession) did not apply because when the applicant moved from St George Bank to NAB the arrangement was a restructure, not a refinancing, of the loan. The primary judge rejected this argument as having no bearing on the availability of subrogation to NAB. Her Honour concluded that as the applicant did not challenge the "justness or enforceability of the loan from St George", he could not overcome the application of the doctrine of subrogation having "obtained the benefit of the NAB's repayment of his indebtedness to St George Bank" (at [38]).
The primary judge was satisfied that the applicant had not established an arguable defence on the merits and that there was no proper basis for setting aside the default judgment.
The primary judge entertained the applicant's application because it was not clear that all of the matters referred to were raised in the previous application before Hamill J. However her Honour concluded that "he essentially sought the same relief" in each application (at [40]). In this regard the primary judge expressed the view that there was a possibility that the applicant had been given a greater opportunity to identify an arguable defence than that to which he was entitled but had failed to do so.
[4]
Grounds
The grounds relied upon in support of the application for leave are contained in a notice of motion filed on 3 August 2015 and a notice of appeal dated 14 September 2015. Those grounds can conveniently be summarised as: (1) the primary judge erred in failing to have regard to medical evidence when refusing the applicant's request for leave to allow Elder John to speak on his behalf at the hearing; (2) the primary judge failed to have proper regard to the evidence in reaching her decision to dismiss the application to set aside the default judgment; (3) there was a failure by NAB to give full disclosure of "'Income Verification' required for the approval of a full Doc loan"; and (4) the primary judge erred in failing to consider "Income Verification" for the applicant.
The applicant's submissions
The applicant submitted that he was denied procedural fairness in that he was denied a "fundamental right to full disclosure". This is said to arise from NAB's alleged failure to comply with the subpoena served on it by the applicant on 27 February 2015 concerning documents evidencing "income verification" in relation to the applicant's 2005 loan application. The applicant claimed that he is in no position to provide evidence or file appropriate submissions in defence of NAB's claim without proper compliance with that subpoena. The applicant contended that in making that loan NAB had failed to comply with the ASIC Regulatory Guide 209 concerning credit licensees and responsible lending conduct.
He also contended that the primary judge erred by "agreeing the defendants income recorded within bank CPR's being accurate without proof of claim"; "asserting the defendant's ability to meet loan repayments without proof of claim"; and "asserting the defendants loan was subjected to subrogation".
NAB's submissions
NAB opposed the application for leave to appeal on the grounds that: (1) the proposed appeal does not raise any question of principle or matter of public importance; and (2) the applicant has failed to demonstrate something more than that the conclusions of the primary judge were arguably wrong. Indeed it contended that a grant of leave to appeal would be futile as the proposed appeal is devoid of all merit.
[5]
Consideration
In respect of the first matter relied on: Although the applicant did not make any oral submissions in respect of the primary judge's refusal to allow Elder John to speak on his behalf, the written submissions suggested that the primary judge failed to have regard to some evidence that may have been before either Hall J or Hamill J on the previous applications. No medical evidence was tendered at the hearing before the primary judge (tcpt 23/07/15, p 4). Furthermore there was evidence that Elder John was a member of the church that had placed a caveat on the Property. In the circumstances, Elder John appeared to have a conflicting interest in the outcome of the proceedings. It was for that reason that the primary judge refused the application. Her Honour did not err in doing so. It was for the same reason that a similar application made to this Court was rejected.
In respect of the second and fourth matters: These complaints are related to the alleged failure of disclosure by NAB described in the third matter above. The applicant's written and oral submissions do not specify any particular respect in which there was relevant evidence before the primary judge which she did not take into account. Her Honour's reasons indicate that she considered the applicant's submissions concerning tax returns and other financial documents provided to NAB in support of his loan application. Assuming that "Income Verification" refers to NAB's receipt and assessment of those documents, the primary judge referred to the material tendered before her (especially at [28]-[34]) and rejected the applicant's submission that details of his income had been knowingly falsified by the bank. None of these matters suggest error on the part of the primary judge.
In the course of oral argument, the applicant also complained that NAB had not properly answered the subpoena issued in February 2015 and that it had failed to comply with various Codes of Conduct. The former matter was not the subject of any application to or ruling by the primary judge. The latter was argued and dealt with (especially at [35]), and her Honour's reasons do not reveal error.
[6]
Conclusion
The proposed appeal has no apparent prospects of success. For that reason leave to appeal should be refused. Accordingly, the application for leave to appeal is dismissed with costs.
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Decision last updated: 27 November 2015