McCarthy v National Australia Bank Ltd - [2015] NSWCA 230 - NSWCA 2015 case summary — Zoe

McCarthy v National Australia Bank Ltd - [2015] NSWCA 230 - NSWCA 2015 case summary — Zoe

Judgment

BASTEN JA: Mr McCarthy, by a notice of motion filed on 3 August 2015, seeks a stay of the execution of a writ of possession obtained by the respondent Bank with respect to land owned by the applicant at Korora, on the New South Wales north coast.
The writ of possession resulted from a default judgment obtained by the Bank on 28 February 2014. Mr McCarthy has taken proceedings on three occasions to have that default judgment set aside. His underlying complaint appears to be that the Bank obtained default judgment because his solicitor failed to attend at a "directions hearing" before the Registrar on 28 February 2014. The reason why default judgment was entered was simply that no defence had been filed within time.
On 5 March 2014 the applicant filed a notice of motion seeking to have the default judgment set aside and seeking leave to file a defence. That matter was dealt with by Hall J in the Common Law Division on 19 December 2014, the motion being dismissed. The applicant then sought leave to appeal from that motion, a matter which came before me on 24 February 2015. At that stage the applicant was seeking an interim stay and leave to issue and serve a subpoena on the Bank.
I granted the requisite leave and steps were taken in that regard, the matter coming back before the Court on 16 March 2015. However, on 1 May 2015 the applicant discontinued his application for leave to appeal, the proceedings in this Court being dismissed with costs. [1]
On 27 May 2015 the applicant appeared before Hamill J on a further application to set aside the default judgment. The application was supported by a draft "defence" and an affidavit of the applicant. Hamill J did not consider that an arguable defence was disclosed and accordingly dismissed the motion with costs. No appeal was taken from that decision.
On 1 July 2015 the applicant filed a further notice of motion seeking a stay of execution of a writ of possession which by that stage had issued. The matter came before Adamson J on 23 July 2015. Although there was no application to set aside the default judgment, at the Court's suggestion an application was apparently made orally during the course of the hearing of the motion and was addressed by the judge.
The application to set aside the default judgment before Adamson J, being the third such application, the judge was understandably concerned that the process was abusive. Nevertheless the Bank, not taking such a point, she determined the application on the merits. By way of a part explanation of how that stage may have been reached, it may be noted that there was some discussion before me with respect to the production of documents on subpoena to the effect that if a new factual issue were raised, the preferable course might be to make a fresh application in the Common Law Division rather than challenge the judgment given in absence of the additional material. However, it is not clear that there was such a basis to the later applications.
The Bank has also noted its view, expressed before Adamson J, that the third application was an abuse of process. That is relevant in the present proceeding to the extent that it may foreshadow a notice of contention to that effect on an application for leave to appeal against the judgment of Adamson J, being an application which is not before me for decision today.
The judgment of Adamson J was handed down on 29 July 2015. [2] On 3 August 2015 a summons seeking leave to appeal was filed in the Registry of this Court. No notice of appeal in draft form has been provided, time being sought for the applicant to obtain a transcript of the proceedings before the primary judge. I accept that no transcript has yet become available to the applicant. Nevertheless, if there is fault with the judgment of the primary judge, then that should be ascertainable from the judgment that was delivered and which is available.
The notice of motion seeks a stay of the judgment of Adamson J of 29 July 2015 and a stay of the writ of possession until such time as the applicant receives a copy of the transcript to file a defence. Adamson J dismissed a motion seeking a stay of the execution of the writ of possession and seeking to set aside the default judgment. There is nothing to be done by way of a stay of that decision. Rather the substantive issue is whether this Court should grant a stay of the execution of the writ pending determination of the application for leave to appeal presently outstanding in this Court.
The issue comes before this Court on somewhat exiguous documentary material. A notice issued on 23 June 2015 (which is before the Court) requires vacant possession to be given by 9am on Tuesday 11 August 2015. In short the applicant has been on notice of the date of the proposed vacation for a month or more.
An application was made at the commencement of the hearing today, the applicant appearing at his own request by telephone, for a gentleman who goes by the name of "Elder John" to be heard to speak on his behalf. I allowed Elder John to speak at the hearing before me on 24 February 2015. The Bank, however, objected on several grounds. One was that the relevant evidence, being a report of a psychologist, did not demonstrate that the applicant was unable to speak for himself. Secondly, it was said that a trust which holds property for a church apparently identified with Elder John, has a caveat over the land which may give rise to at least the appearance of a conflict of interest between the two. As I was willing to hear Elder John put whatever could be put on behalf of Mr McCarthy and to hear from Mr McCarthy himself, it is not necessary for me to determine whether or not it was necessarily appropriate for that course to be taken.
The reason why the Bank has pressed the matter in the course of submissions this morning is that it apprehended, no doubt fairly, that one of the grounds of appeal sought to be raised with respect to the judgment of Adamson J was that she declined to permit Elder John to appear as a lay advocate in the proceedings before her. The applicant submitted that he was not in a fit state to conduct the proceeding before Adamson J and therefore did not do himself justice.
In my view that issue involves a discretionary decision made by a trial judge who had before her some material with respect to his state and was able to make a decision herself as to whether he was able to present material in a manner which should allow the Court to go ahead without hearing from a lay advocate. There is no material before me which suggests that the decision that Adamson J made in that respect is amenable to review by this Court. It is very much a discretionary decision. There is no right to have a lay advocate appear before one. There are very considerable reasons why that leave should be granted with caution and only in circumstances where it appears to be necessary. [3]
In fact the applicant did present his case and there is no suggestion in the judgment that the judge was unable to comprehend what points were sought to be made. She dealt in some detail with the points and they were points which fairly arose on the material before her.
The matter has been dealt with before me on two occasions when I have heard both from Mr McCarthy and from Elder John. It is fair to say that each has acted in a manner which is entirely appropriate in presenting submissions but that the submissions of each have demonstrated that neither has any better understanding of the matter, nor is able to present the matter more coherently, than the other. That is not to say that the applicant is not suffering from a depressive state of the kind identified by his psychologist and I am happy to accept that he is, although it may well be that the significant stress that he is under derives from these proceedings.
The suggestion that there may be an arguable procedural ground therefore based on the refusal to hear from Elder John is not a matter which I would think has any real prospect of supporting an application for leave to appeal in this Court.
Before turning to the substance of the matters raised before Adamson J it is convenient to dispose of two issues which arise from the judgment below, although neither is material to the outcome of the present application.
The first concerns the manner in which the judge dealt with an allegation of fraud against the Bank, which was said to have been involved in creating a false document by transposing the applicant's signature from one document to another in circumstances where the former document contained correct information as to particulars of his income, whereas the latter did not. The judge said in somewhat uncompromising terms that she rejected the allegation. [4] That was perhaps an overly categorical statement of the conclusion that on the material before her she did not consider the defence to be arguable. That is the way in which I will take that statement to be understood.
The second point concerns the judge's acceptance of a claim by the Bank that, regardless of the applicant's allegations in respect of the arrangements between him and the Bank, the Bank could rely on the doctrine of subrogation in support of its judgment. With respect to the way in which it is expressed in the judgment at [37]-[38], I think that the judge was misled. Mr Price has submitted to me that there is authority to support the proposition for which the decisions referred to [37] were proffered. The principle relied on was said to be found in a statement from Drew v Lockett [5] by the Master of the Rolls to the effect that a surety who pays off the debt for which he became surety, must be entitled to all the equities which the creditor whose debts he paid off could have enforced against the principal debtor. That principle was cited with approval by the High Court in Bofinger v Kingsway Group Limited. [6]
The principle is not to be doubted. However, it is not engaged in circumstances where the original debt and security are discharged by the debtor using funds provided by a second lender who was not a surety prior to the refinancing and obtained security by way of a fresh mortgage.
If, as Mr Price suggested, there are other authorities which may support the proposition set out in those paragraphs I am not in a position, nor is it appropriate for me, to deal with them today. Of course it is true that, for example, on a Contracts Review Act application a borrower may be limited as to the relief he or she can obtain where part or all of the funds have been used to pay out an existing obligation, but that is a different matter.
In any event whether or not the proposition stated at [38] of the primary judgment is correct or not, has no bearing on the outcome of the present motion. No doubt on the leave application it may be addressed by the Bank by way of further support for the reasons which led the primary judge to dismiss the application before her.
In substance the complaints made about the default judgment are twofold. One is that the loan arrangements were unjust, unfair and unconscionable and I have been referred to authority in support of the proposition that that may give rise to relief.
That undoubtedly is true as a matter of law. The availability of such defences, however, turns on questions of fact which must be made out by the applicant in order to support them. There was no material before Adamson J, nor is there any material before me, which would support the proposition that any arguable defence of that kind can be raised in this matter. What was found on different facts in other cases is beside the point.
Secondly, it is said that the applicant has not had a proper hearing. If by that it is meant that the applicant has not had a hearing of the merits of a disputed case, that is true but that is because he has not yet been able to satisfy a Court that he has an arguable defence to the claim brought by the Bank, in respect of which it now enjoys a default judgment.
The question, therefore, is whether this Court is likely to grant leave to appeal and to uphold an appeal from the judgment of Adamson J. No error has been identified in the judgment and reasons given by the primary judge which would support such a conclusion. My reading of the judgment, subject to the qualifications I have raised which I do not think cast doubt upon the ultimate conclusion, has not enabled me to identify an arguable basis upon which this Court would grant leave to appeal.
Absent an arguable ground of appeal, it follows that the application for a stay should be dismissed. It also follows that the motion must be dismissed; the Bank is entitled to its costs on the motion.
Accordingly I make the following orders. (1) Dismiss the applicant's notice of motion filed on 3 August 2015. (2) Order that the applicant pay the respondent Bank's costs of the motion.