By amended notice of motion filed in Court on Thursday 29 August 2019 the defendant sought an order or orders preventing the Sheriff from executing a writ of possession over certain real estate located at Point Piper and identified in the pleadings and earlier orders of the Court. The Sheriff has indicated an intention to take possession of the land on 10 September 2019. Meanwhile, the defendant has a notice of motion to set aside the default judgment upon which the writ of possession is based. That application is listed for determination before this Court on 17 September 2019.
The matter was heard in the course of a busy duty list on the day the amended motion was filed, and judgment was reserved with a view to delivering judgment the following day (Friday 30 August 2019). The Court's work-load prevented that from occurring and the matter was listed for decision today (Monday 2 September 2019) so that the evidence and submissions could be considered more closely and judgment prepared over the weekend. Accordingly, these reasons are brief and, maybe, do not do justice to the careful submissions made by counsel on each side.
At the hearing of the notice of motion, the defendant read two affidavits (with annexures) and tendered a letter over objection to which brief reference is made below. The plaintiff read three affidavits of its solicitor and, over objection, an affidavit of service of the statement of claim and other documents. Both parties relied on written submissions, supplemented by submissions made during the course of last Thursday.
The plaintiff commenced the proceedings by statement of claim filed 23 May 2019. The dispute between the parties arises out of a loan agreement between the plaintiff and a company called Australian Property Enterprise Pty Ltd as trustees for Australian Property Trust. The statement of claim asserts that the defendant is "the guarantor, debtor and mortgagor" of that loan agreement. The agreement and guarantee arose on or about 1 November 2018. The terms included payment of interest on the first day of each month.
The statement of claim also sets out the distribution of money under the loan agreement, including around $1.5m to Rita James on 16 November 2018. Rita James is named as the vendor of the property in a contract for sale of land in which the defendant is named as purchaser. The statement of claim asserts that no interest payments were made between February and May 2019.
The statement of claim was served on 4 June 2019 and sought judgment for possession of the land and leave to issue a writ of possession forthwith. In the usual way, the pleading put the defendant on notice that default judgment could be entered if a defence was not filed within 28 days, that is by 2 July 2019. The defendant filed a notice of appearance on 25 June 2019 and there was some correspondence between the lawyers concerning particulars.
On 3 July 2019, the plaintiff's solicitor wrote an email to the defendant's solicitor indicating an intention to apply for default judgment. Further emails were exchanged that day. The plaintiff, as was its right, declined to indulge the defendant in a further 28 days to file a defence. The correspondence between the solicitors is typically curt. The defendant's (then) solicitor indicated that there was a draft defence and provided a copy. However, he said that the defendant was in hospital and that this created problems in verifying the pleading. On 5 July 2019, the plaintiff's solicitor asked for "paperwork which supports your client's admission to hospital" (a matter that is no longer, if it ever was, in dispute). [1] On 5 July 2019 the defendant's solicitor provided a copy of a draft defence. Importantly, for present purposes, that draft defence admitted the paragraphs of the statement of claim that pleaded the loan, mortgage and guarantee.
No defence was actually filed in spite of the plaintiff's solicitor indicating that the defence was defective, required particularisation and, again, foreshadowing an application for default judgment.
On 11 July 2019 the plaintiff sought default judgment for possession of the land. Default judgment was entered the following day on 12 July 2019.
On that very day (12 July 2019), the defendant filed a notice of change of solicitor and the new solicitor wrote a letter to the plaintiff's solicitor which was admitted over objection. I have given little or no weight to most of the contents of this letter. I accept its contents are controversial. However, what is not disputed is that the defendant indicated an immediate intention to seek to have the default judgment set aside. I was told from the bar table, and I accept, that there was some internal glitch in the office of the plaintiff's solicitor whereby that letter did not come to the attention of the senior associate, or partner, or solicitor with carriage of the matter. I accept that there was no bad faith in the event that followed and, insofar as it is necessary to determine the question, reject the suggestion in some of the defendant's submissions that the plaintiff's solicitors acted inappropriately. Even so, the chronology around these events, and those that followed shortly thereafter, speaks for itself.
On 15 July 2019 - that is 3 days after default judgment was entered and the defendant indicated an intention to seek to have the default judgment set aside - the plaintiff sought leave for the issue of a writ of possession of the land.
On 18 July 2019, the defendant filed a notice of motion seeking to have the default judgment set aside. The motion was supported by an affidavit which included a proposed defence in a very different form to that referred to in paragraph [7] above. In particular, the defendant denied the paragraphs of the statement of claim pleading the guarantee and contract and asserted, to put it in very general terms, that she did not understand the documents she was signing as a result of various matters such as her lack of understanding of English, the lack of legal or financial advice, her lack of engagement with the parties, and her failure to receive any benefit from the transaction. She also asserted that particular terms of the contract are "exorbitant and unjust".
On 25 July 2019, the defendant's motion came before the Registrar. The records of proceedings around this time are a little opaque but I gather the hearing date (for the motion) of 26 July 2019 was vacated and the matter was re-listed on 27 July 2019 for directions. On that date, the notice of motion to set aside judgment was listed "before a Common Law Judge for hearing on 17 September 2019 (estimate half day plus)."
Meanwhile, and I suspect in ignorance of the application to set aside the default judgment upon which the writ of possession was based, the Sheriff took steps to take possession of the property. On 1 August 2019 a notice to vacate was generated. It is not completely clear when this was served on the defendant or on the occupier of the property but the notice was brought to the attention of the defendant's solicitor on 7 August 2019. The following day, the defendant's solicitor wrote to the plaintiff's solicitor asking it to consent to orders staying the writ of possession. Accusations were made that to proceed to take possession of the property, in the circumstances set out above and in light of the pending motion to set aside the default judgment, would amount to acting in bad faith. It is unnecessary to make any comment, one way or the other, on that accusation. On 13 August 2019 the plaintiff declined to consent to any such orders.
The defendant then filed a notice of motion seeking a variety of orders and the matter came before the Registrar and Ierace J on 23 August 2019. The motion was adjourned for hearing on 29 August 2019 with various directions. As I have said, a revised notice of motion was filed in Court on the hearing before me.
The plaintiff maintained its opposition to the order staying the writ of possession notwithstanding that the hearing of the application to set aside the default judgment, upon which the writ is based, is due to be heard on 17 September 2019. The plaintiff submits that the defendant has no real defence to the claim for possession. It is clear, on the plaintiff's case, that the money was advanced and used to purchase the real property subject of the writ and that nothing in the proposed defence can defeat the claim for possession made by the plaintiff. The plaintiff submitted that it would be open to allow the property to be sold but to make orders that the plaintiff pay any surplus into Court or into a controlled fund in the event that the defendant is successful and is entitled to repayment of any of the money advanced. Similar orders were made by Davies J in Nibar Investments Pty Ltd v Manikad Pty Ltd [2014] NSWSC 920 although that was an application for summary judgment for possession, along with an application to bring a cross-claim against a third party. The factual circumstances are similar in some ways but the procedural history is very different.
The plaintiff also relied on cases such as Magnate Projects Pty Ltd v Youma Constructions (No 2) Pty Ltd [2005] NSWCA 331 and Allesch v Maunz (2000) 203 CLR 172; [2000] HCA 40 to make the point that, even if the procedural history here suggests that execution of the writ should be stayed until there is a determination on the motion to set aside default judgment, this will make no difference to the ultimate outcome and, accordingly, the relief sought by the defendant should be declined.
The plaintiff's submissions are premised, as it were, on their correctness and on its certainty (which it is submitted the Court should share) as to the outcome of the case. It may be ultimately that the plaintiff is correct and that the defence proposed to be conducted by the defendant has little or no merit. However, the history I have recounted, and the fact that the application to set aside the default judgment is listed on 17 September 2019 with an extended time available for the making of arguments, suggests strongly that these are matters better ventilated at that hearing.
I accept there is potential for prejudice because the plaintiff is not receiving interest payments, has been denied use of the money advanced and cannot sell the property subject of the mortgage. I also accept that there is doubt over the value of the property, a matter which counsel for the defendant says will be rectified by the time of the hearing of the application to set aside the default judgment. The limited evidence there suggests that the sale of the property, if that is finally what happens, will yield sufficient funds to compensate the plaintiff both for the principal, interest and incidental costs associated with the transaction and the litigation. I also accept that, for practical reasons, staying the writ until 17 September 2019 (or until a decision on the motion to set aside) will result in a much longer delay in possession being obtained by the plaintiff: see, for example, the observations of Fagan J in Capital Securities XVII Pty Ltd v Martinovic [2019] NSWSC 1062 at [43].
However, notwithstanding the powerful submissions made by the plaintiff, the chronology of events and the procedural history leads to the conclusion that the interests of justice require that the writ of possession be stayed until the application to set aside the default judgment is resolved. On the limited material, I cannot determine that the defendant's case is unarguable or hopeless or destined to fail, assuming that is the appropriate question to address at this stage of the proceedings. I have significant doubt that the Sheriff would have moved on the writ, or issued the notice to vacate, had they been aware that the Court had already listed a motion to set aside the default judgment for possession on 17 September 2019. There is an element of speculation in that proposition but it seems a reasonable assumption to make in a sensible, just and practical world, notwithstanding the legal entitlement or duty of the Sheriff to act and the legal rights of the plaintiff under extant orders of the Court.
For those reasons I will stay the execution of the writ of possession.
As to costs, I can see no reason why costs of the motion should not follow the event. The defendant acted promptly to advise that it intended to seek to have the default judgment set aside and, once it became aware of the actions of the Sheriff, gave the plaintiff the opportunity to consent to orders that would mean the issue was deferred until the hearing of its motion to set aside the default judgment. The defendant should have her costs of the motion.
Accordingly, I make the following orders:
1. Stay the execution of the writ of possession until the resolution of the defendant's notice of motion to set aside the default judgment.
2. The plaintiff is to pay the defendant's costs of and incidental to the notice of motion.
[2]
Endnote
The evidence includes an operation report from Prince of Wales Hospital indicating that there was surgery performed on the defendant's lower back on 5 July 2019.
[3]
Amendments
03 September 2019 - Solicitor details amended
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Decision last updated: 03 September 2019