National Australia Bank v Salubre

Supreme Court of NSW|2024-08-02|Before: Garling J, Elkaim AJ

JUDGMENT

In the course of being the Duty Judge on 1 August 2024, the Court heard a Notice of Motion filed by Mary Rose Salubre, the defendant, on 24 July 2024, seeking orders relevantly, in the following terms: "4. Order that pursuant to section 135(2)(b) of the Civil Procedure Act 2005 (NSW) and section 23 of the Supreme Court Act 1970 (NSW), pending further order of the Court, that the Sheriff be prohibited from taking any further action on the Writ issued by the Senior Deputy Registrar of the Court on 19th June 2024, authorising entry by the Sheriff at the Sheriff's Office, Parramatta onto the land at the whole of the land comprised in folio identifier 4/SP79889, being the land situated at, and known as Unit 4, 57-61 Penelope Lucas Lane, Rose Hill in the State of New South Wales. 5. Order pursuant to UCPR 49.19(1) that the default judgment for possession of land by the Registrar of the Court given on 12 August 2022 ("Default Judgment") be set aside. 6. In the alternative to Order 5, order that the Default Judgment be set aside insofar as it relates to the land comprised in Certificate of Title, Folio Identifier 4/SP79889, being the land known as Unit 4, 57-61 Penelope Lucas Lane, Rose Hill in the State of New South Wales ("Property"). 7. In the alternative to Order 6, order in the nature of certiorari pursuant to s 69(1)(e) of the Supreme Court Act 1970 (NSW) that the Default Judgment be quashed."
An order for costs was sought as well.
Having heard the Motion and reserved judgment overnight, on Friday 2 August 2024, I ordered that the Notice of Motion be dismissed and that the defendant, who was the applicant on the Motion, should pay the costs of the plaintiff/respondent, the National Australia Bank ("the NAB" or "the Bank").
I indicated that I would give reasons in due course. These are those reasons.

Present Proceedings

The orders sought in the Notice of Motion have been earlier set out.
In the course of submissions, counsel for the defendant submitted that the application set out in the Notice of Motion seeking a stay of the execution order was based upon two fundamental propositions. The first was that the entry of default judgment occurred in the absence of personal service on the defendant and, accordingly, since that was an entitlement of the defendant, default judgment cannot be maintained. The second premise was that the Equity proceedings provided a basis for an equitable set-off against the Bank's claim for possession because there was a direct connection between the matters pleaded in the Equity proceedings such that it would impeach the NAB's title now to obtain possession.
The NAB opposed the orders sought and submitted that the application for a stay should be dismissed. In making those submissions, counsel for the NAB focussed on the application to set aside the default judgment because, he submitted, that it was only if the Court was prepared to consider setting aside that default judgment that there were to be any basis for a stay of execution. He made the following points.
First, he submitted that the defendant had twice before attempted to set aside the default judgment and that there was nothing new in the evidence before this Court or which could not have been put before Campbell J. Secondly, he submitted that the defendant did not exhibit any draft statement of Defence to any affidavit, nor did she advance any grounds of defence to the NAB's possession claim. He submitted that, although given leave to file a Grounds of Defence by Elkaim AJ, no such document had been filed. In front of Campbell J, the defendant did not advance any defence to the NAB's claim.
The third reason advanced by the NAB was that the totality of the defendant's indebtedness to it was on the evidence in the sum of $967,948.00, whereas the NAB's estimate of value of the security property was a little under $600,000.00. Counsel submitted that the NAB faced a significant shortfall which told against the granting of a stay even for a limited period, having regard to the past history of delay in the proceedings.
He noted with respect to this submission that the defendant had not paid any amount at all to the Bank by way of reduction in principal or interest of the original loan since October 2022.
The fourth reason advanced as to why a stay ought not be granted was that there was no suggestion by the defendant that she had taken any steps to repay the Bank the amount claimed either by refinancing or attempting to refinance.
The fifth reason for opposing the grant of a stay was that this was not the first scheduled eviction. This particular eviction, it was submitted, was notified to the defendant on 24 June 2024, which was over a month before the Notice of Motion was filed.
Finally, the defendant submitted, there was no pleading in the Statement of Claim filed 14 June 2024 in the Equity Division (2024/220142 - Salubre & Ors v National Australia Bank) which had the effect of seeking to impeach the Bank's title to the Property, nor to impugn the mortgage which gave rise to the Bank's entitlement to possession.
Counsel submitted that all that was sought in the Equity proceedings were damages pursuant to the Australian Consumer Law, the Australian Securities and Investment Commission Act 2001 (Cth) or damages pursuant to s 991A(2) of the Corporations Act 2001 (Cth), and finally, compensation under s 237 of the Australian Consumer Law.
No relief of any kind was sought with respect to the original loan and the original mortgage over Unit 4. In fact, what was sought to be relied upon was conduct occurring in May 2019 through to December 2019, and representations made in January 2020, which was many years after the original loan and mortgage were entered into.

Further Evidence

To complete the picture with respect to the issue of whether the defendant was, notwithstanding the finding made by Elkaim AJ in his judgment, personally served with the originating documents in either 2020 or 2022 the defendant sought to adduce evidence which was additional to that which had been put before Campbell J.
In paragraph 60 of the affidavit of the defendant filed on 24 July 2024, she sought to put before the Court evidence of an event which was said to have occurred "… subsequent to the decision of Justice Campbell given on 27 May 2024".
The defendant then names the following affidavits from the following deponents as touching upon the same topic: Deponent Date Mary Rose Salubre 21 May 2024 and 27 May 2024 Normary Chadnovsky 29 May 2024 Neptali Bundock 2 June 2024

As well, the defendant sought to identify and rely upon other affidavits sworn prior to 27 May 2024, which were either read, or were available to be read but not read, before Campbell J.
Objection was taken to paragraph 60 of the defendant's affidavit by the Bank. After submissions, I ruled that the contents of paragraphs 60 and 61 (which I have summarised above) were admitted subject to a limitation pursuant to s 136 of the Evidence Act 1995 that the contents of the affidavits which had been referred to in those paragraphs could not be used in evidence to prove their truth.
In summary, the affidavits refer to an incident said to have occurred at about 1pm on 27 May 2024, where it was said that Mr Khoury, the deponent of the affidavits of service as that had originally occurred, had been confronted by the defendant, in the area outside the court room in which Campbell J was sitting, with the proposition that he had, in truth, not served the originating process personally on the defendant, and that other aspects of his sworn affidavits were not true. It was said that Mr Khoury had moved swiftly, or run, to the lift area on Level 10 and left the presence of the three deponents.
The affidavit of the defendant of 27 May 2024 was sworn at 7.45pm on that evening. It was presented on the title page of her then lawyers, although it is unclear who prepared it.
I should also note that it was agreed between counsel for the parties that Campbell J did not commence to deliver his ex tempore judgment on 27 May 2024 until after 2pm.
Whilst I accept that the sworn affidavits were not prepared prior to the delivery of the ex tempore judgment by Campbell J, accepting the accuracy of the affidavits now sought to be put before the Court, any event must have occurred about an hour before judgment commenced to be delivered.
There was more than sufficient time for instructions about that event to be provided to counsel and solicitors then acting for the defendant, for those lawyers to assess the evidentiary worth and forensic relevance of such incident, and if they formed the opinion that the incident was of evidentiary worth, to raise the matter with Campbell J before his Honour commenced to deliver judgment.
There is no suggestion that such incident as did occur, if that ultimately be proved, was ever sought to be raised before Campbell J, nor is there any evidence before me that the lawyers had any knowledge of what had occurred, nor any evidence as to why such an incident (if it occurred) was not drawn to their attention.
If it was drawn to the attention of the defendant's lawyers, I would infer that the incident was not regarded as being of sufficient relevance or importance for the matter to be raised with Campbell J, even though there was a sufficient opportunity for that to occur.
I do not regard the material in the affidavit now sought to be relied upon as either being "fresh evidence" or "new evidence" of a kind which, without more, would justify a complete review of the previous decisions not to set aside the default judgment.
Taken at its highest, this further material raises an inference said to be favourable to the defendant, that Mr Khoury's behaviour in moving swiftly, or perhaps running, to the lifts and avoiding providing answers to assertions made by the defendant about evidence which was the subject of debate before the Court, was only referrable to him admitting the truth of the defendant's assertion about non-service. In my view, such an inference is not available because Mr Khoury's conduct is equally referrable to his desire to avoid a personal and somewhat unexpected confrontation and an understandable view that he should not be engaging directly with other witnesses about their contrary views.
Even if such material was put before Campbell J, having regard to his Honour's reasons, and the fact that his Honour did not determine the matter before him by reference to the substantive question of whether or not personal service had been effected, it would not have been a relevant fact for his determination.

Discernment

The second matter, with which it is convenient to deal with at the outset, relied upon by the defendant to support the relief claimed was the existence of a set‑off available to the defendant which ought to be finalised before the possession proceedings.
The evidence was clear that the proceedings which had been commenced by Statement of Claim in the Equity Division by the defendant (and others) claims damages for the conduct alleged to have occurred on behalf of the NAB as for which the NAB has a legal liability in 2019 and 2020, which it is said caused the defendant (and others) loss. That pleading did not in any way attack the loans which were in default, and which gave rise to the default judgment and the issue of the Writs of Possession at various times with respect to Unit 4.
Nor was it suggested that the original loan had been repaid in full, or that any default had been remedied. Nor was it suggested that the position of the defendant was anything other than that the sum outstanding under the loan was well in excess of the value of the mortgaged property, Unit 4, the subject of the Writ of Possession.
There was of course no suggestion that if the defendant, and her fellow litigants, recovered damages from the NAB, in due course, that the NAB would not be able to meet any judgment.
I was satisfied that the existence of the proceedings in the Equity Division did not give rise to any possible set-off in law or equity of a kind which would warrant any stay on the Writ of Possession and the appointment fixed by the Sheriff. In my view, these current possession proceedings brought in the Common Law Division and by the defendant in the Equity Division, were not so connected as to give rise to any suggestion of mutual dealings or other legal basis for there to be any set‑off.
This conclusion accords with the notations agreed to by the lawyers for the parties with respect to the orders made by Sweeney J on 20 April 2023. At that time, the Court noted the agreement of the parties in this respect: 1. The plaintiff holds default judgment entered on 12 August 2022 for possession of the following mortgaged properties [Unit 4]. 2. The filing of any cross-claim by the defendant will not affect the plaintiff's rights under its registered mortgages over the properties, the default judgment or under any Writs for Possession or Writs of Restitution issued by the Court.
This acknowledgment by the lawyers for the plaintiff accords with the conclusion to which I have just come.
I should say for completeness that the defendant seems to dispute that her lawyers acted upon her instructions or without her knowledge. It is sufficient for me to note that in contested civil litigation, where the plaintiff is represented by a lawyer, the making of these consent orders and notations is well within the authority of her lawyer. She is bound by the conduct of her lawyer.
The first matter relied upon by the defendant in this Notice of Motion was the failure, according to her account, of the Bank to prove that the originating process had been personally served upon her prior to the entry of default judgment in 2022.
It was said that there was a reasonably arguable case that this was so, and that she was therefore entitled to have a full hearing of her application to set aside default judgment and a stay was necessary to permit such a hearing to occur.
I concluded that it was inappropriate, and contrary to the interests of justice, to exercise the Court's power to grant the application for a stay of execution to enable the issue of personal service to be ventilated, thereby enabling a conclusion to be reached on whether or not the plaintiff's claim that she had not been personally served prior to the entry of default should be determined.
It is necessary to examine some of the evidence before the Court.
According to the affidavit of Justin Kang, the solicitor for the NAB, upon which he was not cross-examined, and which I accept, on 18 January 2020, the occupiers of Unit 4 were served with the originating process and other accompanying documents.
Similar service on the occupiers occurred with respect to the two other properties.
On or around 29 January 2020, the defendant sent a letter to the NAB enclosing a number of statutory declarations of individuals who affirmed that they were tenants of the Unit 4 property. The defendant requested the Bank to refrain from taking enforcement action for a period of at least six months.
The fact that such a letter was sent by the defendant to the NAB at that time, in particular requesting that the Bank refrain from taking enforcement action with respect to the mortgaged properties, including Unit 4, satisfies me that at least by the time she wrote the letter, the plaintiff had personal knowledge of the originating process. Or, put differently, the substantive contents of it had come to the plaintiff's attention.
In September 2021, the solicitor for the NAB sent to the defendant by email, a Notice of Motion in which the Bank sought to reinstate the proceedings after the they had been placed on hold due to the COVID pandemic. About 10 days later, the solicitors for the Bank received a letter from the defendant, by email, acknowledging receipt of that letter and asking the Bank for a period of four to six months to enable finalisation of the sale of various properties and other matters with the Bank. There is no reason why such a letter would be written unless the defendant had full knowledge of what these proceedings involved, and in particular that the Bank was taking enforcement action by way of seeking a judgment for possession.
I am satisfied by at least this point in time that the existence of the proceedings, including the originating process, had come to the defendant's attention. No agreement was reached, although correspondence was entered into, in the balance of 2021, seeking that the Bank forbear from taking any further action.
On 10 March 2022, the solicitor for the Bank sent a letter by email to the defendant noting that she had failed to file a Defence by 9 March 2022 which was 28 days after service of the Statement of Claim upon her according to the affidavit of service of Mr Khoury. The letter informing the defendant that at the directions hearing before the Court on 14 March 2022, the Bank was going to seek for the matter to be adjourned for four weeks, during which the Bank intended to apply for default judgment.
Late on the evening of 10 March 2022, the solicitors for the Bank received an email from the defendant raising a number of issues and requesting them to: "kindly withdraw the proceedings as I have put the [Lidcombe] property on the market, the proceeds of which are more than adequate to discharge the mortgage against all properties with the NAB in its entirety". The email went on to say: "I reiterate and request that the proceedings be withdrawn or at least adjourned until we resolve these issues."
Having been warned of the Bank's intention to apply for default judgment, the defendant made no complaint that she had no knowledge of the proceedings because she had not been served with the originating process.
I am satisfied that by 10 March 2022, if not much earlier, the defendant was fully aware of the existence of the proceedings and that the originating process had come to her attention. I note that my satisfaction accords with the finding of Elkaim AJ that personal service occurred on 9 February 2022.
In June 2022, the solicitor for the Bank notified the defendant that the NAB had instructed him to apply for default judgment, which they would do without further notice to her, with such application to be made shortly. Again, no complaint was made about the lack of personal service of the originating process.
On 7 July 2022, the Bank applied for default judgment for possession. It supported its application with proof of service. This application was notified to the defendant on the following day.
On 12 August 2022, orders for default judgment were made. I am well satisfied on the material before me, including all of the material in the affidavit of Mr Kang (only some of which I have referred to) that at the time the application for default judgment for possession was lodged, the defendant had been personally served on 9 February 2022 with the originating process or, if not, that for at least three months before the application for default judgment, the originating process had come to the defendant's attention and that she had made no assertion that she was unaware of the originating process nor that it had not been served upon her personally.
The judgment of Elkaim AJ declined to grant a stay on the eviction scheduled for 3 April 2023. Although his Honour did not determine whether the judgment should be set aside, he granted leave to the defendant to file a Notice of Grounds of Defence prior to 20 April 2023. That Defence, or even a draft of it, was, as Elkaim AJ envisaged, to be used for the purpose of the defendant pursuing the application to set aside the judgment. So far as can be seen, at least with respect to that application, there was no assertion that the originating process had not been personally served. Indeed, there was a finding to the contrary.
As earlier indicated, on 21 April 2023, when the matter was the subject in part of consent orders by Sweeney J, the Notice of Motion seeking to set aside the judgment was dismissed and the parties asked the Court to note their agreement as earlier described with respect to the existence of the default judgment and the Bank's rights under that default judgment or "under any Writs for Possession … issued by the Court".
The orders made by Elkaim AJ and then by Sweeney J by consent, so it seems to me, represent a finalisation of any issue about the validity or appropriateness of the default judgment. To the extent that the defendant had any claim that the judgment was irregularly entered or was not adequately based on proper evidence, those claims had been abandoned by the defendant and resolved by the making of the consent orders.
Lest there be any doubt about that issue, the further litigation by way of an application by the defendant to set aside the default judgment was finalised and disposed of by the judgment of Campbell J on 27 May 2024.
No application for leave to appeal was brought from any of those judgments. No defence to the Bank's claim has ever been provided to the Court. The defendant has instructed lawyers to appear for her. She has fully participated in the litigation. She now seeks relief by way of the exercise of the Court's discretion to stay an eviction at the last moment, on a solely technical basis that while she has received all of the documents in the matter, she was not "personally served" with them.
By the time matter reached me, there was simply no basis upon which the Court ought exercise its discretion to stay the eviction so as to hear yet another application to set aside the default judgment where there is no evidence that the defendant has any defence to the claim, as her lawyers have previously acknowledged.
There was no evidence and no persuasive reason provided as to why the Court would do so.
It was for these reasons that I indicated on 2 August 2024, that the applicant's Motion was dismissed with costs.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 21 October 2024

Australian Consumer Law Australian Securities Investment Commission Act 2001(Cth)

Australian Consumer Law, the Australian Securities and Investment Commission Act 2001(Cth)

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