National Australia Bank v Warren Brian McCarthy

Judgment

1. This is a notice of motion to set aside a default judgment obtained by the plaintiff on 28 February 2014. The judgment was for the possession of the land and for a debt said to be owed by the defendant to the plaintiff.
2. An application to set aside the same default judgment was heard by Hall J in November 2014. On 26 November 2014 his Honour dismissed the defendant's notice of motion that default judgment be set aside: see National Australia Bank v McCarthy [2014] NSWSC 1819.
3. Hall J's decision was subject to a proposed appeal to the Court of Appeal but, in circumstances of no present relevance, that appeal was not pursued.
4. Basten JA made certain orders on 16 March 2015 which facilitated the defendant's desire to issue a subpoena and allowed the parties to determine whether the best course was to return the matter to the Common Law division for a further application for setting aside of the default judgment. That is in fact what has occurred. The decision of Hall J does not disentitle the defendant from pursuing this application. So much is conceded by counsel for the plaintiff who takes no point in relation to the fact that a previous application was dismissed.
5. The material that was tendered on the application before Hall J was significantly more extensive than the material before me. In fact the plaintiff elected to present no evidence and relied on what it contends to be the "manifestly deficient" draft defence relied upon by the defendant. It is submitted by the plaintiff that the proposed draft defence discloses no arguable defence and that, in those circumstances, the notice of motion should be dismissed.
6. The defendant appeared by telephone link from Coffs Harbour. Arrangements for that to occur were made by the Registrar because of difficulties that the defendant had in travelling to Sydney for the hearing. When the matter was called for hearing, the defendant sought an adjournment on two bases. The first basis was that he was under the impression that the matter was only in the list "for directions". He said that had he known his motion was to be heard, he would have travelled to Sydney. The second basis was that he sought to be represented by a [McKenzie] friend, a man from his church known as Elder John. Elder John was late for personal reasons that I need not disclose.
7. As to the first basis of the adjournment application, the defendant said that he had an email from the Registrar indicating that the matter was only in the list for directions. I was unable to locate any such email on the file (although it would not necessary exist in paper form) and I asked him to read the email to the Court. The transcript records the content of the email as the defendant read it: "Your application to appear via telephone on Wednesday 27 May 2015 before Registrar Kenna has been approved. Your matter will be attended to in finalisation of the court list. There is no specific time as to when the court list will complete. It is advisable to make yourself available for a call from the court between the hours of 9am and 11am approximately. This is dependent on the length of the matters being heard before the registry."
8. There is no reference to the motion being listed for directions.
9. The plaintiff opposed the application for an adjournment. In view of history of the case, the fact that the defendant had filed all of the material upon which it relied and the absence of any evidence that suggested that the matter was listed for directions, I refused the adjournment application.
10. The plaintiff also raised some opposition to the defendant being represented by Elder John. It was asserted that there may be some conflict of interest because the church of which John is an elder lodged a caveat on the land subject to the litigation. The defendant maintained that he wanted Elder John to represent him. He was untroubled by the suggested conflict of interest. I resolved to allow Elder John to act as a McKenzie friend and stood the matter down in the Duty List to await his arrival in Coffs Harbour. He arrived less than an hour later and the matter proceeded
11. In support of the notice of motion the defendant relies on his affidavit filed on 18 May 2015. That affidavit has annexed to it a number of documents including two documents purporting to be either the proposed defence or a draft defence. I will return to those documents in due course.
12. The notice of motion sets out the grounds or bases upon which the defendant seeks to have the default judgment set aside. In view of the arguments made at the hearing of the motion, it is necessary to set out the grounds in full: "Annexure "A" 1) Strikeout claim for reasons - i. National Australia Bank has not complied with Basten JA orders for subpoena for disclosure of the full bank loan file as detailed thereon. ii. Precedents; Perpetual Trustee Company Limited v Albert and Rose Khoshaba [2006] NSWCA 41 (20 March 2006) (ref 128 p 24) and; iii. Precedents; National Australia Bank Limited v Jose Petit-Breuilh (No 2) [1999] VSC 395 (Supreme Court of Victoria No 5128 of 1997) iv. The Bank has deliberately refused to produce documented information requested under order of subpoena by Basten JA to conceal fatal evidence exposing the respondent to maladministration, fraud, and unconscionable conduct. 2) Claims alleged by Counsel for the Respondent on defence dated 13 April 2015: At 1 - The Respondent opposes the Application for Leave to Appeal. It evidently clear the Respondent attempts to deny the Applicant from having the case fully heard. It is undeniably evident the Applicant has a show cause against the Respondent. The Respondent has no lawfully documented loan application(s) to substantiate a lawful claim committed under lending principles and the rule of law. Perpetual Trustee Company Limited v Albert and Rose Khoshaba [2006] NSWCA 41 (20 March 2006) (Ref 128 p 24) To engage in pure asset lending, namely to lend money without regard to the ability of the borrower to repay by installments under contract, in the knowledge that adequate security is available in the event of default, is to engage in a potentially fruitless enterprise, simply because there is no risk of loss. At least where the security is the sole residence of the borrower, there is a public interest in treating such contracts as unjust, at least in circumstances where the borrowers can be said to have demonstrated an ability reasonably to protect their own interests, for the purposes of, for example, s9(2)(e) or (f). That does not mean that the Act will permit intervention merely where the borrower has been foolish, gullible or greedy. Something more is required: see Esanda Finance Corp Ltd v Tong(1997) 41 NSWLR 482 at 491(Handley JA) cited with approval in Elkofairi (supra) at [77] by Beazley JA. National Australia Bank Limited v Jose Petit-Breuilh (No 2) [1999] VSC 395 (Supreme Court of Victoria No 5128 of 1997) At 2 - The primary judge dismissed the Applicant's notice of motion seeking to have the default judgment entered on 28 February 2014 set aside. The Applicant advised the primary judge at the commencement of the hearing that legal representation was removed for failure of duty of care that being the core reason for the default judgment and proceeding at hand. The primary judge had both jurisdiction and discretion to set aside the default judgment having knowledge of the circumstances. ["Judge Hoeben - Adelaide Bank v John Abdelkodous & Anor]". A Notice of Motion to set aside a judgment that been entered in the banks favour. The judge set out principles that must be approved before the court will set aside or vary a judgment of the court. Rule 36.16(2)(a) of the Uniform Civil Procedure Rules provides that the court may set aside or vary a judgment or order if the order or judgment is a default judgment. Judge Hoeben set out the principles that had been earlier stated by Judge Hislop in Hamafam Pty Limited v Saadullah as follows: "a. whether the defendants have shown, a satisfactory explanation for the delay in filing a defence or moving to set aside the judgment; b. whether the default judgment was obtained without notice to the defendants; c. whether the proposed defence is asserted bono fide; d. whether, if the judgment was set aside, prejudice would be occasioned to the plaintiff; e. whether the proposed defence presents an arguable or triable issue; f. whether it would be futile to set aside the judgment." Judge Hoeben decided that judgment should be set aside and he set down a timetable for the filing of the defence in the conduct of the trial. The primary judge erred by ignoring principles at hand to set aside the default judgment, and knowing the case was not fully heard, and knowing that insufficient evidence was before him to conclude a just outcome. French J said (at 8) in Tetijo [Holding Pty Ltd v Keeprite Australia Pty Ltd (unreported, Federal Court, 3 May 1991)], "The categories in which the discretion may be exercised are not closed". Davies J expressed (at 6) similar views in Ragata [Developments Pty Ltd v Westpac Banking Corporation (unreported, Federal Court, 5 March 1993)]. At 3 -In seeking leave to appeal the Orders made by the primary judge on 19 December 2014, the Applicant seeks to rely upon an entirely new draft defence and seeks to adduce evidence not before the primary judge. It is fact, a draft defence is submitted under orders by Basten JA. The primary judge had little evidence before him from the defendant to adjudge a just outcome for reason given at 4 hereafter. At 4 - In those circumstances, for the reasons set out by Basten JA (with whom Young JA agreed) in Zippoz Pty Limited v National Australia Bank Limited [2011] NSWCA 164 at [31]-[32], leave to appeal should be refused. The said precedent sidesteps the grounds of argument in this matter. The Respondent has continually denied releasing documented evidence held within the bank loan file, and or that evidence fundamentally necessary for the Applicant to establish whether the alleged loan(s) were established according to income provided. Notwithstanding, and whether the Respondent or its servants allegedly advanced loan(s) knowing the applicant had little to no ability to meet or make repayments for the amount, and whether such loans were made according to the fundamental principles and regulations of lending. Until the Respondent establishes a proof of claim in compliance with the principles and laws, governing lending the said precedent is devoid from merit. The bank adopted the "Code of Banking Practice" on 11 August 2005; Atp11 25. Previsions of credit 25.1 "before we offer or give you a credit facility (we will exercise the care and skill of a diligent and prudent banker in selecting and applying our credit assessment methods and informing our opinion about your ability to repay it." Notwithstanding, the inclusion of the UCCC and the National Credit Code Practice (responsible lending). As expressed in a leading practitioner text of the nineteenth century: It is a general rule, that whenever a party, by fraud, accident, or mistake, or otherwise, has obtained an advantage in proceedings in a Court of ordinary jurisdiction, which must necessarily make that Court an instrument of injustice, a Court of Equity will interfere to prevent a manifest wrong, by restraining the party whose conscience is thus bound, from using the advantage he has there gained. It is obviously clear Basten JA determined it necessary to make orders for serving of a subpoena, affidavit, defence, and draft defence before any appeal was possible. Basten JA orders; 1) Applicant to file and serve by 4pm 7 April 2015 an affidavit annexing any material that he may wish to bring to the attention of this court in support of a defence together with a draft defence. 2) List the matter before the Registrar on Monday 17 April 2015 to determine the further progress of the matter in this court or if the parties think it should go back to the Common Law Division for remittal. Basten JA made no inclination of refusal instead making orders for resolve. Rich ACJ in Cabassi v Vila (1940) 64 CLR 130 at 138-139. If the judgment was obtained. ..by fraud and perjury, the plaintiff has ample remedy by law. The court which rendered the judgment, upon proof of those allegations, would be bound to grant a new trial, so that, upon further investigation, justice might be done. The witnesses, if found guilty, might be indicted for perjury, and so might all those be indicted who had unlawfully conspired together to deprive the plaintiff of his rights, and their conviction would afford most convincing evidence that a review of the action should take place: Dunlop n Glidden (1850) 52 Am Dec at 627-628. At 5 - The Respondent further submits that it would be futile to grant leave as the appeal is devoid of all merit: Jackson v Krakouer (1998) 195 CLR 516 at [7]. The precedent relied on fails, the case has not been fully heard before a court. At 6 - As to the first ground of appeal. There was no denial of natural justice to the Applicant. He had the opportunity to file such evidence as he wished. Orders for filing of evidence were made by the Registrar on 11 March 2014. The Applicant appeared at the hearing of the 26 November 2014 and made submissions. I was not personally served or given instructions for filing of evidence on or after 11 March 2014 by the court or my former legal practitioner. I had no knowledge of such orders until after the default judgment was made at which time I humbly relied on the integrity and honesty of my lawyer and the court. Counsel alleges, I made submissions on 26 November 2014.1 attended the court seeking the courts leniency for adjournment to a later date (see transcript at p 13 No 10 and p 14 No 15) that I could prepare and move forward with the proceedings. My pleas to the court were denied leaving no option but appeal to a higher court in hope the case could be fully heard. At 7 - As to the second ground of appeal: The Applicant had not made any application for production of documents by the Respondent prior to the hearing of his motion (see Transcript, 26.11.14, pi 3). He had 8 months to make such an application. The primary judge made no error in relation to the issue. Several attempts were made to the Respondent for disclosure of documents with continued denial. It was my understanding the lawyer had filed and served a subpoena on the Respondent. On 26 November 2014, a copy of the subpoena was handed to the primary judge. The primary judge accepted the subpoena giving it a court number (MF1#2) then handed the subpoena to the Respondent's Counsel who claimed no subpoena was on file. I then realized the subpoena was not filed and served, however the primary judge eluded he may allow the subpoena in a more narrower form. The primary judge made no mention of the subpoena in his judgment or any reason for not permitting. At 8 - As to the third ground of appeal: The Applicant had no "right" to be represented by the person described as "Elder John ". The person does not claim to be a legal practitioner. In any event, the primary Judge did not preclude the Applicant from receiving assistance from the person described as "Elder John" (see Transcript, 26.11.14, p 9). The primary judge made no error. I am member of the Church of Jesus the Christ. The Church appointed Elder John to assist me with the predicament I was faced with and the possibility of the loss of my home. Elder John is qualified in the Law of God and Holy Scriptures. He has a sound understanding of the Civil law. I authorized Elder John to act as my Power of Attorney and continues to do so. It is the religious belief of the Church that I use an Elder to settle disputes. I have a health problem, I suffer with duress, and other stress related issues and reason why I cannot represent myself. I submit herewith a doctor's report of my medical condition. At 9 - As to the fourth ground of appeal: There was no entitlement on the part of the Applicant to have the case "fully heard". His Honour made no error in confining himself to hearing the mention before him ". Such allegations are a travesty of justice, a miscarriage of justice, a total denial of inalienable rights. It is apparent the Respondent and Counsel willing to go to any extreme in attempt to prohibit a just outcome. Refer to 2 above for a more precise statement. At 10 - The Summons Seeking Leave to Appeal has been listed for hearing on 1 May 2015. As the Applicant is not represented by legal practitioners, the Respondent submits that the matter should not be heard in the absence of the public and without the attendance of the parties. It is not for the Respondent to decide or direct the Applicant or who can or cannot appear before the court. The Applicant made the application for appeal. The Applicant is entitled to be heard in open court and with any number of the public in attendance. This further attests the extent the Respondent is willing go to prevent disclosure from being exposed, and out of the eye of the public. At 11 - The Respondent notes that the Court has already determined that the Application for Leave is to be heard separately from the appeal. The case before court for appeal should be vacated and returned to the lower court for hearing considering a new draft defence is submitted necessitating a new hearing with new evidence for investigation by the court. On 10 April 2015 the Respondent conceded the lower court was the appropriate court considering a new defence was filed, (see attached email). At 12 - The Respondent submits that the usual rule as to costs should apply, namely, that costs follow the event. The Applicant should be ordered to pay the costs of the Respondents in this court. The Applicant likewise seeks damages at the courts discretion. Warren McCarthy Applicant"
13. The affidavit sets out in "Annexure B" a series of propositions which are, in truth, submissions. Indeed, they are couched in terms of submissions. Those matters are as follows: "I, Warren Brian McCarthy of 100 Jordans Way, Korora NSW 2450 affirm that the following is true to the best of my knowledge. 1. I submit - my former legal representation misled me into believing he was prudent and acting competently in my defense against the plaintiff. 2. I submit - my former legal representation without my knowledge made no appearance before the court on 28 February 2014 and in doing so the plaintiff entered into a default judgment. 3. I submit - my former legal representation deceitfully assured me he had filed into court the appropriate documents necessary for my defense and I not realizing until after telephoning the court prior to the court hearing date of 26 November 2014 to find he had not filed certain documents for any possible success against the plaintiff. 4. I submit - that about one week prior to the hearing of 26 November 2014,1 had no alternative but to dismiss my legal representation for reasons as stated. (Tab 1 Annexure "C"). 5. I submit - that on 26 November 2014 I attended the court with my Power of Attorney seeking leave for reasons stated that I re-organize a new defense with material facts in line with the fundamental evidence for rebuttal of the plaintiffs claim. 6. I submit - the court denied my leave leaving me without a defense or any opportunity for of success against the plaintiff. 7. I submit - annexure's attached hereto and listed below that provide fundamental evidence for rebuttal of the plaintiffs claim, notwithstanding, further material facts and or evidence that will be relied on in defense that are fatal to the plaintiffs claim. 8. I submit - there are sufficient precedents in support of my defense, notwithstanding, the plaintiffs failure to comply with lending procedures and protocol necessitated under law. 9. I submit - there is sufficient show cause under "factual causation" answerable by the plaintiff. See HCA Wallace vs. Kam ("factual causation") 10. I submit - the plaintiff refused a settlement offer by the defendant. 11. Annexure attachments; Notice of removal of solicitor 21 November 2014 (Tab 1, Annexure "C") Basten J hearing 24th February 2015 (issue a subpoena on plaintiff) Subpoena served on plaintiff 27 February 2015 (Tab 2, Annexure "D") Basten J Order 16 March 2015 (issue defense and draft defense on plaintiff) (Tab 3, Annexure"E") Notice of Motion Court of Appeal 24 April 2015 (Tab 4, Annexure "F")"
14. The material thus articulated does not in my opinion disclose an arguable defence. Whilst it refers to matters such as "fundamental evidence for rebuttal of the plaintiff's claim" and "further material facts and/or evidence that will be relied on in defence that are fatal to the plaintiff's claim", no particulars or evidence upon which such assertions are made are provided. While it is not incumbent upon an applicant seeking to set aside a default judgment to prove its defence by evidence, it is necessary to make clear what facts it asserts and what evidence may be available in a general sense to establish those facts.
15. The defence which is part of "Annexure E" to the defendant's affidavit says under the heading Pleadings and Particulars: "the defendant does not admit to the allegations of the statement of claim for reasons ascribed under Annexure 'A' of the defence, inclusive of the affidavit attached as Annexure 'B'". "Annexure A" is in the following terms: "The Bank failed comply with basic lending procedures and protocols, which denied me "just terms " and security according to the funder mental principles of Common Law, notwithstanding, any security afforded by those laws ascribed hereinafter, and they along with the Common Law Form the basis of my defence, notwithstanding. Banking Code of Practice Uniform Consumers Credit Code 2003 National Consumers Credit Protection Act (Common Law) - Predatory Lending Unjust Contract - West vs. AGC Advances Pty Ltd (1986) 5 NSWLR 610, McHugh JA (saw at p620) Perpetual Trustee Company Limited vs. Albert and Rose Khoshaba (2006) NSWCA41 (20th March2006) National Australia Bank vs. Petit-Breuilh (NO.2) (1999) VSC 395 Unfair Contract Terms Act 1977 (UK) Unfair Terms in Contract Regulations 1999 (UK) Contracts Review Act 1980 (NSW) ss 7, 9 and Sharman vs. Kunert (1985) 1 NSWLR 225, Holland J Industrial Relations Act 1991 (NSW) Part 10 Industrial Relations Act 1991-Section 275 industrial Court of NSW (notwithstanding) Trade Practices Act 1974 (Cwth) Section 51AA, 51AB (formally section 52 A)-Zoneff vs. Hill J (saw at p 463 conduct as unconscionable) Civil Liability Act 2002 (NSW) Fair Trading Act 1987 (NSW) Section 43 HCA - vs. Kam ("Factual Causation") Section 5D of the Civil Libility Act 2002 (NSW) HCA - (Unconscionable Contract) Commercial Bank of Australia vs. Amadio (1983) 151 CLR 477 (at p 474) HCA - (Unconscionable Contract) Blomley vs. Ryan space (1956) 99 CLR 362 (saw at p 405)"
16. The draft defence refers to an "Annexure C" which is in the following terms: "The defendant relies on the following defence ascribed hereinafter in the defence of allegations bought by the plaintiff. The defendant further submits that the plaintiff failed in its duty of care to provide and to continue to provide that necessary protection afforded to the defendant under common law, and laws of the State and the Commonwealth, notwithstanding, any law or laws that provide "just terms" from unjust contract or, whichever the case may be and in failing to do so has compromised the defendant's my livelihood, security base, marital status and health."
17. I take into account the fact that the defendant is not represented by a legal practitioner. His McKenzie friend was not legally qualified either but he made a reasonable attempt to persuade me that the notice of motion should be granted and the default judgment set aside. However, the oral submissions at no stage articulated the case with any more particularity than the generalisations which are found in the documents and proposed defences to which I have referred.
18. Reference was made to evidence that had been obtained under subpoena which it was said would provide support for the proposition that the bank had been guilty of charging excessive fees and otherwise acting unconscionably. However no particulars of that evidence were provided.
19. Even allowing for the fact that the plaintiff and his friend were not legally qualified, I am of the opinion that the material provided on this application is so defective that it cannot be said that it discloses an arguable defence on the merits.
20. In Magnate Projects Pty Ltd v Youma Constructions Pty Ltd (No 2) [2005] NSWCA 331, Hodgson JA (Campbell AJA agreeing, Handley JA dissenting) observed at [52]: "52. In my opinion an applicant seeking to set aside a judgment obtained after an undefended hearing does not have to show that a different result is likely should the judgment be set aside and a new trial ordered. However, the circumstances may be such as Jordan CJ says, as to require "a reasonably clear case of merits to be shown"; that is that it appear reasonably clearly that there is a defence capable of producing a different result. If that defence depends on facts, then there should be some evidence of those facts, and the circumstances may be relevant to the quality of the evidence that is required to show a defence on the merits in particular cases."
21. The reference in that passage to the circumstances referred to by Jordan CJ is a reference to the former Chief Justice's statement of principle in Vacuum Oil Pty. Co. Limited v. Stockdale (1942) 42 SR(NSW) 239 at 243. His honour there said, amongst other things: "In every such case the Court has an inherent and unfettered, though judicial, discretion, in the exercise of which it will, however, necessarily consider (a) whether any useful purpose would be served by setting aside the judgment, and (b) how it came about that the applicant found himself bound by a judgment regularly obtained: Evans v. Bartlam [1937]AC 473 at 482 . As a general rule (although not necessarily in every case, if some reason exists for departing from it: Collins' Book Depot Pty Ltd. v. Bretherton [1938] VLR 49; Austn. Digest (1934-1939) 1859, the Court requires an affidavit showing prima facie that the defendant has a good defence on the merits: Evans v. Bartlam [1937] AC 473 at 480, 488-9, and also an explanation of his absence which shows that justice requires that in the circumstances it should be excused."
22. In the present case, no point was taken on behalf of the plaintiff concerning the reasons that default judgment had been entered. In the course of argument, counsel read and relied on an affidavit by the defendant's previous legal representative. He did this purely to explain the circumstances in which default judgment was obtained but he took no point against the defendant for his initial failure to file a defence. It seems that any failure to file a defence prior to the entry of default judgment was in no way the fault of the defendant. Responsibly, counsel took no point in that regard and only read that part of the affidavit when asked questions by me in the course of oral argument.
23. Counsel for the plaintiff also made clear that the failure of this application would not prevent the defendant from making a subsequent application if he were able to establish an arguable defence on the merits. Counsel for the plaintiff referred to the cases of National Australia Bank Ltd v McCann [2010] NSWSC 766; National Australia Bank Ltd v McCann (No. 2) [2010] NSWSC 1032 and suggested that the pattern of that litigation supported the notion that a further application could be made provided it was not an abuse of process.
24. The problem for the defendant at this stage is that he has clearly failed to establish by his proposed pleading or otherwise that he has an arguable case on the merits. In the circumstances, I have no option but to dismiss his notice of motion seeking to set aside the default judgment.
25. The orders are these: 1. The notice of motion is dismissed. 2. The defendant is to pay the plaintiff's costs of and incidental to the notice of motion. 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: 17 June 2015