Perpetual Limited v Kelso and Anor

Supreme Court of NSW|2008-08-19|Before: Johnson J

CITATION : Perpetual Limited v Kelso and Anor [2008] NSWSC 906

HEARING DATE(S) : 19 August 2008 JUDGMENT OF : Johnson J at 1

DECISION : Notice of Motion dismissed. No order as to costs.

LEGISLATION CITED : Supreme Court Act 1970 Real Property Act 1900

Damjanovic v Maley (2002) 55 NSWLR 149 Teese v State Bank of NSW [2002] NSWCCA 219 Maroubra Rugby League Football Club v Malo (2007) 69 NSWLR 496 Pitcher v Roe (1841) 9 Dowl 971 Alliance Building Society v Austen [1951] 2 All ER 1068 Abram v National Australia Bank Ltd (Court of Appeal, 1 May 1997, BC9701553) CASES CITED : Maher v Commonwealth Bank of Australia (No 2) (2004) 211 ALR 656 R v Elliott [1955] VLR 126 Balanced Securities Limited v Oberlechner [2007] NSWSC 80 Inglis v Commonwealth Trading Bank of Australia (1972) 126 CLR 161 GE Personal Finance Pty Ltd v Smith [2006] NSWSC 889 Carr v Finance Corporation of Australia Ltd (1982) 150 CLR 139 Adelaide Bank Limited v BMG Poseidon Corp Pty Ltd [2008] NSWSC 68

PARTIES : Perpetual Limited (formerly known as Perpetual Trustees Australia Limited) (Plaintiff) Kerrie Anne Kelso and Dallas John Kelso (Defendants)

COUNSEL : Mr A Casselden (Plaintiff) Kerrie Anne Kelso and Dallas John Kelso (Defendants in person)

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION POSSESSION LIST

11717/08 Perpetual Limited (formerly known as Perpetual Trustees Australia Limited) v Kerrie Anne Kelso and Anor

JUDGMENT 1 JOHNSON J: By Notice of Motion filed 15 August 2008 the Defendants, Kerrie Anne Kelso and Dallas John Kelso, seek certain relief with respect to proceedings commenced against them by the Plaintiff, Perpetual Limited (formerly known as Perpetual Trustees Australia Ltd). 2 The Notice of Motion seeks the following orders: "(i) Judgment to set aside.

(iii) Stay on the writ of possession or writ of restitution,

upon the grounds of needing time to prepare the full details of the defence." 3 On the hearing of the Notice of Motion, Mr Casselden of counsel has appeared for the Plaintiff and opposes the relief sought by the Defendants. The Defendants are unrepresented by a legal practitioner. At the commencement of the hearing, application was made by the Defendants for leave to be granted for Mr John Wilson, who is not a legal practitioner, to appear for them as a "McKenzie friend". I declined to grant leave for Mr Wilson to appear: Damjanovic v Maley (2002) 55 NSWLR 149; Teese v State Bank of NSW [2002] NSWCCA 219 at [5]-[12]. However, I indicated that Mr Wilson could sit at the bar table with the Defendants and provide them with advice during the course of the hearing. I note that Mr Wilson has occupied a position at the bar table and has, to my observation, spoken to the Defendants from time to time during the hearing. I did adjourn at one point during the hearing, for a period of about 10 minutes, to allow the Defendants to examine copies of certain documents which had been provided to them from the Court file.

History of Proceedings 4 It is necessary to place this present application in context. On 16 April 2008, a Statement of Claim was filed in which the Plaintiff sought relief against the Defendants, alleging mortgage default. The Plaintiff claimed possession of land at 22 Parsonage Road, Castle Hill ("the subject land") and other relief, including judgment then in the sum of $817,835.33, calculated as at 3 April 2008. It is common ground that the Statement of Claim was served on each of the Defendants on 21 April 2008. No Defence was filed on behalf of the Defendants. 5 Application was made by the Plaintiff for default judgment and the issue of a writ of possession. On 10 June 2008, default judgment was given in favour of the Plaintiff in the sum of $845,585.40, together with an order giving the Plaintiff possession of the subject land. On 17 June 2008, a writ of possession issued for the subject land. On 24 July 2008, the writ of possession was executed by the Sheriff on behalf of the Plaintiff and the locks to the premises were changed. 6 According to affidavit evidence relied upon by the Defendants on the present application, on 31 July 2008 the Defendants re-entered the premises and arranged for the locks to be changed by a locksmith. It is not suggested that the Defendants re-entered the subject land pursuant to any court order. 7 On 6 August 2008, following application made by the Plaintiff, a writ of restitution issued from the Court entitling the Plaintiff to be restored to the possession which it took on 24 July 2008. 8 Between 12 and 15 August 2008, various steps have been taken by the Defendants involving applications for a stay of execution of the writ of restitution. The matter was before Hislop J on two occasions last week in his Honour's capacity as Duty Judge. On Friday of last week, it was adjourned until 2.00 pm today for hearing before me in my capacity as Possession List Judge. The matter proceeded to hearing today as a result of those orders.

The Present Application 9 As I have said, the Defendants have relied upon evidence in support of the application in the form of an affidavit sworn, in effect, jointly by them on 14 August 2008. During the course of the hearing, the Defendants sought access to a number of documents relating to the issue of the default judgment and the writ of possession and copies of those documents have been provided to them from the Court file. As I mentioned earlier, an adjournment was granted during the course of the hearing to allow the Defendants to consider those documents. 10 During the course of the hearing, the Defendants have indicated that they wish to obtain a copy of the original loan contract upon which they seek to rely in support of the application. It appears that no direct request has been made to the Plaintiff for that document before Court today. Mr Kelso indicated to the Court that he had thought that reference in the affidavit of 14 August 2008 to the fact that the Defendants did not have the document, and that they needed it, was sufficient to activate an expectation that the Plaintiff would produce the document. When a call was made for the document in Court today, it was not produced by Mr Casselden and the document is not present in Court. 11 The Defendants have sought a further adjournment of the application to allow them to obtain the original loan document and, as I was informed today, to seek legal advice with respect to the Court documents concerning the default judgment and writ of possession. Mr Casselden opposed the grant of an adjournment and submitted that it was futile to adjourn this application further given that it was lacking merit, and lacking merit incurably. I took the view that an adjournment of the proceedings would not advance this case given the position that has been reached. 12 The affidavit material relied upon by the Defendants, taken with the submissions made by the Defendants, suggests a number of bases upon which they seek the relief in the Notice of Motion. 13 Firstly, it is contended that the Defendants were not lawfully dispossessed, that the execution of the writ of possession on 24 July 2008 was, in some way, unlawful. The argument stems essentially, as I understand it, from the fact that the Defendants were not given notice by the Plaintiff of an intention to make application for default judgment and the issue of the writ of possession. I do not consider there is any merit in this argument. The Statement of Claim was served upon both Defendants. No Defence was filed. The Statement of Claim itself, taken together with the relevant statutory scheme and the rules of Court, indicates what steps may next be taken by a Plaintiff in those circumstances. It is not necessary to give Defendants notice of an application to seek default judgment or the issue of a writ of possession. The fact that they were not notified of that express application does not undermine the process which thereafter issued. 14 A further and related argument which was put was that, in the absence of the consent of the Defendants to the entry of judgment, the Defendants were entitled to trial by jury of the Plaintiff's claim. In this respect, the affidavit relied upon by the Defendants, and their oral submissions, have touched upon Magna Carta and what are said to be other statutory foundations for such an entitlement. This argument is misconceived. Section 85 Supreme Court Act 1970 makes clear that proceedings in any Division of this Court are to be tried without a jury unless the Court otherwise orders. There are in s.85(2) certain prerequisites to the making of an order for trial by jury. As Mason P observed in Maroubra Rugby League Football Club v Malo (2007) 69 NSWLR 496 at 499 [16], the power to order trial by jury is only engaged if s.85(2) is complied with. I mention this essentially to explain why trial by jury is entirely inapplicable to proceedings of this type, and certainly no steps were taken here which could in any way activate the section. The submission based upon a suggested right to trial by jury is fatally flawed. 15 A further argument advanced by the Defendants is that they seek to be allowed in to defend the proceedings upon arguments identified in the affidavit, where it is said that the loan contract is, in various respects, unfair and unjust. In my view, the fact that the writ of possession has been executed and the Plaintiff has taken possession of the subject land means that, as a matter of law, it is too late for the Defendants to be seeking to be let back in to defend the proceedings. 16 A further argument advanced by the Defendants involves an expression of concern that the Plaintiff is not likely to market the subject land for sale in a manner that will achieve the best available price and that, for that reason, the Defendants ought be allowed to retain possession of the subject land. I do not consider that this is a basis for the grant of a stay, even before the execution of the writ of possession. Again, the fundamental problem for the Defendants is that the writ of possession has been executed. 17 The Defendants acknowledge that a principal sum of $760,000.00 was advanced to them by the Plaintiff pursuant to the mortgage of the subject land. There has been no suggestion from the Defendants of any arrangement that has been put in place, or is being sought to be put in place, to discharge the mortgage to the Plaintiff. 18 I note as well the statement by Mr Casselden that interest is accruing on this loan at the rate of $223.00 per day and that a kerbside valuation of the subject land suggests a likely sale price in the vicinity of $650,000.00 to $725,000.00.

Some Legal Issues 19 It is appropriate that I refer briefly to certain legal issues. The writ of restitution is a recognised procedure where, after entry by the Sheriff under a writ of possession, a defendant forcibly resumes possession of the subject land and the plaintiff seeks to have possession restored. It is a writ in aid of another writ of execution: r.39.1(1)(g), Forms 61, 62, Uniform Civil Procedure Rules: Ritchie's Uniform Civil Procedure NSW, LexisNexis at [39.1.35]; Pitcher v Roe (1841) 9 Dowl 971; Alliance Building Society v Austen [1951] 2 All ER 1068. 20 The use of a writ of restitution has been acknowledged in later cases. In Abram v National Australia Bank Ltd (Court of Appeal, 1 May 1997, BC9701553) Powell JA, at pages 54-55, observed that re-entry by a defendant, after the execution of a writ of possession by the Sheriff, constitutes a trespass with the plaintiffs' remedy being an application for an order in the nature of a writ of restitution. Powell JA cited, in this respect, Pitcher v Roe and Alliance Building Society v Austen. 21 In Maher v Commonwealth Bank of Australia (No 2) (2004) 211 ALR 656 at 658 [6], Finkelstein J observed that there are cases where a defendant has retaken possession within a short period after possession has been taken where the Court would, upon application, issue a writ of restitution. His Honour cited Pitcher v Roe, Alliance Building Society v Austen and R v Elliott [1955] VLR 126. 22 There is a clear foundation for the course of action taken by the Plaintiff in this case, namely to seek a writ of restitution. 23 I should observe that, if this was a case where the writ of possession had not already been executed, and the Defendants were seeking to set aside a default judgment, a number of hurdles would lie in their path. As Simpson J observed in Balanced Securities Limited v Oberlechner [2007] NSWSC 80 at [19], there are three components which an applicant needs to establish in an application to set aside default judgment. Firstly, an explanation for the failure to defend at the appropriate time. Secondly, a good (arguable) defence on the merits, and thirdly, that it is in the interests of justice to allow the proposed defence to be litigated. Her Honour continued at [20] to observe that, although it is not necessary that a defendant establish that the proposed defence will or must succeed, it is necessary to determine the question having in mind the competing interests of the parties - on the one hand the plaintiff who has properly, legitimately and regularly obtained judgment, and on the other hand, a defendant who has been deprived of an opportunity to advance what might be a legitimate defence. 24 On the material which has been advanced in support of the present application, in my view the Defendants would have grave difficulty on an application to set aside default judgment before a writ of possession had been executed. In circumstances where the writ has already been executed, their position is hopeless. 25 A power of sale under s.58 Real Property Act 1900 is to be exercised for the purpose of the plaintiff recovering moneys which are due and owing to it as a mortgagee (see s.58(3)). Even where a plaintiff takes possession of the property for the purpose of exercising its power of sale, a defendant may obtain an injunction restraining a mortgagee from exercising the power of sale if the amount of the mortgage debt (if this is not in dispute) is paid, or (if the amount is disputed) the amount claimed by the mortgagee is paid into Court: Inglis v Commonwealth Trading Bank of Australia (1972) 126 CLR 161 at 164-167, 168-169; GE Personal Finance Pty Ltd v Smith [2006] NSWSC 889 at [17]. 26 If the Defendants wish to challenge the propriety of any conduct of the Plaintiff in respect of the enforcement of its security, it remains open to them to do so in other proceedings: see Carr v Finance Corporation of Australia Ltd (1982) 150 CLR 139 at 152; Adelaide Bank Limited v BMG Poseidon Corp Pty Ltd [2008] NSWSC 68 at [25].

Conclusion 27 I have made these observations so that the Defendants are aware of the principles applicable in circumstances such as this. It will be apparent from my reasons that I am not satisfied that any legal or factual basis has been demonstrated by the Defendants for the relief they seek in their Notice of Motion. 28 Accordingly, the Notice of Motion is dismissed. 29 The Plaintiff does not seek costs with respect to the Notice of Motion. I make no order as to costs. **********

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