Perpetual Trustee Company Ltd v Nomak Holdings Pty Ltd

Applicable Rules 33Division 4 of Pt 36 of the UCPR provides the basis for setting aside judgments. 34Rule 36.15 is in the following form: "36.15 General power to set aside judgment or order (1) A judgment or order of the court in any proceedings may, on sufficient cause being shown, be set aside by order of the court if the judgment was given or entered, or the order was made, irregularly, illegally or against good faith. (2) A judgment or order of the court in any proceedings may be set aside by order of the court if the parties to the proceedings consent." 35Because of the passage of time between when the consent judgment was entered and the application to set it aside was filed, r 36.16 has no application. It is not suggested that rr 36.17 or 36.18 have any relevance to this application.

Principles of Law 36In order to succeed, Ms Batiste must show that the consent judgment was made "... irregularly, illegally or against good faith". Here the central question is whether it was made "... against good faith". 37In Coles v Burke (1987) 10 NSWLR 429, Kirby P, with whom Samuels and McHugh JJA agreed, considered the phrase "irregularly, illegally or against good faith", in the context of a District Court rule. There is no reason to think that there is any difference in the interpretation of the phrase in the rule which is here applicable. Kirby P said at 437: "The genus which is involved in the phrase "irregularly, illegally or against good faith" appears to be me to be misconduct or dishonourable conduct of the person who procured the judgment which it is suggested undermines the authority of that judgment warranting the exceptional course for which [the rule] provides." 38The Court of Appeal further considered the phrase in Kendell v Carnegie [2006] NSWCA 302; (2006) 68 NSWLR 193. Again the Court of Appeal was considering a District Court Rule but as was noted, r 36.15 of the UCPR is in very similar terms. The principles applicable are, in my view, the same. 39At [52], Bryson JA, with whom Hodgson and McColl JJA agreed, expressed his agreement with observations made by Fitzgerald JA in Shirriff v Nominal Defendant [1999] NSWCA 152 where his Honour had said the following: "[19] ... I do not consider that the passage last quoted is intended to express a general principle that, whenever it would be contrary to good faith for a party to attempt to retain the benefit of an order, that order must have been made against good faith. For example, a matter arising subsequent to an order, or fresh evidence which could not have been obtained with proper diligence prior to the order, might make it unjust for a party to retain the benefit of the order, but would not mean that the orders was 'made ... against good faith'. ... [21] Roach did not question the correctness of this Court's earlier decision in Coles v Burke. Kirby P, with whom McHugh JA and, materially, Samuels JA agreed, expressed the opinion that the phrase 'against good faith' was concerned with 'misconduct or dishonourable conduct of the person who procured the judgment which it is suggested undermines the authority of that judgment ..." (references omitted) 40In [52] of Kendall, Bryson JA went on to say: "...the reference in Roach ... to unconscionability in later relying on a judgment which had been entered up as a result of a mistake, is not in my respectful opinion authorised by the terms of [the rule], which relates to good faith to the circumstance in which the judgment was given, and does not extend to lack of good faith in reliance on the judgment at some later time." 41Later in the judgment at [60], his Honour said: "There is not and could not, I would think, ever be an exhaustive judicial definition of what is against good faith; only very broad limits are set by proceeding by analogy from circumstances in which judicial remedies are based on good faith, unconscionability, or other concepts closely related to good faith ... 'Against good faith' is an expression which requires the impeachment of the intention or behaviour of the person whose good faith is impugned." 42The proper application of the rule means that even if the Court is satisfied that the judgment was obtained against good faith, sufficient cause must be shown before the Court will exercise its discretion to set aside the judgment. 43When the Court exercises this discretionary power in accordance with the UCPR, it is obliged by s 56 of the Civil Procedure Act 2005 to have regard to the overriding purpose set out in s 56(1) of that Act. 44As well, in considering whether to exercise the discretion to set aside a judgment, even one entered by consent, it is essential to recognise the need for the finality in judgments of the Court. This is, as Bryson JA said in Kendall at [45], one way in which the Court protects judgments from being set aside "... for slight or uncertain causes". 45The High Court of Australia said in Burrell v R [2008] HCA 34; (2008) 238 CLR 128 at [15]-[16]: "15. Secondly, it is important to recognise that underpinning consideration of the issues presented in this matter are fundamental principles about finality of litigation. As was said in D'Orta-Ekenaike v Victoria Legal Aid: "A central and pervading tenet of the judicial system is that controversies, once resolved, are not to be reopened except in a few, narrowly defined, circumstances." That tenet finds reflection in rules concerning the bringing of an action to set aside a final judgment on the ground that it was procured by fraud and in doctrines of res judicata and issue estoppel. The principal qualification to the general principle of finality is provided by the appellate system. But in courts other than the court of final resort, the tenet also finds reflection in the restrictions upon reopening of final orders after they have been formally recorded. 16. The third consideration of principle which it is necessary to state at the outset is related to the second. It is that the principle of finality serves not only to protect parties to litigation from attempts to re-agitate what has been decided, but also has wider purposes. In particular, the principle of finality serves as the sharpest spur to all participants in the judicial process, judges, parties and lawyers alike, to get it right the first time. Later correction of error is not always possible. If it is possible, it is often difficult and time-consuming, and it is almost always costly." (references omitted) 46The Court of Appeal in Perpetual Trustees Australia Ltd v Heperu Pty Ltd (No.2) [2009] NSWCA 387; (2009) 78 NSWLR 190 identified some principles which it is appropriate to ensure are applied. These principles include: (a)That controversies once resolved are not to be reopened except in a few narrowly defined circumstances: [32]; (b)A power to reopen proceedings such as that conferred by r 36.15 of the UCPR, is to be narrowly confined and sparingly exercised: [33], [45]; (c)The power provided for in r 36.15 is based upon conduct which resulted in the entry of the judgment itself, and not on the merits of the judgment or conduct of proceedings prior to the entry of judgment: [16]; (d)Rule 31.15 of the UCPR can only have limited application to judgments or orders made or entered after a hearing on the merits: [17].

Discernment 47I am wholly unpersuaded that the consent judgment was entered into "... against good faith". 48The contention of Ms Batiste is that the judgment was entered into subject to a condition, namely, that she should be given either a specified time, or perhaps a reasonable time, to sell the property prior to possession being taken by Perpetual. 49On any view, her complaint with respect to the inadequacy of time relates to circumstances which arise well after the judgment was entered. There is simply no evidentiary basis for a finding that the conduct of Perpetual, or its lawyers, leading up to the entry of the consent judgment is capable of being impeached. There is no evidence from which I can draw any intention on the part of those who entered into this agreement to do anything other than comply with such an agreement. 50As well, no such suggestion was ever made contemporaneously with the taking of possession by Perpetual and the sale. It is true that Ms Batiste insisted upon a public auction sale, and insisted upon Perpetual obtaining a proper price for the property. None of this constitutes any basis to suggest that the judgment obtained some months before, was obtained against good faith. 51There are further reasons as to why this judgment should not be set aside. The first is that the evidence of the agreement is most imprecise. Ms Batiste contends variously that the agreement was to give her a fixed time or, alternatively, a reasonable time. There is no evidence that the time allowed, namely, four months, as a minimum, was an unreasonable time. Indeed, having regard to the fact that the evidence suggests that a marketing period engaged in by Perpetual was of the order of four weeks, it is hard to see that there could be any suggestion that four months did not constitute a reasonable time for the sale of the property. 52Secondly, the offer upon which Ms Batiste relies as being the basis for her complaint that she ought to have had a further opportunity to have engaged in the sale was not, upon examination, an offer capable of acceptance. I have earlier set out the terms of the offer. It was at best, in my judgment, a negotiating stance and not one which could have been accepted, nor one which necessarily would have resulted in a sale of the property in the reasonably foreseeable future. 53Thirdly, there is little if any satisfactory explanation in the evidence, or even in the submissions taken at their highest, which would provide a reason for a court after many years to permit a judgment to be set aside and the proceedings reopened. After the passage of many years, good cause would need to be shown to explain the delay and allow the Court to proceed further. Such explanations as have been proffered do not approach a sufficient cause to set aside the judgment. 54Fourthly, the property has been sold and all that remains in dispute between the parties is whether the sale of the property, which occurred in 2010, was undertaken by Perpetual or its agents in circumstances which realised an appropriate price for the property. A mortgagee exercising its power of sale is obliged to act in good faith: Pendlebury v Colonial Mutual Life Assurance Society Ltd (1912) 13 CLR 676. 55As Young CJ in Eq put it in Ultimate Property Group Pty Ltd v Lord [2004] NSWSC 114; (2004) 60 NSWLR 646: "26. In my view, authority compels me to say that there is no common law duty in negligence on a mortgagee in New South Wales which makes a mortgagee liable in common law damages if he fails to get a good price for the mortgaged property. ... 38. The duty is a duty to act conscionably towards the mortgagor and persons under the mortgagor. The duty is not to be considered in some mechanical way, but the whole of the mortgagee's conduct with respect to the sale is to be considered. The mortgagee may, up to a point, act solely in its own interests, but it must also act conscionably towards the mortgagor and those claiming under the mortgagor. ... 40. Indeed, it is a fundamental principle in the textbooks that mere inadequacy in the price obtained and the value will not normally of itself be sufficient for a mortgagor to upset a purported sale ... ." 56Young CJ in Eq expressly approved of the following extract from the decision of McClelland CJ in Eq in Hawkesbury Valley Developments Pty Ltd v Custom Credit Corporation Ltd (1994) 8 BPR 15,581 at 15,583: "... in exercising its power of sale, a mortgagee must act in good faith, which involves an obligation to deal fairly with the interests of the mortgagor, which in turn involves an obligation to refrain from acting in wilful or reckless disregard of those interests. ... Any departure from reasonable standards must be so serious as to be properly characterised as unconscionable, in order to render the mortgagee accountable. If a failure by a mortgagee to take reasonable steps to obtain a proper price is sufficiently serious to be characterised as unconscionable as that expression is understood in equity, then in the taking of accounts between the mortgagee and mortgagor, the mortgagee will be accountable on the basis of wilful default for the price which would have been obtained if the mortgagee had not been guilty of unconscionable conduct." 57The difference in price between what Ms Batiste contends should have been obtained ($650,000) and what was obtained after the property was offered for sale by auction ($620,000) is less than five per cent of the total. Whilst examination of conduct is not a matter of mere numbers and percentages, there is nothing immediately apparent about this sale which in any way suggests that the mortgagee's conduct has been so serious and so derelict as would give rise to a proper basis for complaint. 58Fifthly, the relief sought is inappropriate. Ms Batiste accepts that on any view of the calculation of sums outstanding to Perpetual, she owed it money. Her March 2011 agreement to pay Perpetual the sum of $75,000 itself acknowledges her indebtedness to Perpetual. Yet the relief she seeks is to set aside the monetary sum judgment which has been obtained, and to be allowed to defend the entirety of the proceedings. She has no good defence to the claim for possession or for a monetary judgment. At best she seeks to complain about the sum of the judgment in those circumstances, it is not appropriate to set aside the judgment. 59Finally, as a matter of discretion, in circumstances where Ms Batiste had a fair and proper opportunity to sell the property and had been offered and accepted a fair and reasonable settlement of her indebtedness, which included being allowed to repay that indebtedness over an extended period of 12 months and without additional interest, it is neither in the interests of justice nor is it fair and just that she be allowed any further opportunity to deal with the proceedings and the underlying debt.

Conclusion 60I am not satisfied that the Court should set aside the consent judgment which was entered into in these proceedings in the circumstances which I have described. It follows that the Notice of Motion of Ms Batiste must be dismissed. 61There is no reason why costs ought not follow the event.

Orders 62I make the following orders: (4)Notice of Motion of 16 July 2013 dismissed. (5)Order Ms Batiste to pay the costs of Perpetual Trustee Company Ltd.

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