Westpac Banking Corporation v Parker

The present application 9By notice of motion filed in Court on 5 April 2012, the Parkers seek the following orders: "1. That the plaintiff do all things necessary to cause Westpac Collections SA to cancel and remove the Consumer Credit Information Report dated 29 November 2011 in respect of [the Parkers] lodged with Veda Applied Intelligence Consumer Credit Information file. 2. That the proceedings be stood over to 31 August 2012." 10The parties agreed that, for reasons of cost, the motion ought be dealt with on the papers. 11The Parkers rely on two affidavits, each of which was jointly sworn on 29 March 2012 and 12 April 2012 respectively. 12Westpac relies on two affidavits of Azita Doudman sworn 4 April 2012 and 27 April 2012 respectively.

The facts relating to post-default events 13The first of the Parkers' affidavits, sworn 29 March 2012, establishes, for the purposes of the motion, the effect of the adverse credit report to Veda on their capacity to refinance the Mortgage. In substance, their evidence establishes that unless Westpac removes the overdue amount of $207,530 from the credit report, it will be difficult for them to refinance the Mortgage and the cost of finance will be substantially higher. There does not appear to be any dispute about this matter. 14In May 2007, at the time the Parkers granted the Mortgage to Westpac, they established an account (the Classic Plus account) from which the monthly payments on the Mortgage would be made and arranged a direct debit authority for that purpose. 15On 12 March 2012, the Parkers arranged for $2,500 to be deposited into the Westpac Classic Plus account to cover the mortgage payment due on 15 March 2012. 16By letter dated 12 March 2012, the Parkers' solicitors wrote to Westpac's solicitors in terms which included the following: "...[o]ur clients not only wish to refinance the subject property but have taken steps to do so. The ability to obtain refinance has, however, been hampered by a credit report lodged by your client with the Veda Group on 29 November 2011. The report is to the effect that our clients were at that time in default in respect of real property mortgage due to a payment default. The amount nominated as overdue was $207,530. ... As we understand matters, a mortgage payment in the sum of $3,901 was not made on 18 August 2011. The payment was not made until 22 February 2012. We are instructed that the explanation for the missed payment involves the failure of one of our clients to make the payment when due and his subsequent failure to bring to the attention of his brother the service of a s. 57(2)(b) Notice under the Real Property Act, 1900. We are further instructed that there are no arrears under the mortgage and that all payments are up to date. Our clients wish to refinance the existing Westpac loan, which is secured by mortgage. They have pleaded their intention to do in paragraph 11 of the Defence filed on 7 March 2012. We should be pleased if your client would take all necessary steps to rectify the report dated 29 November 2011 so as to enable our clients to complete necessary applications for finance to satisfy your client's debt." 17On 27 March 2012, the Parkers ascertained, after accessing the Classic Plus account by means of on-line banking, that there had been no transactions on the Classic Plus account. 18On 28 March 2012, the Parkers met with Mr Cooney, the manager of the Bowral branch of Westpac, and informed him of the matters set out above. At that meeting Michael Parker asked Mr Cooney whether they were still in arrears, to which he responded. "It appears that you are not in arrears. I'll have to go and make a phone call." 19Mr Cooney then left the room and returned about half an hour later and said that there had been a block put on the account which meant that there could be no drawings. The following conversation then occurred. Michael Parker: We want to pay the mortgage instalments but we can't. Cooney: The only way we can do that is to set up another account from which the debits can be made. Michael Parker: We want to deposit six months' worth of mortgage instalments. Cooney: I will calculate the amount because it is a variable interest, let's add some more so that it will cover you. 20In the presence of the Parkers, Mr Cooney calculated the mortgage payments over a six-month period taking into account the variable rate of interest. Mr Cooney arrived at a figure of $12,500. Immediately following the meeting they arranged for $12,500 to be deposited to a new account. 21On 28 March 2012 Westpac wrote to the Parkers in the following terms: "You have told us that you would like to replace your Classic Plus account, number [#AAAA], which is linked to your Rocket Loan, with Westpac Choice account, number [#BBBB], in the same name(s). Accordingly, your account, number [#AAAA], will now be the transaction account for the purpose of your Loan Contract. All other terms and conditions of your Loan Contract remain the same and continue to apply." 22Ms Doudman, who is employed by Westpac's solicitor, deposed to her instructions as to the genesis of the letter of 28 March 2012 as follows: "I am informed by Ms Anderson a bank officer of the plaintiff and verily believe that the Letter was automatically generated and sent to the defendants upon the plaintiff receiving a request from the defendants that amounts be directly debited from a new account in reduction of the loan account numbered [#CCCC] (Loan Account) and to notify the defendants that: (a) the account number relating to the direct debit which is linked to the Loan Account has been updated; (b) the Bank as per request will debit mortgage repayments from for the nominated account number; and (c) the changes made to the direct debit details does not change the terms and conditions of the Loan Contract or the Mortgage." 23By letter dated 30 March 2012, Westpac's solicitors responded to the Parkers' solicitors' letter of 21 March 2012 in the following terms: "We are instructed that the Bank does not remove the Veda listing unless the listing was entered in error. In your clients' case, the Mortgagors did not comply with the notices issued by the Bank under section 57(2)(b) of the Real Property Act 1900 and section 88 of the National Credit Code. We are further instructed that once the Loan Account has been brought up to date, the Veda listing should automatically be updated to current, which means the Loan Account is up to date." 24On 4 April 2012, Mr Cooney sent an email to the Parkers in the following terms: "As requested, both mortgages currently show no arrears & this is to confirm the direct debits are set up to currently pay both of the mortgages as per our agreement last week on an ongoing basis. If you need further information please let me know." 25Westpac has adduced no evidence from Mr Cooney. There is no evidence to gainsay the contents of the email dated 4 April 2012 set out above.

The parties' submissions 26The Parkers invoke the inherent jurisdiction of the Court in seeking relief set out in their notice of motion. They submit that Westpac's conduct in refusing to take steps to remove the Veda report unless and until the principal amount is paid in full is unconscionable. They call in aid the principles enunciated in Legione v Hateley [1983] HCA 11; 152 CLR 406 in which the High Court, by majority, held that the Court had jurisdiction to relieve a defaulting purchaser against the forfeiture of his interest in land even though he had failed to comply with a condition whereby time was of the essence. 27In substance, the Parkers submit that it is unconscionable for Westpac to refuse to inform Veda that the total amount is no longer outstanding, in the circumstances set out above, where Westpac, by its manager, has represented that there are no arrears and the Parkers have paid substantial funds, equivalent to six months' mortgage payments, to Westpac following that representation. 28The Parkers rely on the Privacy Act 1988, which relevantly provides: "18F Deletion of information from credit information files ... (3) Where: (a) a credit reporting agency has been given information that an individual is overdue in making a payment in respect of credit provided by a credit provider; and (b) the individual ceases to be overdue in making the payment or contends that he or she is not overdue in making the payment; the credit provider must, as soon as practicable, inform the credit reporting agency that the individual has ceased to be overdue in making the payment, or contends that he or she is not overdue in making the payment, as the case may be. (4) On being informed that the individual is no longer overdue in making the payment, or that the individual contends that he or she is not overdue in making the payment, the credit reporting agency must include in the individual's credit information file a note to that effect." 29They submit that the conduct of Westpac, through its manager, Mr Cooney, has the effect either that they are no longer overdue in making the payment demanded by the notice of default, or that it would be unconscionable for Westpac to continue to contend that they owe the full amount of the principal sum secured by the Mortgage. 30The Parkers rely on s 56 of the Civil Procedure Act 2005 in support of the proposition that this Court has jurisdiction to grant the relief claimed in the notice of motion. Section 56 relevantly provides: "56 Overriding purpose (1) The overriding purpose of this Act and of rules of court, in their application to a civil dispute or civil proceedings, is to facilitate the just, quick and cheap resolution of the real issues in the dispute or proceedings. (2) The court must seek to give effect to the overriding purpose when it exercises any power given to it by this Act or by rules of court and when it interprets any provision of this Act or of any such rule..." 31Westpac relies on evidence which established the default in compliance with the s 57(2)(b) notice. Its position with respect to the report to Veda is that it will not remove the Veda listing unless it was entered in error. It will be updated to "current" only when the whole of the amount outstanding is repaid in full. 32Westpac submits that the Court does not have jurisdiction to make an order of the kind sought in the motion and relies on Johnson J's reasons in National Australia Bank Limited v Thirup [2011] NSWSC 911, where his Honour said, at [107]: "Ms Sinclair raised an issue relating to Veda credit reports concerning the Defendants (MFI1 and MFI2) and possible action which the Plaintiff might take concerning those reports. It is a matter for the legal representatives of the Defendants to communicate with the legal representatives for the Plaintiff with respect to those matters. I do not think that the Court can make any order in that respect, and I merely note that the matter was raised in the course of the submissions today." 33Westpac submits, further, that the relief sought by the Parkers in their notice of motion does not have a sufficient relationship with the principal proceedings to allow the Court to grant it. It relies on the judgment of Campbell J in Rousseau Pty Limited (in liq) v Jay-O-Bees Pty Limited (in liq) [2004] NSWSC 818 at [63]-[74] where his Honour set out the principles that require relief in an interlocutory application to be relief that is sought for the objective purpose of advancing claims made by a party in the principal proceedings. In Rousseau, the respondent in a winding up proceedings sought, in an interlocutory application, an order for rectification of a deed. Campbell J said, at [73]-[74]: "Mr Wood, counsel for the Applicant, submits that obtaining rectification is beyond the scope of the winding up proceedings in which the present Notice of Motion is brought. In my view that submission is correct. The appeal against rejection of proof of debt is brought (and is required to be brought) as an interlocutory proceeding, because that appeal is for the purpose of advancing the process of the winding up of the company, which the Court has ordered. Seeking an order for rectification of a document such as the Disputed Deed is not seeking an order the objective purpose of which is to advance that process. Even though obtaining rectification is something which the Respondent wants for the subjective purpose of improving its position on the appeal from the rejection of its proof of debt, in claiming rectification it seeks to enforce substantive rights which have effect beyond the winding up... This submission provides a sufficient reason why paragraph 4 of Rousseau's Notice of Motion should be struck out."

Reasons 34I do not consider that the equitable jurisdiction to grant relief against forfeiture is relevant to the Parkers' application in light of the authorities which establish that a clause in a mortgage which suspends payment of the principal owing if payments by instalments are made in accordance with the terms of the agreement between the parties is not a penalty and does not involve forfeiture: Kostopoulos v GE Commercial Finance Australia P/L [2005] QCA 311 at [48]-[54], per Keane JA, McMurdo P and Dutney J agreeing; RHG Mortgage Securities Pty Limited & Ors v BNY Trust Company of Australia Limited & Anor [2009] NSWSC 1432. 35The equitable jurisdiction to relieve against unconscionable conduct does not, however, depend on there being any penalty or property forfeited, for its operation: Legione v Hateley [1983] HCA 11; 152 CLR 406, per Mason and Deane JJ. 36In the particular circumstances of this motion and for the reasons given below, it is, however, unnecessary, and would not be appropriate, to determine whether it is unconscionable for Westpac to refuse to remove the report dated 19 November 2011 from the Veda file. 37Westpac has established that the Veda listing was made regularly. It appears to be common ground that when Westpac notified Veda on 29 November 2011 the total amount of principal became owing by the Parkers because of an unremedied default in payment of an instalment. However, in the events that have happened since that time, Westpac appears to have accepted, by its manager's conduct towards the Parkers, that the total amount is no longer owing. Yet, notwithstanding its conduct, it refuses to inform Veda that the total amount of the principal is no longer owing. Westpac's position appears to be that it will not inform Veda that the total amount of the principal is no longer owing unless and until it is repaid in full. 38One can well understand why, as a practical matter, the relief claimed in the motion is being sought by the Parkers. If granted, there is good reason to suppose that they will be able to refinance the mortgage with another credit provider within the period of the adjournment sought. They would, if relief were granted, no longer be regarded as being in default, which Westpac continues to contend that they are, notwithstanding its conduct in accepting the further payments and informing them that they were not in arrears which would tend to suggest otherwise. Indeed, the proposal by the Parkers is so apparently sensible that it is difficult to understand why Westpac has not agreed to it without the Parkers needing to file the present motion. However, whatever practical appeal the orders sought in the motion might have (as to which I make no judgment), I do not consider that they can, or ought, be made. 39Even were it open to me to decide, on the basis of the evidence adduced on the motion, that it is unconscionable of Westpac to insist that the full amount is owing and to refuse to notify Veda that the full amount is no longer owing, there is a real question whether I have the jurisdiction to do so in an interlocutory application in these proceedings. 40In substance, this is an application by the Parkers for an order that Westpac notify a credit reporting agency that monies are no longer owing by them, in order to put them in a better position to refinance their mortgage with Westpac. I consider that the same principles which applied to prevent Campbell J in Rousseau entertaining the suit for rectification in winding up proceedings apply to prevent my granting the relief sought by the Parkers. I can see why it might be subjectively very useful for the Parkers to have the Veda report changed, but I do not consider that the relief sought in the motion can properly be regarded as objectively advancing the claims made by the defendants in the proceedings. I do not consider that the provisions of s 56 of the Civil Procedure Act were intended to alter, or have the effect of altering, the principles referred to and applied in Rousseau. 41There is an additional reason why the relief cannot be granted at this stage: it effectively determines the proceedings on a final basis. The Court could only grant the relief sought in prayer 1 of the notice of motion to order Westpac to notify Veda that the amount was no longer owing if either the Court determined that it was no longer owing, or if it determined that it would be unconscionable for Westpac to insist that it was. If the relief were granted then it is difficult to see on what basis Westpac could obtain an order for possession since it would be relying on a breach which had been remedied in respect of an account that was no longer in default. 42For completeness I record that I do not, however, accept Westpac's submission that what Johnson J said in Thirup has the effect that the Court would have no jurisdiction to grant the relief sought in the motion if it were sought at a final hearing. Although his Honour did not consider it should be granted in that case, I do not consider that it was argued in such a way as to require the Court to determine whether it had jurisdiction, nor do I consider that Johnson J did any more than express a doubt about jurisdiction. 43These matters are sufficient to deal with the present application. 44For these reasons the notice of motion must be dismissed. 45Westpac seeks its costs of the motion on an indemnity basis. It may be immaterial whether or what any order is made, having regard to the terms of the mortgage which require the Parkers to pay Westpac's costs in any event. However, notwithstanding the terms of the mortgage relating to costs, an order for costs remains in my discretion: Kyabram Property Investments Pty Ltd v Murray [2005] NSWCA 87 at [14], per Beazley JA. 46I consider that the costs of the motion ought be costs in the cause. If the Parkers succeed at final hearing on the arguments they have made as to unconscionability in support of their motion, it is just that Westpac bear the costs of the motion, notwithstanding that the Parkers have failed on their motion. I consider this to be sufficient reason for the Court not to reflect the provisions relating to costs in the mortgage in the costs order. 47For the foregoing reasons, I make the following orders: (1)Dismiss the defendants' notice of motion filed in Court on 5 April 2012. (2)Order that the costs of the motion be costs in the cause.

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