rod cameron - hicksons - recent case studies in credit enforcement
TRANSCRIPT
This address represents a brief summary of the law relating to the issues raised and should not be relied on as a substitute for professional
advice. Specific legal advice should always be sought in relation to any particular circumstances and no liability will be accepted for any
losses incurred as a result of reliance on this address by those relying solely on this address.
Recent Case Studies in Credit
Enforcement
16 September 2016
Address by Rod Cameron
© Hicksons 201520162016
Possessions matters instituted by state
© Hicksons 20152016 Slide 32016
St George Bank v Hammer (No. 3)[2016] NSWSC 128 – Dutton J, 26 February 2016
08/01/08 Loan to borrower secured by mortgage, some of the funds used to
refinance previous loan
2013 Loan fell into arrears
27/06/14 Lender filed statement of claim for possession
Self represented borrower filed documents including four defences
which were “idiosyncratic”
17/07/15 Campbell J struck out the last defence and ordered any further defence
could be filed only with prior leave given by a judge obtained by notice
of motion
24/07/15 Lender applied for default judgment
28/07/15 Default judgment entered
© Hicksons 20152016 Slide 42016
St George Bank v Hammer (No. 3) (continued #1)
06/10/15 Borrower filed notice of motion seeking to set aside default judgment
Argument 1 – UCPR 16.2(2)(c) – “… a defendant is not in default if the defendant
has filed a defence after that time limited by the rules or allowed by the court, but
before default judgment is given”.
• Borrower argued that the defence originally filed was a defence ‘filed
after the time limited by the rules but before judgment was given’
despite the fact that the defence had been struck out
• Dutton J noted UCPR 16.2(1)(c) expressly allowed for default judgment
after a defence had been struck out - he did not accept that once a
borrower had filed a defence, no matter how unsatisfactory and even if
that defence was struck out, the plaintiff was prohibited from applying
for default judgment
• Dutton J rejected Argument 1
© Hicksons 20152016 Slide 52016
St George Bank v Hammer (No. 3) (continued #2)
Argument 2 – UCPR 16.3(1A) “… unless the court otherwise orders an application
[for default judgment] may be dealt with in the absence of the parties”.
• Borrower argued that orders of Campbell J on 17/07/15 requiring the
borrower to obtain leave to file a defence, were “otherwise orders”
• Dutton J rejected Argument 2 noting that the orders made by Campbell
J restricted the filing of any further defence not the conduct of the
plaintiff in applying for default judgment
© Hicksons 20152016 Slide 62016
St George Bank v Hammer (No. 3) (continued #3)
Argument 3 – Lack of courtesy
• Borrower argued that the lender’s failure to give the borrower notice that
the lender was going to apply for default judgment argued in favour of
setting aside the default judgment
• Dutton J accepted that courtesy in the context of litigation is important
however he rejected Argument 3 on the basis that:
• the statement of claim had been filed on 27/06/14
• the borrower’s actions had the aim of delaying the proceedings
• on 17/07/15 it must have been clear to the borrower that the plaintiff
would be moving quickly to obtain default judgment
© Hicksons 20152016 Slide 72016
St George Bank v Hammer (No. 3) (continued #4)
Argument 4 – Challenge to the validity of assignment of debt from St George Bank to
Westpac when Westpac acquired the St George Bank
• Borrower argued the assignment may not have been legal
• Dutton J rejected Argument 4 - there was no evidence to suggest the assignment
was not valid
Argument 5 – unconscionability and unjustness and hardship
• Borrower argued that the loan should be varied because of unconscionability,
unjustness and hardship – therefore the default judgment should be set aside
• Dutton J rejected Argument 5 noting that:
• the borrower merely asserted the entitlement and relief
• the borrower did not provide any detail as to why he was so entitled
• an attack on the default judgment would require pleadings of some cogency
and detail
• in order to set aside default judgment if the proposed defence depends on
facts there should be some evidence of those facts
• the borrower had not adequately demonstrated that there was a basis for
allegation of unconscionability, unjustness and hardship
© Hicksons 20152016 Slide 82016
St George Bank v Hammer (No. 3) (continued #5)
Argument 6 – Denial of natural justice
• Borrower argued the default judgment denied him natural justice because
it shut him out from litigating his defence
• Dutton J noted that the entry of judgment had occurred consistently with
the applicable rules there was insufficient material to show any denial of
natural justice
Argument 7 – Presence of tenants
• Borrower argued hardship would be caused to tenants on the property if
they were forced off the land
• Dutton J rejected Argument 7 noting that the occupants had been served
with a notice to occupier back on 09/07/14 and any claim by the tenants
should have been made by them
The borrower’s notice of motion was dismissed and the borrower was ordered to pay
the lender’s costs
© Hicksons 20152016 Slide 92016
RHG Mortgage Corporation v Saunders[2016] NSWSC 929 – Harrison AsJ, 6 July 2016
11/10/07 Borrower mortgaged the property to the lender to secure a loan
09/06/15 Lender served default notices on borrower
02/07/15 Lender filed statement of claim
02/12/15 Default judgment entered
02/02/16 Writ of possession issued and the lender subsequently obtained
possession
© Hicksons 20152016 Slide 102016
RHG Mortgage Corporation v Saunders (Continued #1)
19/05/16 Borrower filed notice of motion seeking to set aside default judgment
• Borrower argued:
• Lender did not comply with NCC obligation to respond to hardship
application
• therefore default judgment had been entered illegally and it should be
set aside under UCPR 36.15 (judgment entered illegally)
• in the alternative, the default judgment should be set aside under
UCPR 36.16 (discretion to set aside default judgment)
© Hicksons 20152016 Slide 112016
RHG Mortgage Corporation v Saunders (Continued #2)
• S.89A of the NCC provides that if a borrower gives a hardship notice the
lender must not take enforcement action unless the lender has given the
borrower notice under s.72(4)(b) of the NCC of the lenders response to
the hardship notice
• Borrower argued that:
• in a conversation with an agent of the lender on or about 18/05/15,
the borrower gave notice of hardship
• the lender had not responded to that hardship notice as required
under s.72 (4)(b) of the NCC when the lender filed the statement of
claim on 02/07/15
© Hicksons 20152016 Slide 122016
RHG Mortgage Corporation v Saunders (Continued #3)
• Harrison AsJ noted:
• The evidence as to the versions of the conversation on 18/05/15 was
similar – the borrower did not mention “hardship” in the conversation
• On at least 5 occasions before July 2015 the borrower had made hardship
enquiries of the lender and had adopted the procedure of obtaining the
lender’s hardship form, completing it and sending it to the lender
• A hardship notice can be given orally
• Whether a particular conversation amounts to a hardship notice depends
on what a reasonable person would understand the conversation to mean
taking into account the objective surrounding facts and circumstances
• In her view the conversation on or about 18/05/15 did not amount to a
hardship notice when considered in the context of the borrower’s
extensive experience of providing notice of hardship and pursuing the
process of seeking hardship variations
© Hicksons 20152016 Slide 132016
RHG Mortgage Corporation v Saunders (Continued #4)
• Harrison AsJ:
• went on to consider whether, if a hardship notice had in fact been given in
the conversation on or about 18/05/15, what would have been the
outcome
• considered the judgments in Monas v Perpetual Trustees [2011] NSWCA
417 and Bank of Queensland v Dutta [2010] NSWSC 574
• held that if there had been a breach of s.72 of the NCC it involved at worst
an irregularity such that the default judgment had not been “entered”,
“made” or “given” illegally and accordingly UCPR 36.15 did not apply to
enable the default judgment to be set aside
© Hicksons 20152016 Slide 142016
RHG Mortgage Corporation v Saunders (Continued #5)
• In considering the application to set aside the default judgment on
discretionary grounds under UCPR 36.16 Harrison AsJ noted:
• in order to set aside the default judgment the borrower had to show:
- a bona fide defence
- an arguable or triable issue
- an explanation for the delay
• The borrower’s defence, while bona fide, did not raise an arguable or
triable issue (the only issue pleaded being the alleged breach of the NCC
and the alleged illegality – already dismissed)
• The borrower failed to explain the delay, particularly in light of at least 5
SMS via email communications from the lender to the borrower from
02/11/15 to 30/11/15 notifying of the impending judgment application
• The borrower’s notice of motion was dismissed and the borrower was ordered
to pay the lender’s costs
• The borrower has appealed on grounds that Harrison AsJ erred in:
- not finding the 18/05/2015 conversation constituted a hardship notice
- failing to find that entry of default judgment in proceedings commenced in
contravention of the NCC was illegal
© Hicksons 20152016 Slide 152016
ANZ v Driffill[2016] NSWSC 1138 – Fagan J, 5 August 2016
16/09/10 Borrower mortgaged property to lender
23/04/14 Default judgment entered for possession and for the amount of
$795,148.06
09/12/14 Lender assigned the debts and transferred the mortgage and received
satisfaction of the judgment debt from the consideration for the
assignment
• Borrower filed a notice of motion seeking to set aside default judgment for
$795,148.06 and seeking leave to file a defence claiming by way of set off
damages for breaches by the lender of civil penalty provisions of the NCCPA
• Borrower alleged the lender breached NCCPA in that the lender failed to
investigate the borrower’s financial position before making the loan which was
unsuitable to the borrower
• The NCCPA s.178 allows a court to order compensation for loss and damage
resulting from contravention of the NCCPA civil penalty provisions
© Hicksons 20152016 Slide 162016
ANZ v Driffill (Continued #1)
• Borrower alleged he had not been served with the statement of claim such
that the default judgment was entered irregularly
• Process server’s evidence was clear
• Subsequent statements by borrower corroborated service of the statement of
claim
• Fagan J found the borrower had been personally served with the statement of
claim and untruthfully sought to contradict and explain away his previous
admissions of service
© Hicksons 20152016 Slide 172016
ANZ v Driffill (Continued #2)
• In the loan application the borrower represented that he had net uncommitted
income of $12,267 per month – that was untrue – evidence was that he had
no income and the prior loans were being serviced from capital
• Loan had refinanced prior loans at higher interest rates
• Borrower asserted that if the lender had not approved and advanced the loan
he would have sold the property in 2010 and would then have had a surplus of
about $550,000
• Borrower conceded that:
• as at 2010 selling was no more than option
• even after the lender refinanced the previous loans the borrower could
still have sold the property
© Hicksons 20152016 Slide 182016
ANZ v Driffill (Continued #3)
• Fagan J held:
• The loan in 2010 to refinance existing debts did not cause, in any legal
sense, the property to not be sold in 2010
• At its highest, if the lender had refused the loan application, that may
have caused the borrower to make a different judgment regarding sale of
the property but that is too remote from any breach of the NCC
• The borrower was not kept in ignorance or induced to not sell the
property by the lender’s lack of investigation – it was the borrower who
kept the lender in ignorance
The borrower’s claims were dismissed and he was ordered to pay the lender’s
costs
© Hicksons 20152016 Slide 192016
Today’s take away messages
• Tricky arguments based on unusual interpretations of rules are unlikely to
succeed – Hammer Arguments 1 and 2
• Where possible give notice and be courteous – Hammer Argument 3
• Breach of NCC s.72, whilst exposing lender to civil penalty, is possibly only
on “irregularity” and apparently does not render subsequent court action by
the lender illegal – Saunders
• In order to have a default judgment set aside, a borrower will need to show a
bona fide, arguable or triable issue by evidence and provide an explanation
for the delay – Saunders and Driffill
• However pre-enforcement action breaches of the NCCPA and/or the NCC
can be troublesome and costly and may be prejudicial to subsequent
enforcement proceedings and/or default judgments so it is worth investing to
avoid them
This address represents a brief summary of the law relating to the issues raised and should not be relied on as a substitute for professional
advice. Specific legal advice should always be sought in relation to any particular circumstances and no liability will be accepted for any
losses incurred as a result of reliance on this address by those relying solely on this address.
This address represents a brief summary of the law relating to the issues raised and should not be relied on as a substitute for professional
advice. Specific legal advice should always be sought in relation to any particular circumstances and no liability will be accepted for any
losses incurred as a result of reliance on this address/document/paper [etc] by those relying solely on this address/document/paper [etc]
Hicksons Lawyers, Level 32, 2 Park Street, Sydney NSW 2000 AustraliaDX 309 Sydney ABN 58 215 418 381t +61 2 9293 5311 f +61 2 9264 4790www.hicksons.com.au
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This was a presentation by Rod Cameron of Hicksons.
If you require any further information, please contact:
Rod Cameron, Partner
t +61 2 9293 5407