RHG Mortgage Corporation Ltd v Sava
[2013] QCA 7
To print this judgment please return to the case and click on the PDF icon
next to the
case name. For court use, a full PDF copy is required or preferred.
Exit Distraction Free Reading Mode
Please Note: You are about to print a copy of the onscreen
version of
this judgment. For court use, a full PDF copy of the judgment is required or preferred. Please
return to
the case for PDF printing options.
- Unreported Judgment
- RHG Mortgage Corporation Ltd v Sava[2013] QCA 7
- Add to List
RHG Mortgage Corporation Ltd v Sava[2013] QCA 7
RHG Mortgage Corporation Ltd v Sava[2013] QCA 7
SUPREME COURT OF QUEENSLAND
PARTIES: | |
FILE NO/S: | |
Court of Appeal | |
PROCEEDING: | Application for Security for Costs |
ORIGINATING COURT: | |
DELIVERED EX TEMPORE ON: | 7 February 2013 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 7 February 2013 |
JUDGE: | Fraser JA |
ORDER: | In each appeal:
|
CATCHWORDS: | APPEAL AND NEW TRIAL – APPEAL – PRACTICE AND PROCEDURE – QUEENSLAND – SECURITY FOR COSTS – where enforcement warrant issued for possession of the respondent’s land – where respondent lodged caveat to prevent the transfer of the land – where respondent appealing a Supreme Court decision removing the caveat – where respondent appealing a District Court decision which allowed for the transfer of the land without awarding damages – whether security for costs should be ordered National Consumer Credit Protection Act 2009 (Cth) Privacy Act 1988 (Cth) Murchie v Big Kart Track Pty Ltd (No 2) [2003] 1 Qd R 528; [2002] QCA 339, cited Natcraft Pty Ltd & Anor v Det Norske Veritas & Anor [2002] QCA 241, cited Peterson v Rockhampton Permanent Building Society [1988] 2 Qd R 49, cited |
COUNSEL: | D J Kelly for the applicant The respondent appeared on his own behalf |
SOLICITORS: | Thynne & Macartney for the applicant The respondent appeared on his own behalf |
FRASER JA: Mr Sava has commenced two appeals. RHG Mortgage Corporation, (“RHG”), which is the respondent in each appeal, has applied for security for the costs of both appeals. The circumstances in which the applications are brought are set out in detail in an affidavit sworn by a solicitor employed by the firm of solicitors who has acted for RHG throughout. It is useful to commence these reasons with a brief summary of the procedural and factual background as it appears in that affidavit.
Mr Sava was the registered proprietor of improved land over which he gave a mortgage to RHG. On 8 November 2011 Justice Atkinson gave summary judgment in favour of RHG ordering that Mr Sava pay RHG an amount in the order of $300,000 as arrears of principal and interest due under the mortgage, that RHG recover possession of the land and that Mr Sava pay RHG's costs of the proceedings.
Justice Atkinson found that on the unchallenged evidence RHG had proved that Mr Sava had defaulted in payment and that RHG had otherwise established its entitlement to possession and to the recovery of the mortgage debt.
Her Honour rejected Mr Sava's argument that he had an arguable defence that he was entitled to a change in his obligations under the mortgage on the grounds of hardship pursuant to the provisions of the National Consumer Credit Protection Act 2009.
She found that Mr Sava had not made any application to RHG for such a change that complied with s 72(2) of Schedule 1 of that Act. That was so even though an earlier hearing had been adjourned to allow RHG to inform Mr Sava, and it had informed Mr Sava, of the material necessary for such an application. Nor was there evidence that if such an application were made and granted Mr Sava would be able to discharge the changed obligations. Mr Sava did not appeal against that decision.
An enforcement warrant for possession of the land was issued on 21 December 2011. On 3 April 2012 Justice Atkinson dismissed Mr Sava's application to set aside the enforcement warrant and ordered Mr Sava to pay RHG's costs of those proceedings.
Justice Atkinson rejected Mr Sava's argument that RHG had engaged in misleading conduct by initially insisting upon payment of the whole judgment debt and then very shortly before execution of the warrant telling Mr Sava that it might be possible to stay the warrant if he paid a lesser amount.
Justice Atkinson held that the evidence before her Honour showed merely that RHG had indicated its preparedness to grant a concession to Mr Sava. Mr Sava did not appeal against that decision.
After RHG had contracted to sell the land as mortgagee with a settlement date in mid July 2012 the buyer's solicitor discovered that Mr Sava had lodged a caveat over the land which would prevent registration of a transfer to the buyer. The grounds for the caveat, which were stated in it, substantially repeated the arguments which Justice Atkinson had rejected.
RHG and the buyer agreed to extensions of time for settlement of the contract, with the final date for settlement fixed at 16 December 2012.
On 26 September 2012 Mr Sava commenced a claim in the District Court for an injunction to restrain RHG from transferring the property to any other party and for other relief, including damages. Mr Sava's statement of claim substantially repeated the contentions concerning hardship and misleading conduct, which Justice Atkinson had rejected in the earlier decisions.
RHG applied in the District Court to strike out Mr Sava's claim and it applied in the Supreme Court for the removal of this caveat. In each application Mr Sava filed affidavits by Mr Sava's parents. They stated that they were co-owners of property, the unimproved land value of which was $680,000, but they did not know why the equity in their property was not available to help finance "that fraction of arrears" required "to stop enforcement", that "better communication" between RHG and its solicitors and Mr Sava could have avoided his eviction, and that they were concerned about lending practices "where the elderly have lost their properties unjustly."
That seems to have been the only evidence upon which Mr Sava relied in those proceedings. He apparently did not adduce any evidence in either proceeding that he might be able to pay his judgment debt.
On 30 November 2012 Justice Douglas ordered that the caveat be removed pursuant to s 127 of the Land Title Act 1994 and that Mr Sava pay RHG's costs of the application to remove the caveat. Mr Sava has appealed against those orders in CA No 11921 of 2012.
On 14 November 2012 Judge Andrews ordered that Mr Sava's claim and statement of claim in the District Court be struck out and that he pay RHG's costs of the application to strike out the claim and statement of claim and the proceedings. Mr Sava has appealed against those orders in CA No 11926 of 2012.
The caveat was subsequently removed by the Registrar of Titles pursuant to RHG's request and the contract for the sale by RHG as mortgagee to the buyer was completed on 27 November 2012. After taking into account the proceeds of sale of the land Mr Sava remains indebted to RHG for an amount in excess of $164,000 on account of the judgment debt. Apart from those proceeds of sale the last payment made by Mr Sava to RHG in repayment of his loan under the mortgage was in February 2010.
RHG's solicitors were served with notices of appeal in each matter on 12 December 2012. On 19 December 2012 RHG's solicitors sent letters to Mr Sava on each matter, threatening to file applications seeking orders for security for costs and other orders if Mr Sava did not supply evidence that he would be in a position to meet an adverse costs order against him or put forward a proposal for providing security or explaining why he was capable of meeting the costs order. The letter explained in detail the grounds of the threatened application for security, which are reflected in RHG's affidavit evidence today.
Mr Sava responded on the following day that he had not been given sufficient notice, that he might have some more information on the following day, but that he could not give an entire response until 11 January 2013. Mr Sava had not provided any further response before RHG filed applications in each appeal for security for costs on 21 December 2012.
On 11 January 2003 Mr Sava sent an e-mail to RHG's solicitors. Relevantly, the e-mail stated that his parents' affidavits established that their unencumbered property had an unimproved land value of $680,000 which, Mr Sava stated, could have been used to finance his arrears and to stop the eviction if it were not for what he described as RHG's and its solicitors "recorded misinformation to me." The e-mail elaborated upon Mr Sava's claims that he had been the victim of misinformation by RHG or its solicitors. There was no substantive response to RHG's solicitor's letter of 19 December 2012.
Against that background I turn now to the security for costs applications. The Court's discretion to order security for costs is unfettered - see Peterson v Rockhampton Permanent Building Society [1988] 2 Qd R 49 and Murchie v Big Kart Track Pty Ltd (No 2) [2003] 1 Qd R 528.
On the unchallenged evidence before me Mr Sava owes RHG more than $164,000. He has made no payment in reduction of his liability other than for the proceeds of sale for more than two years and nine months and real property searches reveal that Mr Sava owns no real property.
I am satisfied that if Mr Sava's appeals are dismissed and if a costs order is made against him he is unlikely to be able to satisfy that order.
RHG applied promptly for security for costs once the notices of appeal were served upon its solicitor. Mr Sava appears to have been in financial difficulties before the litigation commenced and there is no evidence that his apparent impecuniosity was caused by any wrongful conduct of RHG.
These circumstances strongly favour the grant of security for RHG's costs of opposing the appeals - see Natcraft Pty Ltd & Anor v Det Norske Veritas & Anor [2002] QCA 241.
RHG argue that the appeals were without merit. That may be so, although I reach no final conclusion on the point. It does seem that the appeal against Justice Douglas's order that the caveat be removed is futile since the property has been sold to a third party and, of course, the mortgage has been discharged. For the same reason the appeal against Judge Andrews' order seems to be futile to the extent that Mr Sava seeks to challenge the striking out of so much of his claim as sought to prevent the sale.
Mr Sava argued that the buyer could be required to reconvey the land to RHG, thus enlivening Mr Sava's equity of redemption, because the buyer might be found to have acted in bad faith in taking the purchase. There is, however, no evidence before me that the buyer acted, or might have, acted in bad faith. Mr Sava's e-mails to the buyer before the sale and confirming in conversations after the sale, that is conversations that occurred before the sale, which conveyed Mr Sava's allegations and which advised the buyer that ASIC was investigating his allegations, are not evidence that the buyer acted in bad faith in taking the purchase. That is so, particularly in light of the fact that Justice Atkinson had rejected Mr Sava's claims in decisions which were not the subject of any appeal.
The only utility of successful appeals, apart perhaps from reversing costs orders against Mr Sava, would appear to concern Mr Sava's District Court claim for damages against RHG. That claim, like all of Mr Sava's claims, was based upon Mr Sava's contentions that RHG had engaged in misleading conduct and had failed to accord him relief in his hardship to which he was entitled, thereby producing what Mr Sava argued was an "unnecessary eviction." Justice Atkinson rejected those or substantially the same contentions in the earlier proceedings for reasons which do not reveal any apparent error and Mr Sava did not appeal against those decisions. Nor have I identified any obvious error in the reasons given by Justice Douglas and Judge Andrews in the decisions against which Mr Sava appeals.
Mr Sava argued that his contentions were supported by the sequence of events and various e-mails which were tendered, but my provisional view is that there is no support for his contentions in the evidence before me. Furthermore, the grounds of Mr Sava's appeals, which are identical, refer in express terms to his inability to obtain phone recordings between RHG and its solicitor which, so ground 1 states, are "needed to prove RHG's misleading conduct." This suggests, consistently with Justice Atkinson's decisions, that Mr Sava had and has no evidence that RHG did engage in misleading conduct. The Privacy Commission and the Privacy Act 1988 are referred to in grounds 5 and 7, but the relevance of that to Mr Sava's appeal is not elucidated in the notice of appeal and, notwithstanding Mr Sava's arguments, remains obscure.
In summary, whilst I express no concluded view, on the present material RHG has a substantial argument that both appeals are doomed to fail. As should be apparent from what I have earlier said, however, I would order security for costs, even if the correct conclusion were that the appeals do have some prospects of success.
Mr Sava argued that RHG should not pursue its application for security, or perhaps that those applications should be stayed, because the Financial Services Ombudsman has recently "registered" my dispute "by auto generated e-mail."
I have been supplied with an e-mail from the Financial Service Ombudsman dated 1 February 2013 and directed to Mr Sava. The effect of the statements by the Ombudsman in the e-mail is that RHG is contractually bound by the Financial Service Ombudsman's terms of reference, which I understand to amount to an external dispute resolution scheme approved under s 47 of the National Consumer Credit Protection Act 2009.
Paragraph 13 of the Terms of Reference prohibits a financial services provider, which would include RHG, from "(1) Commencing legal proceedings against the applicant relating to any aspect of a dispute; (2) pursuing legal proceedings relating to debt recovery instituted prior to the lodging of the dispute by the applicant with FOS provided that the applicant has not taken a step beyond lodging a defence or a defence and counterclaim. Attending a directions hearing is not considered to be a step for the purposes of the Terms of Reference; (3) taking any action to recover a debt the subject of a dispute, protect any assets securing that debt or to assign any right to recover that debt while FOS is dealing with the dispute."
On the face of it, those provisions do not preclude RHG from applying for security for costs. It is not now taking or pursuing a legal proceeding, it is merely defending the litigation instituted in the Court of Appeal by Mr Sava and seeking to protect itself against the risk that it will not be able to recover the costs it will incur in the event that its defence is successful.
Furthermore, the e-mail from the Financial Ombudsman Service adds the following after the three paragraphs upon which Mr Sava relies, "An exception to these prohibitions is where FOS agrees in writing to a financial services provider taking legal proceedings or enforcement action. This will only occur in limited circumstances such as where necessary to preserve property the subject of a dispute or where a limitation period is about to expire."
RHG filed an affidavit by a solicitor employed by the firm of solicitors acting for RHG, which refers to an e-mail from the Ombudsman to that solicitor. The e-mail is dated 6 February 2013. Before referring to paragraph 13 of the Ombudsman's terms of reference and to the exception which I have mentioned, the e-mail states, "As discussed, FOS will not prevent RHG from proceeding with today's hearing." That amounts to an exception of the kind mentioned in the Terms of Reference. I must say, I don't quite understand why any such exception was necessary, but if it was necessary it was provided. In the result, Mr Sava's arguments about the Ombudsman and its role do not appear to me to have any substance.
Mr Sava also argued that security should not be ordered before he had a further opportunity to obtain further evidence. He has, however, had ample time since he was given notice of the application and since the application was filed to obtain whatever evidence he required. Also, there is no basis in the material before me for a conclusion that he has any prospect of obtaining any further evidence which would be of assistance to him.
In these circumstances I will order that Mr Sava supply security for RHG's costs in both appeals.
FRASER JA: In each appeal I order as follows:
1.By 4 pm on 22 March 2013 the appellant provide security for the respondent's costs of resisting both appeals in the total amount for both appeals of $10,000 in a form satisfactory to the Registrar.
2.The appellant pay the respondent's costs of and incidental to the respondent's application on the standard basis.
3.That the respondent is relieved from any obligation to take any step in both appeals before the appellant provides security in accordance with order 1.