RHG Mortgage Corporation Limited v Property Angels Investments Pty Ltd
[2011] QDC 66
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- RHG Mortgage Corporation Limited v Property Angels Investments Pty Ltd[2011] QDC 66
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RHG Mortgage Corporation Limited v Property Angels Investments Pty Ltd[2011] QDC 66
RHG Mortgage Corporation Limited v Property Angels Investments Pty Ltd[2011] QDC 66
[2011] QDC 66
DISTRICT COURT
CIVIL JURISDICTION
JUDGE ROBIN QC
No 3521 of 2010
RHG MORTGAGE CORPORATION LIMITED ACN 065912932 | Plaintiff |
and | |
PROPERTY ANGELS INVESTMENTS PTY LTD ACN 103231394 and KATHLENE ELIZABETH DAVIS and WESLEY JAMES WADESON DAVIS and JOANNE ALEXANDRIA HAY | Defendants |
BRISBANE
DATE 28/03/2011
ORDER
CATCHWORDS | Uniform Civil Procedure Rules r 283, r 287 Application to set aside default judgement for liquidated debt and recovery of mortgaged land fails - grounds put up by applicants included an estoppel said to recover from plaintiff's non-response to a notarised declaration that the debt had been paid and that by negotiating, plaintiff had led defendants to believe no steps would be taken - no evidence to show any triable issues - whether request for judgement misleading |
HIS HONOUR: This is an application to set aside default judgment entered by the Registrar on the 24th of January 2011. The request for default judgment was filed on the 21st of January 2011, but the date of the judgment is three days later.
On the order sheet on the file is the Deputy Registrar's endorsement, unfortunately one which doesn't show the date; it’s perhaps obscure whether it's the 21st of January or the 24th, probably more likely the latter. The Deputy Registrar who's signed has made further endorsements to indicate that the judgment was granted against the first and second defendants and also "no NITD [for no notice of intention to defend] filed by either defendant, 9.20 a.m."
No judgment was sought against the third defendants, who were guarantors in respect of a loan agreement which the plaintiff, formerly RAMS Mortgage Corporation Limited, made with the first defendant, Property Angels Investments Pty Ltd. It appears that the $188,000 made available, less nearly $2,000 withheld to cover fees, was used to acquire a property for the second defendant. She was also a guarantor, and it seems that both she and the third defendants undertook the obligations of the guarantor. Kathlene Elizabeth Davis executed a registered mortgage over the subject property.
The judgment, the first defendant and the second defendant not having filed a notice of intention to defend, was that:
"1.The first defendant and second defendant pay to the plaintiff the amount of $196,680.39, including $2,869.48 interest to today, and $1,909 costs.
2. The plaintiff recover as against the second defendant possession of all that piece or parcel of land described as lot 22 on registered plan 130150 situated in the county of Stanley, parish of Bunya, being the whole of the land contained in title reference number 14808040."
Today one of the third defendants, Ms Hay, appeared for all defendants. She informed the Court that the second defendant is a 74 year old lady who's very ill and unable to attend to the matter. All of the second and third defendants appear to have been, at least at the time when the contractual documents were signed, directors of the first defendant company which was the borrower.
The defendants have been assisted by Mr Moxley, who's apparently without legal training, but acted as a McKenzie friend, and indeed took over the function of making submissions in the defendants' interests after a certain way into the hearing.
The points the defendants make appear to me to be the following:
The plaintiff has failed to respond to requests for further information about the loan and events that have occurred in relation to it.
The plaintiff has acted dishonourably, indeed deceitfully, in obtaining a default judgment without advice to the defendants, that was in the course of doing so at the same time as arrangements were being made to meet with one or more of the individual defendants to discuss the matter with a view to reaching a resolution of it. The apparent inability of Mr Davis or others to attend led to deferral at their request of the meeting at the solicitor's office, indeed to the 25th of January 2011, which was, of course, after judgment was entered.
One can understand the defendants’ unhappiness at being led up the garden path, to use my phrase from earlier in the day, in this way. A lot of people could no doubt take from what went on that the plaintiff had no intention whatever of implementing the threat clearly printed at the foot of the statement of claim that is the defendant is in default by not filing a notice of intention to defend within the time allowed, judgement may be given for the relief claimed without further notice. There is also the rule 150(3) notice in the statement claim advising that the plaintiff is entitled to claim additional costs of entering judgment in default.
If the defendants had the advantage of competent legal representation one could be fairly certain that any period through which negotiations were being attempted would have been covered by an express intimation, probably in writing, that the assumption was made that no steps would be taken towards obtaining a default judgment. The defendants had no professional assistance to provide that protection, nor, it seems to me, did they communicate to the plaintiff that they had any such understanding.
I have to say that I agree with and share the plaintiff’s and its solicitors’ apparent understanding that on the defence side what was going on was a rather desperate attempt to put off the evil day when a substantial amount of money might have to be found. The mortgage arrangements go back to 2004. The term was five years. It's not suggested by the plaintiff that substantial payments were not made in the course of the mortgage but the five years has well and truly run out without payment of the balance which, so far as all the material before the Court goes, is now owing as alleged.
That basis of getting the default judgment set aside is not one to which the Court can give effect in my view.
Mr Cooke has suggested from the Bar table that in matters of this kind the practice is that the Court processes are pursued with alacrity but companyies such as the plaintiff nonetheless remain ready to engage in negotiations and are willing to accept that that is a description of his present client's attitude. Indeed he's expressly confirmed that his client's interest is in getting payment and that if that were forthcoming his client would happily release the mortgage and indeed have consented, and might still consent if possible, to the default judgment being set aside.
I'm not prepared to take that step, however, against the plaintiff's opposition today, on the basis that the defendants may be asserting they don't know what the true amount of the indebtedness is. They would have the means to calculate that for themselves, or at least make an effort to do so, since they ought to know what has been paid.
Nor am I prepared to set the judgment aside on the basis that the defendants were entitled to believe that the clear intimation about default judgment had somehow been waived. The Court hasn't seen anything to suggest that any serious offers of compromise which could have had useful effect in the real world were extant. Indeed, when they were quizzed by the Court regarding what could be done to satisfy the plaintiff's demand, the Court was told that a "species of money" could be made available at some time in the near future. My further questions elicited that that "species of money" would not extend to actual bank notes.
The other broad ground of challenge is a notarised document called "Certificate of Dishonour" which appears to have been taken before a notary public, Peter Mahoney of Benowa Waters, whose jurat and seal and signature appear at the end of the document. It's Exhibit M in a collection of sealed-up material which was attached to affidavits of Ms Hay and Mr Davis.
The Court accepts for present purposes that Mr Mahoney is a notary appointed under the authority of the Archbishop of Canterbury who has been prepared to add the details referred to above to authenticate the declaration of Mr Davis which has also been witnessed by Ms Hay and Mr Moxley - the document being "autographed" by them.
Among other things, the document, which came into existence without any participation of the plaintiff, although addressed to it, contends: "that the alleged debt did not exist in the first place, or (2) that the alleged debt has already been paid in full."
There is what appears to be an instruction to the plaintiff that: "you will no longer pursue this matter any further;
(7) The public records be amended to reflect this matter as 'settled in full and closed' and that Glen Goddard of RHG Mortgage Corporation Limited will bare full commercial liability jointly and severally should the records fail to be amended to show the matter as fully settled and closed.
(8) Due process in relation to this 'Private Administrative Process' has now been duly applied and exhausted."
As it happens, I have had the task of considering a similar document in the past in GE Automotive Financial Services v. Newton [2009] QDC 369. The current document, in my opinion, carries no more weight than did the one which Mr Newton procured.
The contention made against the plaintiff is that the document which is said to have been given to the plaintiff's solicitor in some way placed an onus on the plaintiff to establish its inappropriateness, failing which effect has to be given to it by this Court. Mr Moxley went to the extent of referring to the Constitution of the Commonwealth and the prevailing effect which is given to Commonwealth law over State law. It was suggested that obligations undertaken by the Commonwealth, presumably in relation to the notarised document, in some way deprive this Court of jurisdiction.
It was also contended that the matter ought to go to the Supreme Court as one which possesses jurisdiction in equity enabling it to give effect to the second defendant's equity of redemption. Since the 1989 amendments to tis jurisdiction, this Court has had relevantly the same equitable jurisdiction as the Supreme Court would have.
Mr Cooke has made it clear that the equity of redemption is understood and accepted by his client and that no barrier would be placed in the way of Ms Kathlene Elizabeth Davis exercising her equity of redemption on the basis that she did what would ordinarily be required of her, namely pay what is owing to the plaintiff. It might be made clear again that what is owing to the plaintiff is, in my view, unaffected by the notarised document.
I did express to Mr Cooke some misgivings about the terms of his client's request for default judgment which at first blush is misleading in stating that "the claim against the first defendant and the second defendant is for $191,901.91 as a debt or liquidated demand with interest and against the second defendant for the recovery of possession of land. The plaintiff's claim is not for delivery of possession under a mortgage."
It's a regrettable hangover over past jurisprudence if there's still life in the old distinction that used to be important under the Supreme Court rules between delivery of possession and recovery of possession. It's absolutely clear that the plaintiff's claim does arise under a mortgage. It's also clear enough that the plaintiff's claim against the second defendant is not "for the recovery of possession of land only" in that a money judgment was sought and indeed obtained against her as well under rule 283.
My concern is alleviated by reference to rule 287 which relates to judgment by default for mixed claims and applies if the plaintiff's claim is for relief under two or more of the claims for relief mentioned in the preceding rules and no other claim. In that event the plaintiff is entitled to a judgment against the defendant on all or any of the claims for relief that the plaintiff could request under those rules if that were the plaintiff's only claim for relief against the defendant.
What the plaintiff's solicitors have done is pick up one of the alternatives provided in form 25, the one which provides "the claim is for the recovery of possession of land only, and the plaintiff's claim is not for delivery of possession under a mortgage." It might well have been open to the plaintiff's solicitors to cover the situation rather more carefully for fear of confusing another Judge or Registrar in the future, but it's difficult to be critical of a litigant who follows the form.
This Court has jurisdiction to entertain the monetary claim under the District Court of Queensland Act 1967 section 68(1)(a) and under paragraph (b)(xi) to recover possession of land where the value doesn't exceed the monetary limit. Under the preceding subparagraph (i) it also has jurisdiction to enforce by delivery of possession any mortgage, etcetera, where the amount owing in respect thereof doesn't exceed the monetary limit. It would be nice to think that the complications arising from those arrangements could be attended to by some clever thinkers in the future.
Mr Moxley was given leave to read and file a conditional notice of intention to defend which is still in unsigned form, although I don't think anything turns on that. He explained that its not having been filed already is attributable to advice from a Court officer that it shouldn't be filed until today's application was dealt with. That was probably sensible advice but I was not wanting to see the defendants feel that anything they wished to place before the Court was ignored.
The "conditional notice of intention to defend" essentially raises the same points as those discussed above, in particular to do with the "private administrative settlement" as it's called and the related "estoppelic default by the plaintiff" in not taking the notarised matters further.
There's also a criticism in strong terms of the plaintiff's solicitors for seeking judgment while expressing apparent willingness to meet to negotiate and the contention that the Supreme Court is the one with jurisdiction. That document carries things no further.
It is perhaps worth referring to a decision of this Court which would justify overlooking the irregularity, if it be that, that attrached my curiosity regarding the plaintiff's request referred to above. I'm referring to Max Christmas Real Estate Pty Ltd and Hockley [2005] QDC 404.
Mr Cooke also referred the Court to Yankee Doodles Pty Ltd v. Blemvale Pty Ltd BC9903401, Atkinson J, 23rd of June 1999, Writ No. 78 of 1998, one of the many cases which confirms that a defendant seeking the setting aside of a default judgment has to demonstrate by evidence that there is some relevant issue worthy of going to trial to occupy the Court. That hasn't been done in this matter by way of evidence or by the making of contentions in unsworn form.
The application to satisfy the default judgment is rejected.
MR COOKE: Your Honour, I have a draft order. I'd ask for any debt costs to be on an indemnity basis. Your Honour, there's two things I'll say about it. The first one is the loan document itself held a clause allowing - as a contractual term allowing the plaintiff to seek its reasonable expenses incurred in enforcing the agreement and that's at clause 10.1(c) of the loan document itself.
HIS HONOUR: But if you can get that‑‑‑‑‑
MR COOKE: Sorry, your Honour?
HIS HONOUR: If you can get that, then when you take your accounts, you'll just do it on that basis.
MR COOKE: Take our reasonable expenses?
HIS HONOUR: Yes.
MR COOKE: I think it's a matter of getting the judgment from the Court so we can say that they are the reasonable expenses as the Court has reviewed.
HIS HONOUR: I'll say about what the solicitors did - I'd be livid if it happened to me, ‑‑‑‑‑
MR COOKE: Your Honour, may I say that for the purpose of this application, and what we're asking for is costs for this application, there's an affidavit - sorry, there's a letter at the back of the larger affidavit of Elizabeth Abernathy and this was sworn on the 23rd of March and that letter was sent on or around the 15th of March 2011 and it's addressed to the defendants clearly setting out what should be shown for the purposes of an application such as this and then proceeded on the basis we've also given them some time to think about their position before we engage counsel and so forth and embark on those costs. So, we say there was ample time, ample warning and we've tried to help them even by setting it out in correspondence‑‑‑‑‑
HIS HONOUR: Yes, right.
MR COOKE: ‑‑‑‑‑and they've‑‑‑‑‑
HIS HONOUR: All right.
MR COOKE: ‑‑‑‑‑proceeded with going forward on some sort of application that we say just has no merit at law.
HIS HONOUR: All right. Have you got another copy of this? I'm prepared to put in words that say "without prejudice to your entitlements"‑‑‑‑‑
MR COOKE: Oh, thank you, your Honour.
HIS HONOUR: ‑‑‑‑‑under the mortgage‑‑‑‑‑
MR MOXLEY: May I speak in relation to that?
MR COOKE: Well‑‑‑‑‑
HIS HONOUR: Well, I don't know that you have to. Well‑‑‑‑‑
MR MOXLEY: I'm asking.
HIS HONOUR: Well, what do you want to say, Mr Moxley?
MR MOXLEY: There was correspondence seeking‑‑‑‑‑
HIS HONOUR: I'm not going to make any special order as to costs.
MR MOXLEY: I don't understand what that means.
HIS HONOUR: Well, indemnity costs means - ordinary costs means you get what under the Court's scales is a fair thing and they're always a lot less than your real costs. Mr Cooke was asking for a special order that the defendants have to pay their real costs, which are going to be considerably higher. I'm not inclined to give him that, but he says there's a contractual right anyway. Well, I'm leaving that for the future.
MR MOXLEY: All right. In that case I don't need to talk, thank you.
MR COOKE: Your Honour, I don't have any other drafts.
HIS HONOUR: All right. Well, I'll just fix this one up.
MR COOKE: Thank you.
HIS HONOUR: So, paragraph 2 will say that: "without limiting the plaintiff's entitlement to costs under the" - what's it called - "loan agreement"‑‑‑‑‑
MR COOK: Loan agreement, yes, your Honour, and the mortgage.
HIS HONOUR: ‑‑‑‑‑yes - "mortgage, the costs of and incidental to this application be the plaintiff's costs to the cause."
So it's order as per initialled draft.
Thank you.