Commonwealth Bank of Australia v Nemeth
[2013] QDC 125
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- Unreported Judgment
- Commonwealth Bank of Australia v Nemeth[2013] QDC 125
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Commonwealth Bank of Australia v Nemeth[2013] QDC 125
Commonwealth Bank of Australia v Nemeth[2013] QDC 125
DISTRICT COURT OF QUEENSLAND
CITATION: | Commonwealth Bank of Australia v Nemeth [2013] QDC 125 |
PARTIES: | COMMONWEALTH BANK OF AUSTRALIA (plaintiff) and IRENE NEMETH (first defendant) and JOHN NEMETH (second defendant) |
FILE NO/S: | D4324/2012 |
DIVISION: | |
PROCEEDING: | Application |
ORIGINATING COURT: | District Court, Brisbane |
DELIVERED ON: | 6 June 2013 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 21 May 2013 (without oral hearing) |
JUDGE: | McGill DCJ |
ORDER: | The default judgment dated 21 December 2012 as against the first defendant be set aside pursuant to r 290 of the Uniform Civil Procedure Rules 1999 (Qld). The plaintiff have leave to amend the claim and statement of claim in accordance with exhibit LHG4 to the affidavit of Liam Hunter Gillies filed 7 May 2013, but omitting any claim against the first defendant for interest under the Civil Proceedings Act 2011 s 58. |
CATCHWORDS: | INTEREST – Recoverability under common law and statute – liability under guarantee of loan agreement – liability under guarantee limited to specified amount plus enforcement expenses – effect on claim for interest by statute. Civil Proceedings Act 2011 s 58 Bank of Adelaide v Lorden (1970) 127 CLR 185 – cited. Cusack v De Angelis [2007] QCA 313 – applied. Degmam Pty Ltd v Wright [1983] 2 NSWLR 348 – followed. Hughes v Justin [1894] 1 QB 667 – cited. Hungerfords v Walker (1989) 171 CLR 125 – considered. Thakral Fidelity Pty Ltd v Commissioner of Stamp Duties (No. 2) [2001] 1 Qd R 428 – cited. |
COUNSEL: | Application without oral hearing |
SOLICITORS: | Gadens Lawyers for the plaintiff. |
- [1]On 2 November 2012 the plaintiff filed a claim and statement of claim in this court against both defendants, seeking as against the second defendant the amount owing under a loan agreement together with interest under the agreement and costs, and as against the first defendant the amount payable under a guarantee of the second defendant’s obligations under the loan agreement, in the amount which was the limit of the guarantee, together with interest pursuant to the Civil Proceedings Act 2011 s 58 and costs, and recovery of possession of certain mortgaged property of the first defendant, held on two titles but situated at a single street address. No notice of intention to defend and defence was filed on behalf of either defendant, and a deputy registrar gave default judgment on 21 December 2012 against the first defendant for possession of the land on those two titles, and for $38,277.55 including an amount for interest and a further amount for costs, and against the second defendant for $38,259.77 including an amount for interest under the contract and an amount for costs.
- [2]It has since emerged that the land subject to the security is actually held on three titles. A copy of the registered mortgage shows that the mortgage covers two lots on a particular registered plan on one title reference, and a third lot on the same registered plan on a separate title reference. Searches of those title references show that both are owned by the first defendant, and show the mortgage registered in favour of the plaintiff. A Valuer-General’s valuation confirms that the three lots together have a single street address, and contain a single residence, described as a “single unit dwelling”, though the total land area is over 4,000m2. The site value of the property is lower than the monetary limit of the jurisdiction of the District Court.
- [3]The title searches and the mortgage also confirm that the first name of the first defendant is “Irena”, not “Irene”, the name used in the court documents, including the judgment.
- [4]The plaintiff wishes to obtain possession of all three lots covered by the mortgage, so that the entire security property can be sold. An attempt to amend the default judgment under r 388 was refused by a deputy registrar, on the ground that the error was not considered a clerical error or slip. I would respectfully agree with that conclusion. The proposed amendment was to add the third lot number, and to amend the first name of the first defendant. I suspect that if the latter had been the only change the matter could have been rectified by the registrar under that rule.[1] This was a claim to recover possession of two parcels of land in circumstances where there was security over three parcels of land, but the claim on its face was valid, and the fact that on reflection the plaintiff, or the solicitors for the plaintiff, realised that it was more appropriate to seek possession of all three parcels of land does not expose the sort of clerical error or slip contemplated by r 388.
- [5]The plaintiff has therefore applied to set aside the default judgment for the purpose of amending the claim and statement of claim, so as to add the claim to the third parcel of land, and to amend the name of the first defendant. Reliance is placed on the spelling error in the name of the first defendant as a matter rendering the default judgment irregular and making it appropriate to set it aside. I am not at all sure that the appropriate response to the error in the name, which is a fairly minor one and not one which in the circumstances was likely to engender any confusion, would be sufficient to justify setting aside the default judgment rather than amending the default judgment, as the court may also do under r 290: Cusack v De Angelis [2007] QCA 313. In that case the majority of the Court of Appeal did not decide whether the inclusion of a particular claim for interest in the default judgment meant that it was irregularly entered, but held that there was power to remedy any irregularity, in circumstances where the plaintiff elected to abandon that part of its claim, by amending the default judgment to reduce it by the amount previously allowed for interest, rather than setting aside the default judgment. It might be that the same approach could apply in a case of misnomer.
- [6]It seems to me however that in this case a more fundamental reason for setting aside the default judgment is apparent. The statement of claim in paragraph 7(a) pleaded that it is a term of the guarantee that the liability of the first defendant is limited to the amount of $35,200 (guarantee limit) plus the plaintiff’s reasonable enforcement expenses. The affidavit in support of the application includes a copy of the deed of guarantee, which shows that the pleading accurately reflects the terms of the guarantee. It is in plain English, and clause 3 provides: “We cannot ask you to pay more than the maximum amount.” The front page of the document says under the heading “the details” “maximum amount we can ask you to pay us under this guarantee - $35,200 plus our enforcement expenses under clause 5 of this guarantee.”[2]
- [7]Apart from that provision, the guarantee included all amounts owing by the borrower, including interest, and the statement of claim alleged that the loan agreement with the second defendant provided for interest calculated in accordance with the terms of the loan agreement, the whole to be repayable by the second defendant by way of monthly payments of principal and interest, over the term of the loan.
- [8]I might add that the guarantee was also an indemnity, as it provided in clause 2.1 that “you indemnify us against, and must therefore pay us, when we ask, for loss we suffer because the borrower does not pay us in accordance with the guaranteed agreement.” Clause 2.2 however provided that the indemnity “terminates when you have paid us the maximum amount.” It was said to be a continuing separate and independent obligation, but subject to, relevantly, the limitation in clause 3.
- [9]In these circumstances, it seems to me that there is an issue as to the entitlement of the plaintiff to claim interest under s 58 of the Civil Proceedings Act 2011. It was submitted in supplementary written submissions, after I had raised this point through my associate with the solicitors for the plaintiff, that the plaintiff was entitled to claim interest under the statute because of the loss it sustained as a result of its not being paid the debt by the first defendant when it was due and payable, and that the claim for interest under s 58 is separate from any contractual right under the guarantee, so that the limitation in the guarantee did not limit the plaintiff’s right to include a claim for statutory interest.
- [10]Reference was made to the decision of the High Court of Hungerfords v Walker (1989) 171 CLR 125. In that case there was some discussion of an analogous provision of South Australian legislation, but in the context of a conclusion that the power to award damages at common law for breach of contract or negligence could in some circumstances include an award of damages by way of interest, and this was not foreclosed by that section. In that case Mason CJ and Wilson J said that the section was not intended to erect a comprehensive and exclusive code governing the award of interest, but was a “provision intended to provide a plaintiff with some protection against the late payment of damages. The section does not attempt to regulate the measure of compensation to be awarded for a specific head of loss.” In my opinion the decision does not suggest that there is an entitlement to recover interest under the statute, or that interest may be awarded under the statute, in circumstances where the relationship between the parties is governed by contract and the contract provides expressly for a limitation on the amount payable which does not provide for interest.
- [11]Indeed, s 58(2)(b) provides that the section does not apply in relation to a proceeding for the payment of money on which interest is payable as of right whether because of an agreement or otherwise. There is an agreement between the parties here. The guarantee and indemnity by the first defendant of the obligations of the second defendant include the second defendant’s obligation to pay interest, subject only to the limit as to the maximum amount payable. The amount lent under the loan agreement which was guaranteed was also $35,200, and the amount alleged to be owing by the second defendant as of 24 October 2012 was $35,587.63.
- [12]It is not possible for me to ascertain from the material on the file to what extent this is principal and to what extent interest, but I would be very surprised if the amount of unpaid principal came to $35,200, in circumstances where the second defendant’s obligation was to repay the principal sum together with interest by way of monthly payments, the loan agreement had been entered into in October 2008, and the first default relied on was in January 2012. In these circumstances I think it very likely that the outstanding principal was less $35,200, so that the amount claimed from the first defendant under the agreement included a component by way of interest, just not as much interest as was claimed against the second defendant, because of the operation of the limitation of liability under the guarantee. In those circumstances this was a case where interest was payable as of right pursuant to an agreement, so that s 58 did not apply.[3]
- [13]Even apart from this, the terms of the contract between the parties, as to the amount payable under the guarantee, are in my opinion quite clear and unequivocal. In such a case, in my opinion it would be inappropriate to construe the contract as preserving a right to claim interest by statute, and it would not be appropriate to exercise the power conferred by the statute, if it applied, to give interest under the statute in circumstances where to do so would be inconsistent in result from the express terms of a contract between the parties as to the maximum amount of the liability of the first defendant under it.
- [14]Accordingly, in my opinion the plaintiff has no right to claim interest under s 58 of the Civil Proceedings Act 2011 in circumstances where the amount sought to be recovered is already the maximum amount recoverable by the terms of the guarantee. It follows that for this reason as well the default judgment was irregular in that the amount of the judgment was more than the amount actually owing by the first defendant.[4] For that reason the default judgment against the first defendant ought to be set aside, unless the defect was appropriately cured by amending the default judgment. In the present case however, the plaintiff is seeking for other reasons to have the default judgment set aside rather than amended, and accordingly I order that the default judgment be set aside.
- [15]The proposed amended claim and statement of claim include the third lot covered by the mortgage. The statement of claim also rectifies the spelling of the name, and some other drafting errors in the original statement of claim. The claim and statement of claim should be amended, to reflect the amendments sought to be made by the plaintiff, but to omit the claim for interest under s 58.
Footnotes
[1]Thakral Fidelity Pty Ltd v Commissioner of Stamp Duties (No. 2) [2001] 1 Qd R 428 at [4].
[2]Contrast the terms of the guarantee in Bank of Adelaide v Lorden (1970) 127 CLR 185.
[3]Degmam Pty Ltd v Wright [1983] 2 NSWLR 348. In a situation where there was no contractual, or other, right to interest, s 58(3) would apply.
[4]This issue strictly arose when the judgment was signed, because what matters was the amount actually owing then: Hughes v Justin [1894] 1 QB 667; Cusack v De Angelis (supra) at [38] – [40].