Pioneer Mortgages Limited v Gooden
[2014] QDC 16
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- Unreported Judgment
- Pioneer Mortgages Limited v Gooden[2014] QDC 16
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Pioneer Mortgages Limited v Gooden[2014] QDC 16
Pioneer Mortgages Limited v Gooden[2014] QDC 16
DISTRICT COURT OF QUEENSLAND
CITATION: | Pioneer Mortgages Limited v Gooden [2014] QDC 16 |
PARTIES: | PIONEER MORTGAGES LIMITIED (respondent/plaintiff) v MARK ANDREW PEARSON (applicant/defendant) |
FILE NO/S: | 4710 of 2012 |
DIVISION: | Civil |
PROCEEDING: | Application |
ORIGINATING COURT: | District Court, Brisbane |
DELIVERED ON: | 31 January 2014 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 31 January 2014 |
JUDGE: | Reid DCJ |
ORDER: |
|
CATCHWORDS: | Stay of enforcement warrant – stay of decision pending appeal – possession of real property – mortgage default – unconscionable conduct Beraru & Anor v Perpetual Limited [2013] QCA 330 applied Elphick v MMI General Insurance Ltd & Anor [2002] QCA 347 applied Raschilla & Anor v Westpac Banking Corporation [2010] QCA 255 applied Violet Home Loans Pty Ltd v Schmidt & Anor [2013] VSCA 56 considered |
COUNSEL: | M. Pearson (applicant) in person M. Alexander for the respondent |
SOLICITORS: | Gadens Lawyers for the respondent |
Introduction
- [1]This is an application by the defendant for a stay of the original decision of the District Court in this matter, pending the outcome of appeal number 84/2014 to the Court of Appeal. The defendant also seeks a stay of an enforcement warrant entitling the plaintiff to the possession of unit 1/296 The Esplanade, Miami. I was told the warrant is to be executed on Sunday, 2 February 2014. It is, in such circumstances, important I give judgment in this application expeditiously. The appeal I have referred to is against the decision of Rackemann DCJ given on 6 December 2013. His Honour refused the defendant’s application to set aside an earlier default judgment of 18 October 2013.
Background
- [2]The defendant was represented by counsel in those proceedings, before Rackemann DCJ, but was self-represented before me. His Honour Judge Rackemann, in the judgment below, characterised the claim in the following way:
‘The subject proceedings were commenced by a claim and statement of claim filed on 3 December 2012. The relief sought in the proceedings for which default judgment was obtained with the possession of certain real property… the plaintiff is a financier who advanced money to the defendant on security of a mortgage. The defendant has, at all relevant times, been in default. The defendant claims that he was not aware of the proceedings at the time default judgment was obtained.’
‘Service of the claim and statement of claim had been affected by substituted service pursuant to an order made on 9 September 2013. That order:
- dispensed with personal service;
- required the claim (and a copy of the substituted service order) to be served by sending them to a PO Box and to an e-mail address and by informing the defendant of that by a text message;
- deemed service to have been effected four business days after service in that way;
There is no suggestion that the documents were not served in the way ordered. The consequence is that service was deemed to have been effected (whether it had come to the defendant’s knowledge or not) and there was nothing irregular about the plaintiff seeking or obtaining default judgment; and
There was an attempt to impugn the plaintiff’s conduct in obtaining the substituted service order. It was said that it knew that the PO Box address was one which was ineffective. All the defendant pointed to however, was an e-mail of 10 December 2012 from the defendant to the financial ombudsman. Nothing was put before me to substantiate any claim that there was a material non-disclosure of facts known to the plaintiff at the time of obtaining the substituted service order.’
- [3]In such circumstances, his Honour found that it was not established that the judgment was irregular. His Honour then considered whether, in the exercise of his discretion, he should set aside the default judgment. His Honour identified the following questions as being of relevance:
- (i)‘Has the applicant delayed in bringing the application?
- (ii)Has the applicant explained his failure to file a notice of intention of passive intention to defend within time?
- (iii)Is there a prima facie defence on the merits?’
- [4]His Honour accepted the defendant’s explanation for his delay and for not filing a notice of intention to defend and said that he would not refuse to set aside the default judgment on account of those factors. He considered however, that the crucial question was whether the defendant had demonstrated a prima facie defence. In respect of that, his Honour found that, based on a draft defence and counterclaim prepared by the defendant’s counsel on the application before him, it was not disputed:
- (i)That on or about 23 November 2006, the defendant purchased the property with finance from the National Australia Bank, which took a mortgage out on the property;
- (ii)In 2008, the defendant (with the assistance of a mortgage broker) refinanced the debt with the plaintiff;
- (iii)A firm of solicitors acted for him in that transaction;
- (iv)The plaintiff advanced the monies on security of a mortgage on or about 10 July 2008; and
- (v)The defendant has fallen into arrears and indeed has not made any payment since 1 February 2011.
- [5]His Honour said that the draft pleading sought declarations that both the loan agreement and mortgage were ‘void’ as a result of the plaintiff’s unconscionable conduct (both in equity and within the meaning of that term as used in the Australian Securities and Investment Commission Act 2001) which conduct of the plaintiff was said to have resulted in the defendant entering into the refinancing arrangement with the plaintiff. The defendant asserts that, as a result, he assumed responsibility for a debt which he could not service, thus falling into arrears. He asserted the plaintiff’s conduct amounted to ‘asset lending’ and was unconscionable.
- [6]His Honour said that the defendant’s counsel did not submit that, on the face of the loan application, the plaintiff ought not have offered the refinancing it did to the defendant. Instead, counsel submitted that the broker who prepared the application had falsified it and that the broker was either the plaintiff’s agent or the plaintiff had an obligation to independently investigate the bona fides of the content of the loan application.
- [7]In respect of this, the defendant said:
- (i)He had signed only a three-page document;
- (ii)That document was added to by others without his consent; and
- (iii)The loan application was amended without his knowledge or consent and, among other things, grossly overstate his income.
- [8]I interpose that the defendant told me he sought to rely on material that was not available before his Honour Judge Rackemann. He said that he still has only a partial copy of the original loan agreement (see paragraph 46 of his outline of submissions), but maintains his assertion that the documents were forged or altered or contained false statements as to his income. There is however, no independent supporting evidence of those assertions and even if true, no evidence at all linking such conduct to the plaintiff rather than to the broker, Mr John Jenkins, who the defendant states in his submissions approached him saying he had became aware of the defendant’s intention to sell the property. There is nothing that I have been shown to indicate Mr Jenkins was an agent of the plaintiff.
- [9]His Honour then referred to the prima facie position that the broker is taken to be the agent of the borrower rather than the lender said that there was no evidence to support the contrary position. Indeed, his Honour found there was some evidence that a third party had suggested the broker make an unsolicited approach to the defendant, the third party having become aware of the defendant’s intention to sell the subject property. This appears to be generally consistent with the submissions made by the defendant in argument before me.
- [10]In regard to the defendant’s contention that the plaintiff was in breach of an obligation to make its own inquiries into the facts set out in the loan application, his Honour said he was not referred by defence counsel to any provision or authority supporting that proposition. His Honour was however referred by defence counsel to a decision of Violet Home Loans Pty Ltd v Schmidt & Anor[1]. In that case, a loan contract and mortgage were set aside due to the lender’s unconscionable conduct. The financier’s credit officer (an employee of the financier) had, however, ‘fudged’ figures as to the borrower’s income and ignored inconsistencies which were readily apparent on the face of the loan application and income declaration themselves.
- [11]The fact that such matters were due to the lender’s own conduct was self-evident on the face of the documentation in support of the loan and so was to be distinguished, his Honour held, from the subject case. His Honour pointed out that the defendant’s counsel was unable to point to anything warranting a conclusion that the plaintiff ought have been put on notice of such matters in this case. It was in such circumstances that his Honour concluded that the defendant has not shown a prima facie case of unconscionability. His Honour also refereed to the fact that in Violet Home Loans Pty Ltd v Schmidt & Anor[2] the borrower, who succeeded in establishing unconscionability, had the loan contract and mortgage set aside only on the condition that he paid the lender the amount that had been refinanced plus interest.
- [12]His Honour then addressed a contention raised about the Consumer Credit (Queensland) Act 1994 and the Consumer Credit Code. His Honour pointed out that the defendant’s signed loan application was said to be ‘wholly or predominantly for business or investment purposes’ and held also that, in any case, the defendant had not established a prima facie case to reopen the transaction on the basis that it was unjust.
The Application
- [13]The notice of appeal is unusual in that it lists three additional respondents to the appeal: ING Bank (Australia) Limited; Financial Ombudsmen Service Limited; and Pioneer Mortgage Services Pty Ltd who were not parties in the matter before his Honour Judge Rackemann.
- [14]
- [15]
‘To succeed on an application for a stay the applicants must show good reason for the stay to be granted and that it is an appropriate case in which to grant a stay. Those authoritative decisions in this court establish that an applicant should demonstrate:
- A good arguable case on appeal.
- That the applicant will be disadvantaged if a stay is not ordered.
- That a competing disadvantage to the respondent should the stay be granted, does not outweigh the disadvantage suffered by the applicant if the stay not be granted.’ (footnotes omitted).
- [16]
‘The principle ground upon which Westpac opposes the application [for a stay] is its contention that Mr and Mrs Raschilla do not have a good arguable case on appeal. If that is demonstrated, then it is clear that the Court should not grant a stay since such an order is designed to ensure a successful appeal would not merely be a hollow victory.’
- [17]Counsel for the plaintiff also referred me to the case of Beraru & Anor v Perpetual Limited.[7] As in this case, in that the applicant sought the stay of an enforcement warrant pending the appeal. Fraser JA, in that case, refused to grant a stay. His Honour said:
‘The authorities show that the applicants bear the onus of establishing that it is an appropriate case for a stay to be granted and that no stay should be granted where there is a readily apparent lack of merit in the appeal… It is impossible not to have sympathy for people in the position of these applicants who are to be ejected from their home as a result of their inability to repay the loan. However, the evidence upon which the applicants rely reveals no ground for thinking that there is any merit in their appeal… In the absence of any evidence, which suggests that the appeal has any real prospect of succeeding, it would do no favour to the applicants merely to defter the inevitable. It would be wrong to grant a stay.’ (footnotes omitted).
- [18]Counsel submits that very similar considerations dictate that this application should also be dismissed. He points out that it is not disputed in the proposed defence tendered before Rackemann DCJ on behalf of the defendant that after purchasing the property the defendant could not keep up the repayments due to the NAB, his initial lender, and that by written agreement of 15 April 2008 the plaintiff lent $472,500 to the defendant. This was secured by a mortgage of 15 April 2008. The defendant again breached the loan agreement by failing to make payments due to the plaintiff.
- [19]The current financial position under the loan agreement is said (see paragraphs 10 and 11 of the affidavit of Barbara-Ann Sim filed 29 January 2014) to be as follows:
- (i)Arrears of $234,569.43;
- (ii)Total indebtedness of $707,069.43; and
- (iii)No payments received from the defendant since 4 February 2011.
- [20]It is clear that the defendant has, on a number of occasions, interfered with the plaintiff’s possession of the property by changing locks and re-letting it to tenants. Obviously, such conduct significantly affects the plaintiff’s ability to deal with the property.
- [21]Pursuant to consent orders made by Kingham DCJ on 21 November 2013, the defendant was restrained from further tenanting the property or in any way dealing with it. The plaintiff was given leave to issue an enforcement warrant for possession of it. It was further agreed, also by consent, that in the event that any tenancy of the property came to an end the defendant was restrained, ‘from taking any steps to dispossess the plaintiff of the property.’
- [22]It is apparent the appeal will not be speedily resolved, as the defendant seeks not only to join the new parties I have referred to, but also to adduce fresh evidence, and he has already sought an extension of time for filing his material. The ongoing delay in the matter potentially increases the defendant’s liability to the plaintiff by a figure that I roughly calculate at about $1,000 per week. The defendant’s financial predicament is such that he has no realistic ability to meet the indebtedness that he would owe to the plaintiff if he is ultimately unsuccessful, and so any further delay, in the event of such lack of success, would result in a real loss to the plaintiff, which it would be unable to recover by their security over the property.
- [23]The defendant has failed to demonstrate to me that he has reasonable prospects of success with the appeal. The material before me significantly supports the conclusion of his Honour Judge Rackemann. Furthermore, examination of such material as I was taken to during submissions, in my view, casts doubt on the reliability of the assertions made by the defendant about the matter. Many of his assertions are unsupported by other evidence, and appear to be no more than mere assertions unsupported by cogent evidence. Furthermore, there seems no prospect that the relief the defendant seeks, discharge of the debt and conveyance of the property to him, could ever be achieved, because as I have previously stated in Violet Home Loans Pty Ltd v Schmidt & Anor[8], where unconscionability was established, the borrower was still required to repay the amount that hand been financed plus some interest. Before Rackemann DCJ, the defendant’s counsel conceded that the mortgage could be declared void, ‘only… on the repayment of the principal amount of money advanced.’
- [24]In the circumstances, I cannot conclude that the defendant has discharged the onus of establishing that this is an appropriate case for a stay. In my opinion, the lack of merit in the appeal is palpable. Furthermore, there is a significant risk of increased prejudice to the plaintiff if its right to possession of the property is delayed further. Even if the defendant were, beyond my expectations, successful, it is inherently unlikely he would not have to repay the principal advance and some interest, and there is, on the evidence, a real risk that that itself might exceed the value of the property.
Orders
- The application for a stay of the order of the District Court order of 18 October 2013 pending the outcome of the appeal, and a stay of the enforcement warrant is dismissed.
- The defendant pay the plaintiff’s costs of the application on the indemnity basis.
- The enforcement warrant WN394/03 issued on 17 December 2013 be executed against the defendant, any of the occupants/tenants of the land described as Lot 1 on Building Unit Land 2233 in the County of Ward, Parish of Wilson, Title Reference 15559087, being the property situated at 1 ‘Bellara’ 296 of The Esplanade, Miami also known as 1-296, The Esplanade, Miami and 296 The Esplanade, Miami, in the state of Queensland.