Queensland Judgments
Authorised Reports & Unreported Judgments
  • sclq logo
  1. Caselaw
  2. QDC
  3. 2015
  4. Westpac Banking Corporation v Howard - [2015] QDC 76

Authorised Reports & Unreported Judgments
Exit Distraction Free Reading Mode
  • Unreported Judgment

Westpac Banking Corporation v Howard[2015] QDC 76

Westpac Banking Corporation v Howard[2015] QDC 76

DISTRICT COURT OF QUEENSLAND

CITATION:

Westpac Banking Corporation v Howard [2015] QDC 76

PARTIES:

WESTPAC BANKING CORPORATION

(ABN 33 007 457 141)

Plaintiff/Respondent

v

GLENN MATTHEW HOWARD

Defendant/Applicant

FILE NO:

D 78/11

PROCEEDING:

  1. Application to extend time for filing and serving an application to set aside a default judgment and affidavits in support of that application.
  2. Application to set aside default judgment.

ORIGINATING COURT:

District Court, Southport

DELIVERED ON:

10 April 2015

DELIVERED AT:

Southport

HEARING DATE:

27 March 2015

JUDGE:

Judge CF Wall QC

ORDERS:

Time extended; judgment set aside

CATCHWORDS:

Civil procedure – application to set aside default judgment – relevant considerations – long delay in making application – plaintiff bank – allegations of fraudulent conduct by bank manager – false details inserted in loan application unbeknown to defendant – whether defendant has a defence on the merits – National Credit Code – whether defendant has arguable case that loan agreement and mortgage constitute an unjust transaction – nature and extent of possible relief.

LEGISLATION:

National Credit Code, Sections 76, 77

Contracts Review Act 1980 (NSW)

Consumer Credit (Qld) Act 1994,

Consumer Credit Code (NSW) Section 70

National Consumer Credit Protection Act 1990

National Consumer Credit Protection (Transitional Consequential Provisions) Act 2009

CASES:

Tonto Home Loans Australia v Tavares (2011) 15 BPR 29, 699

Permanent Mortgages Pty Ltd v Cook & Cook [2006] NSWSC 1104

West v AGC (Advances) Ltd (1986) 5 NSWCE 610

Barker v G E Mortgage Solutions Ltd [2013] QCA 137

Perpetual Trustees Co Ltd v Khoshaba (2006) NSWCA 41

COUNSEL:

Mr D. Myrteza (Solicitor) – for the applicant

Ms M.J. Luchich – for the respondent

SOLICITORS:

Forbes Dowling – for the applicant

Minter Ellison Lawyers – for the respondent

Introduction

  1. [1]
    This is an application by the defendant to extend time for filing and serving an application to set aside a default judgment and affidavits in support of that application and an application to set aside the default judgment if time is extended.
  1. [2]
    The application and affidavits were to be filed by 4.30pm on 25 March 2015. They were not and it is conceded by the defendant that he is out of time and unless time is extended an enforcement warrant based on the default judgment may be enforced.
  1. [3]
    The plaintiff’s claim against the defendant was for recovery of possession of land as mortgagee and for $596,265.13 owing by the defendant to the plaintiff pursuant to a loan agreement dated about 5 May 2009 plus interest. The relevant Westpac account no. is 037151 286. The land is situated at 14 Surrey Court, Helensvale which is where the defendant lives.

The loan – the plaintiff’s case

  1. [4]
    Pursuant to the loan agreement the plaintiff advanced to the defendant $576,000 which was for the purchase of the property and lender’s mortgage insurance charge of $10,644.48 (The material is silent as to what happened in relation to the insurance. Was a claim made? What default does the insurance cover?). The contract of sale states the purchase price as $650,000 and the deposit as $1,000. Westpac provided $563,385.82 at settlement on 22 May 2009. The defendant agreed to pay $50,000 to the vendors by 22 May 2010. Mrs Elizabeth Orchard, a good friend of the defendant, says the vendors “agreed to settle for $600,000 and to take a second mortgage for the balance”.  This is consistent with the vendors reference to the contract requiring payment, subject to adjustments at settlement, as follows:
  1. (i)
    Deposit$1,000
  1. (ii)
    Cash balance at settlement;$599,000
  1. (iii)
    Cash payable 12 months from settlement$ 50,000

Total$650,000

  1. [5]
    Queensland Law Group acted for the defendant in the purchase of the property.
  1. [6]
    The plaintiff says it “is a bona fide mortgagee for value”.
  1. [7]
    Subsequently the defendant defaulted in paying the $50,000 to the vendors and they obtained undefended judgment for that amount plus interest and costs. It seems as though all of the money loaned by the plaintiff went towards the purchase price and insurance ($574,030.03) and other bank charges.
  1. [8]
    By 27 August 2010, according to the statement of claim (para 7), the defendant was $9,192.17 in arrears of repayments of principal and interest and was therefore in default under the loan agreement and under the mortgage. No further repayments of principal and interest have been made. On or about 8 October 2010 the plaintiff served on the defendant notice demanding payment of all monies owing. The plaintiff’s claim was filed on 14 February 2011.
  1. [9]
    As at 26 March 2015 the balance owing on the loan was $846,848.03 and interest at $109.74 per day was accruing. No payments have been made since 25 August 2010. The plaintiff has undertaken not to enforce the judgment debt “by way of enforcement orders or bankruptcy proceedings”.  This, I think, represents a pragmatic commercial decision rather than an admission of any wrongdoing by the bank.  It wants the property though.
  1. [10]
    The defendant refuses to vacate the property.
  1. [11]
    Based on a valuation of the property obtained by the plaintiff, the plaintiff “anticipates there will be no equity in the property and the bank will suffer a significant shortfall following sale”.  Further delay may exacerbate the plaintiff’s loss. 
  1. [12]
    So far the plaintiff has paid $24,120.30 for rates and charges for the property and may have to pay the current overdue rates bill of $2,677.34. These amounts have been/will be added to the loan amount.

The loan – the defence version

  1. [13]
    Mrs Orchard has filed an affidavit in support of the defendant. Mr Howard describes her as “my housemate/family member”.  Mrs Orchard says she has “been taking care” of the defendant since 2010 and that he is a member of her “extended family”.  She says that since he suffered a stroke in 2002 and a brain tumour in 2004 she has looked after his financial matters and paperwork.  The defendant says she “looks after any documentation or financial matters” for him.  In February 2011 the defendant, according to Mrs Orchard, was “in and out of hospital”. 
  1. [14]
    The defendant admits the property was purchased with funds advanced by the plaintiff and secured by a mortgage over the property but says his “loan details were bogus” and the loan “completely fraudulent” and the result of a criminal conspiracy between David St Pierre, a former Westpac Home Finance Manager at the bank’s Pacific Fair, Broadbeach branch and one Bradley Silver (a person Mrs Orchard once worked for) and/or his companies, Capital Growth International Club Pty Ltd (CGIC) and its real estate arm, All About Property Development Pty Ltd (AAPD).  He says St Pierre fraudulently completed the loan application which he had the defendant earlier sign in blank.  There is no evidence to the contrary from the bank.  False details relating to the defendant’s employment, assets, liabilities and capacity to make mortgage payments were inserted by St Pierre.  The defendant says he in fact had no capacity to repay the loan.  He and Mrs Orchard contend they are “Westpac fraud victims”.
  1. [15]
    The following statements made in the loan application are said by the defendant to be false (and there is again no evidence to the contrary from the plaintiff):
  • the defendant was a landscape architect employed full time by a Silver company and had been so employed since 1 January 2004
  • the defendant had assets as follows
  • property valued at $400,000
  • cash/bank accounts of $101,338
  • motor vehicle $30,000
  • furniture and personal effects $100,000
  • the defendant’s net monthly income was
  • wages$ 6,629
  • rental properties income $ 1,906

total monthly income$8,435

  • the defendant’s gross annual income (before tax) was $110,000
  • the defendant’s total liabilities were
  • property$320,000

(monthly payment $1,815)

  • personal loans/ leasing $ 13,000
  • Total$333,000
  1. [16]
    The defendant’s actual position, he says, was as follows: he owned a house at Upper Coomera. Mrs Orchard says it was worth $320,000 and was subject to a “just manageable” mortgage.  He did some part time gardening and maintenance work for Silver, averaging about $50 per week otherwise he was unemployed and he said so to St Pierre.  He was not a landscape architect, he didn’t have cash/bank accounts of $101,338 or assets totalling $631,338 and he was paid no wages and did not have an annual gross income of $110,000.  No financial records or documents relating to the defendant were required by St Pierre.
  1. [17]
    The defendant says that St Pierre suggested “bumping” up the purchase price from $619,000 (which the defendant says was the advertised price) to $650,000.  Mrs Orchard says St Pierre “demanded” this adjustment to the purchase price “in order to allow greater borrowing for Silver’s benefit so that Westpac would contribute more”.   She also says the advertised price was $619,000.[1] 
  1. [18]
    The defendant says that he and Silver agreed that Silver and/or his companies would spend $100,000 – 150,000 renovating the property, pay the defendant $1,500 per week to work on the renovations, make all mortgage repayments and pay all other expenses following which the property would be sold for $1M or more with the profit going to Silver. None of this in fact happened. On 28 February 2011 a liquidator was appointed to GCIG and AAPD.
  1. [19]
    Mrs Orchard alleges that at St Pierre’s behest Silver unlawfully obtained $68,000 from an investment account she had with a Silver company by forging her signature and this was used as a deposit for the purchase of the property. She says she saw the property settlement statement 48 hours after settlement. She said St Pierre told her surplus money would be for renovation/development costs.
  1. [20]
    Mrs Orchard said St Pierre and Silver “trapped” her into making mortgage repayments of $70,000.
  1. [21]
    After settlement of the purchase of the property the defendant moved into the property with Mrs Orchard and they still live there.

Discussion

  1. [22]
    Mrs Orchard may have made mortgage repayments on behalf of the defendant but maybe not to the extent of $70,000. According to my calculations between May 2009 and August 2010 deposits to the account totalling $51,666.91 were made to the loan account.
  1. [23]
    The plaintiff has no knowledge of and has found no documents relating to an amount of $68,000 being applied to the purchase price. Settlement details do not support that this happened.
  1. [24]
    The purchase price was $650,000. It was never $619,000. The price was never “bumped up” or inflated.
  1. [25]
    I doubt that the settlement statement referred to by Mrs Orchard would support her allegations.

Proposed defence

  1. [26]
    The defence/s which the defendant says he has to the plaintiff’s claim appear to revolve around the following allegations:
  • the loan was fraudulent and based on a criminal conspiracy involving an employee of the plaintiff (St Pierre) and false documents
  • more money was advanced than was required to purchase the property
  • $68,000 was stolen by Silver from Mrs Orchard’s account and was used by an employee of the plaintiff (St Pierre) to “settle the loan” and/or “fund the purchase of the property”/pay the deposit
  • Mrs Orchard was trapped or forced into making mortgage repayments of $70,000
  • the claim is bogus and bogus claims are being orchestrated by Westpac.
  1. [27]
    The false statements in the loan application were known to the plaintiff because, it is argued, they were known to and in fact inserted by its employee, St Pierre. No evidence has been led from St Pierre and there is no evidence contradicting what the defendant says about his dealings with him.
  1. [28]
    It is not possible to say with any certainty but the undercurrent to the defence case seems to be that the bank and Silver conspired to cause the defendant to purchase the property using money obtained via a fraudulent loan application so that Silver could renovate it and sell it for a profit. Silver was to pay the holding charges and renovation costs and perhaps then reward St Pierre with some form of commission, alternatively St Pierre earned a cash bonus from his employer for arranging the loan. The defendant himself never had any capacity to make loan repayments, only Silver did but for some reason he didn’t nor did he undertake any renovations and the defendant predictably defaulted under the loan agreement and mortgage. For these reasons, the defendant contends that the transaction was unlawful or at least unjust and should be re-opened. Consequential orders would then be considered. This scenario does not seem to have been considered by the plaintiff.
  1. [29]
    Ms Luchich made the following written submissions

26.The crux of Mr Howard’s allegations is that he signed a blank loan application form and that it was filled out with incorrect information and that, presumably, Westpac ought not have lent him any money.

27.Putting to one side how implausible it is that Mr Howard seriously thought that Westpac would advance money to him if he told them he had no job and no assets, at best for Mr Howard, success in respect of this case can mean only that he might be relieved from liability under the loan agreement above the value of the Property which is security for the loan.  He could not be both relieved from such liability and retain ownership of the Property.

  1. [30]
    To me she submitted

So at its highest Mr Howard’s defence is he seeks to impugn the loan agreement because of information in the loan application he says was incorrect.  But he can’t keep the money and keep the house… He can’t be relieved from the loan agreement and retain the property which was purchased with the (loan) moneys.[2]

  1. [31]
    I agree with Ms Luchich that there is no logical reason why a bank would lend money to someone who was not employed and had no capacity to repay but that is what the plaintiff did and the uncontradicted evidence is that it knew of these facts when it did so. It follows then that as a result of the falsified loan application the money was advanced and secured by a mortgage. Why the bank did this is something known only to the bank and its employee, St Pierre. According to the defendant and Mrs Orchard there seems to have been a pre-existing relationship of sorts between Silver and St Pierre.
  1. [32]
    St Pierre is not without form. In March 2014 the Australian Securities and Investment Commission (ASIC) permanently banned him from engaging in credit activities and providing financial services because of his activities arranging loans for people to invest in GCIG. Specifically ASIC found that between July 2008 and June 2010 he submitted loan applications to Westpac for approval when he knew they contained false information and were supported by false documents. He enabled and encouraged customers to borrow funds from Westpac and earned a financial advantage in the form of cash bonuses on loans in addition to his base salary, despite knowing that they would not be able to repay the loan if the property development scheme operated by CGIC and AAPD failed, which it did.
  1. [33]
    No draft defence has been filed. Mr Myrteza sought more time to brief counsel to do this. Ms Luchich opposed this as did I. Mr Myrteza submitted that on these facts the defendant has at least a prima facie case to the effect that the “transaction” (the loan agreement and the mortgage) was unjust and would be reopened by the court under s. 76 National Credit Code following which orders could be made under s. 77.[3]  He referred to Tonto Home Loans Australia v Tavares (2011) 15 BPR 29, 699.  In addition he referred to “a number of equitable defences available to the defendant” without specifying them.  He also foreshadowed a counter-claim where the defendant would pursue a number of unspecified heads of damages.  It is not clear but they may include mortgage repayments made by or on behalf of the defendant.  He also referred to the fact that as a result of the mortgage repayments to Westpac the defendant “had to let his Upper Coomera property go”.  He submitted that the bank “should never have advanced the loan”.  Ms Luchich denied any basis for a counter-claim and referred to what she submitted was the absence of any evidence in the affidavit material supporting a damages claim.
  1. [34]
    In his written submissions Mr Myrteza highlighted s. 76(2)(l) National Credit Code which is to the effect that in considering whether a transaction was unjust the court can consider whether at the time it was entered into the bank “knew, or could have ascertained by reasonable inquiry at the time, that the debtor could not pay in accordance with its terms without substantial hardship”.  Also of particular relevance are sub-sec (2)(b) the relative bargaining power of the parties; 2(h) whether or not independent legal advice was obtained by the defendant; 2(j) whether the bank used unfair tactics; 2(k) whether the bank took measures to ensure that the defendant understood the nature and implications of the transaction should his agreement with Silver fall over and if so, the adequacy of those measures and 2(o) the terms of other comparable transactions involving other credit providers.
  1. [35]
    The obvious discrepancies in the evidence of the defendant and Mrs Orchard which I have referred to should not, at this stage at least, stand in the way of the relief which is sought and, in any event, may be irrelevant to a claim for relief based on a fraudulent loan application.[4]
  1. [36]
    In Tonto Home Loans, supra, relied on by Mr Myrteza, investors were encouraged to invest borrowed funds secured by mortgage as a result of deceptive and dishonest conduct on behalf of the lender.  The investments were lost.  Under the Contracts Review Act 1980 (NSW), the court determined the loans and mortgages were unjust and in the case of four of the investors B, B, T and R, set aside the loans thereby relieving the investors from liability under the loans and ordered the mortgagee to deliver to them a registrable discharge of mortgage.  By way of example the trial judge found that T and R were persuaded to sign loan applications in blank.  The blanks were later filled in by the lender’s agent who overstated their assets and income.  The trial judge also found that they were not provided with a copy of the loan application.
  1. [37]
    Ms Luchich referred to West v AGC (Advances) Ltd (1986) 5 NSWCE 610, Barker v G E Mortgage Solutions Ltd [2013] QCA 137 and Permanent Mortgagees Pty Ltd v Cook & Cook [2006] NSWSC 1104. 
  1. [38]
    In West, AGC loaned Mrs West $85,000 secured by a mortgage over her house.  Almost $30,000 was to discharge an existing mortgage over her house, about $8,600 was to discharge another loan and the balance was to finance the expansion of the business conducted by a company called Quiche whose directors would guarantee the loan.  Quiche was virtually insolvent at the time of the loan and would not be able to use the funds to expand its business.  In fact the amount received from Mrs West would not even enable Quiche to meet its existing debts.  The directors’ guarantees turned out to be worthless.  AGC knew Mrs West had no income by which to make the loan repayments.  It was reasonably foreseeable to AGC that Quiche might be wound up and that Mrs West might have to meet the payments out of her own funds which she couldn’t.  By majority and for reasons referred to in the judgment of McHugh JA, the Court of Appeal agreed with the decision of the trial judge that the deed of loan was not unjust under the Contracts Review Act 1980.  Those reasons highlight the extent to which this case could be said to be distinguishable from the present.  In my view, for the reasons stated by Spigelman CJ in Perpetual Trustees Co Ltd v Khoshaba (2006) NSWCA 41 at paras 63-65, West would most probably be decided differently today.
  1. [39]
    In Barker, the appellant in May 2007 borrowed $259,250 from GE secured by a mortgage over her property.  She ceased making loan repayments in December 2011.  The loan was obtained with the assistance of a broker, MB.  The appellant was a single mother receiving Centrelink payments and running a business at a loss.  MB, without her knowledge, completed a blank signed home loan application by inserting her income as $120,000 per annum which was incorrect and contrary to the financial documents concerning her income given by her to MB to be provided to GE.  GE sued the appellant for money owing under the loan agreement and for recovery of possession of the mortgaged property.  The appellant denied she owed any money contending (inter alia) that GE had “not been responsible with their lending” in circumstances where she was incapable of satisfying the loan.  The Court of Appeal agreed with the decision of the primary judge granting summary judgment to GE.  It did so for these reasons
  1. (a)
    MB was not the agent of GE
  1. (b)
    the Consumer Credit Code (Qld) governed the loan contract.  The National Consumer Credit Protection Act 2009 provisions about responsible lending conduct (Chapter 3) did not apply to the loan agreement.  There was therefore “no legal obligation upon GE at the relevant time to do more than act on the face of the application which was signed by the appellant and prepared by the broker engaged by her”.
  1. (c)
    the appellant though was able to argue that the transaction was unjust under s. 76 of the National Credit Code. She failed for these reasons
  1. (i)
    the fact that a party cannot afford a loan is insufficient on its own to result in a finding that the loan contract is unjust
  1. (ii)
    the contract was not the product of unfair conduct on the part of GE in respect of the means it employed to conclude the contract
  1. (iii)
    any misrepresentation or misconduct by the broker as to the appellant’s annual income could not be attributed to GE
  1. (iv)
    in relation to s. 76(2)(l) various declarations were made in the loan application as to the truth of its contents; the appellant could not prove that GE knew that she could not pay in accordance with the loan contract, it was not apparent from the loan application or other documents that GE was aware she was on Centrelink payments and she did not depose to what her actual income was at the time she entered into the loan contract.
  1. [40]
    These reasons need only be stated to appreciate the extent to which the facts in that case are distinguishable from the present.
  1. [41]
    Finally, in Permanent Mortgages, in April 2003 the defendants borrowed $200,000 to refinance a mortgage in default over their home.  The new loan was secured by a mortgage over the home.  They defaulted in their repayments. The trial judge found that the National Credit Code applied to the credit provided by the plaintiff to the defendants.  An expert witness described the mortgage as evidencing a ‘Ponzi’ loan, namely one which could only be repaid by either taking out a larger subsequent loan, or by selling the asset that was financed using the loan.  The defendants did not have the capacity to service the loan.  Factors personal to the defendants directly concerned with the particular transaction were found to warrant greater focus than public interest in resolving the case.  The defendants were experienced borrowers and had the services of a solicitor at the time of the loan.  The judge found

Given the means of the Defendants and their credit history, the Plaintiff, in my view, was aware, or would have been aware, had it made the most perfunctory of enquiries, that the Defendants were not capable of servicing the loan even at the lower rate of interest and could only satisfy their obligations by selling the mortgaged property for a sum sufficient to cover the principal and interest.[5]

  1. [42]
    His honour also found that the defendants were “foolish” but that the plaintiff or its agents were, or should have been, aware of their foolishness and had, in effect, encouraged it.  He found the mortgage and the credit contract, pursuant to which it was given was unjust within s. 70 of the Consumer Credit Code (NSW) and the transaction should be re-opened.  He concluded that the defendants should, so far as possible, be returned to the position they were in as at April 2003.  They were relieved of their obligations under the loan contract except for the amount used to discharge their outstanding debts.  The mortgage was not set aside “as this would result in the defendants obtaining a benefit from the transaction and would result in injustice to the plaintiff”. 
  1. [43]
    This is not to say that the same would necessarily happen in the present case were the defendant to succeed in his defence. At least he should be permitted to argue that it shouldn’t. Section 77 is silent as to considerations which may influence the nature and extent of the relief to be granted.  Considerations relevant to the formulation of the relief to be granted in the case of an unjust transaction may include the following
  1. (a)
    the conduct of the bank, more so if the defendant can prove St Pierre was aware of the repayment agreement the defendant had with Silver[6]
  1. (b)
    the failure of the bank to observe its own guidelines and the fact that if the guidelines had been observed the bank would never have advanced the loan
  1. (c)
    the substantial purpose of the legislative scheme is to protect persons who are not able to look after themselves
  1. (d)
    the public interest in discouraging conduct like St Pierre’s
  1. (e)
    enforcing a security against the personal residence of an impecunious borrower and a pensioner should not be treated as if it were the first resort.  Such conduct by a lender is entitled to significant weight against the lender in the determination of unjustness.  Where the security is the sole residence of a borrower with no ability to repay the instalments under the contract there is a public interest in treating such contracts as unjust[7]
  1. (f)
    public interest considerations, such as the need to deter banks from engaging in fraudulent conduct and the way in which a bank handles complaints. 

Obtaining default judgment

  1. [44]
    On or about 2 February 2011 Minter Ellison received instructions from the plaintiff to commence proceedings against the defendant for recovery and possession of the property and the debt because of default in repayments by the defendant.
  1. [45]
    On 3 February 2011 Minter Ellison wrote to the defendant at the Surrey Street address referring to the account and stating that if the default was not remedied within 7 days proceedings would issue. The letter was not returned, nor did Minter Ellison receive any response from the defendant.
  1. [46]
    A further letter addressed to the Surrey Street home was sent by Minter Ellison on 7 March 2011 foreshadowing an application for substituted service. This also was not returned, nor was any response received from the defendant.
  1. [47]
    The plaintiff learned that Mrs Orchard may have been able to help with service. Minter Ellison emailed her and she replied by email on 27 May 2011 saying the defendant had been “in and out of hospital for extended periods with life threatening health problems”.
  1. [48]
    On 29 July 2011 an order for substituted service of the claim and statement of claim on the defendant by posting copies of the document to him at the Surrey Street address, at the Coomera address and to Mrs Orchard was made. This was all done. No notice of intention to defend was filed.
  1. [49]
    The defendant recalls receiving the claim and statement of claim by post “some time ago”.  He handed the documents to Mrs Orchard “who was involved with a group of creditors who were victims of fraud of St Pierre.  At the time that these proceedings were served upon me I was unemployed and had no capacity to pay any solicitor to assist me in relation to the claim”.  Instead, on the referral of Mrs Orchard, he appointed a Mr David Hickie “who was looking after claims on behalf of 32 claimants who were defrauded by St Pierre and his associates, Bradley and Troy Silver”.  He continued

I understood that Mr David Hickie was managing the claims and was negotiating with Westpac on behalf of both myself and the other claimants to achieve a moratorium in relation to the mortgage repayments given the actions of Mr St Pierre in defrauding both myself and other claimants.

  1. [50]
    On 18 October 2011 the plaintiff requested default judgment be entered against the defendant for recovery and possession and a specified money amount. On the same date, by reason of the defendant not having filed a notice of intention to defend, judgment was entered for the plaintiff against the defendant for recovery and possession of the land and for $628,177.92.
  1. [51]
    By reason of the fact that service took place in accordance with the order for substituted service the judgment could probably be said to have regularly entered and that is how I will approach it. In fact Mr Myrteza seems to concede this in para 20 of his submissions when he says the defendant did not file a defence because he had “no financial capacity to retain a solicitor to act for him and he also entrusted the matter to various representatives” to negotiate with the bank and the Financial Ombudsman’s Service.

Notice to defendant of the judgment and explanation for delay

  1. [52]
    By letter dated 19 October 2011 addressed to the defendant at 14 Surrey Street, Minter Ellison sent him, by way of service, a copy of the default judgment and requested vacant possession of the property. A response email, apparently on behalf of the defendant, stated that Mrs Orchard was leasing the property until 29 November 2012.
  1. [53]
    In 2012 the defendant appointed Mr David Purcell as his solicitor to act for him “in the matter of this claim by Westpac and compensation sought from Westpac for the actions of St Pierre along with the other claimants”.
  1. [54]
    The defendant may have been inadvertently encouraged in this respect by the fact that the bank, according to Minter Ellison, “placed its action on hold for a lengthy period” while it investigated his complaints and suggested he be assessed for eligibility for hardship relief. 
  1. [55]
    He says Mr Purcell requested relevant documents from Westpac but they were not forthcoming.
  1. [56]
    By letter to the defendant dated 14 May 2012, Minter Ellison advised that they were instructed to proceed with enforcement action pursuant to the judgment.
  1. [57]
    By letter dated 28 May 2012 addressed to the defendant at 14 Surrey Street, Minter Ellison again sent the defendant a copy of the judgment and requested vacant possession of the property by 7 June 2012 otherwise the bank would continue with its enforcement proceedings.
  1. [58]
    On 1 June 2012 Mrs Orchard telephoned Mr Russo, the plaintiff’s solicitor and advised that the defendant was seriously ill and would not vacate the property by 7 June 2012. She also advised that she was living at the property pursuant to a lease. At no time has she provided any documentary evidence of a lease or tenancy. The plaintiff extended the date for vacant possession to 1 August 2012.
  1. [59]
    By letter to the defendant dated 18 July 2012 Minter Ellison referred to their letter of 28 May 2012 and advised that if they did not hear from the defendant by 1 August 2012 the bank would proceed with its enforcement action against the property.
  1. [60]
    In August 2012 the defendant says he was advised by Senator John Williams (apparently as a result of a Senate Inquiry) that the Westpac loans of 32 claimants involving St Pierre would be forgiven. He says he was “led to believe that Westpac would not be enforcing its rights against me under the mortgage”. 
  1. [61]
    Copies of the judgment were again posted to 14 Surrey Street on 7 March 2013 (addressed to the defendant), 19 September 2013 (2 letters – one to ‘the occupants’ and one to the defendant) and on 17 November 2013 (addressed to the defendant).
  1. [62]
    Between 17 November 2014 and 18 February 2015 various allegations of wrongdoing were made by or on behalf of the defendant against the plaintiff in relation to conduct by or on behalf of the plaintiff relating to the loan and mortgage. Details are not specified in the Minter Ellison letters but I apprehend that the allegations are the same as those presently relied upon. The plaintiff denied any wrongdoing. Previously on 14 May 2012 Minter Ellison had advised the defendant that the bank considered that it had at all relevant times complied with its duties in relation to his account and the advancing of funds to him and on 25 November 2014 they advised that “the bank specifically denies that (its) securities were obtained by any wrongdoing and particularly any wrongdoing on the part of the bank or of which it was aware”. 
  1. [63]
    By letter dated 17 November 2014 and notwithstanding the plaintiff’s contention that he already had them, Minter Ellison sent to the defendant copies of his loan application, the mortgage and the loan agreement. The defendant says he was not able to “prove” all of his claims against the plaintiff until he received these documents.  He maintained he had not earlier received them.  There is no direct evidence from the bank to contradict this claim, certainly so far as it relates to the loan application. 
  1. [64]
    Mrs Orchard says

Due to Howard’s ill health and depression I took charge of all documentation and correspondence with regard to the Westpac mortgage, compiling the letters and statements which have caused Westpac to stop legal action and put a moratorium on all mortgage payments.  I did not show Glenn the documents or correspondence relating to the bogus claims, in my opinion, being orchestrated by Westpac in relation to Mr St Pierre using funds stolen from my account by Silver, which Westpac have deliberately concealed as it is the only mortgage where stolen funds have been used to settle a loan.

  1. [65]
    On 18 December 2014 the plaintiff applied for leave to issue an enforcement warrant for possession of the land. This prompted the subject application to set aside the judgment.
  1. [66]
    The defendant says he first became aware that Westpac were seeking to obtain a warrant for the property “late last year” and before then he was not aware that judgment had been obtained against him or of Westpac’s attempts to obtain a warrant of possession of the property.  He had “no recollection” of previously seeing the Minter Ellison letters to him dated 19 October 2011, 14 May 2011, 28 May 2012, 18 July 2012, 7 March 2013 and 19 September 2013.  In this context he does not mention the letter dated 17 November 2013.  He has not received any advice to set aside the judgment “until now”.
  1. [67]
    The defendant says it was not until the plaintiff finally made its application for leave to issue an enforcement warrant for possession that he realised the matter hadn’t resolved. Matters moved relatively quickly after that.
  1. [68]
    When the application for the warrant first came before me I indicated that because the warrant was based on the judgment, for the defendant to resist the application he would first have to have the judgment set aside. Orders were then made as to the filing and service of relevant material and that if that was not done by 4.30pm on 25 March 2015 the enforcement warrant could issue.
  1. [69]
    The application to set aside the judgment and the affidavit of the defendant were filed by Mrs Orchard at 4.55pm on 25 March 2015. She was late because she was held up in traffic between Brisbane (the location of Mr Myrteza) and Southport, a not uncommon occurrence. She arrived at the Registry at 4.40pm and was required to pay to re-open it.
  1. [70]
    The application and affidavit of the defendant were served at 9.15am on 26 March 2015. Unfiled copies had been served after 4.30pm on 25 March 2015.
  1. [71]
    Mr Myrteza did not finalise the affidavit of Mrs Orchard until 26 March 2015 and it was filed at 4.18pm that day and served as promptly as he could do so after that.

Result

  1. [72]
    In the circumstances I am satisfied that the defendant
  1. (a)
    has given a satisfactory explanation for his failure to file the documents on time and to defend the plaintiff’s claim
  1. (b)
    has explained why he did not earlier apply to set aside the judgment and
  1. (c)
    has a prima facie defence on the merits to the claim on which the judgment is founded.
  1. [73]
    For these reasons the time for filing and serving the application and affidavits in support will be extended to the times they were actually filed and served.
  1. [74]
    The application to set aside the judgment was realistically dealt with at the same time as the application to extend time because of the commonality of issues.
  1. [75]
    For the same reasons I set aside the judgment entered on 18 October 2011.
  1. [76]
    I will hear the parties as to consequential orders and costs.

Footnotes

[1] Before me the defendant continued to maintain that this was what happened.  See Myrteza at T1-18

[2] T1-19, 21

[3] See in particular his written submissions, paras 33-36.  The loan agreement and mortgage are said to be “carried over instruments” as defined in s. 4(1) National Consumer Credit Protection (Transitional and Consequential Provisions) Act 2009 in which case the National Credit Code applies to them, see Schedule 1 s. 3(2) of the same Act.  Ms Luchich did not make any submission to the contrary.

[4] See e.g. Permanent Mortgages Pty Ltd v Cook & Cook [2006] NSWSC 1104 at paras 76-77

[5] Para 88

[6] Conduct is relevant to whether relief should be granted (s. 76(5))

[7] See Perpetual Trustees Co. Ltd v Khoshaba, supra, at paras 83, 128

Close

Editorial Notes

  • Published Case Name:

    Westpac Banking Corporation v Howard

  • Shortened Case Name:

    Westpac Banking Corporation v Howard

  • MNC:

    [2015] QDC 76

  • Court:

    QDC

  • Judge(s):

    Wall DCJ

  • Date:

    10 Apr 2015

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited

Case NameFull CitationFrequency
Barker v GE Mortgage Solutions Limited [2013] QCA 137
2 citations
Jump To
Cite 1 - [2013] QCA 137
Cite 2 - [2013] QCA 137
Permanent Mortgages Pty Ltd v Cook [2006] NSWSC 1104
4 citations
Jump To
Cite 1 - [2006] NSWSC 1104
Cite 2 - [2006] NSWSC 1104
Cite 3 - [2006] NSWSC 1104
Cite 4 - [2006] NSWSC 1104
Perpetual Trustee Company Limited v Albert and Rose Khoshaba (2006) NSWCA 41
2 citations
Jump To
Cite 1 - (2006) NSWCA 41
Cite 2 - (2006) NSWCA 41
Tonto Home Loans Australia v Tavares (2011) 15 BPR 29, 699
2 citations
Jump To
Cite 1 - (2011) 15 BPR 29, 699
Cite 2 - (2011) 15 BPR 29, 699
West v AGC (Advances) Ltd (1986) 5 NSWCE 610
2 citations
Jump To
Cite 1 - (1986) 5 NSWCE 610
Cite 2 - (1986) 5 NSWCE 610

Cases Citing

No judgments on Queensland Judgments cite this judgment.

1

Require Technical Assistance?

Message sent!

Thanks for reaching out! Someone from our team will get back to you soon.

Message not sent!

Something went wrong. Please try again.