Archer v Permanent Custodians Ltd - [2010] WASCA 125

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT : THE COURT OF APPEAL (WA)

CITATION: ARCHER -v- PERMANENT CUSTODIANS LTD [2010] WASCA 125

CORAM: PULLIN JA
NEWNES JA

HEARD: 28 MAY 2010

DELIVERED : 5 JULY 2010

FILE NO/S: CACV 155 of 2009

BETWEEN: GREGORY JOHN ARCHER
VANESSA KERAN ARCHER
Appellants
AND
PERMANENT CUSTODIANS LTD
Respondent

ON APPEAL FROM:
Jurisdiction              :  SUPREME COURT OF WESTERN AUSTRALIA
Coram  :MASTER SANDERSON
Citation  :PERMANENT CUSTODIANS LIMITED -v- ARCHER [2009] WASC 363
File No  :CIV 2086 of 2009

Catchwords:

Practice and procedure Notice to appellant to show cause why appeal should not be dismissed Rule 43(2)(g) of the Supreme Court (Court of Appeal) Rules 2005 (WA) Grounds of appeal manifestly defective Failure to prosecute application for leave to adduce new evidence No effective progress in appeal over period of six months Turns on own facts

Practice and procedure Application for stay of enforcement of judgment Civil Judgments Enforcement Act 2004 (WA), s 15 Failure to show appeal has reasonable prospect of success

Legislation:

Civil Judgments Enforcement Act 2004 (WA), s 15
Supreme Court (Court of Appeal) Rules 2005 (WA), r 43(2)(g)

Result:

Appeal dismissed

Category: B

Representation:

Counsel:

Appellants: Ms L Horwood
Respondent: Mr B W Ashdown

Solicitors:

Appellants: L Horwood Solicitor
Respondent: Galilee Solicitors

Case(s) referred to in judgment(s):

Eastland Technology Australia Pty Ltd v Whisson [2003] WASCA 307; (2003) 28 WAR 308
Ladang Jalong (Australia) Pty Ltd v Callander [2005] WASCA 203
McLean v Westpac Banking Corporation [2010] WASCA 124
Permanent Custodians Limited v Archer [2009] WASC 363
Smolarek v McMaster [2006] WASCA 216

JUDGMENT OF THE COURT: This appeal has been brought on by a registrar's notice to attend dated 24 May 2010 requiring the parties to attend for the following purposes:
1.For the appellants to show cause why the appeal should not be dismissed under r 43(2)(g) of the Supreme Court (Court of Appeal) Rules 2005 (WA) (the Rules) on the ground that none of the grounds of appeal have a reasonable prospect of succeeding or that the appellants have failed to comply with the Rules;
2.to consider the appellants' application for a stay of the enforcement of the judgment; and
3.for directions in relation to the appellants' application for leave to adduce additional evidence.

The background

It is necessary before turning to those applications to outline the relevant background.
The proceedings between the parties arose out of a loan agreement between the appellants and the respondent, dated 24 September 2007. In essence, pursuant to the loan agreement the respondent agreed to lend to the appellants the sum of $511,013 and the appellants agreed to repay that sum and interest on it by consecutive monthly instalments of principal and interest over a period of 30 years. The appellants granted to the respondent a mortgage over the appellants' property in Pinjarra by way of security for the loan. The loan money was advanced by the respondent but the appellants subsequently failed to make repayments required under the loan agreement. Following the appellants' failure to rectify the default in accordance with a default notice served on them, the respondent commenced proceedings on 12 June 2009 claiming possession of the mortgaged property and the balance outstanding under the loan agreement.
The appellants filed a memorandum of appearance on 3 July and a defence to the claim on 20 July 2009. In the defence it was pleaded, among other things, that the respondent had failed to make reasonable enquiries into the appellants' ability to meet the payments required by the loan agreement and that it should have been aware the appellants did not have a regular income sufficient to enable them to do so.
On 26 August 2009, the respondent brought an application for summary judgment. The first appellant swore three affidavits in opposition to the application. None of those affidavits denied the facts relied upon by the respondent in the summary judgment application. Nor did the appellants verify the allegations set out in the defence. The affidavits were concerned with an application the appellants had made on 7 August 2009 to the State Administrative Tribunal (SAT) for relief under the Consumer Credit (Western Australia) Act 1996 (WA) and the Consumer Credit Code in respect of the loan agreement and mortgage. There was, however, nothing in the affidavits which set out in admissible form the basis of the appellants' claim for relief under the Act or Code.
In an affidavit of 18 September 2009, the first‑named appellant (Mr Archer) said that he had told a member of SAT at a directions hearing that the respondent had made no attempt to assess the appellant's capacity to service the loan and that the appellants felt that they had been 'railroaded' into the loan. In an affidavit of 17 November 2009, Mr Archer deposed to the appellants having filed a 'Statement of Issues, Facts and Contentions' at SAT. A copy of the document was annexed to the affidavit. A number of statements regarding the circumstances in which the loan was obtained are set out in it but Mr Archer did not depose to the truth of its contents.
The summary judgment application was heard on 19 November 2009 and Master Sanderson delivered his decision on 7 December 2009: Permanent Custodians Limited v Archer [2009] WASC 363. The master found that there was nothing in any of the appellants' affidavits which explained why they said SAT ought to set aside the transaction. He considered it was not sufficient for the appellants simply to say that there was an application before SAT or that there was a possibility SAT may intervene in the contractual relationship between the parties; it was necessary for the appellants to say what it was that could lead SAT to do so. The master concluded that the appellants had failed to show they had an arguable defence to the claim. He gave judgment for the respondent in the sum of $563,049.53 and ordered that the appellants deliver up vacant possession of the Pinjarra property to the respondent within 42 days.
The notice of appeal was filed by the appellants on 22 December 2009.
On 23 February 2010, the appellants' current solicitor, Ms Horwood, filed a notice that she was acting on behalf on the appellant in place of the appellants' previous solicitors. The appellants' case was filed on 26 February 2010. The grounds of appeal contained in it were as follows:
1.The Honourable Master Sanderson erred in granting the Respondent Summary Judgement on the 19^th of November 2009 because:
1.1The Honourable Master exceeded the jurisdiction of the Supreme Court.
1.2The matter was at the time 'sub judice', ie under judgment of another tribunal.
1.3The Appellant had a defence and therefore Order 14 of the Supreme Court Rules applied
The appeal was listed for directions before a single judge of appeal on 12 March 2010. At the directions hearing, the court pointed out that the grounds of appeal were defective and needed to be redrafted. It was also pointed out that the appellants' case was not in proper form in other respects and required attention. It was ordered that any amended appellants' case be served on or before 26 March 2010.
A substituted appellants' case was filed on 26 March 2010. The grounds of appeal contained in it were as follows:
The Honourable Master Sanderson erred in granting the Respondent Summary Judgement on the 10th of December 2009 because:
(a)The Honourable Master erred in fact by making a finding that the [appellants] had not filed a sufficiently detailed defence when in fact they had;
(b)The Honourable Master erred in law as he, in granting summary judgement against the Appellants exceeded the jurisdiction of the Supreme Court in a matter concerning alleged breaches of the Consumer Credit (Western Australia) Act 1996 (WA) which matter is pursuant to s 7 of said Act, subject only to the jurisdiction of the State Administrative Tribunal;
(c)The Appellants had a defence therefore Order 14 of the Supreme Court Rules applied;
(d)By granting summary judgement, the Honourable Master was giving effect to a loan agreement and mortgage that under the original jurisdiction of the State Administrative Tribunal pursuant to s 7 of the Consumer Credit (Western Australia) Act 1996 (WA) was liable to be set aside;
(e)The matter was at the time the Summary Judgement was granted sub judice ie under judgment of the State Administrative Tribunal.
On 29 March 2010, the appellants filed an application for leave to adduce evidence that had not been before the master and for an order staying execution on the judgment. An affidavit of Mr Archer was also filed. Whilst the affidavit is described as being in support of both applications, there is nothing contained in it directed to the application for leave to adduce new evidence. It will be necessary to come back to that affidavit shortly.
The application for a stay was listed for directions on 19 April 2010. At that hearing orders were made for the filing of any further affidavits in relation to the application by 22 April 2010. An order was also made that the appellants file and serve any affidavits in support of the application to adduce new evidence on or before 30 April 2010.
A further affidavit of Mr Archer in support of the application for a stay was filed on 21 April 2010. The respondent filed affidavits in opposition on 6 May and 21 May 2010. No affidavits were filed by the appellants in support of the application to adduce new evidence.
The registrar's notice to attend was issued on 24 May 2010 and the matter came before the court for hearing on 28 May 2010.

The notice to show cause

It is convenient to deal first with a question of whether the appeal should be dismissed under r 43(2)(g) of the Rules.
There is no substance in par 1(a) of the grounds of appeal. The summary judgment application turned, not on the terms of the defence filed by the appellants, but on whether there was evidence which disclosed that they had an arguable defence or that there was some other issue which ought to be tried. The defence filed by the appellants was not verified on affidavit. It was no answer to the respondent's affidavit which verified each element of the respondent's claim.
There is equally no substance in par 1(b) of the grounds of appeal. Under s 7 of the Act, SAT has exclusive jurisdiction in respect of, relevantly, s 70 and s 71 of the Code, dealing with 'unjust' transactions under the Code. In granting summary judgment on the respondent's claim pursuant to the loan agreement and the mortgage, the master was plainly not exercising any jurisdiction reserved to SAT.
It is not entirely clear what is intended by par 1(e) of the grounds of appeal. But the suggestion that it was not open to the master to proceed to hear and determine the summary judgment application simply because the appellants had lodged an application to SAT under the Code is, in our view, misconceived.
In fact, it appears that the substantive case sought to be advanced by the appellants is intended to be contained in par 1(c) and (d) of the grounds of appeal. That is, the master erred in concluding that the respondent was entitled to summary judgment in circumstances where the loan agreement and the mortgage were liable to be set aside by SAT on the ground that the transaction was 'unjust' within the meaning of s 70 of the Code. But in the absence of new evidence being received on the appeal, those grounds must fail. There was no evidence before the master upon which it could have been found that the loan agreement or the mortgage was liable to be set aside by SAT. The evidence simply did not deal with the merits of the application to SAT.
We understand, however, that the appellants seek to adduce new evidence on the appeal in order to establish that it is at least arguable the loan agreement and mortgage were 'unjust' within the meaning of s 70 of the Code and are liable to be set aside under s 71.
Whatever might be the merits of that case, grounds 1(c) and 1(d) are plainly defective in their present form and cannot be allowed to stand. If the appeal is to proceed, they would have to be amended to put them in a proper form. The real question is whether the appellants should be given a further opportunity to do that. In considering that question is appropriate to have regard to the case the appellants seek to advance on the appeal.
The effect of the relevant provisions of s 70 and s 71 of the Code is described in McLean v Westpac Banking Corporation [2010] WASCA 124 and it is unnecessary to repeat all that is said there. It is sufficient to note that s 70(1) of the Code provides, in effect, that SAT may reopen a transaction giving rise to a credit contract or mortgage if satisfied that at the time it was entered into the credit contract or mortgage was 'unjust'. In determining whether a credit contract or mortgage was unjust, SAT is required to consider all the circumstances of the case. Among the factors to which it may have regard is whether, at the time the credit contract or mortgage was made, the lender knew or ought reasonably to have known that the consumer could not pay in accordance with its terms. Where a credit contract or mortgage is found to be unjust, SAT has wide powers under s 71 to vary it or set it aside, to make orders relieving the consumer of the obligation to pay any amount, or to order payment of an amount by one party to the other.
The only explanation of the factual basis of the appellant's claim in SAT is set out in the affidavit of Mr Archer, sworn and filed on 29 March 2010, which accompanied the application for a stay of the judgment. In that affidavit, Mr Archer refers to the application the appellants have lodged at SAT and says that:
[A]t the time the [respondent] or there [sic] agents or assigns advanced the money it should have been obvious that the [appellants] did not have the capacity to repay the loan and the [respondent] or their agents or assigns have breached the Code by advancing monies to me and taking a security over my property in those circumstances.
In addition, annexed to Mr Archer's affidavit of 21 April 2010, among other things, is a copy of a document entitled 'Statement of Issues, Facts and Contentions' which the appellants have filed and served in the SAT proceedings. The document was also annexed to Mr Archer's affidavit of 17 November 2009 in the summary judgment proceedings. In neither affidavit does Mr Archer depose to the truth of the statements made in that document.
Putting aside questions of admissibility, it therefore appears, as in McLean v Westpac Banking Corporation, the appellants contend that at the time it was entered into the loan agreement was unjust because the respondent knew, or ought to have known, that the appellants did not have the financial capacity to make the loan repayments. That in turn seems to rest on the proposition that a lender is under a duty to satisfy itself of the capacity of a borrower to repay a loan before making the loan. We were not referred to any provision of the Act or Code (or any other relevant legislative provision) which imposes such a duty. What appears from s 70(2)(l) of the Code is that whether the lender knew or could reasonably have ascertained that the borrower could not pay in accordance with the terms of the loan is a factor that SAT may take into account in determining whether, in all the circumstances, a transaction was unjust.
The case the appellants seek to advance depends upon evidence which was not before the master. No explanation has been provided for the failure to adduce that evidence. In that connection, it is significant that at that stage the appellants had legal representation. Nor has any explanation been provided for the failure to pursue the application to adduce further evidence, although that application is clearly critical to the appeal. It has made no progress since it was filed, unsupported by an affidavit, on 29 March 2010. Despite the order of 19 April 2010 that the appellants file and serve any affidavits in support of the application by 30 April 2010, no such affidavit has been filed. The evidence upon which the appellants seek to rely remains unidentified.
Moreover, Ms Horwood told us that she had not seen any of the documents upon which the appellants seek to rely as additional evidence and could not say whether there was anything in them that would be of relevance to an appeal against the decision of the master.
It is plainly unacceptable that some six months after the appeal was commenced the grounds of appeal are still not in a proper state. It is also unacceptable that some two months after the application for leave to adduce new evidence was filed nothing has been done to advance it: the new evidence has still not been identified and there is nothing to indicate the basis upon which the appellants say new evidence should be received on the appeal.
In the circumstances, it is not in the interests of justice to afford the appellants another opportunity to put the grounds of appeal in a proper form. So far the appellants have demonstrated a complete inability or unwillingness to do so or to attempt to prosecute the appeal with reasonable diligence. To the extent the appellants have made any endeavours to formulate acceptable grounds of appeal those endeavours have been entirely ineffectual. There is nothing to indicate that the position will improve. In the meantime the respondent has been left with the appeal hanging over it. The appellants have had sufficient opportunity to put the grounds of appeal in order and it is time the matter was brought to an end. We would dismiss the appeal.

The application for a stay

In light of our conclusion that the appeal should be dismissed, strictly speaking it is unnecessary to deal with the application to stay the enforcement of the judgment. However, even if the appeal had not been dismissed we would have refused the application for a stay for the following reasons.
Under s 15 of the Civil Judgments Enforcement Act 2004 (WA), a person against whom a judgment is given may apply for an order suspending the enforcement of the judgment. The court may only make such an order if there are special circumstances that justify doing so: s 15(3).
The principles applicable to an application under s 15 are not materially different from those which applied to an application for a stay of execution before the introduction of the Act: see Ladang Jalong (Australia) Pty Ltd v Callander [2005] WASCA 203 [3]; Smolarek v Brian Keith McMaster as Administrator of Eznut Pty Ltd [2006] WASCA 216 [33]. The general principles were summarised by Murray and Parker JJ in Eastland Technology Australia Pty Ltd v Whisson [2003] WASCA 307; (2003) 28 WAR 308 [9]. It is unnecessary to set them out. Suffice it to say that the ordinary rule is that a successful litigant at first instance is entitled to enforce the judgment pending the determination of any appeal and the court will not prevent it from doing so unless special circumstances are shown justifying the departure from the ordinary rule. A stay will generally not be granted unless, among other things, the appellant establishes that the appeal has reasonable prospects of succeeding.
In the present case, there was no basis upon which it could have been concluded that the appeal had reasonable prospects of succeeding. The prospects of success turned entirely on the new evidence which the appellants sought leave to adduce. As we have said, despite an order of the court that any affidavits in support of the application to adduce new evidence be filed and served on or before 30 April 2010, no such affidavit was filed. The evidence upon which the appellants sought to rely therefore remained undisclosed and its admissibility and cogency remained unknown. It necessarily followed that whether or not the evidence would be likely to be received on the appeal also remained unknown.

In the circumstances, we would have dismissed the application for a stay.

Conclusion

We would dismiss the appeal.