Bayford v St George Bank Ltd No. Scciv-01-711

BAYFORD v ST GEORGE BANK LIMITED
[2003] SASC 210
Civil

BESANKO J: Ms Susanne Bayford appeals from an order of a Master of this Court (Master Kelly) made on 2 December 2002. Ms Bayford occupies land at Lot 4 Pelican Point, Morgan, in the State of South Australia, being the land comprised and described in Certificate of Title Register Book Volume 5387 Folio 604 (“the land”). The Master’s order was made on the application of St George Bank Limited (“the Bank”) and was to the effect that Ms Bayford give up possession of the land to the Bank. The Bank holds a mortgage over the land. The Master also made orders relating to the circumstances in which the Bank is required to redeliver possession of the land to Ms Bayford, costs and further orders and directions. It is unnecessary to set out the details of those other orders. The critical order for the purposes of this appeal is the order that Ms Bayford give up possession of the land to the Bank.
The appeal is governed by Rule 97 of the Supreme Court Rules 1987 (see r 106.05). The appeal is by way of a rehearing (r 97.17) and the Court may in its discretion receive further evidence upon any question of fact (r 97.18). The Master did not give reasons for his decision.
The Relevant Statutory Provisions
The Bank issued a summons for possession pursuant to the Real Property Act 1886 (“RPA”). The relevant statutory provisions are contained in Part 17 (Ejectment) and are as follows:
“192. Any of the following persons (in the following sections called "the claimant") may cause any person in possession of land under the provisions of this Act to be summoned to appear before the Court to show cause why the person summoned should not give up possession to the claimant-
I. The registered proprietor of a freehold estate in possession:
II. Any registered mortgagee or encumbrancee where the person in possession is a mortgagor or encumbrancer in default, or a person claiming under such mortgagor or encumbrancer:
III. Any lessor with power to re-enter where the rent is in arrear for three months, whether there be or be not sufficient distress found on the premises to countervail such rent, and whether or not any previous demand shall have been made for the rent:
IV. Any lessor where a legal notice to quit has been given, or the lease become forfeited, or the term of the lease has expired.
193. The summons shall contain a description of the land, and shall require the person summoned to appear before the Court on a day not earlier than sixteen days after the service of the summons. The summons shall be served in the same manner as a writ of summons in an action for the recovery of possession of land in the Supreme Court.
194. If, on the hearing of the summons, the person summoned do not appear, then upon proof of the service of the summons and of the claimant's title, or on the production of a consent to an order by the person summoned, the Court may order immediate possession to be given to the claimant.
195. If the person summoned shall appear, the Court shall hear the summons, and may make such order thereon and impose such terms as it may think fit: Provided that in the case of a lessor against a lessee, if the lessee before or at the hearing pay or tender all rent due, and all costs incurred by the lessor, the Court may dismiss the summons.
196. The dismissal of any such summons shall not prejudice the right of the claimant to take any other proceedings against the person summoned to which he may be entitled.
197. Every order for possession under this Part of this Act shall have the effect of, and may be enforced in the same manner as, a judgment in the Court for the recovery of possession of land. “
The relevant Rule of Court for applications under Part 17 of the RPA is r 65. It is not necessary to set out the provisions of that Rule.
The Bank did not dispute the fact that s 55A of the Law of Property Act 1936 (“LPA”) applied to the mortgage over the land. Relevantly, that section provides as follows:
“55A. (1) A right of sale or foreclosure in respect of mortgaged land, a right
to enter into possession of mortgaged land or a right to appoint a receiver in
respect of mortgaged land shall not be enforceable by the mortgagee under a
mortgage to which this section applies against the mortgagor by action or
otherwise unless-
(a) the mortgagee has served upon the mortgagor a notice in writing-
(i)    alleging a breach of a covenant or condition of the mortgage by
            the mortgagor; and
(ii)   if the breach is capable of remedy, requiring the mortgagor
            within one month after service of the notice, or such longer
            period as may be stipulated in the notice, to remedy the
            breach; and
(iii) if the mortgagee seeks compensation for the breach, requiring
            the mortgagor within one month after service of the notice or
            such longer period as may be stipulated in the notice, to pay
            to the mortgagee the amount of the cost and expenses,
            stipulated in the notice, that the mortgagee has reasonably
            incurred in consequence of the breach; and
(b) where requirements are made of the mortgagor in the notice, he has
      failed to comply with those requirements.
(2) Where a mortgage to which this section applies contains a provision by
virtue of which a liability to repay moneys under the mortgage falls due in
the event of a breach of a covenant or condition of the mortgage at an earlier
date than if there were no such breach, that provision shall be inoperative
unless a notice has been served upon the mortgagor in conformity with the
provisions of subsection (1) of this section and where requirements are made
of the mortgagor in the notice, he has failed to comply with those
requirements.
(2a) Upon the application of a mortgagee, a court may dispense, upon such
terms and conditions as it thinks fit, with the requirement of notice under
this section.
(2b) Where such a dispensation has been granted, the provisions of subsection
(1) and subsection (2) of this section shall not apply in respect of the
mortgage.
(3) In any proceedings brought by a mortgagee for the recovery of a mortgage
debt or for the enforcement of a mortgage, or in proceedings instituted by a
mortgagor within twenty-one days after service of a notice under this section,
a court may, upon such fair and equitable terms as it may determine, grant
relief to a mortgagor against the enforcement of rights of a kind referred to
in subsection (1) of this section, and may reinstate the position of the
mortgagor in all respects as if no breach of a covenant or condition of the
mortgage had occurred.”
The Bank did not dispute the fact that before an order for possession could be made, the Court must be satisfied that the Bank had complied with the requirements of s 55A. Nor did the Bank dispute the fact that on its application for an order for possession, the Court could grant relief to the mortgagor under s 55A(3) of the LPA. Recently, the scope of that subsection was considered by the Full Court of this Court in Barker v Perpetual Trustees Australia Ltd and Pioneer Homes Australia Pty Ltd [2003] SASC 148. Bleby J (with whom Prior J agreed) said (in paras 29 – 34):
“On the hearing of a substantive application under s 55A based on hardship to the mortgagor, the power of the Court is to interfere with the exercise of the lawful rights of a mortgagee. It then behoves the mortgagor to make a true, full and frank disclosure to the Court of all relevant circumstances. There must be a full and frank explanation by the mortgagor as to why the default has occurred. Where the application is based on circumstances of alleged temporary or permanent hardship or unexpected changes in circumstances, those circumstances must be fully explained, with no room for suggestion or inference that there may be some other reason for the default. When, as is usually the case, the mortgagor is seeking the indulgence of the Court, it will be necessary to propose what the mortgagor suggests should be the fair and equitable terms on which the relief should be granted. The mortgagor cannot hope to avoid a sale without being required to comply with some material and perhaps ongoing terms and conditions.
Where there has been a temporary lapse in payment of instalments payable under the mortgage and the mortgagor proposes to resume payments, the Court should be satisfied that the mortgagor has a reasonable prospect of making those payments or of complying with the fair and equitable terms that the mortgagor proposes or that the Court thinks fit to impose. The mortgagor must present sufficient information to enable the Court to reach its own independent conclusion that that is the case. The mortgagor’s unsupported assertion to that effect will seldom be sufficient.
If, when viewed as a whole, the mortgagor’s application appears to be no more than an attempt to delay and frustrate the exercise of the mortgagee’s rights, then the application for relief may well fail.
Also relevant to the exercise of the Court’s decision to grant or withhold substantive relief will be the diligence with which the mortgagor has sought to pursue the remedies available to him. There would need to be good and cogent reasons why the time limits imposed by s 55A and by any relevant rules of Court have not been observed, particularly where, as in this case, delay can cause the mortgagee to incur expense which will have to be reimbursed by the mortgagor.
All these considerations will be relevant to the Court’s decision to grant the primary relief and to its assessment as to whether the mortgagor is likely to be able to comply with any terms and conditions necessarily imposed by the Court under s 55A. If the Court cannot be so satisfied, and there are no other countervailing considerations requiring relief under s 55A, the Court will, in all probability, refuse the relief.
It follows that, the mortgagor will need to place before the Court, as a matter of some urgency, all material relevant to the exercise of the Court’s discretion to grant or withhold the remedy.”
I said (in para 60):
The right given to a mortgagor in s 55A(3) is a statutory right to apply to the Court under the subsection for certain orders. The Court has a discretion as to whether it will grant relief. A number of matters will be relevant to the question of whether a mortgagor will be granted relief under s 55A(3). These matters include the nature of the mortgagor’s default, the reasons for the mortgagor’s default, the effects on the mortgagor and the mortgagee of making or not making an order under the subsection, the identification of fair and equitable terms, the ability of the mortgagor to comply with the terms so identified, and the ability of the mortgagor to comply with the terms and conditions of the mortgage in future. Some of these matters are likely to require a careful scrutiny of the mortgagor’s financial position. It is not necessary for a mortgagor to have an underlying private law right, such as a claim for damages, before orders are made under the subsection. The mortgagor may or may not have such a right. Despite the breadth of the matters which a Court might be required to consider under s 55A(3), it is to be expected that in the ordinary case there will not be a lengthy delay between the issuing of an application under that subsection and its determination. If an interlocutory injunction is needed to preserve the status quo, it should only be in place for a short period of time.”
In addition, the Bank did not dispute the fact that the loan agreement between the Bank and Ms Bayford was a credit contract within the provisions of the Consumer Credit (South Australia) Code (“CCC”) (see the Consumer Credit (South Australia) Act 1995). Section 80 of the CCC requires the service of a default notice on a debtor and a mortgagor before enforcement proceedings (including proceedings to take possession of mortgaged property) are taken against the debtor and mortgagor. Sections 171 and 172 set out the statutory requirements in relation to the service of the relevant notice.
The procedure under s 192 of the Real Property Act and r 65 is essentially a summary procedure and if there is a dispute of fact of substance the Court may direct pleadings and refer the action into the civil list for determination (Moonta Town Corporation v Rodgers (1981) 26 SASR 143 per Cox J at 160). On the other hand, I note that on appeal in that case, the High Court said that if there was no triable issue, the Court should proceed to make an order (1981) 55 ALJR 710 per Gibbs CJ at 712.
The Facts
The summons for possession was issued on 26 April 2001 and is supported by an affidavit sworn on 2 May 2001 by Mr Geoffrey Weeks, Manager of Securities at the Bank. On the face of it, the affidavit establishes that the Bank succeeded to the rights of Advance Bank Australia Limited which traded as “Bank of South Australia”. On 19 April 1987 Ms Bayford executed a Memorandum of Mortgage in favour of the Bank’s predecessor. The mortgage secured monies lent to Ms Bayford under a loan described as loan 90423198005. As I have said, the Bank does not dispute the fact that the CCC applies to the contract of loan. As at 26 April 2001 Ms Bayford was in arrears under the loan and mortgage in the sum of $7,426.52. Furthermore, Mr Weeks asserted that Ms Bayford was a bankrupt.
In early 2001 the liquidator of a company called Bayford Enterprises Pty Ltd ACN 075 401 017 (in liq) (“the company”), Mr R Heywood-Smith, was asserting an interest in the land by reason of the fact (said the liquidator) that monies of the company had been used to pay the deposit in relation to the purchase of the land. The liquidator was corresponding with the Official Receiver on behalf of the Official Trustee in Bankruptcy who was the trustee of Ms Bayford’s estate.
On or about 10 January 2001 the Bank served a Notice of Demand on Ms Bayford claiming the payment within 31 days of arrears under the mortgage of $2,807.13 and costs and expenses of $198.00 and a Notice to Mortgagor under s 80 of the CCC claiming payment of the same amounts. I will need to return to the issue of service because Ms Bayford claimed that she did not receive the Notice of Demand and Notice to Mortgagor.
On or about 10 March 2001 the Bank served a Notice of Default and Intention to Sell (s 132 of the Real Property Act and s 55a of the Law of Property Act) claiming the payment within one month of arrears under the mortgage of $5,152.73 and costs and expenses of $176.00. For convenience I will call this notice the Notice of Default. Ms Bayford was advised that if the arrears were not paid within one month the Bank would sell the land and seek possession of the land for the purposes of sale. The Notice of Default was served by Mr Malcolm Peters, licensed investigation agent, by leaving the same at the land. I will also need to return to the issue of the service of this notice because Ms Bayford also claims she did not receive the Notice of Default.
Ms Bayford’s default under the credit contract and mortgage continued up to 26 April 2001. Ms Bayford was in possession of the land.
On 25 August 2001 a Notice to Occupiers was served by the Bank and on 26 August 2001 the summons for possession was served on Ms Bayford.
Ms Bayford sought legal advice and in due course she instructed Cowell Clarke, solicitors, to act for her. Mr Peter Britten-Jones was the solicitor at that firm who had the conduct of the matter on her behalf. The summons for possession came on before the Master on 12 September 2001. He adjourned the summons to 10 October 2001 and gave Ms Bayford 21 days to file an answering affidavit.
Ms Bayford swore an affidavit on 5 October 2001. In that affidavit Ms Bayford deposes to the following:
1.That the Official Trustee in Bankruptcy is the registered proprietor of the land. That fact is accepted by the Bank.
2.That the loan repayments had fallen into arrears but the immediate cause of that was her husband who had ceased honouring an agreement he had with her.
3.That she has been discharged from bankruptcy. The relevant documents indicate, and I find, that Ms Bayford was bankrupt from 15 March 1995 to 16 March 1998 when she was discharged from bankruptcy by operation of law.
4.That she has an interest in the land at 11 High Street, Morgan, in the State of South Australia. However, she did not live there. She asserts that she did not receive the Notice of Demand and Notice to Mortgagor or the Notice of Default. She asserts that she was not aware that she was in default under the mortgage.
5.That in July 2001 she paid $3,500 towards the arrears and on 11 September 2001 she made a further payment of $5,300 towards the arrears at the branch of the Bank at Gawler.
6.That she wished to pay all of the arrears and to make the loan repayments in accordance with the terms of the loan.
The Bank filed an affidavit in response to Ms Bayford’s affidavit sworn on 5 October 2001. It is an affidavit from the Bank’s solicitor, Mr Luckhurst-Smith, sworn on 3 December 2001 wherein he deposes to the following:
1.That the Bank accepts that the Official Trustee is the registered proprietor of the land. Ms Bayford was convicted in the Magistrates Court at Berri of a bankruptcy charge in which she was declared bankrupt in 1995 and obtained $138,000 in credit in 1997 without disclosing her status. The credit of $138,000 is the loan from the Bank.
2.The means by which the Notice of Demand and Notice to Mortgagor and the Notice of Default were served is set out in the affidavit. I will return to this evidence when I consider the issue of service.
3.That the last payment the Bank received from Ms Bayford was the sum of $3,460.00 on 27 July 2001.
4.That the arrears under the mortgage as at 29 November 2001 were $10,234.97.
On 10 October 2001 the Master adjourned the hearing of the summons for possession to 5 December 2001. On that date the hearing of the summons for possession was adjourned to 16 January 2002.
On 11 January 2002 Mr Britten-Jones swore an affidavit. At that time, Ms Bayford’s solicitors were attempting to reach a settlement with the Official Trustee in Bankruptcy which would include a term that her name be restored to the certificate of title as the registered proprietor of the land. It appears that there were also negotiations between the liquidator of the company and Ms Bayford about the settlement of the company’s action against her (District Court of South Australia Action Number 955 of 2001). A settlement was reached with the liquidator of the company subject to the Official Trustee not claiming an interest in the land. Despite what were said by Ms Bayford to be earlier intimations from the Official Trustee that it would not claim an interest in the land if a settlement was reached with the liquidator of the company, the Official Trustee was now insisting on a valuation of the land. Mr Britten-Jones deposes to the fact that Ms Bayford had paid all arrears and was continuing to make repayments in accordance with the credit contract. Mr Britten-Jones states he was instructed to seek a further adjournment of the summons for possession to allow negotiations with the Official Trustee to continue. He also states that Ms Bayford had been involved in a serious car accident in December 2001 and that she had suffered injuries including a fractured skull and a dislocated shoulder.
Ms Bayford swore an affidavit which was filed on 29 May 2002. In the affidavit she suggests that there was some difficulty with the Bank’s direct debit system. Neither of the two bank statements which were exhibits to affidavits put before the Court suggest that there was a difficulty. The affidavit of one of the Bank’s employees, Mr Craig Jorgan Warhurst (Manager – Loan Services) sworn on 21 May 2002 establishes the following:
1.That the Bank was implementing the direct debit system but that there were no funds in the source account and that in due course the credit to the loan account had to be reversed.
2.That no payment of $2,940.50 was made by Ms Bayford at the Gawler branch of the Bank. There was such a payment at the branch of the Bank at Waikerie, however, the cheque was subsequently dishonoured.
3.That no repayments of the loan were made between 4 December 2001 and 15 May 2002 and the arrears under the credit contract and mortgage as at the latter date were $3,744.36.

Ms Bayford swore an affidavit on 30 May 2002 saying she was not aware the cheque would be dishonoured. She states that she paid all the arrears and enforcement costs on 30 May 2002 when she paid the sum of $4,143.36 at the branch of the Bank at Gawler. She sought a further adjournment so that negotiations with the Official Trustee could continue.
I mention at this point that adjournments of the hearing of the summons for possession were granted on 16 January 2002, 10 April 2002 and 15 May 2002.
The summons for possession was listed for argument on 12 June 2002.
Ms Bayford’s solicitors filed written submissions for the purposes of the argument. It is important to note the case being put by Ms Bayford at that stage. The major points of her case were as follows:
1.She did not receive the Notice of Demand, Notice to Mortgagor or the Notice of Default.
2.It was admitted that from the time the summons for possession was issued in April 2001 to June 2002, Ms Bayford had defaulted in her loan repayments on a number of occasions. In part this was, she said, the fault of her husband. In part it was the fault of the Bank in its implementation of the direct debit system. I find that there is no substance in the latter complaint.
3.Ms Bayford was still negotiating with the Official Trustee. She was seeking to settle with the Official Trustee and to have her name restored to the certificate of title as the registered proprietor. She then hoped to refinance the loan.
4.Ms Bayford was effectively seeking relief against forfeiture. On 12 June 2002 Ms Bayford was seeking an adjournment so that negotiations with the Official Trustee could continue.
The summons for possession was not argued on 12 June 2002. The Master fixed the argument for 29 July 2002.
Mr Britten-Jones swore an affidavit on 29 July 2002. Although it appears to be accepted that by 23 July 2002 the loan was again in arrears, it is asserted that payments by Ms Bayford had cleared the arrears. Negotiations with the Official Trustee were continuing and again an adjournment was sought so that the negotiations could continue.
On 29 July 2002 the Master made the following Remarks and Orders:
“Remarks
I think there is sufficient before me to say that justice favours the granting of some relief to the mortgagor given all of her circumstances.
As far as I can see there is no appreciable damage to the mortgagee, whereas there will be considerable damage to the mortgagor if I simply make an order for possession.
Order
1.I decline the order at this time but will adjourn for three months to monitor whether the mortgagor justifices (sic) my sympathy.
2.Liberty to the plaintiff to apply in the interim.
That this matter be adjourned to For Mention Only on 2.12.2002 at 10:00am.”
I mention at this point that an exhibit to Ms Bayford’s affidavit sworn on 24 December 2002 (ie., after the order for possession was made) is the first page of a letter from Cowell Clarke to Ms Bayford dated 29 July 2002. Mr Britten-Jones reports on the outcome of the hearing that day. Mr Britten-Jones says:
“We submitted that there would be no prejudice to the Bank if there was a further adjournment because the loan was now up to date, there is sufficient security in the property to pay the loan in full and all the enforcement costs are being added on to your loan. On the other hand, you would suffer extreme prejudice if an order was made and your property was sold because you and your four children would have to leave the property. His Honour agreed but said that there must be no further defaults by you, no matter how minor.
His Honour ordered that the hearing be adjourned for three months to 10.00 am on 2 December 2002 so that he can monitor the repayments being made by you. He said that if you default by as little as ‘one penny’ during the three months adjournment period then he would make an order for possession, but if you kept up to date then he would likely dismiss the application for possession.
Once again we can only reiterate how important it is for all fortnightly payments to be made on time. This means that there must be sufficient funds in yours (sic) savings account so that the fortnightly instalment to your loan account can be made. In the past you have not been advised of defaults until close to the next hearing date. We suggest that you keep a close eye on the savings account and loan account to ensure that there are no defaults. If you do discover a default then it should be immediately rectified. You may be able to use the internet banking service to assist you.”
By application dated 28 November 2002 Cowell Clarke sought an order declaring that they had ceased to act as the solicitor for Ms Bayford. The application was supported by an affidavit of Mr Britten-Jones sworn on 28 November 2002. Cowell Clarke were seeking the order because Ms Bayford had not paid their accounts. Cowell Clarke had raised the issue of funds with Ms Bayford on (among other dates) 21 August 2002, 30 August 2002, 15 October 2002 and 20 November 2002. Importantly, on 15 October 2002 Cowell Clarke had clearly reminded Ms Bayford that the summons for possession was coming on again on 2 December 2002 and that if they had no instructions, “orders may be made against you which would include an order for possession of your house”. Cowell Clarke advised that they would not continue to act if the amounts requested were not paid. By electronic mail dated 22 October 2002 to Cowell Clarke, Ms Bayford promised payment in “2 or 3 part payments over the next 3 or 4 weeks”. No such payments were made. The letter from Cowell Clarke to Ms Bayford dated 20 November 2002 states:
“We enclose a letter from Hunt & Hunt Lawyers dated 20 November 2002 advising that since their letter dated 6 November 2002, a copy of which was enclosed with our letter to you dated 12 November 2002, no payment has been made and another loan instalment has fallen due.
The mortgage loan is in arrears by $1,402.93 as at today.
We advise you to pay your arrears on the bank loan immediately.
We remind you that the Bank’s summons for possession has been adjourned until 2 December 2002.
Given your current default, there is every likelihood that the Bank would be successful in seeking an order for possession of your property if they wanted to do so.
We can do no more than advise you of the necessity to ensure that there are no defaults on the loan account. We would not be able to prevent an order for possession being made if you default on you (sic) bank loan, which you have now done, given what His honour indicated at the last Court hearing. The Judge effectively gave you one last chance to prove that you could abide by making the loan repayments required under the loan on time.
Would you please advise us as soon as all arrears are brought up to date so that we can advise Hunt & Hunt lawyers of the same.
We confirm that we will be unable to attend for you at the hearing on 2 December 2002 unless all outstanding accounts are paid and $1,000.00 is placed into our trust account.”
On 21 November 2002 Mr Britten-Jones tried to contact Ms Bayford by telephone. He left a message but received no response. Cowell Clarke wrote to Ms Bayford by letter dated 21 November 2002. The letter said:
“We confirm that for some time your account with us has been in arrears.
We advise you that our firm will cease acting for you. In any event, we require immediate payment of all outstanding accounts of $6,205.21.
Enclosed is a Notice of Party Acting In Person (“the Notice”) which we ask you to sign and return to us in order to file at Court.
If you fail to send us the Notice signed by Wednesday 27 November 2002, we will proceed with an application to cease acting for you, which will result in further costs being incurred by you.
Accordingly please sign the Notice and return it to us by no later than 27 November 2002.
We advise you that at the hearing in relation to the mortgage proceedings by St. George Bank in the Supreme Court on 2 December 2002 we will ask for an order of the Court confirming that we cease acting for you.”
As at 28 November 2002 Ms Bayford owed Cowell Clarke the sum of $6,205.21 plus work in progress in the vicinity of $487.00. Mr Britten-Jones swore two affidavits on 2 December 2002. An exhibit to his first affidavit is an electronic mail from Ms Bayford dated 30 November 2002 at 6:42AM. It reads:
“Dear Peter,
I am now in receipt of your letters dated the 21^st of November and the 28^th November regarding no longer acting on my behalf on Monday. I find this a little harsh considering the circumstances I have been having to work around with all of this in relation to my health.
You know that I have contacted you as soon as I have been able to when I have known that you needed to speak to me. As you know it is going to be nearly impossible for me to be able to organise transport to Adelaide on Monday morning at such short notice, along with child care for my children also. I would have appreciated it greatly if this information had have been conveyed to me a week or two prior to the Friday before the 10.00am Monday morning hearing. I am advised by the post office that they received the Express Post letters today which would correspond with the dates of the 28^th Nov, 2002 on the documents and letters and the date they were filed.
I feel somewhat dismayed that I have been left in such a precarious position at the absolute last minute. I am told by my daughter that 1 attempt was made to reach me by telephone, but the urgency of the matter was not conveyed at the time to her and therefore she placed the message with any others she had for me for when I got home. Had she known it was amatter (sic) of urgency she could have contacted her grandmother my mother and she would have got the message to me.”
An exhibit to his second affidavit is an electronic mail from Ms Bayford dated 30 November 2002 at 4:42AM. That electronic mail reveals an amount outstanding to the Bank (according to Ms Bayford) of $900.00 which she said she had paid on 29 November 2002. The important point is the acknowledgment of arrears under the credit contract and mortgage. A second exhibit to Mr Britten-Jones’ second affidavit is the balance of the electronic mail from Ms Bayford dated 30 November 2002 at 6:42AM. The balance of the electronic mail discusses the position of the Official Receiver and it is apparent from what she says that Ms Bayford had received a letter from the solicitors for the Official Receiver to her solicitors dated 27 November 2002. It seems that in the course of negotiations with the Official Receiver, Ms Bayford claimed that the value of various improvements she had made to the land should be taken into account. She put forward details of the claim for the value of those improvements. The letter from the solicitors for the Official Receiver asserts that a number of claims made by Ms Bayford in relation to improvements to the land were “in fact false and/or fraudulent”. In the electronic mail Ms Bayford seeks to respond to at least some of the allegations. The electronic mail concludes:
“I will contact ITSA and advise them to correspond with me in the future regarding this matter as per your requests.”
Ms Bayford asserts that she did not receive the letter dated 21 November 2002 from Cowell Clarke or the application of Cowell Clarke dated 28 November 2002 until 29 November 2002. I did not understand her to assert that she did not receive the letter from Cowell Clarke dated 20 November 2002 until 29 November 2002, although even if she does make such an assertion it does not, for reasons I will give, advance her arguments on appeal.
I am told by counsel for the Bank that on 2 December 2002 Master Kelly had before him an affidavit of the Official Receiver in and for the State of South Australia. The Official Receiver swore the affidavit for and on behalf of the Official Trustee in Bankruptcy (ss 15 and 18 of the Bankruptcy Act 1966 (Cth)). For reasons that are not clear the affidavit was not filed. Nor was it served on Ms Bayford prior to the hearing of the summons for possession on 2 December 2002. I was given a copy of the affidavit. The affidavit of the Official Receiver sworn on 29 November 2002 repeats in general terms some of the allegations in the letter from the Official Receiver’s solicitors dated 27 November 2002. The affidavit states that the Official Trustee in Bankruptcy is no longer prepared to entertain settlement negotiations and that it supports the orders for possession sought by the Bank. Furthermore, the Official Receiver states that, “but for the instigation of the within proceedings, the Official Trustee would have commenced its own proceedings against the defendant”.
Ms Bayford did not appear on 2 December 2002. Mr Britten-Jones appeared and an order and declaration was made that Cowell Clarke had ceased to be the solicitors acting for Ms Bayford in the action.
The solicitor for the Bank appeared as did the solicitor for the Official Trustee. The Master made the order for possession.
The Proceedings after the Order was made
The order for possession was served on Ms Bayford on 20 December 2002.
On 24 December 2002, Ms Bayford issued an application for directions and for a stay in the execution of proceedings. The application was supported by a lengthy affidavit of Ms Bayford.
A Warrant of Possession was issued on 15 January 2003.
Ms Bayford’s application came on before another Master of the Court on 24 January 2003 and again on 18 February 2003. Ms Bayford did not attend on 18 February 2003 allegedly because of illness. The application was adjourned for argument to 4 March 2003. The Bank undertook not to execute the Warrant of Possession in the meantime. On 4 March 2003 the Master adjourned the application. He considered the appropriate course was for Ms Bayford to appeal from the order and for that purpose to seek an extension of time within which to appeal.
Ms Bayford lodged a document entitled a “Notice of Appeal to a Single Judge” dated 17 March 2003. She also filed an affidavit of Mr Ricky Bayford apparently sworn on the same date.
On 21 March 2003 a Judge of this Court made the following orders:
“1 Waiving the payment of court fees by the plaintiff.
2. Extending the time in which to appeal until 17 March 2003.
3.The costs of this application will be costs in the appeal.
4.That this appeal be heard on 30 April 2003 or such other date as advised.”
On 30 April 2003 the appeal came before me. Ms Bayford did not attend Court. She advised the Court that the person who was to look after her children had not arrived. She advised that she sought an adjournment as she had made an application for legal aid.
I adjourned the hearing of the appeal to 9 May 2003 to fix a date for hearing. The hearing took place on 3 June 2003. At the hearing on 3 June 2003 I heard the submissions of the respective parties. Ms Bayford handed to me an Appeal Book which contained material upon which she relied in addition to the material before the Master. The material consists of the following:
1. A document entitled “Pleadings”.
2.An unsworn copy of the affidavit of Ms Bayford said to have been sworn on 24 December 2002. The unsworn copy is the same as the sworn copy which is on the Court file save and except that exhibit 3 is different.
3.An unsworn copy of an affidavit of Mr Ricky Bayford. The date of the document is said to be 17 February 2003. The document contains significantly more information than the sworn affidavit of Mr Bayford of 17 March 2003 which is on the Court file.
Counsel for the Bank objected to some of the material in the Appeal Book. Ms Bayford also sought to tender four documents relating to the action the liquidator had brought against her. I had the documents marked for identification (“A”) and said that I would rule on their admissibility in the course of giving my decision. I admit the documents. They show that in October 2002 Ms Bayford and the liquidator settled the action instituted by the liquidator of the company on the basis that each party would bear their own costs. Furthermore, Ms Bayford made a number of submissions which counsel for the Bank said were not supported by the evidence. Although I considered that Ms Bayford had been given a proper opportunity to present her appeal, I decided to give her an opportunity to review the transcript and the evidence before the Court to see if there was any further evidence she sought to put before the Court. At the conclusion of the hearing on 3 June 2003 I made the following orders:
“1.I direct that a copy of the transcript of argument of today be provided to Mrs Bayford.
2.I adjourn the hearing of the appeal to Tuesday 17 June 2003 at 9:15AM.
3.I direct that the appellant, on or about 4:00PM on Tuesday 10 June 2003, file and serve any affidavits outlining such further, or fresh evidence as the appellant may seek to rely upon.
4.I direct that the respondent, on or before 4:00PM on 13 June 2003, file and serve an outline of the respondent’s objections to any of the material in the appeal book and to any of the material outlined in the affidavit referred to in para. 3 above.
5.I reserve the question of costs.”
The Bank filed the document envisaged by the fourth order. Ms Bayford did not file any affidavit material in accordance with the direction in the third order. On 17 June 2003 Ms Bayford said that she had not had a proper opportunity to consider the document filed by the Bank containing its objections to the affidavit material and she also sought an adjournment of the hearing of the appeal so that she could put further evidence before the Court. I adjourned the hearing of the appeal to 30 June 2003 to enable Ms Bayford to consider the document filed by the Bank. I intimated that I would hear submissions from Ms Bayford at that time on the document filed by the Bank and thereafter (subject to any other matter being raised), I would deliver judgment on the appeal.
On 30 June 2003 Ms Bayford applied to put before me a document responding to the document filed by the Bank. I read that document and after hearing from counsel for the Bank I received it. Ms Bayford also sought to tender an affidavit which had twenty three exhibits. The significance of the affidavit is in the exhibits rather than the affidavit itself. After hearing submissions on each exhibit to the affidavit, I received the affidavit and twenty one of the twenty three exhibits to the affidavit.
As far as the Bank’s objections to the material in the Appeal Book are concerned I can deal with those relatively briefly. In relation to the unsworn affidavit of Ms Bayford:
1.I overrule the objection to paragraph 3. The evidence is admissible for what it is worth.
2.I uphold the objection to paragraph 7 (last sentence). The receipts if produced speak for themselves. If not produced the evidence is inadmissible secondary evidence of documents.
3.I overrule the objection to the final clause in paragraph 8. Ms Bayford is entitled to say this even though my finding on the point is to the contrary.
4.I overrule the objection to the third sentence in paragraph 9. Ms Bayford is entitled to state her belief on this matter.
5.I uphold the objection to those parts of paragraph 12a identified in the Bank’s Notice of Objections. The particular matters concerning Mr Campbell are irrelevant and much of the paragraph is argumentative in form.
6.I uphold the objection to those parts of paragraph 12b identified in the Bank’s Notice of Objection. The particular matters concerning Mr Tassone are irrelevant and much of the paragraph is argumentative in form.
7.I uphold the objection to paragraph 12d. In my opinion, it does not contain evidence of any fact but simply assertions as to what evidence others could give.
8.I overrule the objection to those parts of paragraph 13 identified in the Bank’s Notice of Objections. I am prepared to receive this material but only on the basis that the assertions about documents rise no higher than the documents themselves and the allegations against the Official Trustee in Bankruptcy and BDO Nelson Parkhill are no more (on the evidence before me) than allegations.
9.I uphold the objection to paragraph 14. It is argumentative and does not contain statements of fact.
10.I uphold the objection to that part of paragraph 16 identified in the Bank’s Notice of Objection. The relevant passages are argumentative and irrelevant.
11.I overrule the objections to exhibits 13, 14 and 23. I will receive these documents for what they are worth.

In relation to the unsworn affidavit of Mr Bayford:
1.I uphold the objection to those parts of paragraph 2 identified in the Bank’s Notice of Objections. The conversation with a third party is not admissible against the Bank. It is, in any event, irrelevant.
2.I uphold the objection to those parts of paragraph 4 identified in the Bank’s Notice of Objections. Mr Bayford cannot give evidence of what Ms Bayford was thinking or saying.
3.I uphold the objection to those parts of paragraph 5 identified in the Bank’s Notice of Objections. It seems to me that the assertions made are argumentative and in the view I take of the issues, irrelevant.
4.I uphold the objection to the last sentence of paragraph 6. Mr Bayford cannot give evidence of what Ms Bayford said.
5.I uphold the objections to paragraphs 11 and 12. They are argumentative and, in the view I take of the issues, irrelevant.
6.I uphold the objections to those parts of paragraphs 13, 14 and 15 identified in the Bank’s Notice of Objections. The allegations concerning Mr Brady are argumentative and irrelevant.
At the conclusion of the submissions on 30 June 2003, I made an order dismissing the appeal. I indicated that I would hear the parties on costs and hand down my reasons for judgment on 2 July 2003. These are my reasons.
The Arguments on Appeal
There are a number of reasons why I must consider afresh the question of whether an order for possession should be made.
First, the appeal is an appeal by way of a rehearing. Secondly, the Master did not deliver reasons for his decision. In my respectful opinion, he should have delivered at least brief reasons which explain the basis of his decision. Thirdly, and most importantly, I have received further evidence. I did so because I consider that Ms Bayford has an arguable case that she has a reasonable explanation for her non-attendance on 2 December 2002. I emphasise the word “arguable” because short of hearing evidence including cross-examination, I am not able to make a clear finding as to matters such as when Ms Bayford received various items of correspondence from Cowell Clarke and whether she could and should have appeared in Court on 2 December 2002. It appears that Ms Bayford did not receive a copy of the Official Receiver’s affidavit sworn on 29 November 2002 until some days after the hearing on 2 December 2002. I do not think it was the Bank’s fault that Ms Bayford was unrepresented on 2 December 2002. It is not a case of a judgment obtained irregularly where the defendant has a right to have it set aside ex debito justitiae (Watson v Anderson (1976) 13 SASR 329). Nor am I to be taken as attributing any fault to Mr Britten-Jones of Cowell Clarke. He had very properly sought the payment of his firm’s fees on a number of occasions and had clearly warned Ms Bayford of the consequences of non-payment. The amount owing to his firm was substantial.
However, the fact is that matters concerning her legal representation came to a head shortly prior to the hearing on 2 December 2002 and on that day an affidavit was used which had not been served on Ms Bayford. In those circumstances, my approach to the appeal is that if Ms Bayford establishes that she has an arguable defence to the summons I will allow the appeal and send the action back to the Master for rehearing.
There are two broad issues. First, I need to be satisfied that the preconditions for the making of an order for possession have been met. If so, I must next consider the application for relief under s 55A(3) of the Law of Property Act. Although I say application for relief, there was in fact no written application or counterclaim for such relief. Nevertheless, it is implicit in the way in which the matter proceeded that such an application was being made and counsel for the Bank did not contend otherwise.
I think the Bank has established that the preconditions for the making of an order for possession were met. The fact that there were defaults at the relevant times is clearly established. The only other issue was the issue of service of the Notices. As to the various Notices, I find as follows:
1.The Notice of Demand and the Notice to Mortgagor are both dated 10 January 2001 and are addressed to Ms Bayford at 11 High Street, Morgan, in the State of South Australia. At the relevant time, Ms Bayford had an interest in the land at 11 High Street, Morgan. Each notice was sent by pre-paid post to that address and neither Notice was returned unclaimed. I am satisfied that the Bank made proper inquiries and that from those inquiries it may be concluded that 11 High Street, Morgan was an address at which Ms Bayford could be located.
The Notice of Demand and the Notice to Mortgagor were also sent to the other known address of Ms Bayford, namely, PO Box, Greenock, SA 5360. The Notices were returned by Australia Post from that address but the sending of the Notices to that address was proper service by the Bank because it was the address for service of notices nominated (I infer) in the credit contract and it was the address for service expressly stated in the mortgage. Therefore, service on that address was proper service of the Notice of Demand and Notice to Mortgagor (see s 172 of CCC).
2.The Notice of Default was addressed to Ms Bayford at 11 High Street, Morgan, and was sent to that address by the Bank by pre-paid post. However, for present purposes, proper service of the Notice of Default was effected by the licensed investigation agent (Mr M J Peters) leaving the Notice of Default at the land (s 112(3) LPA).
I am satisfied that Ms Bayford did not establish a case for relief under s 55A(3) of the LPA or, alternatively, an arguable case such that the summons for possession should be referred back to the Master or for trial. I have reached that conclusion for two main reasons. First, I think the fact that Ms Bayford repeatedly fell into arrears and that the amounts were substantial is a significant factor. She was given every opportunity over a period of approximately 20 months to clear the arrears and to keep the loan repayments up to date. She cleared the arrears from time to time but thereafter again fell into arrears. The Master gave her the opportunity of an adjournment for 5 months but still there were arrears in that period. Precisely when the arrears arose was a matter of dispute between parties. Ms Bayford seemed to suggest the arrears were outstanding from the prior hearing in Court on 29 July 2002. I think that there is sufficient material to conclude that that was not the case and that the arrears arose after 29 July 2002. The letter dated 29 July 2002 from Mr Britten-Jones to Ms Bayford refers to the fact that he made a submission to the Court on Ms Bayford’s behalf on 29 July 2002 that the loan was up to date. That is consistent with the suggestion implicit in Mr Britten-Jones’ affidavit sworn on 29 July 2002 that there were no outstanding repayments. I find that the arrears of $900.00 referred to in Ms Bayford’s electronic mail arose after 29 July 2002. Even if that conclusion is wrong I do not think it helps Ms Bayford. In one way or another monies were outstanding between July and late November 2002. Furthermore, Ms Bayford’s excuses for the loan falling into arrears were unconvincing and certainly were not such that one could confidently assume that further defaults would not occur in the future.
Secondly, Ms Bayford is not the registered proprietor of the land and there is no reasonable prospect that she will become the registered proprietor in the near future. The Master and the Bank were prepared to give her time to negotiate with the Official Trustee to see if a settlement could be reached which would see Ms Bayford’s name put back on the certificate of title. That is consistent with the position the Bank took in August 1997 when by letter to Ms Bayford the Bank said it was happy to continue with the mortgage over the land once the Official Receiver has removed their interest from the title. Substantial time was given but a settlement with the Official Receiver has not been reached. The registered proprietor supports the making of an order and the sale of the land, and in fact says it would have instituted proceedings (presumably for an order for possession) if these proceedings had not been instituted.
There is a body of evidence to the effect that Ms Bayford challenges the position taken by the Official Trustee. She alleges that she reached various agreements with the Official Trustee that the Official Trustee would transfer the land to Ms Bayford if she settled the action instituted against her by the liquidator of the company. She has now reached an agreement with the liquidator of the company and the action has been discontinued. Ms Bayford strongly disputes the assertion of the Official Trustee that her claims in relation to improvements to the land are false or fraudulent. As to whether there is an agreement between Ms Bayford and the Official Trustee, it is not obvious to me that there is an enforceable agreement. To date, Ms Bayford has not instituted an action to enforce any such agreement. However, it is unnecessary for me to decide the point. As to the claim in relation to improvements, it is neither necessary nor possible for me to decide whether any of Ms Bayford’s claims in relation to improvements to the land are justified or are fraudulent. In my opinion, the resolution of these issues is unnecessary because they are irrelevant. The rights of the Bank cannot be postponed because of a dispute between the Official Trustee and Ms Bayford. Alternatively, even if in the exercise of the Court’s discretion to adjourn the summons some account can be taken of the possibility of a settlement, the Bank’s rights cannot be postponed indefinitely because of a dispute between the Official Trustee and Ms Bayford. The negotiations appear to have started some years ago and have not resulted in a settlement. The point is that there is no reasonable prospect that Ms Bayford will become the registered proprietor in the near future. In those circumstances I do not think relief would be granted under s 55A.
Conclusions
It was for these reasons that I dismissed the appeal.

[2003] SASC 210

2 July 2003