Bendigo Bank v Peter Gorczynski

[2016] NSWSC 693

Supreme Court

New South Wales

Medium Neutral Citation:	Bendigo Bank v Peter Gorczynski [2016] NSWSC 693
Hearing dates:	30 May 2016
Date of orders:	30 May 2016
Decision date:	30 May 2016
Jurisdiction:	Common Law
Before:	Campbell J
Decision:	(1) direct the plaintiff within twenty-eight days to provide the defendant with a further statement of account setting out its calculation of the sum due to it from the proceeds of sale of the mortgaged property as at 14 May 2010, including short particulars in relation to each item of the basis of its legal entitlement, if applicable, by reference to the terms of the mortgage or loan contract. (2) each party bear its own costs of this application.
Catchwords:	PROCEDURE– mortgages– sale of property– where surplus disputed– whether order providing for reservation of liberty to apply allows party to advance cross-claim for recoupment of surplus– where order made many years ago
Legislation Cited:	Civil Procedure Act 2005 (NSW), s 73 Real Property Act 1900 (NSW) Uniform Civil Procedure Rules 2005 (NSW), r 26.1
Cases Cited:	Bendigo & Adelaide Bank Ltd v Gorczynski (No 3) [2016] NSWSC 55
Category:	Procedural and other rulings
Parties:	Bendigo & Adelaide Bank Ltd (Plaintiff) Peter Francis Gorczynski (Defendant)
Representation:	Counsel: J Foley (Plaintiff)    J Button (Defendant)   Solicitors: Gadens Lawyers (Plaintiff) Jane Button & Associates Pty Ltd (Defendant)
File Number(s):	2009/293542

ex tempore Judgment –Revised

1. I am required to decide the issues raised by a notice of motion filed by the defendant in these proceedings purportedly pursuant to liberty reserved by McCallum J on 3 February 2016: Bendigo & Adelaide Bank Ltd v Gorczynski (No 3) [2016] NSWSC 55. On that day McCallum J made orders under s 73 of the Civil Procedure Act 2005 (NSW) finding that the parties had settled an ongoing dispute about the disposition of surplus funds from the exercise by the plaintiff bank of its power of sale under a mortgage between it and the defendant. I will not go into all of the details of that original dispute, suffice it to say that Mr Gorczynski, the defendant, at all times accepted, when it arose, that he who was in default of his mortgage. When the bank brought proceedings for possession, and in debt, on the mortgage he did not contest them but allowed the bank to obtain default judgment for possession and for its debt.

2. It is also fair to say from the evidence read in the proceedings before me that he at all times cooperated with the exercise by the bank of its power of sale giving up possession of his home in response to the judgment for possession and the exercise by the bank of its powers of sale.

3. His grievance however relates to the calculation of the surplus. He was of the impression that when one looked at the amount of the judgment obtained by the bank and compared it to the sale price that he was entitled to a surplus of around $140,000. As things transpired, the bank calculated that the surplus was in fact a figure of around $22,000. I am being deliberately imprecise. There was a dispute in that the Bank purported to withhold part of that $22,000 in relation to some of the costs of enforcement of the loan and that gave rise to a long running series of interlocutory applications in this Court which were almost finally determined by McCallum J in February.

4. Mr Gorczynski has explained in a proposed draft cross-claim that there was a delay in him advancing his grievance because of ill-health for a number of years and possibly because of his involvement in other proceedings.

5. Among the orders pronounced by McCallum J on 3rd February 2016 is the following, order 5:

“The defendant has liberty to apply with respect to matters other than these orders. In particular, information as to how the plaintiff calculated the sum of $730,429.04 which it deducted from the proceeds of sale of the property the subject of the proceedings.”

In explaining that order (at [12]) her Honour referred to Mr Gorczynski's desire to make a separate application in respect of the bank's calculation of the debt due at the time of the sale. Her Honour thought his apprehension about being shut out in that regard was misplaced because the bank has at all times made it clear, as Mr Foley who appears today made clear to me, that if Mr Gorczynski thinks he has a claim in respect of the surplus he may bring it forward in the proper forum.

6. This is made clear at [13] of her Honour's judgment where her Honour said this:

“In referring to “surplus funds”, the deed plainly refers to the funds in fact calculated at the time that the sale was settled. If it later transpires that the bank calculation was wrong, I see nothing in the deed to preclude Mr Gorczynski from pursuing any claim for such additional surplus funds. In any event the important point is that the deed reflects the actual agreement in that respect.”

7. Using her Honour’s reasons at [12] and [13] as an aide to the interpretation of order 5, which is the reservation of liberty, I am of the view that the proper scope and ambit of order 5 does not extend to permitting Mr Gorczynski, at this stage of these proceedings, bearing in mind judgment was entered back in 2009, to advance a cross-claim in respect of any shortfall he can identify in relation to the surplus proceeds of sale actually paid to him.

8. Moreover, considering the proposed cross-claim annexed to his notice of motion, which he drafted before he had the benefit of representation by Ms Button who appears for him today, Mr Gorczynski seeks relief that goes far beyond any possible reading of order 5. Indeed he seeks ten different forms of relief which seek to set aside or set aside or avoid both the loan contracts between him and the bank and the mortgage he granted to the bank under the Real Property Act 1900 (NSW).

9. Potentially, prayers eleven and twelve in the cross-claim seek to advance a claim for recoupment of what he says are the monies wrongly withheld by the bank. And if one reads through the averments of fact in the proposed cross-claim, what was said about the calculation of the surplus is quite clear, although other claims are advanced and various iterations of his legal entitlement to those amounts are propounded.

10. What is not evident is the amount claimed and that is because Mr Gorczynski says that despite many requests, the bank has failed to properly account to him in relation to its calculation of its entitlement out of the proceeds of sale. This is made clear in an affidavit affirmed by him on 16 November 2015, read before me together with other evidence. In particular, at para 16 Mr Gorczynski sets out the various amounts referred to by the bank at various times and says this,

“The bank has also not explained the different figures that it has provided in relation to the amount allegedly due under the mortgage as at 14 May 2010.”

14 May 2010 is the date of settlement of the sale.

11. In his affidavit of 9 November 2015, Mr Foley explained the various calculations arising out of the sale. He disputes that there has been a failure to account as alleged. However, I think Mr Foley acknowledges that the various tables set out in his affidavit do not disclose the basis, even in short form, of the bank’s legal entitlement to the various additional charges it made against Mr Gorczynski following the entry of judgment in this Court.

12. I raised with counsel whether I could direct that that information be provided, although that it is not the relief sought by Mr Gorczynski.

13. I digress to record that earlier today, for reasons which will appear in the transcript, I refused a belated application for an adjournment made by Ms Button to enable counsel who has advised in the matter to appear to argue the case. I will not reiterate my reasons for that decision here.

14. It seems to me, as I have said, that: first, the liberty reserved by McCallum J, for the reasons I have expressed, did not extend to leave for Mr Gorczynski to file a cross-claim seeking recoupment of that part withheld by the bank which he regards as part of the surplus; and secondly, it certainly did not extend to the prayers one to ten in the proposed cross-claim, even if, contrary to my interpretation, a cross-claim was envisaged.

15. What I think her Honour had in mind, and the intended operation of order five referred to, was the provision of information to enable Mr Gorczynski to better understand what the bank said about its calculations, and the legal basis of them, which would put him in a position to decide for himself whether he was entitled to bring further proceedings to recoup those monies. Given the parameters of any possible dispute, it seems unlikely that the Supreme Court of New South Wales would be the appropriate forum.

16. Although the reasons I have given so far support a dismissal of the plaintiff’s motion, the long history of this matter suggests to me that, having raised the matters with the legal representatives for both parties, who do not dispute the power, I should exercise the power conferred on me by r 36.1 of the Uniform Civil Procedure Rules 2005 (NSW) to grant the relief to which, it seems to me, Mr Gorczynski is entitled pursuant to order five made by McCallum J, even though it is not asked for by him and no prayer for relief in that regard appears in the notice of motion. That relief is to direct the bank to provide particulars of the type that I have referred to. I will pronounce the formal order in a moment. I wish to make it quite clear that in my judgment, the order I am about to propose exhausts the liberty reserved by McCallum J.

17. During the course of argument, Mr Foley reminded me of the fundamental principles of law relating to the finality of litigation and, in particular, relating to the inability of parties to re-open orders of superior courts which have been formally entered in the court’s record. Those principles of law seem to me to support the decision I have made in relation to this matter to refuse leave to file the proposed cross-claim.

18. My order is:

Direct the plaintiff within twenty-eight days to provide the defendant with a further statement of account setting out its calculation of the sum due to it from the proceeds of sale of the mortgaged property as at 14 May 2010, including short particulars in relation to each item of the basis of its legal entitlement, if applicable, by reference to the terms of the mortgage or loan contract.

19. Mr Foley has applied for the costs of the motion on the basis, as he argues, that the defendant was entirely unsuccessful in as much as Mr Gorczynski did not obtain the only relief sought in the motion filed and served.

20. The usual order, of course, is that costs follow the event, and the event in this case is the order I have made. That, of course, is an order which favours Mr Gorczynski. But given that it was not an order sought at any time, either in the motion filed or in the argument of his learned legal representative, I am of the view that the Court should depart from the usual rule.

21. However, it seems to me that the proper order in all the circumstances of this particular case is that each party bear its own costs of this application. I have come to this conclusion because Ms Button has informed me, without any objection from Mr Foley, that this information, or information perhaps like it, was sought at the time Mr Gorczynski ventilated the application with the bank.

22. As I have said, the order made is not what Mr Gorczynski wanted but it favours him. Nonetheless, I think that the fair resolution of the matter, given that this was a suggestion that fell from me, is that each party bear his or its own costs.

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Decision last updated: 31 May 2016