CBA v Davies
[2011] VSC 666
•21 December 2011
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
S CI 2008 4676
| THE COMMONWEALTH BANK OF AUSTRALIA (ACN 123 123 124) | Plaintiff |
| v | |
| IVOR THOMAS DAVIES | First Defendant |
| SWAROOP DAVIES | Second Defendant |
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JUDGE: | ZAMMIT AsJ | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 14 and 15 November 2011 | |
DATE OF JUDGMENT: | 21 December 2011 | |
CASE MAY BE CITED AS: | CBA v Davies and Anor | |
MEDIUM NEUTRAL CITATION: | [2011] VSC 666 | |
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MORTGAGE – Default – Action for possession – Summary Judgment - Essential elements of judgment for possession established – Counterclaim subject of proceedings in VCAT – Counterclaim barred by res judicata and issue estoppel – Costs at VCAT awarded against defendant.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr J Mereine | Minter Ellison |
| For the First and Second Defendants | In Person |
HER HONOUR:
The plaintiff, the Commonwealth Bank of Australia (“CBA”) by its summons dated 15 August 2011 seeks orders, inter alia, that:
1.the stay granted by Master Evans on 3 July 2008 be lifted;
2.possession of the land situated and known as 901/422 Collins Street, Melbourne (“property”);
3.the sum of $424,495.92 together with interest;[1]
4.its contractual claim for $196,104.71, being expenses which CBA reasonably incurred in the VCAT proceeding; and
5.its costs of this proceeding.
[1]Affidavit of Christine Karthikeyan sworn 10 November 2011 at [5].
CBA seeks the above relief on the basis that it has established each of the material facts and the defendants, the Davies, have no defence to CBA’s claim. CBA submits that the Davies are barred from raising the causes of action and issues pleaded in their amended counterclaim as they are res judicata and/or the subject of an issue estoppel.
Alternatively, by its summons, CBA seeks an order that the Davies’ amended defence dated 10 June 2006 be struck out on the basis that it does not disclose an arguable defence to CBA’s claim or is frivolous and vexatious.
CBA also seeks summary judgment dismissing the Davies’ amended counterclaim dated 10 June 2008, alternatively that it be struck out.
On 14 February 2008, CBA filed proceedings against the Davies in this Court, seeking payment of $322,253.76 (plus interest and costs) and possession of the Collins Street property.
The Davies filed an amended defence and counterclaim dated 6 June 2008.
On 30 July 2008, Master Evans made consent orders that this proceeding be stayed until the hearing and determination of the proceeding in the Victorian Civil and Administrative Tribunal (“VCAT”). On 4 April 2008 the Davies commenced a proceeding in VCAT, making numerous allegations against CBA and seeking, inter alia, compensation and a stay and postponement of this proceeding.
On 10 May 2011, Member Proctor handed down reasons in the VCAT proceeding and determined that the proceeding be dismissed.
CBA relies upon the affidavits of Christine Karthikeyan sworn 12 August 2011 and 10 November 2011 in support of its application.
The Davies rely upon affidavits of Swaroop Davies sworn 10 November 2011, 11 November 2011 and 14 November 2011.
Swaroop Davies’ affidavit filed with the Court on 14 November 2011 exhibits an index of documents which were relied upon in the VCAT proceeding.
The earlier affidavit filed with the Court on 10 November 2011, exhibits the defendants’ submissions and request for orders.
The Davies’ affidavits were tendered into evidence without objection by CBA. To be fair to counsel for CBA, Mr Mereine, the absence of objection was put by CBA as a matter of expediency and allowance for the fact that the Davies are not legally represented.
I have considered the Davies’ affidavits and the attached exhibits. The affidavits purport to prove facts that the CBA through its own actions and conduct between 2001 and 2006 has forfeited rights which it seeks to enforce in this proceeding. These are the same facts which were considered in VCAT.
The affidavits also purport to prove that the VCAT determination did not canvass all the relevant evidence and that there were discrepancies between the decisions of Deputy President McKenzie and Member Proctor.
It is sufficient to note that the affidavit materials are inadmissible on the ground that they do not prove facts or adduce any additional facts relevant to this application.
CBA must establish material facts for judgment: possession and debt
On the basis of the writ and statement of claim and the amended defence and counterclaim, it is common ground that:
(a)the Davies are registered proprietors of the property;
(b)the Davies entered into the investment home loan facility, which is the subject of this proceeding;
(c)there were terms to the effect that the Davies would provide a mortgage over the property;
(d)the mortgage in respect of the property was registered and allocated dealing number X844838F;
(e)if the Davies did not pay on time under the loan facility, CBA may serve a demand requiring the default to be remedied within 30 days of the demand and if the Davies failed to do so CBA may decide that the balance of the loan would become immediately due and payable and the mortgage enforceable and the Davies liable for CBA’s reasonable enforcement expenses;
(f)CBA made the loan and provided the banking facilities to the Davies. A demand dated 18 September 2007 was issued by CBA and by that demand CBA demanded payment of arrears under the loan facility in the amount of $22,572.24 within 38 days.
CBA submits that the Davies are also taken to have admitted other material facts on the basis that in their amended defence and counterclaim there is no denial of the facts nor admission of those facts. In particular, CBA submits that the Davies are taken to have admitted that as at 18 September 2007 they were in breach of their obligations; that the Davies failed to pay CBA the amount claimed in the demand; that by notice dated 1 November 2007 CBA demanded payment of the total amount owing under the loan facility and the mortgage being at that time $313,918.82; that they failed to pay the amount claimed in the notice; by further notice CBA demanded that the Davies deliver possession of the property to CBA; and that they failed to deliver up the property.
CBA submits that in any event its claim for judgment and possession is proved by the evidence before the Court contained in the affidavits of Christine Karthikeyan. This includes evidence of the Consumer Credit Agreement executed by the bank and the Davies dated 2 August 2001; the variation dated 16 September 2002; the Usual Terms and Conditions for Consumer Lending; the mortgage certified by the Registrar of Tiles; the Memorandum of Common Provisions (“MCP”) referred to in the Mortgage, certified by the Registrar of Titles pursuant to s.156 of the Evidence Act 2008 (Vic); the demands for payment of arrears dated 18 September 2007 totalling $22,572.24; the default Notice dated 1 November 2007; the demands for possession dated 8 January 2008; the failure by the Davies to deliver up possession of the property to the bank and the Davies’ continued indebtedness to the bank in the amount $674,909.36 pursuant to the loan facility.[2] Ms Karthikeyan deposes that as at 10 November 2011 the Davies were indebted to CBA in the amount of $674,909.36 pursuant to the loan facility of which $432,249.37 is principal and interest.[3]
[2]Affidavits of Christine Karthikeyan sworn 12 August 2011 at [17] and 10 November 2011 at [5].
[3]Affidavit of Christine Karthikeyan sworn 10 November 2011 at [5].
I accept that by way of evidence and/or by way of the operation of the rules and actual admissions in fact, CBA makes out the material facts necessary to establish the cause of action to have judgment for possession and debt.
I am satisfied that the CBA has proved its case. Having made this finding, I shall consider whether there is any reason why the Court should not give summary judgment to the CBA. What remains for consideration is the Davies’ counterclaim.
By way of counterclaim the Davies allege that CBA has forfeited its right to the mortgage and the security and any right to remedy for default under the loan facility and any remedy to enforce the mortgage. The Davies allege that CBA has forfeited its right to enforce the mortgage and claim expenses on the basis of CBA’s own actions and conduct between 2001 and 2006. In addition to the forfeiture claim by the Davies, the Davies also allege that the sum of $5,476 and the sum of $9,465 respectively are owed by CBA to the Davies.
Are the Davies barred from raising defences and maintaining a counterclaim?
CBA submits that the Davies are barred from raising the defence and maintaining the counterclaim by the doctrines of res judicata and/or issue estoppel. CBA submits that the allegations made by the Davies in their defence and counterclaim were raised and finally determined, or could and should have been determined in the VCAT proceeding. On 10 May 2011, Member Proctor dismissed the VCAT proceeding and delivered his reasons. Numerous causes of action were raised by the Davies by pleadings filed with VCAT on 11 May 2010 entitled “Particulars (integrated”).[4]
[4]Affidavit of Christine Karthikeyan sworn 12 August 2011, exhibit CK-1 at pp 88 - 122.
I accept that a decision of VCAT in its original jurisdiction, is capable of giving rise to a res judicata otherwise known as cause of action estoppel and an issue estoppel claim.
Res judicata/cause of action estoppel
The rule of res judicata is that no proceeding can be maintained on a “cause of action” upon which judgment has been entered.[5]
[5]Jackson v Goldsmith (1950) 81 CLR 446, (Fullagar J); Chamberlain v Deputy Commission of Taxation (1988) 164 CLR 502; Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589.
The doctrine may apply where the causes of action are substantially the same.[6] It not the legal form of a cause of action to which consideration should be directed but rather whether the controversy in the subsequent action, as a matter of substance, is the same as the controversy determined in the first proceeding.
[6]Trawl Industries of Australia Pty Ltd v Effem Food Pty Ltd (1992) 108 ALR 335, 347 (Gummow J).
The question in the present proceeding is whether the substance of the earlier VCAT proceeding and the counterclaim in this proceeding are substantially the same. That requires consideration of the rights and liabilities determined by the order of VCAT. For that purpose, only the record of the proceeding is relevant.[7] Regard can only be had to the formal order of the Court and the pleadings in the earlier action, not the evidence.[8]
[7]Jackson v Goldsmith (1950) 81 CLR 446 at p 467.
[8]Stewart v Biodiesel Producers Ltd [2009] WASC 145 at [49].
The doctrine of issue estoppel on the other hand concerns itself with whether an issue of fact or law which is raised in a later proceeding was an issue of fact or law also raised in an earlier proceeding and determined.[9] In Jackson v Goldsmith, Fullagar J noted that:[10]
… It follows from the very nature of the difference between the plea of res judicata and the plea of issue estoppel that different materials are relevant in each case. Where the plea is a res judicata, only the actual record is relevant. Where the plea is of issue estoppel, any material may be looked at which will show what issues were raised and decided. Reasons given for the judgment pronounced are likely to be particularly important for this purpose.
[9]Jackson v Goldsmith (1950) 81 CLR 446 at p 467.
[10]Ibid.
Counsel for CBA provided the Court with a road map comparing the Davies’ VCAT pleading with the amended defence and counterclaim in this proceeding. The comparison demonstrates that at the core of the VCAT proceeding was an attempt by the Davies to impugn the mortgage and loan facility, the subject of this proceeding. The Davies sought orders from the Tribunal that the:
1.“collateral contract” (as defined in the Davies’ VCAT pleading) was breached;
2.Access Advantage loan contract (reference 386610026237) and Veridian loan contract (reference 386610026018) both be re‑opened and declared breached;
3.the loan facility was breached from its inception;
4.CBA take steps to discharge the mortgage with immediate effect; and
5.CBA make appropriate substantial compensation to the Davies.
In this proceeding, the Davies claim:
(a)the re‑opening of the Access Advantage loan contract (reference 386610026237) and Veridian loan contract (reference 386610026018) on the basis that they were unjust transactions and that they be annulled;
(b)the annulment of the loan facility and discharge of the mortgage;
(c)an order that CBA has forfeited its right to the property;
(d)an order that CBA has forfeited its right to the property at 300 Patullos Road, Lara Victoria, and compensation.
In the VCAT proceeding, the orders were sought on the basis of sub-para 70(2)(b) and (o), 70(5) and 70(7) of the Consumer Credit Code in addition to what was said to be “the operation of fraud, fraudulent misrepresentation and unconscionable conduct” as well as “unjust, unconscionable, misleading and deceptive” conduct allegedly engaged in by CBA.
CBA submits that the causes of action claimed in the VCAT proceeding are the same as those which the Davies now seek to re‑litigate in this proceeding. In particular:
(a)breach of a collateral contract;[11]
(b)fraudulent misrepresentations/false legal documents;[12]
(c)misleading and deceptive claims;[13]
(d)breach of contract;[14]
(e)breach of Banking Code;[15] and
(f)unconscionable conduct.[16]
[11]Amended Defence and Counterclaim at [19] – [24]. Affidavit of Christine Karthikeyan sworn 12 August 2011, exhibit CK-1 at p 109.
[12]Amended Defence and Counterclaim at [25A] - [L], [26A] to [D] and [27L](1) – (6). Affidavit of Christine Karthikeyan sworn 12 August 2011, exhibit CK-1 at p 98 – 108, 119.
[13]Amended Defence and Counterclaim at [29](1) to (10).
[14]Amended Defence and Counterclaim at [31](1) to (3). Affidavit of Christine Karthikeyan sworn 12 August 2011, exhibit CK-1 at p 93 - 94.
[15]Amended Defence and Counterclaim at [32]. Affidavit of Christine Karthikeyan sworn 12 August 2011, exhibit CK-1 at p 121 – 122.
[16]Amended Defence and Counterclaim at [34](1) - (2). Affidavit of Christine Karthikeyan sworn 12 August 2011, exhibit CK-1 at p 116 – 118.
CBA submits that each of these causes of action is res judicata between CBA and the Davies.
Issue estoppel
CBA submits that in addition to the causes of action which are said to be res judicata between CBA and the Davies that the Davies raise factual and legal issues in the amended defence and amended counterclaim that were raised by the Davies at the hearing in VCAT and determined in favour of CBA. CBA relies on the reasons given by Member Proctor to make good their proposition that the Davies are precluded from agitating these matters in this proceeding.
CBA submits that the reasons given by Member Proctor establish that the following factual and legal issues were raised by the Davies at the hearing in VCAT and determined in favour of CBA:
1.Claim of $9,465.33 – in paragraph 12(c) of the amended defence, the Davies claimed that CBA owes them the sum of $9,465.33. In the VCAT proceeding the Davies alleged that CBA made fraudulent misrepresentations to obtain the sum of $9,465.33 by using “false legal instruments”. Member Proctor did not accept that the documents were false and dismissed this claim.
2.Claim of $5,476 – in paragraph 12(a) of the amended defence the Davies claimed that CBA owes them an amount of $5,476. In the VCAT proceeding the Davies alleged that the Banking and Financial Services Ombudsman found that CBA overcharged them $5,476 and claimed a refund of this amount. Member Proctor found that CBA erroneously withheld credit of approximately $5,475 but that the Davies failed to establish that this caused them to suffer loss greater than the benefit obtained from reduced interest paid due to CBA’s error.
3.Collateral contract – the Davies’ allegation of a collateral contract is raised at paragraphs 19 to 24 of the amended counterclaim. Member Proctor found there was no oral contract created between the Davies and CBA in the nature of what was alleged to be the “collateral contract”. Member Proctor also determined that the documents on which the Davies relied did not support the existence of the collateral contract;
4.False valuation of the property – the Davies alleged in the VCAT proceedings that a valuation relied upon by the CBA was in respect of a different property, due to an error in the Folio number and that the use of an older valuation gave rise to a claim. Member Proctor determined that the 2001 valuation contained an error in the Folio number but in substance it was a valuation of the property. Member Proctor also determined that there was no basis to the claim that the valuation was in some sense false;
5.Material alterations of a mortgage and the discharge authority – the Davies raise the issue of material alterations to a mortgage and a discharge of authority at paragraph 25 of the amended counterclaim. Member Proctor determined both issues against the Davies in his reasons at paragraph 65(d) and (e) respectively;
6.Unconscionable conduct 2001 to 2006 – the Davies plead in paragraphs 31(1) and (2) of the amended counterclaim that the CBA acted unconscionably in its relations with the Davies between 2001 and 2006. Member Proctor found that there was no foundation for this allegation and that the CBA had acted reasonably throughout;
7.Misleading the Banking Ombudsman – this issue is raised in paragraphs 29(5) and (9) of the amended counterclaim. Member Proctor found there was no evidence to support the allegation and dismissed it.
Negligence claim and privacy claim
CBA submits that the only remaining claims that are not barred by virtue of the doctrines of res judicata and/or issue estoppel are the negligence and privacy claims pleaded in the amended counterclaim and that these claims are without basis, vexatious or frivolous.
The Davies’ allegations of negligence are contained in paragraphs 31 sub‑paragraphs (1) to (3) of the amended counterclaim. CBA submits as pleaded it does not disclose a cause of action.
At paragraph 31 of the amended counterclaim the Davies allege the following:
1.The counterclaims assert that CBA’s actions show a serious lack of due care and a standard of care and skill that can reasonably be expected from a financial institution.
2.Since December 1999, CBA has been negligent in not indicating the correct mortgage for a secured loan transferred from another property in the Land Victoria office. CBA was unjustly enriched by the discharge of this loan in January 2006.
3.In 2005, CBA knowingly sent correspondence that belonged to another customer.
The allegations of privacy breaches are contained at paragraph 33 of the amended counterclaim. The Davies allege:
The counterclaimants claim that CBA misrepresented sensitive information relating to the plaintiffs’ credit standing to external third parties.
On 29 January 2009, Deputy President McKenzie struck out the Davies’ claim of negligence on the basis that the claim failed to establish a duty of care on the part of CBA. The use of the word “negligent” was said to be insufficient. I do not consider that the negligence claim or privacy claim disclose any cause of action against CBA. It is convenient to deal with these claims now. Both causes of action should be struck out. In relation to the negligence claim, the Davies should have brought the claim in the VCAT proceeding and having failed to do so are now estopped from prosecuting the claim in this proceeding.
The Davies’ submissions
The Davies’ submissions are contained in a document headed Defendants’ requests for orders dated 9 November 2011. As noted, this document is annexed to an affidavit of Swaroop Davies affirmed 10 November 2011.
In summary, the Davies’ oppose the CBA’s application for summary judgment on the basis that:
1.the Davies have received substantial new evidence subsequent to the filing of the counterclaim and defence;
2.the Davies were advised to table irregular and unlawful actions from the CBA’s legal representatives during the legal proceeding at VCAT;
3.the Commonwealth Bank’s solicitors by their actions and conduct in the course of the VCAT proceeding “undermined and compromised the impartiality the defendants were entitled to expect at VCAT”.
The Davies submit that they became aware of evidence that they had not been aware of prior to the filing of the amended defence and counterclaim during the prosecution of their claim at VCAT. The Davies tendered a folder of documents which, as discussed, was received into evidence by the Court. These were all documents that had been tendered and/or obtained in the course of the VCAT proceeding.
The Davies contest the CBA’s claim for professional costs incurred in the VCAT proceeding. The basis for the objection to the claim for CBA’s costs in the VCAT proceeding are set out in the Davies’ submissions dated 9 November 2011. The grounds are confusing and difficult to understand. It appears that the grounds for the objection are:
1.That the issue of costs was reserved by Member Proctor in the VCAT proceedings;
2.no costs orders were made by Member Proctor in favour of the CBA;
3.there is no valid contract or enforceable mortgage upon which the CBA can rely for their enforcement costs;
4.the Court cannot be satisfied that the amount claimed is reasonable.
Decision
I consider the Davies’ amended counterclaim is barred by reason of the doctrines of res judicata and issue estoppel. The evidence before the Court was the same evidence before Member Proctor at VCAT. There was no new evidence. The Davies’ seek to re‑agitate the matters disposed of by VCAT. This includes assertions by the Davies that the CBA and it legal representatives engaged in conduct resulting in a forfeiture of the CBA’s rights under the mortgage and loan.
Despite the dismissal of the Davies’ claim by Member Proctor at VCAT, the Davies have not lodged any appeal of that decision. Therefore, the decision by Member Proctor at VCAT is presumed to be correct and by the principles of res judicata and issue estoppel cannot be retried and re‑agitated in this Court.
I consider that the CBA has proved the essential elements of its case. Its remedy under the mortgage is for possession of the land as mortgaged and payment of the moneys secured.
Both the loan agreement and the mortgage have the typical clauses that entitles the plaintiff to give a certificate about the amount payable under the loan agreement and mortgage, which stands as sufficient evidence unless it is proved to be incorrect.
The CBA puts into evidence a certificate dated 10 November 2011 from one of its authorised officers, Christine Karthikeyan. It says that as at 10 November 2011 the amount outstanding on the loan including all legal costs incurred by the secured mortgage was $674,909.36 and the certificate states that the amount is still owing and payable. The certificate relied upon by the CBA certifies the CBA’s enforcement expenses incurred in the VCAT proceeding (M99 of 2008) totalling $196,104.71;[17] and an amount owing in relation to the current proceedings as at 10 November 2011.
[17]The amount of $196,104.71 is made up of disbursements of Legal Services Victoria (CBA’s former solicitors) in relation to proceeding Davies v Commonwealth Bank of Australia (VCAT, M99 of 2008), $22,855.06 and professional fees and disbursements of Minter Ellison, in relation to proceeding Davies v Commonwealth Bank of Australia (VCAT, M99 of 2008), $173,249.65.
Clause 9.4 of the Usual Terms and Conditions for Consumer Lending states:
You must pay us any expenses we reasonably incur in enforcing our rights under the Contract or a security..
Clause 21.7 of the MCP states:
You must pay us our reasonable enforcement expenses reasonably incurred or expended by us in exercising our rights in relation to your default.
The wording of clause 21.7 of the MCP is synonomous with the wording of rule 63.30 of the Supreme Court (General Civil Procedure) Rules 2005, which defines costs on a taxation on a solicitor client basis as all costs reasonably incurred and of reasonable amount.
Clause 24 of the MCP deals with the statement of accounts. It provides:
A written statement made up from our book and signed by one of our authorised officers about an amount payable under this mortgage, is sufficient evidence of the amount and of any other amount referred to in the statement in connection with the amount, unless it is contested in any proceeding between you and us.
The Davies contest the amount owing under the loan facility and any claim for interest. They also contest the amount claimed in the certificate for the legal expenses of the VCAT proceeding and the amount for the costs of this proceeding.
The question it seems is how is clause 24 of the MCP to be construed. The certificate, unless contested, is sufficient evidence of the amount for principal and interest and reasonable enforcement expenses reasonably incurred by CBA in exercising their rights in relation to the Davies’ default.
Clause 24 does not require the borrower to state the grounds of their objection. As a matter of ordinary language, something contested is something challenged. When it comes to the construction of a contract, the Court looks to the intention of the parties by looking at the words they have used. When the Court is construing a commercial contract, it begins with the words of the document.
I consider the purpose of clause 24 is to relieve the lender of the need to prove the particular amounts contained in the certificate. However, the proviso in clause 24, “unless it is contested in any proceeding between you and us”, is there for the benefit of the borrower and should be beneficially construed. However, the contest to the amounts in the certificate must be in good faith. There must be more than a mere assertion that the amounts in the certificate are not payable under the mortgage.
The Davies contest the amount claimed for the principal and interest. Paragraphs 15 and 16 of the Davies’ amended defence and amended counterclaim pleads:
16.With reference to paragraph 15, the defendants deny that the plaintiff is owed a sum of $322,253.76. The defendants say the plaintiff has lost its right to discharge the mortgage by possession of the “property” by reason of the plaintiff’s forfeiting its right to the mortgage or its enforcement since 2001. Particulars are indicated in the counterclaim.
17.With reference to paragraph 16, the defendants deny the plaintiff is entitled to the accumulating interest. The plaintiff has lost its right to discharge the mortgage by possession of the “property” by reason of the plaintiff’s forfeiting its right to the mortgage or its enforcement since 2001. Particulars are indicated in the counterclaim.
There is no evidence before the Court to challenge the amount in the certificate for the principal sum and interest. The CBA has put into evidence demands to make payment of arrears and the accelerated amount owing. There must be more than mere assertion that the amount claimed for the principal and interest in the certificate is not payable.
CBA commenced this proceeding to enforce its rights under the loan agreement and mortgage. The Davies filed a defence and counterclaim and amended defence and counterclaim in this proceeding. The evidence confirms that the Davies chose to commence the VCAT proceeding rather than litigate the matters raised in their pleadings in this proceeding because it is a more cost effective forum to have those matters litigated and determined. On 28 January 2009, Deputy President McKenzie struck out parts of the Davies’ claim in the VCAT proceeding and ordered that new particulars be filed. In the reasons given by Deputy President McKenzie on 28 January 2009, she states:[18]
Moreover, the striking out of their (the Davies) claims would not wholly shut them out from arguing their case. They had raised similar matters in their amended counterclaim in the Supreme Court proceeding and could still pursue them there. The Davies submit that they want to continue their case at VCAT. They say they could not afford to run their case in the Supreme Court. They say that, without the assistance of a lawyer, they have tried their best to comply with the Tribunal’s directions and to particularise their claims.
[18]Exhibit CK-1, p 58 at [120] – [121].
For the reasons given I consider the causes of action and issues raised in this proceeding and the VCAT proceeding are the same. I accept that the fact that the Davies chose to litigate their claims in VCAT does not change the substance of the expenses incurred by CBA, that is expenses were incurred by CBA to enforce its rights in relation to the Davies’ default as contemplated in clause 9.4 of The Usual Terms and Conditions for Consumer Lending and clause 21.7 of the MCP.
Ms Karthikeyan in her affidavit sworn 12 August 2011 at paragraph 21(a) to (ss) sets out the evidence upon which CBA relies to make good the proposition that the costs were reasonably incurred.
The issue of costs was reserved by Member Proctor. At paragraph 138 of the Reasons, Member Proctor said:
In my view, it is not appropriate to make orders concerning costs at this time. On learning of my decision and reasons, the parties can consider their positions on the issue and make applications if they wish.
CBA is entitled to its enforcement costs pursuant to its contractual claims against the Davies. The sum claimed for the enforcement costs incurred by CBA in the VCAT proceeding are substantial. Having said that, the evidence before the Court supports CBA’s submissions that the defence of the claim in VCAT was protracted given the way in which the Davies conducted the VCAT proceeding. The hearing alone of the VCAT proceeding took eight days. The Davies commenced the proceeding in VCAT on 4 April 2008 and it was concluded to its determination on 10 May 2011. The Davies were required to provide particulars and remedy deficiencies in their particulars on six occasions.
There is no evidence before the Court to suggest that the expenses incurred by CBA in the VCAT proceeding were not reasonably incurred. The nature of the expenses is recoverable as enforcement expenses and therefore form part of the moneys secured. However, the Davies are in no position to know how the amount claimed for the VCAT costs or the costs of this proceeding are calculated. This is in contrast to the amount claimed for principal and interest.
Ordinarily where there is a contractual right under the mortgage to costs, the discretion as to costs should ordinarily be exercised so as to reflect that contractual right.[19]
[19]Taree Pty Ltd v Bob Jane Corp Pty Ltd and Anor [2008] VSC 228.
I consider the CBA is entitled to its reasonable costs incurred at VCAT pursuant to clause 21.7 of the MCP. Put another way, the CBA is entitled to its costs on a solicitor and client basis. The Davies contest the amount and should have the opportunity to have the costs assessed. I consider the appropriate and expedient course is to order that the amount claimed by CBA in relation to the VCAT enforcement costs be on a solicitor client basis and that if there is no agreement, the assessment of the costs be referred to the Costs Court pursuant to s.17D(1)(c) of the Supreme Court Act 1986.
Accordingly, the plaintiff is entitled to judgment for possession and payment of the sum of $432,249.32 together with interest on that sum pursuant to the loan facility and the mortgage, and its reasonable enforcement costs of resisting the defendant’s proceeding brought in VCAT, such costs to be taxed on a solicitor and client basis. The counterclaim should be dismissed.
I make the following orders:
1.The stay ordered by Master Evans on 3 July 2008 be lifted;
2.the plaintiff recover possession of the land situated at and known as 901/422 Collins Street, Melbourne in the State of Victoria, being the land more particularly described as Volume 10595 Folio 156;
3.the defendants pay the plaintiff the sum of $432,249.32 together with interest on that sum pursuant to the loan facility and the mortgage the subject of the proceeding;
4.the plaintiff’s costs of resisting the defendants’ proceeding brought in Victorian Civil and Administrative Tribunal (M 99 of 2008) in accordance with clause 21.7 of the MCP on a solicitor and client basis. If the amount cannot be agreed the assessment of such costs be referred to the Costs Court; and
5.the defendants pay the plaintiff’s costs of this proceeding to date on a solicitor and client basis.
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