Citigroup Pty Ltd v Remta
[2017] WASC 181
•30 JUNE 2017
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL
CITATION: CITIGROUP PTY LTD -v- REMTA [2017] WASC 181
CORAM: HALL J
HEARD: 20 JUNE 2017
DELIVERED : 20 JUNE 2017
PUBLISHED : 30 JUNE 2017
FILE NO/S: CIV 2102 of 2012
BETWEEN: CITIGROUP PTY LTD
Plaintiff
AND
MARCUS AUGUSTIN DE VERNY REMTA
First DefendantLAWRENE HILLARY REMTA
Second Defendant
Catchwords:
Suspension order - Civil Judgments Enforcement Act 2004 (WA) - Whether special circumstances established
Legislation:
Civil Judgments Enforcement Act 2004 (WA), s 15
Result:
Application refused
Defendants to pay the plaintiff's costs of the application, to be taxed
Category: B
Representation:
Counsel:
Plaintiff: Mr B Smith
First Defendant : Mr M Khosa
Second Defendant : No appearance
Solicitors:
Plaintiff: Dentons
First Defendant : Law on Newcastle
Second Defendant : No appearance
Case(s) referred to in judgment(s):
Eastland Technology Australia Pty Ltd v Whisson [2003] WASCA 307; (2003) 28 WAR 308
Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [2008] WASCA 222
State Bank of Victoria v Parry [1989] WAR 240
HALL J: On the evening of 20 June 2017, the defendants made an urgent application for a suspension order pursuant to s 15 of the Civil Judgments Enforcement Act 2004 (WA) (the Act). The application came before me as the duty judge. After hearing submissions by counsel for the parties, I dismissed the application. I gave short oral reasons and said that more detailed written reasons would be published in due course.
Background
On or about 12 June 2008, the plaintiff and the defendants entered into a loan agreement by which the defendants borrowed $750,000. The defendants secured repayment of all monies payable under the loan agreement by a first registered mortgage over a residential property situated in Karoo Street, South Perth (the property). The loan was repayable by monthly instalments over a 30‑year period, the first five years of which were interest only. As of 8 May 2012, the defendants had failed to pay the sum of $10,648.23 to the plaintiff by the due date. As a result of that failure the defendants were in default under the loan agreement and the mortgage.
On 14 May 2012, the plaintiff gave notice to the defendants that if the default was not rectified within the time specified the whole of the amount owing pursuant to the loan agreement would become immediately due and payable and the plaintiff would commence enforcement proceedings. The defendants failed to rectify the default within the time specified and the plaintiff commenced proceedings in this court.
On 21 February 2013, the plaintiff obtained a judgment pursuant to O 62A of the Supreme Court Rules1971 (WA). By that judgment, the defendants were ordered to deliver up vacant possession of the property within 28 days and to pay to the plaintiff the sum of $783,858.83, being the total amount due under the loan agreement as at that date.
The defendants were served with a copy of the judgment and put on notice that if they neglected to obey the judgment by the time referred to the plaintiff could instruct its solicitors to enforce the judgment and obtain possession of the property. Before that occurred, an agreement was reached that the defendants could remain in possession of the property on condition that the arrears were cleared and all future payments under the loan agreement were made on time. However, the plaintiff reserved its right to enforce the judgment.
Over the following years, the defendants defaulted on their repayment obligations on a number of occasions. On four occasions the plaintiff issued instructions to the Sheriff to take possession of the property, before arrears were paid.
In late 2016, the defendants again defaulted. On 1 November 2016, the plaintiff's solicitors wrote to the defendants advising that if the arrears outstanding as at that date, being $14,095.23, were not cleared by 7 November 2016, the plaintiff may instruct them to enforce the judgment and obtain possession of the property. By 28 March 2017, the arrears had risen to $21,275.60 and a further letter was sent to the defendants on 29 March 2017. The total outstanding balance of the loan account at that time was $739,295.19.
The arrears were not cleared and on 25 May 2017, the plaintiff applied for a property seizure and delivery order. That order issued on 30 May 2017. The plaintiff instructed the Sheriff's Office to execute it. On 14 June 2017, the Sheriff's Office gave notice to the defendants that, pursuant to the order, possession would be taken of the property on 21 June 2017.
On 20 June 2017, the defendants instructed the solicitors who represented them on this application. Those solicitors contacted the plaintiff and sought a postponement of the repossession for a period of 21 days to allow the defendants to pursue a refinancing application. In an email the solicitors advised that a previous refinancing application had lapsed due to serious illness suffered by Mr Peter Remta, the husband of Lawrene Remta and father of Marcus Remta, the defendants in this matter. The email advised that the defendants had revived the refinancing process and had been in touch with their broker to have the application expedited. At the hearing counsel for the defendants advised that the relevant refinance application was made on 18 May 2017 and that a valuation of the property was required before it could be finalised. The email also stated that in the event that the plaintiff refused the request for a postponement, they were instructed to make an urgent application to this court to allow the defendants to complete the refinancing process.
Counsel for the defendants raised another matter which he submitted was relevant. He said that on 12 June 2017, the defendants had submitted a 'hardship application' to the plaintiff. I understood this to mean that the defendants had asked the plaintiff to refrain from taking action against them on the grounds that they were suffering temporary financial difficulties. Counsel advised that on 16 June 2017, officers of the plaintiff had sought further information in respect of this application and that such information had been provided later that day. It was submitted that the defendants believed that the repossession would not occur until their hardship application had been finally determined. However, the defendants could provide no evidence of any express representation to that effect.
Relevant law
The judgment obtained by the plaintiff in 2013 is a judgment to which the Act applies: s 5. The judgment had effect from the time it was given and an application for an order to enforce the judgment could be made at any time after it came into effect, subject to s 12 and s 13 of the Act. Section 12 provides that an order to enforce a judgment must not be made if 12 years have elapsed since the judgment took effect. Section 13 provides that leave of the court must be obtained to enforce a judgment in certain cases, including if six years have elapsed since the judgment took effect. Neither s 12 nor s 13 are applicable in the circumstances of this case.
A judgment creditor may apply to a court for an enforcement order for the purpose of satisfying a judgment debt: s 19. One such order is a property seizure and delivery order: s 59.
In this case, the defendants seek an order suspending enforcement of the judgment. The application is made pursuant to s 15 of the Act which provides:
15.Suspension order
(1)A person against whom a judgment is given may apply for an order suspending the enforcement of all or part of the judgment to ‑
(a)the court that gave the judgment; or
(b)a court that is dealing with an appeal against the judgment.
(2)The court may deal with such an application in the absence of the person entitled to the benefit of the judgment if it is just to do so.
(3)On such an application, the court may only make such an order if there are special circumstances that justify doing so.
(4)A suspension order may be made for any period (including an indefinite period) and may be made on terms as to costs or otherwise.
(5)When or after making a suspension order the court may make any necessary ancillary or consequential order including an order ‑
(a)that a means inquiry, default inquiry or interpleader proceedings be adjourned;
(b)that a means inquiry or default inquiry not be held for such period as the court specifies;
(c)as to the operation or effect of any order that has been made under Part 4 or 5 or section 101;
(d)that a person imprisoned under section 90 or 98 for a contempt of court be released from prison for such period and on any terms that the court specifies;
(e)that prohibits or restricts dealings with a judgment debtor’s property, or the payment of debts owed to a judgment debtor, while the suspension order has effect.
The existence and validity of the original judgment is not contested. Nor is it contested that it remains open for the plaintiff to enforce that judgment, including by an order to seize and sell the property. The only issue is whether there are special circumstances that justify making a suspension order. The onus is on the defendants to establish that such circumstances exist. In any event, a decision as to whether to make such an order is discretionary.
The principles governing the exercise of the discretion under s 15 are materially the same as those which applied to an application for a stay of execution before the introduction of the Act: Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [2008] WASCA 222 [17]. Those principles were set out in Eastland Technology Australia Pty Ltd v Whisson [2003] WASCA 307; (2003) 28 WAR 308. They are as follows:
(1)A successful litigant at first instance will ordinarily be entitled to enforce the judgment pending the determination of any appeal.
(2)It is for the applicant for a stay to move the court to a favourable exercise of its discretion.
(3)It will not do so unless special circumstances are shown justifying the departure from the ordinary rule.
(4)The central issue will be whether the grant of a stay is perceived to be necessary to preserve the subject matter or the integrity of litigation or whether the refusal of a stay could create practical difficulties in respect of any relief which may be granted on appeal. It is often put that it is necessary to establish that without the grant of a stay any appeal will be rendered nugatory.
(5)A stay will generally still be refused unless it can be established that there is a reasonable prospect that an appeal has a reasonable prospect of success and, in that event, will result in the grant of relief to the appellant.
In this case the judgment is not the subject of any appeal, nor is it suggested that any appeal (which would be well out of time) is contemplated. It is possible for special circumstances to exist other than where there is a pending appeal. One example of this is where there is an unresolved cross‑claim between the same or related parties: State Bank of Victoria v Parry [1989] WAR 240. That is not the position here. However, the classes of cases which meet the test of special circumstances is not closed and each case must be determined on its merits.
Merits of the application
The defendants submit that special circumstances exist for three reasons, either independently or in combination. They are that the defendants have a pending application for refinance, that the hardship application to the plaintiff has not been determined and that the property is the primary residence of Mr and Mrs Remta.
I am not satisfied that special circumstances do exist in this case. I have come to that conclusion for the following reasons:
(1)The judgment is unchallenged and its terms are clear.
(2)The plaintiff has consistently maintained its right to enforce the judgment and this right has also never been challenged by the defendants. The forbearance of the plaintiff has always been subject to compliance with the terms of the loan agreement.
(3)The defendants were at all times aware that failure to comply with the loan agreement could result in enforcement of the judgment.
(4)The defendants fell into arrears over six months ago and that position has not been remedied.
(5)The defendants were notified by the plaintiff in November 2016 and again in March 2017 that action to enforce the judgment could be taken.
(6)The making of the 'hardship application' did not oblige the plaintiff to postpone enforcement action. Even if the plaintiff was prepared to consider that application, that could not reasonably be viewed as being a representation that enforcement action would be postponed.
(7)The application to refinance the loan does not prejudice the plaintiff's right to enforce the judgment. It is a matter for the plaintiff to weigh up whether the uncertainties in respect of that application justify not proceeding with enforcement.
(8)The fact that the property is presently the primary residence of Peter and Lawrene Remta does not, of itself or in combination with other factors, amount to special circumstances. It is a common feature of actions relating to mortgage defaults that defendants are dispossessed of their homes. However regrettable or unfortunate this may be for the individuals concerned, it is not an unusual or exceptional consequence.
Even if special circumstances existed, there are other factors which weigh against the exercise of discretion in this case. In particular, delay on the part of the defendants. The defendants have been in arrears for over six months and have received two letters notifying them of the possible consequences. The pending refinance application was not made until 18 May 2017 and the hardship application not made until 12 June 2017. There has also been delay in bringing this application. At the latest, the defendants were aware that the plaintiff intended to obtain possession of the property when they were served with a notice by the Sheriff's Office on 14 June 2017. They did not instruct lawyers or seek a suspension order until the evening before the Sheriff was due to take possession. The urgency was entirely of the defendants' making. That urgency not only entailed inconvenience for the plaintiff's counsel and the court, but also meant that the information available on the application was limited.
The defendants may well have hoped that the plaintiff would indulge them by postponing enforcement action. That was, however, never more than a mere hope and there was no reasonable basis for an expectation that enforcement action would not proceed.
It was also suggested by counsel for the defendants that postponement of enforcement to allow them to pursue refinancing would not prejudice the plaintiff. I do not accept that suggestion. The plaintiff would be prejudiced by not being able to pursue the benefit of a judgment in its favour. In any event, the onus is on the defendants to establish that a suspension order should be granted, not on the plaintiff to show that they would be prejudiced.
For these reasons, following the hearing of the application I made the following orders:
(1)the application for a suspension order is refused; and
(2)the defendants are to pay the respondent's costs of the application, to be taxed.
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