Commonwealth Bank of Australia v Nugawela

[2017] WASC 303

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   COMMONWEALTH BANK OF AUSTRALIA -v- NUGAWELA [2017] WASC 303

CORAM:   ALLANSON J

HEARD:   5 OCTOBER 2017

DELIVERED          :   19 OCTOBER 2017

FILE NO/S:   CIV 1694 of 2017

BETWEEN:   COMMONWEALTH BANK OF AUSTRALIA

Plaintiff

AND

PATRICK ALLAN NUGAWELA
Defendant

Catchwords:

Practice and procedure - Summary judgment - Where claim for default on loan secured by mortgage - Where no triable issue - Where sequestration order made against defendant - Whether plaintiff may proceed for possession of secured property - Turns on own facts

Legislation:

Bankruptcy Act 1966 (Cth), s 58
Corporations Act 2001 (Cth), s 441D(2)
Rules of the Supreme Court 1971 (WA), O 14 r 1, O 14 r 2

Result:

Leave granted
Application for summary judgment for possession of secured property granted

Category:    B

Representation:

Counsel:

Plaintiff:     Ms C M Guy

Defendant:     No appearance

Solicitors:

Plaintiff:     HWL Ebsworth Lawyers

Defendant:     No appearance

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

Australian Gypsum Industries Pty Ltd v Dalesun Holdings Pty Ltd [2015] WASCA 95

Hermes Capital Australia Ltd v Melia [2017] WASC 185

Nugawela v Deputy Commissioner of Taxation [2017] FCA 897

1. ALLANSON J:  The plaintiff has applied for summary judgment against the defendant.  The action is founded on three loan agreements, secured by mortgages over the two properties. 

2. The plaintiff originally sought judgment for payment of the amount owing under the loan agreements, plus interest, as well as possession of the land.  Since the application was first filed, a sequestration order has been made against the defendant.  The plaintiff now confines its application to orders for possession of the properties.

The plaintiff's claim

1. The plaintiff commenced this action by writ filed on 1 May 2017.  The plaintiff pleads three written loan agreements dated 5 March 2012, 16 April 2002, and 12 November 2001.  The plaintiff is the successor in law to the Bank of Western Australia Ltd and thus is the successor in law to loan agreements made between the defendant and the Bank of Western Australia.

2. The defendant gave security for the loan agreement dated 5 March 2012 by a first registered mortgage over two properties in the suburb of Greenwood.  The other two loans were each secured by a mortgage over one of the properties.

3. As at 4 January 2017, the defendant was in default on each of the loan agreements.  Written notice of default, dated 10 January 2017, was served on the defendant on or about that date.

The application for summary judgment

1. The plaintiff applied for summary judgment by chamber summons filed 6 July 2017. 

The need for leave

1. The plaintiff seeks an extension of time, as the chamber summons was filed more than 21 days after the defendant filed his memorandum of appearance:  see Rules of the Supreme Court 1971 (WA) O 14 r 1(1). The application has been expressed as an application for an extension of time rather than leave, but it is proper in my opinion to treat it as an application for leave.

2. The plaintiff's application is supported by an affidavit of Cassandra Michelle Guy, sworn 6 July 2017.  Ms Guy is the solicitor with carriage of the matter for the plaintiff.  In her affidavit she explains the comparatively short delay in bringing the application.  The primary reason for delay is because, while the defendant filed his appearance on 9 June 2017, he did not serve it until 7 July 2017.  The plaintiff only became aware that the defendant had filed an appearance on 23 June 2017, when its solicitors received a notice to attend a case management conference.  After receiving the notice, the plaintiff's solicitors attempted to confer with the defendant regarding the proposed application for summary judgment.  

3. On those facts I am satisfied that the delay is short and it is not the result of any fault of the plaintiff.  The defendant has not identified any prejudice that he has or might suffer by reason of that short delay.  The plaintiff will have leave to bring the application.

The affidavit in support

1. The affidavit in support of the application for summary judgment was sworn by Kishin Bhavnani on 26 June 2017, filed on 6 July 2017.  Mr Bhavnani deposes:

   1.He is a Secured Collections Officer for the plaintiff.

   2.He is familiar with the books of the plaintiff with respect to the account of the defendant.

   3.He confirms the facts set out in the statement of claim to be true and correct, and attaches the three loan agreements and related mortgages.

   4.He believes that the defendant has no defence to the claim.

2. The plaintiff has, in separate affidavits, proved service of the application for summary judgment.

The defendant's affidavit

1. The defendant filed an affidavit, sworn 20 September 2017.  He has sent emails and a letter to the court.  There is no doubt that he was aware of the hearing on 21 September 2017, and the later hearing on 5 October 2017.  He did not attend either hearing or offer any satisfactory reason for not attending.

2. In his affidavit, the defendant asserts that he and others will suffer hardship by the loss of the two properties.  One of them is his place of business.  The other is occupied by his former mother‑in‑law, recently widowed, and her daughter.

3. The defendant did not dispute that he is in default on the agreements.  He has said nothing to demonstrate that he has any defence to the claim, or to identify a triable issue.

Consideration

1. On an application for summary judgment the application must be supported by an affidavit verifying the facts on which the claim is based and stating that there is no defence to that claim. The application is supported by an affidavit that complies with O 14 r 2.

2. The defendant is entitled to show cause against the application by affidavit or otherwise to the satisfaction of the court.  A defendant will not ordinarily be denied the opportunity to have his or her case determined following trial, and for that reason the jurisdiction to grant summary judgment is reserved for clear cases where there is a high degree of certainty about the ultimate outcome of the action if it were allowed to go to trial. 

3. The plaintiff has satisfied me that it has a good claim for possession of the secured property.  None of the material filed by the defendant has raised a triable issue.  On the material before me there is no issue or question in dispute which ought to be tried. 

4. The plaintiff is entitled to summary judgment on the mortgages.  

The defendant's bankruptcy

1. This matter first came before me on 21 September 2017.  The plaintiff's solicitor was not then aware that a sequestration order had been made against the defendant.

2. The defendant has appealed against the making of the sequestration order.  By coincidence, it was on 21 September 2017 that the Federal Court of Australia delivered judgment on the defendant's application to stay all proceedings of sequestration pending the determination of his appeal.  The Court dismissed the application:  see Nugawela v Deputy Commissioner of Taxation [2017] FCA 897. The history of the proceedings leading to the making of a sequestration order against the defendant is set out in the judgment of Barker J.

3. The plaintiff asked for an adjournment to 5 October 2017, to enable it to consider its position.   The defendant was given notice of the new hearing.  He did not attend.

4. Section 58(1) of the Bankruptcy Act provides for the property of a bankrupt to vest in the Official Trustee or a registered trustee as trustee of the estate of the bankrupt. By s 58(3) and (5):

   (3)Except as provided by this Act, after a debtor has become a bankrupt, it is not competent for a creditor:

   (a)to enforce any remedy against the person or the property of the bankrupt in respect of a provable debt; or

   (b)except with the leave of the Court and on such terms as the Court thinks fit, to commence any legal proceeding in respect of a provable debt or take any fresh step in such a proceeding.

   …

   (5)Nothing in this section affects the right of a secured creditor to realize or otherwise deal with his or her security.

5. On the resumption of the hearing, the plaintiff submitted that while s 58(3) bars it from proceeding to recover the amount owing under the loan agreement and mortgages, it might maintain its application for summary judgment but limited to judgment for orders for possession of the properties. The plaintiff submitted that in seeking orders for possession it is within s 58(5) as a secured creditor otherwise dealing with its security.

6. I am satisfied that submission is correct.  The plaintiff's position is supported by a range of authority, recently referred to by Kenneth Martin J in Hermes Capital Australia Ltd v Melia [2017] WASC 185 [11]. On the relevantly similar provision in s 441D(2) of the Corporations Act 2001 (Cth), regarding a secured creditor of a company subject to a deed of company arrangement, Buss JA said in Australian Gypsum Industries Pty Ltd v Dalesun Holdings Pty Ltd [2015] WASCA 95 [87]:

   There is a distinction between a secured creditor instituting an action in debt, on the one hand, and a secured creditor realising or otherwise dealing with the security, on the other.  The concept of realising or otherwise dealing with a security over property includes an action to enforce a right to possession of the property or a right to exercise a power of sale of the property under any applicable agreement or instrument or any applicable statutory provisions.

7. I note that the plaintiff conferred with the trustee in bankruptcy.  The trustee does not oppose the orders sought. 

8. For these reasons, I am satisfied that the plaintiff is entitled to an order for possession of each property and I will make orders accordingly.