Commonwealth Bank of Australia -v- Tallents

[2014] WASC 218

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CIVIL

CITATION:   COMMONWEALTH BANK OF AUSTRALIA -v- TALLENTS [2014] WASC 218

CORAM:   PRINCIPAL REGISTRAR GETHING

HEARD:   19 JUNE 2014

DELIVERED          :   24 JUNE 2014

FILE NO/S:   CIV 2851 of 2011

BETWEEN:   COMMONWEALTH BANK OF AUSTRALIA

Plaintiff

AND

MATTHEW DOMINIC TALLENTS
First-named Defendant

JOANNE LOUISE SPALDING
Second-named Defendant

Catchwords:

Practice and procedure - Judgment for possession of land under the mortgage - Suspension order

Legislation:

Civil Judgments Enforcement Act 2004 (WA), s 15

Result:

Suspension order granted for 6 weeks
Application otherwise dismissed

Category:    B

Representation:

Counsel:

Plaintiff:     Mr B C Smith

First-named Defendant     :     No appearance

Second-named Defendant    :     In person

Solicitors:

Plaintiff:     Gadens Lawyers (WA)

First-named Defendant     :     No appearance

Second-named Defendant    :     In person

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

Alvaro v Amaral [2013] WASCA 16

Commonwealth Bank of Australia t/a Bankwest v Bell [2014] WASC 2012

Duckworth v Commonwealth Bank of Australia [2013] WASCA 24

Eastland Technology Australia Pty Ltd v Whisson [2003] WASCA 307; (2003) 28 WAR 308

Hamersley Iron Pty Ltd v Lovell (No 2) (1998) 20 WAR 79

Inglis v Commonwealth Trading Bank of Australia [1972] HCA 74; (1972) 126 CLR 161

M R & R C Smith Pty Ltd t/as Ultra Tune (Osborne Park) v Wyatt [2011] WASCA 43

National Australia Bank Ltd v Cone [2014] WASC 121

Perpetual Ltd v Buttarelli [2012] WASC 512

Spiers Earthworks Pty Ltd v Landtec Projects Corporation Pty Ltd [2010] WASCA 226

1. PRINCIPAL REGISTRAR GETHING:  Joanne Spalding and Matthew Tallents are the registered proprietors of land situated at 88 Winery Drive, Karnup (Property).  In August 2005 they entered into a written loan agreement with the Commonwealth Bank of Australia (CBA) pursuant to which they borrowed $445,000 and secured repayment of the principal and interest by way of a first mortgage over the Property (Loan).  By July 2010 Ms Spalding and Mr Tallents were in default under the Loan.   Accordingly, in July 2010 the CBA issued a default notice under the Loan.  The default was not rectified. 

2. In September 2011 the CBA commenced an action in the Supreme Court against Ms Spalding and Mr Tallents (Defendants).  The Defendants did not enter an appearance.

3. On 10 July 2012 the Court made an order pursuant to the Rules of the Supreme Court 1971 (WA) (RSC) O 62A granting judgment to the CBA in default of appearance. Specifically, the Defendants were ordered to:

   (a)give up possession of the Property;

   (b)pay CBA the sum of $261,952.53 being the amount then due under the Mortgage, together with interest in the sum of $48.72 per day from 10 July 2012; and

   (c)pay CBA's costs of the application and action to be taxed.

4. The Defendants do not contend that the judgment was irregularly entered.

5. On 20 January 2014 the Court made a property seizure and sale order in relation to the Property.   

6. On 17 June 2014 Ms Spalding made an application for a suspension order under the Civil Judgments Enforcement Act 2004 (WA) (CJEA). At the same time, she filed an affidavit sworn 17 June 2014 setting out the facts supporting the application.

7. The sheriff was scheduled to seize the property on 19 June 2014.  However, on being advised that Ms Spalding had made an application for a suspension order, the CBA's lawyers advised the Sheriff to defer taking possession until the application could be heard. 

8. I heard the application for a suspension order on 19 June 2014.  At the conclusion of the hearing, I made the following orders:

   1.Enforcement of the Property (Seizure and Sale) Order dated 20 January 2013 be suspended until 31 July 2014.

   2.The application be and is otherwise dismissed.

   3.There be no orders as to costs.

9. I advised the parties that I would provide written reasons.

Evidence of the defendants

1. According to Ms Spalding, in August 2009 the Defendants requested a payment break in relation to the Loan as Mr Tallents had been made redundant.  A break of six months was requested, but the CBA only agreed to three months.  On receiving this advice Ms Spalding called the CBA and asked them to change it to six months.  Ms Spalding then describes a series of interactions with the CBA in which the Defendants thought they had taken steps to clear the arrears, only to be told that they had not done so.  She deposes to having been given the option to have the arrears placed 'at the end of the Mortgage term', an option which the Defendants accepted.  There then appears to have been a prolonged series of exchanges between the Defendants and the CBA dealing with the issues of the arrears and repayments.

2. Ms Spalding annexes a letter dated 21 November 2012 from the CBA to her and Mr Tallents containing a proposal to regularise the position.  In part, it provides:

   Mr Tallents and Miss Spalding, while I believe that the Bank acted within its contractual rights in these proceedings, I concede that given the security position and your previous bulk repayment to the loan, the Bank was able to offer further assistance.  However, your continual refusal to provide financial information has prevented this assistance.

   The Bank's proposal to you is as follows:

   •Agree to re‑instate the redraw amount, less repayments that have not been met to date;

   •Current arrears will be absorbed over the remaining term of the loan;

   •Repayments on the loan to be adjusted to ensure full repayment over the remaining term;

   •The Bank to set aside the default judgment and absorb the costs of this action;

   •All current legal action to be stayed.

   The proposal is subject to the following conditions:

   •Your full financial position is disclosed to the Bank (a Personal Money Plan is attached for completion and return);

   •Any use of the redraw results in the debt increasing and therefore adjustment of the monthly repayments may need to be made;

   •You agree to indemnity [sic] the Bank against taking any action pursuant to the loan.

   Please signify your acceptance of the proposal and conditions by signing and returning the copy of this letter to this office with the completed Personal Money Plan.

   The Bank reserves its rights pursuant to the loan contract.

3. The proposal contained a space for it to be accepted.  Ms Spalding says that she and Mr Tallents signed this letter.  She then states that she heard nothing from the bank about the increased level of repayments she was supposed to make. She states in her affidavit:

   [A]s I had not heard from the bank I just carried on paying my normal … amount, so between November 2012 and April 2013 I had managed to accumulate $3,990 worth of arrears which I did not realise.

4. There was then a series of further exchanges between the CBA and Ms Spalding about repayment of this amount of arrears.  She concludes:

   I have paid into and off my Mortgage in the past 9 years over $383,000.00 which according to my calculations is over and above the monies required from me at this point in time so I dispute any arrears from this point that the Commonwealth Bank claim I have.

Evidence of the CBA

1. The CBA filed an affidavit sworn on 19 June 2014 by Tamara Strack, a solicitor employed by its lawyers.  Ms Strack relies on information provided to her by Kevin Mullens, who is the employee of the CBA overseeing this matter. 

2. From the information in Ms Strack's affidavit it is apparent that at least on two occasions - November 2012 and April 2013 - the CBA has offered to allow the Defendants to capitalise the arrears, continue with the repayments of the Loan and stay all legal action.  Notwithstanding this, the Defendants have remained in default of repayments.  In particular, in a letter dated 30 April 2014 Mr Mullens states that the amounts paid by the Defendants from March 2009 to the date of that letter total $47,770, against scheduled repayments of $106,067.  In this letter, Mr Mullens concluded:

   I have postponed the eviction set down for 29 April 2014 mainly to allow for this response.  However, I will provide you yet again with time to bring the loan into order and service it thereafter.  The eviction has been re‑scheduled for the first available date after 30 May 2014.  This gives you one month to clear the arrears and service the loan within arrangements inclusive of the monthly amount.  The arrears are currently $10,679.00 with monthly repayments of $1,784.00 due on 1st of each month.

   Should you not bring the loan into order as stated, the Bank will continue legal action which will include eviction of all occupants from the security property at 88 Winery Drive Karnup WA without further advice to you.

   The Bank reserves its rights pursuant to the judgement order held and the loan contract.

3. In the hearing before me, Ms Spalding said that she had not received this letter.  She indicated that she has the funds to pay the amount of arrears but had not done so because Mr Mullens had not honoured an earlier agreement with her late last year to capitalise an amount of $4,000 of the arrears.

4. Ms Strack also deposes that the Defendants have made four complaints to the Financial Ombudsman Service (FOS) over the period February 2012 to March 2014.  Each of those complaints has been closed.

5. As at 2 June 2014 the Loan was in arrears in the amount of $14,247.

Determination

1. The court does have the power to suspend the enforcement of the judgment against the Defendants pursuant to the CJEA s 15. This power may be exercised by a registrar: RSC O 46 r 2(1).

2. The CJEA provides that the court may only make a suspension order 'if there are special circumstances that justify doing so': the CJEA s 15(3). By the CJEA s 15(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'.

3. The onus is on Ms Spalding as the applicant to move the court to a favourable exercise of its discretion:  M R & R C Smith Pty Ltd t/as Ultra Tune (Osborne Park) v Wyatt [2011] WASCA 43 [4] (Pullin JA); Spiers Earthworks Pty Ltd v Landtec Projects Corporation Pty Ltd [2010] WASCA 226 [16] (Newnes JA); Eastland Technology Australia Pty Ltd v Whisson [2003] WASCA 307; (2003) 28 WAR 308 [9] (Murray and Parker JJ).

4. In considering whether there are 'special circumstances' as required by the CJEA s 15(3), the court may consider hardship and the balance of convenience: Hamersley Iron Pty Ltd v Lovell (No 2) (1998) 20 WAR 79, 91, 94 (Anderson J); Duckworth v Commonwealth Bank of Australia [2013] WASCA 24 [2] (Pullin JA); Alvaro v Amaral [2013] WASCA 16 [3] (Pullin JA). The court may also consider whether it is 'just' for the enforcement to be suspended. This is evident from the explanatory memorandum to the CJEA which contains the following comment about the power in s 15:

   Circumstances may arise where enforcement action has been commenced and it is just that the enforcement be suspended.  An example is where judgment was obtained by default in that the defendant did not respond to a summons but there is an explanation for the default such as hospitalisation.  Another example could be where the debtor was impecunious (pages 5 ‑ 6).

5. In a mortgage action, the general rule is that a stay (at least pending an appeal) will not be granted in circumstances where the mortgage debt has not been paid or paid into court:  Inglis v Commonwealth Trading Bank of Australia [1972] HCA 74; (1972) 126 CLR 161, 164 (Walsh J); Duckworth [3].

6. On the evidence before me, it is apparent that the CBA has exercised considerable patience with the Defendants and has given them ample opportunity to regularise the repayments under the Loan.  Ms Spalding did not provide any evidence to the effect that there was another source of funds from which the Loan could be repaid other than sale of the Property, though it seems that there is a considerable amount of equity in the Property.  From her comments from the Bar table, it appears that Ms Spalding may have the funds to pay the arrears set out in Mr Mullen’s letter of 30 April 2014, but has declined to do so because of the ongoing disagreement which she has with the CBA about the way in which they have managed the Loan, given effect to her instructions and honoured arrangements which she says were agreed to. 

7. Significantly, there is no evidence taking this case outside the normal range of mortgage default and repossessions cases.   

8. Accordingly, I find that Ms Spalding has not discharged the onus on her to satisfy the court that there are the 'special circumstances' required by the CJEA s 15(3) which justify the permanent or even medium term suspension of enforcement of the judgment pursuant to which the CBA is entitled to possession of the Property. This decision is consistent with the decision in Duckworth.  It is also consistent with the decision in Perpetual Ltd v Buttarelli [2012] WASC 512, as well as my decisions in National Australia Bank Ltd v Cone [2014] WASC 121 and Commonwealth Bank of Australia t/a Bankwest v Bell [2014] WASC 2012.

9. The discretion in the CJEA s 15 is very broad. Within the boundaries of the words of the section, it allows the court to balance the risk of injustice. In the exercise of that discretion, I do consider it just to suspend enforcement of the judgment until Thursday, 31 July 2014 in order to allow the Defendants time to find alternative accommodation for them and the animals which Ms Spalding tells me are on the Property, and to move out in an orderly manner.