Credit Union Australia Ltd v Parkhouse

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT

S CI 2015 1547

CREDIT UNION AUSTRALIA LIMITED	Plaintiff
v
DEBORAH MAY PARKHOUSE	Defendant

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JUDGE:	LANSDOWNE AsJ
WHERE HELD:	Melbourne
DATES OF HEARING:	27 June 2016 and 20 July 2016
DATE OF JUDGMENT:	5 August 2016
CASE MAY BE CITED AS:	Credit Union Australia Ltd v Parkhouse
MEDIUM NEUTRAL CITATION:	[2016] VSC 462

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SUMMARY JUDGMENT – Recovery of land – Application for adjournment refused – Whether necessary to plead and prove that the plaintiff has given notice of default and that the defendant has failed to remedy the default – Commonwealth Bank of Australia v Jackson and anor (1992) V Conv R 54-447 considered – Wren Close Nominees Pty Ltd v McCulloch [2002] VSC 138 and National Australia Bank Ltd v Lawrence [2011] VSC 556 considered – Held that it is necessary to plead and prove these matters where the mortgage requires a notice of default and gives a right to the mortgagor to remedy the default within a certain period– Leave to amend the statement of claim granted – Summary judgment given.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr T B Maxwell	Cooper Grace Ward
For the Defendant	In person

TABLE OF CONTENTS

Introduction and summary of conclusions................................................................................... 1

Revised ruling on adjournment application................................................................................. 4

Reasons for giving summary judgment for possession............................................................ 11

Legal principles applying to summary judgment................................................................. 11
Necessary elements of the plaintiff’s case............................................................................... 13
Pleading and proof of the plaintiff’s case................................................................................ 17
Defence arising from proposed contract of sale..................................................................... 20
Limited evidence of an effective consent by the plaintiff in 2010.............................. 20
Resolution Agreement in 2011 overtook any earlier agreement................................ 24
Proposed contract of sale does not correspond to the Resolution Agreement........ 25
Defendant had repudiated the Resolution Agreement............................................... 29

Other matters advanced in opposition to the application.................................................... 32
Discretion..................................................................................................................................... 35

Costs.................................................................................................................................................... 36

Orders................................................................................................................................................. 37

Enforcement of the judgment........................................................................................................ 37

HER HONOUR:

Introduction and summary of conclusions

This proceeding came before me on 27 June 2016 on the application of the plaintiff for summary judgment for possession of land by virtue of default under two mortgages. The first mortgage is dated 19 October 2004 and initially secured repayment of a 2004 loan to the defendant by mortgage over land identified in two certificates of title, being Volume 4148 Folio 520 and Volume 4729 Folio 682.[1] At the time that loan was entered into and that mortgage was given, the defendant was the registered proprietor of three crown allotments, known as 19B, 22 and 23 in Section 12 Parish of Blackwood, and collectively known as 75 Amblers Lane, Trentham East Victoria. Crown allotments 19B and 22 were the subject of certificate of title Volume 4148 Folio 520, and crown allotment 23 was the subject of certificate of title Volume 4729 Folio 682. The initial lender was the Australian National Credit Union Limited. In January 2006 the plaintiff became the successor in law to the initial lender and by way of debt consolidation and refinancing paid out the initial loan, and entered into a new loan with the defendant in the sum of $490,000. This new loan was initially secured only by the 2004 first registered mortgage over the three allotments.
[1]GJHJ-4 to the affidavit of Gordon John Hugh Jones (‘Mr Jones’) sworn 22 February 2016.

In 2007 the plaintiff agreed to discharge its mortgage over one of the allotments, lot 22, to enable the transfer of the allotment from the defendant to a company she said was associated with her son, Gardens of Avalon Pty Ltd.[2] In return for the discharge, the defendant gave the plaintiff a second mortgage over one of the remaining two lots, lot 19 B.[3] Also as a consequence of the transfer, the earlier certificate of title in respect of lots 19B and 22 (which was Volume 4148 Folio 520) was cancelled, and new certificates of title issued, being Volume 11032 Folio 145 for lot 22 and Volume 11032 Folio 146 for lot 19B. The plaintiff seeks recovery of possession of lots 19B and 23, by virtue of default under the 2004 mortgage (which is a first registered mortgage over lot 19B and lot 23) and the 2007 mortgage (which is a second registered mortgage over lot 19B).
[2]Mr Jones’ affidavit of 22 February 2016 at [32]–[38].
[3]Exhibit GJHJ-7 to Mr Jones’ affidavit of 22 February 2016.

The date for hearing of the plaintiff’s summons was set at a directions hearing on 4 April 2016 which was attended by both parties. At the commencement of the hearing on 27 June 2016, the defendant sought adjournment of the hearing, which I refused. The plaintiff’s application then proceeded, and I said that I would give summary judgment. I gave very brief oral reasons for giving summary judgment, as the hearing did not conclude until after 5pm. I indicated that I would give detailed reasons in writing. I had earlier that day given detailed oral reasons for refusing the adjournment, which have been transcribed and now appear below, with limited corrections and additions and some redaction. The redaction is to remove the content of medical certificates on which the defendant relied. The un-redacted revised reasons have been provided to the parties. The corrections of grammar and syntax are to make the reasons more appropriate for written, rather than oral, form. The additions elaborate the reasons as delivered orally.

In the course of preparation of the reasons for the grant of summary judgment I became aware of an issue that had not been explored in the hearing. That issue is whether it is necessary for the plaintiff to plead and prove that the defendant had failed to remedy her default in the grace period afforded her by the notice of default. The plaintiff pleads in the statement of claim that the notice of default was given, and proved it in its evidence on 27 June 2016, but does not plead the failure to remedy, although in fact the evidence given on 27 June 2016 proves that the default was not remedied.

My preliminary view when I became aware of this issue, without at that time hearing from the parties, was that in this case, having regard to the terms of the mortgages in question, failure to remedy the default is an essential element of the plaintiff’s claim and so should have been pleaded. Accordingly, I withdrew the grant of summary judgment prior to its authentication, and caused the proceeding to be relisted on 20 July 2016 to hear any argument on the point and any application by the plaintiff for leave to amend its statement of claim.

On the relisted date, 20 July 2016, counsel for the plaintiff adhered to the view expressed in his written submissions for 27 June 2016 that even where the terms of the mortgage require a notice of default, it is arguably not necessary to prove such a notice.[4] It would follow that it is not necessary to prove failure to remedy the default identified in the notice. If that is what the authorities say, which I do not consider is beyond doubt, then I respectfully disagree. In my view, where the terms of the mortgage require a notice of default and allow the mortgagor to remedy the default within the period given, the giving of the notice and the failure of the mortgagor to remedy the default within that period are both matters that the mortgagee must plead and prove to obtain an order for possession.
[4]Plaintiff’s Outline of Written Submissions in Support of its Summary Judgment Application dated 27 June 2016 at [12]-[13].

In any event, the plaintiff sought leave on the relisted date to further amend its statement of claim to add the plea of failure to remedy the default. I granted that leave. I considered it appropriate to do so because the amendment, while necessary, is essentially formal. There is no dispute that this case involves very long standing default; the evidence adduced at the first hearing establishes that the default was not remedied within the grace period; and the matters that the defendant raised by way of defence do not touch on failure to remedy in the notice period.

I had caused the parties to be advised that the relisted date was for the purpose of ventilating this one issue only, but nevertheless the defendant sought to reopen her case by tendering further documents and making further submissions. As she is unrepresented, and the relisted date afforded an opportunity to the plaintiff to put its case in order, I considered it just to allow her to do so to a limited extent. I admitted into evidence the further documents that the defendant said she wished to rely upon, and allowed her to give evidence from the bar table in respect of them and make further submissions. I went off the bench to give the defendant some time to be certain that she had tendered all she wished to tender. In answer to my direct question when the Court resumed, the defendant said that there were no more documents which she wished to tender. Later in the hearing the defendant sought to put into evidence still more documents. I refused her leave to do so, given the opportunities already given to her to put her case in order.

The defendant had not put the plaintiff on notice that she wished to reopen her case on the relisted date. Indeed, she said that she had only decided to do so the night before. Counsel for the plaintiff made some oral submissions in reply at the time. Given the lack of prior notice, I also allowed the plaintiff to put any further submissions in reply or adduce any further evidence in reply within seven days after the relisted date. The plaintiff did not adduce any further evidence in reply but did make some further submissions in reply, dated 26 July 2016.

Having now considered the all the evidence and submissions, including the further submissions given pursuant to the order made on the relisted date, I consider that the plaintiff has proved its case for summary judgment and shown that there is no real prospect of success in any defence sought to be advanced by the defendant. I do not consider there is any reason shown why, in the exercise of the discretion conferred by s 64 of the Civil Procedure Act 2010 (Vic) the Court should refuse summary judgment, and accordingly I will grant it. The plaintiff seeks an order that the defendant pay its costs of the proceeding on the standard basis i.e. reasonable costs, reasonably incurred as assessed by the Costs Court if not otherwise agreed. I will also make that order.

Revised ruling on adjournment application

The defendant seeks that today’s hearing of the plaintiff’s application for summary judgment be adjourned to a date on or about 25 August 2016. She advances three reasons for that. The first is that when orders were made on 4 April 2016 listing the matter for today in providing a timetable of events between 4 April 2016 and today those orders did not properly reflect her medical situation as had been made known to the Court by medical certificate from her general practitioner dated 30 March 2016. That medical certificate was put into evidence as Exhibit A on that date. It is my recollection of that day and the plaintiff’s recollection that the orders were made only after considerable discussion with the defendant about her situation, and what she could do, and when. If that was in fact not the case then it is trite, but nevertheless accurate, to say that the remedy for the defendant was to appeal the orders.

In any event, looking at the orders in detail they record in Other Matters at paragraph 3, that the intention of the orders is to allow sufficient time to the defendant to prepare Court documents after the conclusion of the period specified in the medical certificate (emphasis added). The conclusion of that period was 28 April 2016. The orders do not require any Court document from the defendant until 27 May 2016. The intention was, as is shown by order 2, that if the defendant wanted to bring an application for further discovery she was to first make a request of the plaintiff, because that is the sensible thing to do, and was to do that in writing by 14 April 2016. Making such a request is not filing a Court document. There was then a period of time between the making of that request, by 14 April 2016, and the making of any application, by 27 May 2016, during which it was envisaged that if the request was made the plaintiff would respond to it and if the defendant was not happy with that response she could bring an application.

In fact what occurred is that the defendant did in fact make that request and she made it by the required date, i.e. by 14 April 2016. She chose to do so in the form of a second notice for discovery, dated 6 April 2016 and filed 14 April 2016. The orders did not require the defendant to make her request in the form of a notice for discovery or to file the request. The second notice for discovery is not just in general terms. It is a very detailed notice which covers four pages and specifies in detail certain documents that are required. On its face the preparation and the content of that document do not suggest, and in fact are inconsistent with, the suggestion that the defendant was unable to prepare such a request.

What the defendant says today is that while she could make the request, the preparation of the document exacerbated her medical condition. That is not an impossible proposition, but the difficulty for the defendant is that she has no medical evidence to support it, that applies to the period in question i.e. April 2016. The only further medical evidence that she has is the certificate from her general practitioner dated 24 May 2016 which she exhibits to her affidavit filed on 24 June 2016, and the referral that the general practitioner gave her on that date for [redacted] which the defendant has provided today and is Exhibit B. The medical certificate of 24 May 2016 states that Ms Parkhouse, the defendant, has been experiencing [redacted], but in the context of the certificate that statement is in relation to the previous week. Specifically, the medical certificate dated 24 May 2016 states that [redacted].

In other words, the certificate is directed to the requirement in the orders of 4 April 2016 to file any application and any affidavit in opposition to the plaintiff’s application by 27 May 2016. The defendant did not file any such application or any affidavit in opposition to the plaintiff’s application by that date, or indeed by today. The certificate does not refer to the period in the middle of April when the request was required to be made, and was made.

The second reason that the defendant advances for an adjournment is that she is still suffering from [redacted] and is about to undertake further treatment for those conditions, following the referral by her general practitioner on 24 May 2016. I accept that both of those propositions are correct, that is that the defendant is experiencing [redacted] and that she is about to commence further [redacted] treatment on 12 July 2016. I also accept for the purpose of this ruling that that appointment was the first available to the defendant after 24 May 2016, although that proposition is only advanced by Ms Parkhouse from the bar table and so it is not on oath. It is not suggested by the plaintiff that it is not correct. However, for the following reasons, I do not consider the fact that the defendant is [redacted], and has not yet been able to commence the recommended treatment for those conditions, to be sufficient reason to further adjourn this proceeding, in the context of the history of the disputes between the plaintiff and the defendant, her very long default under the mortgages, and the history of this proceeding. I will elaborate those matters in more detail.

First, [redacted]. The very many documents that the defendant has in fact prepared from the date of this certificate, 24 May 2016, to date suggest that she has significant capacity to put her case. Those documents attest to her lucidity, her grasp of detail and her command of the facts. [Redacted] what it suggests to me, and I am satisfied is the case, is that the defendant is able to effectively participate in the proceeding, and has been so able from 24 May 2016, despite her [medical condition].

Next, I note that the referral for [further treatment] as completed by the defendant’s general practitioner does not in any way suggest that the defendant is suffering a very severe illness. [Redacted].

In summary, the facts that the defendant is suffering from [redacted], has been referred for treatment, and is about to commence that treatment, do not in my view justify a further adjournment having regard to her demonstrated capacity to participate in the proceeding after the date of that certificate and the nature of the illness as is described in the certificate. In relation to documents that attest to the defendant’s capacity I refer not only to her affidavit filed on 24 June 2016 but also to the very many communications between her and the plaintiff’s solicitors which are exhibited to Mr Roberts’ affidavit of 23 June 2016.

The third matter that is advanced by the defendant in support of her application for adjournment is that there is an outstanding discovery issue. The defendant says that she cannot properly respond to the summary judgment application until this discovery dispute is resolved. Specifically, her allegation is that the plaintiff or the plaintiff’s solicitors or both have improperly claimed privilege in respect of certain documents. Those documents are not identified in Ms Parkhouse’s affidavit of 24 June 2016, but in her oral submissions today in response to questioning from me she has identified those documents as being internal communications prepared by Mr Donnelly of the plaintiff in 2007 and 2008. The defendant requested any such documents in her second notice for discovery under point 2 on page 3, and says that they have not been provided to her in the plaintiff’s supplementary affidavit of documents which was filed and served in response. The defendant believes these documents exist because she can recall reception staff of the plaintiff reading them out to her in the period 2008 to 2010 stating that they were screen shots from the electronic record kept in relation to her account. The defendant’s suspicion is that the plaintiff has documents answering this description but has claimed privilege over them as a reason for non-production.

In my view the defendant’s suspicion is not shown to be a reason for adjournment. I reach my conclusion on the privilege issue for the following reasons.

First, there is sworn evidence from Mr Jones of the plaintiff and from the solicitors for the plaintiffs, Mr Roberts and Ms McDonald, describing in great detail the discovery process that they have undertaken, which is to the effect that all documents that relate to the defendant other than privileged documents have now been produced. Mr Jones of the plaintiff deposes in his affidavit sworn 23 June 2016 that the plaintiff does maintain an electronic record for customers, and that he caused the whole of the electronic record relating to the defendant to be printed and delivered to the solicitors for the plaintiff, together with the whole of her hard copy customer file. Ms McDonald of the solicitors for the plaintiff deposes in her affidavit sworn 23 June 2016 that she caused the documents provided by the plaintiff to be reviewed for the purposes of discovery, and, at paragraph 13 of that affidavit, that ‘(Mr Jones’) Supplementary Affidavit of Documents discovered all documents identified relating to the defendant with the exception of the documents that the plaintiff maintains a claim for privilege over and (duplicates)’.

It follows that the only exception from production, according to that sworn evidence, is privileged documents.

Next, counsel for the plaintiff concedes that, on the material before me and his current instructions, the documents in question, being internal communications prepared by Mr Donnelly in 2007 or 2008, would not be privileged. On counsel’s instructions, given in court by Ms McDonald, privilege has only been claimed in relation to material after 2012. The Court then has sworn evidence that all documents relating to the defendant have now been provided to her unless they are privileged, and the concession by the plaintiff that these documents would not be privileged.

As against that, what the defendant advances is a suspicion on the basis of her recollection of what she was told in telephone conversations up to seven or eight years ago, in the period 2008 to 2010. Weighing these competing accounts against each other, I do not consider that the defendant has shown a reason for further adjournment. She has not put her contention on oath, she has not supported it by detailed account of the particular documents in question or their particular contents, and the documents in question were only identified in the course of the oral submissions and are not spelt out in her affidavit.

In any event, I am not persuaded that those documents, even if they existed (and as I say I am not persuaded that they exist), would be relevant. The statement of claim in this proceeding relies on default as at 30 June 2014 and notices as at that time. I accept that the default as at that date was already of long standing, but there were significant further events that occurred as between the plaintiff and the defendant after 2007-2008. I anticipate that the defendant will want to rely on those events by way of defence and I will hear her in relation to that shortly. But the mere fact that there was so much that occurred between the plaintiff and the defendant after 2007 to 2008 persuades me that even if these documents existed they could no longer be relevant. They were overtaken by those subsequent events.

I have dealt with the three reasons advanced by the defendant for adjournment. As against these reasons there are very significant reasons why the proceeding should not be further adjourned. I noted in particular that I do not consider the defendant’s current medical situation to be sufficient reason in the context of the history of the dispute between the parties and the history of the proceeding to justify further adjournment. I now return to that issue.

First, this is a longstanding default. In his affidavit sworn 27 June 2016, Mr Jones of the plaintiff deposes that the defendant’s loan account is in excess of 2120 days i.e. nearly six years in arrears, and the last two payments made by the defendant were $500 in December 2014 and $73.38 in January 2010. In his earlier affidavit sworn 22 February 2016 Mr Jones deposes that the defendant’s first default was in or around May 2007 and that over the course of the period from August 2008 to 31 October 2010 the plaintiff granted the defendant five separate payment moratoriums. He deposes that after each of these moratoriums, the defendant and the plaintiff did not come to an arrangement for repayment of the arrears.

Secondly, in his February affidavit Mr Jones deposes that the current market value of the mortgage properties was already at that time ‘significantly less’ than what was then owed by the defendant to the plaintiff. Comparison of the two affidavits shows that no payments have been made by the defendant to increase the arrears since February, and accordingly the arrears have increased. Interest will continue to accrue on the debt, so that situation will only get worse unless there is a payment made. It follows that the plaintiff will be significantly prejudiced by any further delay. The defendant has made no offer of any payment today and so there is no reason to suggest that that is imminent.

Next, the plaintiff’s costs will substantially increase if the matter is adjourned because there will be costs thrown away for today, and further preparation and appearance costs for the next occasion. Even if an order is made that the defendant bear those costs, the costs prejudice to the plaintiff will not be alleviated because, as I have said, there is no indication that the defendant is in a position to meet such an order other than by sale of the properties. As noted, as at February the value of the properties was already less than the debt.

Finally, this is a proceeding that has been on foot for a substantial period of time, over a year, and was not commenced until there had already been very significant attempts to resolve the dispute between the plaintiff and the defendant. Mr Jones in his affidavit sworn 22 February 2016 deposes to five disputes that the defendant has lodged with the Financial Services Ombudsman (‘FOS’), from 2009 to 2014, and in particular to an agreement between the plaintiff and the defendant arrived at in the course of the second dispute in a conciliation conference with FOS. That agreement was not implemented. The parties are in disagreement as to why, which is an issue to which I will return in my reasons for giving summary judgment. At the conclusion of the third dispute, in March 2014, the FOS determined that the only realistic option for repayment of the debt was for the secured properties to be sold; that a small sum charged by the plaintiff for consideration of the defendant’s hardship applications should be refunded (which was done); that the defendant should be given 30 days to voluntarily surrender the securities (which was given, and not complied with); and thereafter the plaintiff was at liberty to commence recovery action, after giving 14 days’ notice. The defendant lodged two further disputes with FOS in 2014, which were closed quickly on the basis that all matters had been dealt with by the determination of the third dispute. This proceeding was only commenced thereafter.

The proceeding commenced on 7 April 2015, it then moved moderately efficiently until this summons for summary judgment was filed on 22 February 2016. The summons first came before me for directions on 4 April 2016 and it was on that date that today’s date was set. In addition to the earlier attempts at resolution between the parties prior to litigation, there has already been a period of time within the Court timetable, and a generous period of time, for the defendant to put on any material that she wishes to in response to the application.

In my view, it would be inconsistent with the obligations cast on the Court by ss 8 and 9 of the Civil Procedure Act 2010 (Vic) to adjourn this hearing and so further adjourn the proceeding. For all these reasons I refuse the application.

Reasons for giving summary judgment for possession
Legal principles applying to summary judgment

Before turning to the necessary elements of the plaintiff’s case, I first set out the principles that apply to an application for summary judgment. The plaintiff applies for summary judgment pursuant to r 22.03 of the Supreme Court (General Civil Procedure) Rules 2015 (‘the Rules’) and s 63 of the Civil Procedure Act2010 (Vic) (‘CivilProcedure Act’). That section relevantly provides:

63       Summary judgment if no real prospect of success
(1)Subject to section 64, a court may give summary judgment in any civil proceeding if satisfied that a claim, a defence or a counterclaim or part of the claim, defence or counterclaim, as the case requires, has no real prospect of success.
(2)A court may give summary judgment in any civil proceeding under subsection (1)—
(a)       on the application of a plaintiff in a civil proceeding;
(b)       (not relevant);
(c)       (not relevant).

To obtain summary judgment the plaintiff must prove all necessary elements of its own case. What is necessary turns on two things- the elements of the plaintiff’s cause of action, all of which should be pleaded; and whether the defendant admits by her defence some or all of those matters. The plaintiff is not required to prove matters it has pleaded if the defendant admits them in her defence. After proving its case, the plaintiff must show that any proposed defence has ‘no real prospect of success’. The Court of Appeal has held that the test for summary judgment under s 63 is whether the respondent to the application for summary judgment (here the defendant) has a ‘real’ as opposed to a ‘fanciful’ chance of success.[5]
[5]Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd [2013] VSCA 158, per Warren CJ and Nettle JA at [35]. Approved in subsequent cases including Klein v National Australia Bank [2016] VSCA 144, and Mandie v Memart Nominees Pty Ltd [2016] VSCA 4.

Rule 22.05(1) of the Rules provides that ‘(t)he defendant may show cause against the application (for summary judgment) by affidavit or otherwise to the satisfaction of the Court.’ Here the defendant has not filed any affidavit in response to the plaintiff’s application, but I have taken into account her defence, her answers to the plaintiff’s request for further and better particulars (‘Answers’) which considerably elaborate the matters asserted in her defence, the documents introduced into evidence in her case on the relisted date, her evidence from the bar table and her oral submissions in opposition.

The power to grant summary judgment under s 63 of the Civil Procedure Act is subject to s 64. That section provides as follows:

64 Court may allow a matter to proceed to trial
Despite anything to the contrary in this Part or any rules of court, a court may order that a civil proceeding proceed to trial if the court is satisfied that, despite there being no real prospect of success the civil proceeding should not be disposed of summarily because—
(a) it is not in the interests of justice to do so; or
(b)the dispute is of such a nature that only a full hearing on the merits is appropriate.

Section 64 confers a discretion to refuse summary judgment, even if the applicant has shown that the respondent has no real prospect of success. The exercise of the discretion is to be considered in every case.

Necessary elements of the plaintiff’s case

Counsel for the plaintiff in his written submissions for the primary hearing on 27 June 2016 contended that the only matters that the plaintiff need prove are the execution of the mortgages, the advance, default under the mortgages, and that the defendant as mortgagor is in possession. He submitted that ‘arguably’ the plaintiff is not obliged to demonstrate that notice of default has been given, although in fact it was given in this case.[6] Counsel for the plaintiff did not in either his written or oral submissions address the further issue of failure to remedy the default the subject of the notice, but it would follow that if the notice need not be pleaded or proved, neither does failure to remedy the default. Here the original statement of claim pleaded the notice, but not failure to remedy. The Further Amended Statement of Claim pleads both, as is conventionally done. Both matters were in any event proved by the evidence in the plaintiff’s case given for the hearing on 27 June 2016.
[6]Plaintiff’s Outline of Written Submissions in Support of its Summary Judgment Application dated 27 June 2016 at [12] and [13].

For the reasons I now set out, in my view, it is not correct that the plaintiff in this case need not prove service of a proper notice. Further, I consider that the plaintiff in this case is also required to plead and prove failure to remedy within the notice period.

The plaintiff relies on three cases in support of his proposition that only the four identified matters need be proved in an action to recover possession under a mortgage. These cases commence with the judgment of Tadgell J in Commonwealth Bank of Australia v Jackson[7] (‘Jackson’). It is correct that in that case, Tadgell J held that the plaintiff needed only to prove the execution of the mortgages, the advances, default, and that the mortgagors were in possession to recover possession under s 78 of the Transfer of Land Act 1958 (Vic) (‘Transfer of Land Act’). The section relevantly provides:
[7](1992) V Conv R 54-447.

78Power to mortgagee or annuitant to enter into possession or bring ejectment
(1)The mortgagee or annuitant upon default in payment of the principal sum or interest or annuity or any part thereof respectively at the due time—
(a)may enter into possession of the mortgaged or charged land by receiving the rents and profits thereof; or
(b)may bring an action of ejectment to recover the land, either before or after entering into the receipt of the rents and profits and either before or after any sale of the land as aforesaid.

However, in that case the mortgages in question did not require any demand be made before the moneys under the mortgage became payable. The statement by Tadgell J on which counsel for the plaintiff relied in his initial written submissions was preceded by the qualification that no demand was necessary under the mortgages as a prerequisite to the mortgagee’s entitlement to possession.

The other two cases on which the plaintiff relies cite and purport to rely on Jackson. In Wren Close Nominees Pty Ltd v McCulloch[8] (‘Wren’) Beach J refused to set aside a summary judgment for possession where the defence that the defendant wished to advance was that the notice of default that had been given was defective. Beach J held that because no notice of default was required the defendant could not show an arguable defence. In reaching his conclusion, Beach J expressly relied on the statement in Jackson that no notice of default is required. The judgment does not, however, set out the terms of the mortgage. Accordingly, it is possible that the mortgage did not require a notice.
[8][2002] VSC 138.

The other case on which the plaintiff relies is National Australia Bank Limited v Lawrence[9] (‘Lawrence’). That case proceeded as an undefended trial.[10] The trial judge, Gardiner AsJ, cited in his judgment the full quote from Jackson as to the elements that the plaintiff must prove, including the qualifier that in Jackson the terms of the mortgage did not require notice. He recited terms of the mortgages in question in the case before him that required notice of default and gave an opportunity to remedy the default, and also recited uncontradicted evidence from the plaintiff to the effect that notices of default were given, and the default was not remedied. He did not, however, expressly make findings on these matters. On one reading of his judgment, he made findings only on the elements identified in Jackson as being necessary, and on the basis of proof of those elements he gave judgment to the mortgagee.[11] The service of the notices of default and failure to remedy the defaults within the necessary time frame was, however, proved by the uncontradicted evidence of the plaintiff and also by the failure of the defendant to respond to a notice to admit these, and other facts, in the plaintiff’s case.[12]
[9][2011] VSC 556.
[10]Lawrence at [13]. The circumstances are summarised in the introduction to the judgment.
[11]At [40].
[12]Lawrence, at [16].

I accept that Wren and Lawrence may be instances in which the Court has held that it is not necessary to prove that notice of default was given for recovery under s 78 of the Transfer of Land Act, even if the terms of the mortgage require such a notice. If that is what they state, and as noted I do not think that this is clear, then, with respect, I disagree. In the case on which they both rely, Jackson, the judgment of Tadgell J states expressly that the mortgages there in question did not require any demand as a prerequisite to the mortgagee’s entitlement to possession. It was for this reason that he stated, with some apparent exasperation, that ‘(t)he plaintiff’s proofs in seeking possession were very simple indeed. The plaintiff, however, seems to have gone about it the hard way…’.[13] He continued after a further comment in these terms [emphasis by bolding added]:

The circumstances being as they have been proved, that is to say default having been made in the way I have indicated, and no demand being necessary under the mortgages as a prerequisite to the mortgagee’s entitlement to possession, s 78 of the Transfer of Land Act made the mortgagee’s task a comparatively simple one. It merely needed to allege in the statement of claim and prove upon an application for summary judgment the execution of the mortgages, the advances, default by the failure of the mortgagors to pay anything under the mortgages, and that the defendants as mortgagors were in possession.[14]

[13]Jackson (1992) V Conv R 54-447 at p65,225.

[14]Ibid.

The facts in this case are different to those in Jackson. In this case, the two mortgages in question adopted by reference the terms of Memorandum of Common Provisions AA830 (‘MCP’).[15] The MCP is in evidence as GJHJ-8 to the affidavit of Mr Jones sworn 22 February 2016. Clause 19.1 of the MCP provides that if a mortgagor is in default ‘for one day or more’ and the mortgagee chooses ‘to enforce this mortgage’, then it ‘must’ give the mortgagor a notice of the default which ‘must’ ‘specify a period of grace of at least 31 days’. Clause 19.3 provides that within that period of grace, the mortgagor is ‘allowed to correct any default that can be corrected’. Clause 19.3 goes on to provide that if the default is not so corrected, or cannot be, then the full amount owing under the mortgage becomes due and payable without further notice (conventionally called an ‘acceleration’ provision) and the mortgagee has certain rights in addition to ‘anything else the law allows us to do as mortgagee’.
[15]The mortgages are exhibited as GJHJ-4 and GJHJ-7 to the affidavit of Gordon John Hugh Jones sworn 22 February 2016 (‘Jones 1’).

In my view, the effect of the words I identify in brackets in clauses 19.1 (notice of default as set out in the clause ‘must’ be given) and 19.3 (‘you are allowed to correct any default than can be corrected’) is that before recovery action can commence a notice of default must be given that allows at least 31 days to remedy the default. In addition to this contractual obligation, this loan and the mortgages that secure it would appear to be subject to the requirements of the National Credit Code or its predecessor the state Uniform Credit Code and the notice obligations thereby imposed on mortgagees. If this is the case, then service of a compliant notice is also a requirement under the relevant Code before enforcement proceedings may commence. Clause 19.2 of the MCP envisages that information required under an applicable Code and under s 76 of the Transfer of Land Act may be given in the notice of default required by the terms of the MCP. That is in fact the course that the solicitors for the plaintiff sought to take by the notice exhibited to the affidavit of Graham Geoffrey Roberts sworn 22 February 2016.

Jackson stands for the proposition that where no demand or notice of default is required under the terms of the mortgage in question, it is not required by s 78 of the Transfer of Land Act. A notice is, however, required in this case by the terms of the mortgage, and possibly also the relevant Credit Code. The terms of the mortgage also give the mortgagor the opportunity to remedy the default before the mortgagee’s rights under clause 19.3 arise. In my view, that means that even though notice of default is not explicitly required by s 78 before the rights it confers on the mortgagee apply, the section is to be read as subject to the terms of the particular mortgage. Accordingly, a proper notice and failure to remedy the default after that notice are essential elements of the plaintiff’s case for ejectment in this case.

Pleading and proof of the plaintiff’s case

I granted leave to the plaintiff at the commencement of counsel’s submissions on the summary judgment application on the first day of hearing to amend its statement of claim to correct the numbering in the statement of claim as attached to the writ, and to bring the pleading of the components of the advance to the defendant in line with the evidence given by Mr Jones. The defendant did not oppose the grant of this leave, which is administrative in respect of the numbering and formal in respect of consistency with the evidence of Mr Jones.

On the relisted date, the plaintiff sought and was granted leave to further amend its statement of claim to insert a new paragraph 18A alleging that the defendant failed to remedy the default within the grace period afforded by notice of default, and to make consequential amendments to paragraphs 22 and 23. The plaintiff proceeds on the basis of this further amended statement of claim.

The defendant admitted by her defence dated 7 April 2015 all elements of the plaintiff’s case (including the mortgages over the two lots in question and their terms) save for the following:

· an ambiguity introduced by the fact that there were two paragraphs numbered 1 in the original statement of claim;

· a qualified admission of the loan, apparently relating to the date of the loan (paragraph 2 of the defence);

· a qualified admission of the exact figure of the advance, how it was made up and the terms of the loan (paragraphs 3 and 4 of the defence);

· a qualified admission that she was in default as pleaded as at 30 June 2014 (paragraph 16 of the defence, which agrees with paragraph 16 of the original statement of claim save for five listed matters);

· a qualified admission that a notice of default and demand for payment was sent to her on 30 June 2014 containing the terms as pleaded, these matters being ‘agreed save that they failed to so do or notify FOS’ (paragraph 17 of the defence);

· a qualified admission that she has failed to give possession of the properties, being an admission ‘save for CUA period of correction of figure of their own figures and legal negotiations’ (paragraph 20 of the defence); and

· a qualified admission that the plaintiff is entitled to possession, being an admission ‘ save for the Contract of Sale/FOS and Consent’.

I will address the qualifications that the defendant adds to her agreement in paragraphs 16, 17, 20 and 22 of the defence when I address her defence. As to the other aspects of the matters not wholly or clearly admitted by the defendant, the plaintiff has proved them as follows (using the same dot points):

· the second paragraph 1 of the original statement of claim (that the plaintiff is the successor in law to the former mortgagee Australian National Credit Union Limited and acquired the whole of the assets and liabilities of the former mortgagee by reason of a Certificate of Transfer under the Financial Sector (Business Transfer and Group Restructure) Act 1999 (Cth)) is proved by Exhibit GJHJ-2 to Mr Jones’ affidavit of 22 February 2016;

· that the defendant’s original 2004 loan from her former mortgagee was consolidated with other debts and refinanced by a loan from the plaintiff on or about 13 January 2006 is proved by Exhibit GJHJ-5 to that affidavit;

· that the sum of $490,000 comprised as set out in paragraph 21 of that affidavit was advanced to her by the plaintiff pursuant to that loan is proved by Exhibit GJHJ-6 to that affidavit at page 721;

· that the defendant was in default as at 30 June 2014 in repayment of instalments of principal and interest in the sum of $220,868.64 is proved by paragraph 86 of Mr Jones’ affidavit of 22 February 2016 and the final entry in the last column of the spreadsheet attached to the default notice, exhibited as Exhibit GGR-3 to the affidavit of Mr Roberts sworn 22 February 2016;

· that a default notice containing the pleaded terms was sent to the defendant at appropriate addresses is proved by paragraphs 7 and 8 of Mr Roberts’ affidavit of 22 February 2016 and Exhibit GGR-3 to that affidavit;

· failure to remedy the default within the grace period afforded by the default notice is proved by the loan statement for the period 1 July 2014 to 28 December 2014 contained within Exhibit GJHJ-6 to Mr Jones’ affidavit of 22 February 2016. The loan statement shows no payment made within the grace period, indeed no payment in the statement period at all except for $500 on 1 December 2014. Failure to remedy the default within the grace period is also proved by the further affidavit of Mr Jones sworn 15 July 2016;

· that a demand for possession was made by the plaintiff is proved by paragraphs 9 and 10 of Mr Roberts’ affidavit of 22 February 2016 and Exhibit GGR-4 to that affidavit; and

· there is no dispute that the defendant has not surrendered possession of the properties to the plaintiff.

It follows that the plaintiff has proved all necessary elements of its pleaded case, as now further amended.

Defence arising from proposed contract of sale

The defendant has advanced a number of matters in her defence, which she elaborated in her Answers and spoke to in her oral submissions on both hearing dates. Not all of these matters can constitute a defence in the legal sense to the plaintiff’s claim or a counterclaim known to law.

The matter advanced by the defendant which could conceivably constitute a defence known to law is that the plaintiff breached an agreement they had reached by not agreeing to a contract of sale of a lot within a proposed subdivision of the land. The defendant’s contention is that the plaintiff had agreed to a proposed subdivision in 2010 but when presented with a contract of sale for a lot following registration of that subdivision in 2013 the plaintiff refused or declined to consent. The defendant says that had the sale proceeded, the proceeds of the sale would have been sufficient to pay out her then arrears, being the instalments arrears of approximately $220,000.

In legal terms, these factual matters might amount to a defence if the parties had entered in to an agreement by which the plaintiff compromised its rights under the mortgages, and the plaintiff subsequently breached that agreement. For the reasons that I now set out, I do not consider that the defendant has any real prospect of success in establishing such a defence.

Limited evidence of an effective consent by the plaintiff in 2010

The defendant contends that the plaintiff consented to a proposed subdivision in or around September 2010. The plaintiff appears to disputes this. Mr Jones for the plaintiff says on oath that on the basis of his search of the books and records of the plaintiff, the plaintiff did not agree to ‘any earlier proposed contract of sale in 2010’.[16] This denial refers to an earlier proposed contract of sale, but it appears from the plaintiff’s supplementary submissions that the plaintiff disputes that it ever agreed to a proposed subdivision in 2010.[17]
[16]Affidavit sworn 22 February 2016 at [94].
[17]Plaintiff’s Supplementary Outline of Written Submissions dated 26 July 2016 at [12].

At the relisted hearing, I allowed the defendant to put into evidence a letter dated 7 September 2010 from the plaintiff to her acknowledging receipt of an application for registration of a plan of subdivision and stating ‘Our Power of Attorney has duly endorsed the Form 10 Plan of Subdivision Application and we now return it to you for lodging at the Victorian Land Titles Office’.[18] The letter goes on to seek payment of a $200 Consent Fee and say that once this is paid, the plaintiff will forward the certificates of title to their agents for lodgement at the Land Titles Office. The plan of subdivision to which the letter refers is not identified in the letter, but the defendant says that she would say on oath that it was Plan of Subdivision PS 546177N. A Form 10 application dated 23 August 2010 and signed by her in relation to that plan of subdivision is Exhibit E, also put into evidence by the defendant with my leave on the relisted date. The actual plan itself is not attached to either the letter or the form.
[18]Exhibit D.

The first difficulty for the defendant is that it is unclear on the face of Exhibit E whether it sufficiently refers to the then current titles. It refers to three titles, but by the date it bears, 23 August 2010, one of these titles - Vol 4148 Folio 520 - had been cancelled and replaced by two titles, Vol 11032 Folio 145 and Vol 11032 Folio 146.[19] Volume 11032 Folio 146 is also written on the face of Exhibit E, but apparently in a different pen, and so possibly at a different time, but there is no other indication on the application of appropriate amendment such as re-signature or striking out of the cancelled title Vol 4148 Folio 520.
[19]Exhibit GJHJ 3 to Mr Jones’ affidavit of 22 February 2016.

The defendant concedes in her oral evidence from the bar table that the title references were incorrect, and says that she corrected the form at the request of the plaintiff. She says that there were a series of communications between them about this matter in August and September 2010. Exhibit D is, however, the only such communication she has put into evidence. Somewhat confusingly, the defendant said in answer to my question whether she had the amended form, that she did not. I will assume that this was an error, and that she could show at trial that Exhibit E is the corrected form, or, if it is not, produce the corrected form. For the purpose of this application, I will treat the question of the plaintiff’s consent in 2010 to PS 546177N as one for trial.

There is, however, a further difficulty for the defendant. Even if the application for registration of PS 546177N was corrected to refer to the current titles as she claims, and the plaintiff consented to the registration, PS 546177N proposed the subdivision of three lots, 19B, 22 and 23 into two, and after 9 October 2007 the defendant was the registered proprietor of only lots 19B and 23. Gardens of Avalon Pty Ltd was the registered proprietor of lot 22.[20] I summarised what had occurred in the introduction to these reasons. I now set out in more detail the account of events given by the plaintiff. This account of events is supported by the titles in evidence and the other documents exhibited by Mr Jones. The defendant has not contradicted this account in any coherent way, and on the material before me I do not consider that she has any real prospect of doing so at trial.
[20]The title to this lot is contained within the contract of sale that is Exhibit C.

Mr Jones deposes in his affidavit of 22 February 2016 that a plan of subdivision bearing number 546177N was proposed to the plaintiff by a conveyancer for the defendant in March 2007, but did not proceed. He states that if it had proceeded, it would have converted into two the three crown allotments of which the defendant was then registered proprietor, and over which the plaintiff then held the mortgage given in 2004.[21] He exhibits a letter to the plaintiff from Fairhurst Conveyancing for the defendant dated 20 March 2007 seeking the plaintiff’s consent to this subdivision. The letter from Fairhurst Conveyancing states that the proposed subdivision affects both of the then current titles Vol 4148 Folio 520 (showing the defendant as registered proprietor of lots 19B and 22) and Vol 4729 Folio 682 (showing the defendant as registered proprietor of lot 23). PS 546177N and the defendant’s titles are attached to the letter. The plan clearly shows a two lot proposed subdivision of the three lots then comprised within those certificates of title. The defendant’s proposal was that Lot 1 of the proposed subdivision would be unencumbered, and only Lot 2 would be encumbered by the plaintiff’s then single mortgage.[22]
[21]Mr Jones’ affidavit sworn 22 February 2016 at [28]–[31].
[22]Exhibit GJHJ 9 to Mr Jones’ affidavit sworn 22 February 2016.

Mr Jones deposes in that affidavit that what transpired thereafter, in September 2007, was that the defendant decided to transfer crown allotment 22, the middle lot of the three lots, to ‘her son’s business, Gardens of Avalon Pty Ltd’[23] and so requested that the plaintiff release its mortgage over crown allotment 22. The plaintiff agreed on condition that the defendant gave a further mortgage over crown allotment 19B. That is what occurred. The defendant gave the plaintiff a second mortgage over crown allotment 19B in return for discharge of the plaintiff’s mortgage over crown allotment 22. As noted earlier, crown allotments 19B and 22 had previously been contained on the one certificate of title, and new certificates of title were issued, one for each lot, following the transfer of lot 22. The new certificate of title for lot 22[24] records the registered proprietor as Gardens of Avalon Pty Ltd as of 9 October 2007 and that the title was created on that date (presumably following transfer of lot 22 by the defendant to Gardens of Avalon Pty Ltd).
[23]Ibid, at [32].
[24]Part of the vendors’ statement attached to the contract of sale which is Exhibit C and also part of Exhibit GGR 6 to the affidavit of Mr Roberts of 22 February 2016.

In other words, to register Plan of Subdivision 546177N at or after the time the defendant says the plaintiff consented to its registration would have required not just the defendant’s and the plaintiff’s consent to the subdivision, but also that of Gardens of Avalon Pty Ltd. The application form for registration that the defendant has put into evidence, Exhibit E, dated 23 August 2010 does not show on its face that it is also made by Gardens of Avalon Pty Ltd. It bears only the defendant’s name and signature.

Resolution Agreement in 2011 overtook any earlier agreement

The most significant difficulty for the defendant in the defence she seeks to advance does not arise, however, from proof of an effective consent by the plaintiff in 2010. It arises from the fact that whatever was agreed or consented to in 2010, or was not, the parties reached a different agreement to resolve their disputes and settle the arrears (‘Resolution Agreement’) in September 2011. The defendant agreed in open court on 20 July 2016 that she signed this agreement, and has not contested its terms in any of her written or other oral submissions or material.

Mr Jones’ evidence[25] for the plaintiff is that the Resolution Agreement referred to a proposed subdivision and sale with the following features. First, the proposed subdivision, which he calls the ‘Second Plan of Subdivision’ to distinguish it from the earlier plan that did not proceed, would realign the boundaries of the three lots, two owned by the defendant and one owned by Gardens of Avalon Pty Ltd, but maintain three lots. With the agreement of the plaintiff, the defendant would sell Lot 1 of that proposed subdivision, which was vacant land, and the defendant would retain Lot 3, containing a house and land, which was to become the sole security for the plaintiff. Mr Jones’ evidence is that the parties agreed to a moratorium on payments from the registration of the subdivision to allow Lot 1 to be sold.
[25]Mr Jones’ affidavit of 22 February 2016 at [53]–[54].

Mr Jones exhibits a document in the form of a letter addressed to the defendant dated 26 September 2011 headed ‘FOS CASE-RESOLUTION AGREEMENT’ which sets out these and other terms of the Resolution Agreement. The document is signed by Paul Denny as Credit Services Manager for the plaintiff, and by the defendant. The letter does not identify the proposed plan of subdivision by number. The first term of the agreement is said to be ‘CUA to consent to the proposed subdivision as per the plans submitted’. However, attached to the letter is a Plan of Subdivision PS 646331X which bears a stamp stating that it is the plan referred to in planning permit 2100552 issued pursuant to the Macedon Ranges Planning Scheme. The date on the stamp is 24 February 2011.[26] Further, Mr Jones deposes in his affidavit that the plan of subdivision the subject of the Resolution Agreement was indeed that Plan of Subdivision, PS 646331X. The defendant has not adduced any evidence to dispute this account of the terms of the Resolution Agreement.
[26]Exhibit 19 to Mr Jones’ affidavit of 22 February 2016.

The Resolution Agreement was plainly intended by the parties to compromise the plaintiff’s rights under the mortgages with a view to resolving the dispute between them. As I will shortly elaborate, the plaintiff certainly viewed it in this way. Given that, the usual legal conclusion would be that any earlier agreements between the parties were overtaken by the Resolution Agreement. The Resolution Agreement required the registration of a different plan of subdivision to that on which the defendant relies to show the plaintiff’s consent. It also required registration of the subdivision before the sale of one of the subdivided lots, not after, as is required by the contract of sale. I now turn to that contract.

Proposed contract of sale does not correspond to the Resolution Agreement

The defendant relies on a contract dated November 2013 for the sale of a subdivided lot. As noted earlier, she contends that the plaintiff remained bound by its consent to subdivision in 2010 and pursuant to that consent was bound to consent to the 2013 contract of sale.[27] The defendant contends that the plaintiff withdrew its consent in 2013 ‘after FOS voided The Agreement’.[28]
[27]Answers at the bottom of page 2, towards the top of page 5 and page 7, and her and oral submissions.
[28]Ibid.

The first issue that arises is whether or not the plaintiff received this contract of sale. The defendant says in her Answers and oral submissions that she provided a copy of the contract of sale to the plaintiff at the time the contract was signed, as did her estate agent and the Financial Ombudsman Service (‘FOS’). Mr Jones of the plaintiff says that he first saw the 2013 contract of sale when it was provided by the defendant with her Answers in February 2016 and on the basis of his search of the plaintiff’s books and records he does not believe that the plaintiff was provided with a copy of the 2013 contract of sale at any earlier time or that the defendant provided a copy to FOS.[29] If this is correct, then the plaintiff could not be held to have breached any agreement to consent to a subdivision or sale.
[29]Mr Jones’ affidavit of 22 February 2016 at [92]–[93].

For current purposes, I will assume that the question as to whether or not the defendant provided the contract to the plaintiff in November 2013, would be for trial, if the matters asserted by the plaintiff could otherwise constitute a defence with a real prospect of success. In my view, the reasons which follow, they cannot.

A copy of the contract for sale on which she relies is Exhibit C. It is a contract for sale of land described in the particulars of sale as ‘being lot on proposed Plan of Subdivision PS546177N being Part of the land contained in Certificates of Title Volume 4729 Folio 682 Volume 11032 Folio 145 and 11032 Folio 146’. The property address is given as 75A Amblers Lane, Trentham East. It is plain from the contract that the sale of the lot is subject to registration of the plan of subdivision. It is also immediately apparent that the plan of subdivision referred to in the particulars of sale is not the plan of subdivision that was the subject of the Resolution Agreement. I will return to this issue in a moment.

As noted earlier, the land the subject of the mortgages is lot 23 (contained within certificate of title Volume 4729 Folio 682 and described on that title as having the street address of 75 Amblers Lane, Trentham East) and lot 19B (contained within certificate of title Volume 11032 Folio 146 which also gives 75 Amblers Lane as the street address). The third title referred to in the identification of the land in the particulars of sale is Certificate of Title Volume 11032 Folio 145. That title is included in the s 32 statement attached to the contract. It refers to lot 22, which is also said to have a street address of 75 Amblers Lane, Trentham East, and shows as registered proprietor Gardens of Avalon Pty Ltd. It would appear to be the land transferred by the defendant to that company in 2007. It would appear that no part of the land encompassed within the existing three titles had a street address of 75A Amblers Lane, but this may have been the intended street address of the lot to be sold subject to registration of the subdivision.

The vendors are identified as Deborah Mary Parkhouse (who is the defendant) and Gardens of Avalon Pty Ltd. There appears to be only one signature on the contract for the vendors, being that of the defendant which is dated 15 November 2013. There is no evidence before me as to the officers of Gardens of Avalon Pty Ltd or who could sign for it at the relevant time. Counsel for the plaintiff says from the bar table that the defendant may have been at the relevant time a director. For the purposes of this application, I will assume that she was at the relevant time able to sign for that company.

The purchasers are stated to be William Robert St John Ainslie and Emily Catherine Dynon of Prahran, and there appears to be two signatures for the purchasers, which I will assume are theirs, dated 18 November 2013. A real estate agent is identified for the vendors, but no solicitor. The s 32 statement states that it was prepared for the vendors by ‘H C Curwen-Walker Barrister & Solicitor’. A solicitor is identified for the purchasers. The purchase price is stated as $340,000 with a deposit of $10,000. The contract states that settlement is due on 11 December 2013 ‘unless the land is a lot on an unregistered plan of subdivision, in which case settlement is due on the later of (11 December 2013) or 14 days after the vendor gives notice in writing to the purchaser of the registration of the plan of subdivision’. The intended settlement date may have been 11 May 2014.[30]
[30]Mr Jones states that the defendant stated this- see his affidavit of 22 February 2016- at [90], but I could not easily locate this date in the defendant’s material.

There is no evidence before me as to the circumstances in which this contract was apparently signed; whether or not the deposit was paid; and what transpired in relation to the sale, save that it is apparent from the title searches put in evidence by the plaintiff[31] which are dated 11 March 2015 that the defendant remained at that date the registered proprietor of the land the subject of the mortgages. There does not seem to be any dispute that the contract did not proceed. Those titles do not evidence any registration of the plan of subdivision identified in the contract, or any other plan. There does not seem to be any dispute that neither the plan of subdivision referred to in the particulars of sale, PS 546177N, or the plan of subdivision referred to in the Resolution Agreement, PS 646331X, was ever registered.
[31]Exhibits GJHJ-3 and 15 to Mr Jones’ affidavit of 22 February 2016.

There are three difficulties for the defendant in her reliance on this contract. The first two arise from the description of the land by reference to proposed plan of subdivision PS 546177N. First, this plan of subdivision relates on its face to two titles only, one of which was cancelled in 2007 on the transfer of lot 22 to Gardens of Avalon Pty Ltd. The contract may have been unenforceable as against the purchasers for that reason alone.

The second difficulty is that against the plaintiff, the plan of subdivision by which the land the subject of the contract is identified is not the plan of subdivision the subject of the Resolution Agreement. It follows that the plaintiff could not have been under any obligation to agree to the contract pursuant to the Resolution Agreement, assuming for the moment that that Agreement was enforceable and remained in force so as to bind the plaintiff.

When I pointed out the plan of subdivision number to the defendant on the first hearing date, she said that it was a typing error. If so, it is an error that is repeated throughout the contract. The land the subject of the contract is identified by reference to PS 546177N not just in the particulars of sale, but also in the identification of the property at the commencement of the vendors’ statement, and at clause 7.4 in that statement.

There is some indication in the contract that there may have been an error, and that the intended subdivision reference was to PS 646331X. First, the correct current titles are given in the contract. Next, PS 646331X (which relates to a planning permit in 2011) on its face also contains a reference to the cancelled title Vol 4148 Folio 520, which was replaced on the transfer of lot 22 to Gardens of Avalon Pty Ltd in 2007 by Vol 11032 Folios 145 and 146. Thirdly, while PS 546177N is attached to the vendors’ statement, so also is PS 646331X and the planning permit to which it relates. The content and date of the permit are consistent with a proposed sale of Lot 1 of that plan of subdivision for the purpose of the purchasers building a dwelling. The planning permit is dated 24 February 2011, but is stated to be extended by amendment dated 20 May 2013. The effect of the amendment is stated at page 10 of 10 of the permit to be that the plan of subdivision must be registered by 24 February 2014 and the proposed development of Lot 1 on that plan of subdivision for a dwelling commenced by 24 February 2015.

Even if there was an error in the description of the intended plan of subdivision in the contract, there is no doubt that it was a highly significant one. Potentially it made the contract unenforceable, as the land to be sold was referrable to a plan of subdivision that related to titles one of which had already been cancelled. It would also have been sufficient reason for the plaintiff to refuse consent to the contract unless and until it was rectified, even assuming that the plaintiff was provided at that time with the contract, which it denies. Rectification to correct the plan of subdivision would have required the agreement of the purchasers. The defendant has not adduced any evidence directed to these matters.

The third difficulty for the defendant is that the Resolution Agreement clearly required subdivision first, then sale of one of the lots to reduce the amount outstanding. The contract of sale purported to sell one of the lots on the basis of future registration of a plan of subdivision. It did not comply with the Resolution Agreement in this regard.

Defendant had repudiated the Resolution Agreement

Even if all these difficulties could be overcome, to succeed in her proposed defence the defendant would have to show that the plaintiff remained bound by the Resolution Agreement at the time she requested its consent to the contract. I do not consider that she has any real prospect of success of doing so.

The starting point is that both parties initially regarded the Resolution Agreement as binding on them. As far as the plaintiff is concerned, Mr Jones deposes that the plaintiff became concerned a year after the date of the Resolution Agreement that the plan of subdivision had not been registered and wrote to the defendant in that regard. That letter, dated 24 September 2012, is from the solicitors for the plaintiff to the defendant. It refers to the Resolution Agreement; contends (amongst other things) that the defendant is in breach of an implied term that the defendant would cause the subdivision to be registered within a reasonable time from the date of the Resolution Agreement and that the breach is a breach of an essential term, evidencing repudiation of the Resolution Agreement by the defendant; states that the plaintiff reserves its rights to terminate the Resolution Agreement based on that repudiation; and gives the defendant until 29 October 2012 to register the subdivision. The letter gives notice that if the defendant does not register the subdivision by that time, the plaintiff ‘intends to terminate the Agreement and demand the monies owing under the mortgage’.[32]
[32]Exhibit GJHJ-22 to Mr Jones’ affidavit of 22 February 2016.

It is plain from this letter that the plaintiff had regarded itself as bound by the Resolution Agreement, but would contend that the defendant had repudiated it unless she registered the subdivision by 29 October 2012. This is more than a year before the date of the contract of sale. The defendant did not take up the opportunity to register the subdivision within that extended time frame. Instead, she lodged, on 5 October 2012, a further dispute with FOS.

FOS took the view that the Resolution Agreement was uncertain and unenforceable and reopened its earlier investigation. The Resolution Agreement had been arrived at in the course of that investigation. The defendant asserts that the plaintiff was no longer bound by the Resolution Agreement because it was ‘voided’ by FOS. This is a misapprehension of the legal position. Whether or not the Resolution Agreement was binding was a matter for the parties, or a court if they could not agree, not FOS. The function of FOS is to conciliate disputes, and, if the parties do not reach an agreement in that process, to make recommendations that the parties are at liberty to accept, but are not required to accept, save that the lender cannot take any action to the contrary for a period of time. If one or both parties does not accept a FOS recommendation, they may seek the assistance of a court to make a legally binding determination.

FOS investigated the dispute lodged on 5 October 2012 until 25 February 2014. By letter of that date, FOS advised the plaintiff that, in substance, it had determined the dispute in favour of the plaintiff, save for an overcharge of administrative fees on hardship applications. The letter advised the plaintiff that it could not ‘commence or continue any legal proceedings or take any recovery action until after we have closed our file’ which was to be on 27 March 2014[33]. FOS subsequently gave notice by letter of that date that its file was now closed, and refused subsequent attempts by the defendant to re-agitate the dispute. [34]
[33]Exhibit GJHJ-16 to Mr Jones’ affidavit of 22 February 2016.
[34]Mr Jones’ affidavit of 22 February 2016 at [71],[76]-[79].

After FOS closed its file, the plaintiff was at liberty to pursue its remedies at law. If still bound by the Resolution Agreement, the plaintiff could seek to enforce that. If not so bound, due to repudiation of the Agreement by the defendant, the plaintiff could pursue its rights under the mortgages. The plaintiff took the approach of pursuing its rights under the mortgages, as it had indicated in September 2012 it would do if the plan of subdivision was not registered by 29 October 2012. I do not consider that the defendant has any real prospect of success of showing that the plaintiff was not permitted to take that approach, in particular that it should have agreed to the contract of sale dated November 2013. The plaintiff had indicated more than a year earlier, in its letter of 24 September 2012 to the defendant, that it would regard the Resolution Agreement as repudiated by her if she did not register the subdivision by 29 October 2012. She did not. I consider that if the matter proceeded to a trial, the defendant would be unable to show that the Resolution Agreement remained in force as at November 2013. The Resolution Agreement did not state a date by which the defendant had to register the subdivision, but the plaintiff’s assertion that it contained an implied condition that the defendant cause the subdivision to be registered, and within a reasonable time, would in my view be found correct if the matter proceeded to trial. I do not consider that the defendant has any real prospect of success in contending that this reasonable period exceeded two years, particularly given that she was on notice of the plaintiff’s stance that she was already in breach by September 2012.

There is not in evidence any letter from the plaintiff to the defendant giving notice of termination of the agreement by virtue of her repudiation of it, as was envisaged in the letter from the solicitors for the plaintiff to the defendant of 24 September 2012. However, I consider that the plaintiff could reasonably have considered it inappropriate to take that step outside the FOS framework while FOS was considering the dispute lodged by the defendant. The plaintiff advised FOS by submissions dated 6 February 2014 in substance that it regarded the agreement as terminated, and that it would not consent to further time to register a subdivision.[35] Further, there could be no doubt from the actions of the plaintiff after the determination of that FOS dispute that it regarded the Resolution Agreement as terminated.
[35]Exhibit GJHJ-28 to Mr Jones’ affidavit of 22 February 2016.

Other matters advanced in opposition to the application

The other matters advanced by the defendant in opposition to the application are shown by the plaintiff to be of no substance, do not constitute defences in law, or may have been intended only as points of clarification rather than defence by the defendant.

In response to the plea of default at paragraph 5 of the original statement of claim, the defendant noted five matters in her defence. The first is that she had paid $500 towards the arrears. There is no dispute about this. Mr Jones in his affidavit of 22 February 2016 specifically acknowledges a payment of $500 in December 2014, and it is shown in the account statements exhibited to his affidavit.[36] The payment is not a defence to the recovery action, as it was not made within the grace period and was not, in any event, sufficient to remedy the default.
[36]Paragraph 6 and Exhibit GJHJ-6 respectively.

The second qualifying matter to her admission that she was in default as at 30 June 2014 is a reference to the contract of sale of November 2013. I have dealt with this above.

The third qualifying statement is that the figures were unconfirmed by her accountant. I am satisfied on the basis of the spreadsheet attached to the notice of default[37] that the defendant has no real prospect of proving that the figure asserted in paragraph 16 as being the amount by which she was in default of instalment payments at that time is incorrect. It is not a defence in law that the figures had not been confirmed correct by the defendant’s accountant.
[37]Part of Exhibit GGR-3 to Mr Roberts’ affidavit of 22 February 2016.

The fourth matter refers to a view the defendant says that FOS expressed, being that the ‘entire figure’ was not due to arrears. In her Answers, the defendant asserts that the plaintiff had no entitlement to the full mortgage payout figure until they had sent her a notice of default for arrears.[38] As will be apparent from my earlier comments, this is a correct statement of the law. The plaintiff was required under the terms of the MCP to give notice of the arrears of instalment payments, and to allow a period of grace of no less than 31 days to remedy them before the full amount under the mortgages fell due. As set out earlier, I am satisfied that it did so, and the default was not remedied within that time frame. Whether the plaintiff said something different to FOS, which is denied, is irrelevant to a defence at law. Even if the defendant was able to show that the plaintiff did misrepresent its entitlements, and that, as she contends, ‘(t)entire outcome at FOS would have altered due to this one acknowledgment of truth’[39] that does not constitute a defence in law as a determination by FOS (as opposed to the parties’ own agreement entered into with the assistance of FOS) is not legally binding on the parties.
[38]Answers, page 3.
[39]Answers, page 4.

The fifth matter is an apparent objection to the statement at paragraph 16 of the statement of claim ‘that in addition to arrears of instalments, the defendant had also failed to pay ‘other moneys due and owing and not paid’. I agree that it is not clear from the pleading or from the evidence in the plaintiff’s case to what this refers, but accept the submission of the plaintiff that it does not affect the validity of the notice (which asserts default by failure to pay the instalments only). Nor does it affect the plaintiff’s case for summary judgment, because the plaintiff is not seeking a judgment for a fixed sum.

The defendant qualifies her agreement to the plea that the notice of default was sent by the words ‘save that they failed to so do or notify FOS’. From her Answers, it appears that the defendant means by this reference to reiterate her assertion that the plaintiff mislead FOS by ‘omission’ by failing to advise FOS that only the arrears were due and payable, and not the full mortgage figure.[40] I have dealt with this assertion above.
[40]Answers, page 4.

In response to the plea in the statement of claim that the defendant has failed to give possession of the properties, the defendant asserts that this should be qualified by ‘CUA period of correction of their own figures and legal negotiations’. She gives more detail in her Answers as to corrections in the figures made by the plaintiff in 2014. Even if it was the case that figures initially given by the plaintiff to the defendant required correction, and this caused delay, there is no dispute that the defendant has not surrendered the properties to the plaintiff and remains in possession. No defence is made out by this qualification.

The defendant reiterates at paragraph 22 of her defence in response to the plea that the plaintiff is entitled to possession her reference to the ‘Contract of sale/FOS and Consent’. I have dealt with these matters above.

In her oral submissions, the defendant asserts that there were other occasions when the issues between her and the plaintiff could have been resolved. These were in 2007, when the plaintiff refused her bridging finance to enable her to relocate; in September or October 2010 when she offered to pay $40 per week towards arrears and the officer of the plaintiff laughed at her; and an occasion in 2010 when an agreement was reached between her and an officer of the plaintiff for a three month moratorium which a new credit manager failed to honour.[41] It may be that this is the agreement that is referred to in letter dated 10 May 2010 from Mr Peter Carson of the plaintiff to her, which I allowed her to put into evidence on the relisted date.[42] As I explained to the defendant in the hearing, these concerns do not give rise to any defence in law. It was a matter for the plaintiff to decide whether or not to accept her proposals. Commercial decisions by a credit provider or its refusal to agree to a proposal put by a borrower generally do not constitute a defence to an action for recovery of possession under the mortgage following an event of default. I do not consider that the defendant has any real prospect of success of proving to the contrary in this case.
[41]It is not clear to me whether these are two different occasions in 2010 or one and the same. The defendant gives some details at page 5 of her Answers.
[42]Exhibit F.

Discretion

The proposed defence based on the contract of sale would fail for multiple reasons, even allowing for some matters to be considered at trial. Even where a defendant has no real prospect of success, however, s 64 of the Civil Procedure Act provides that, in some circumstances, a court may refuse summary judgment and so require the plaintiff to prove its case at a trial. A trial which would ordinarily involve oral evidence by, and cross examination of, witnesses for the plaintiff and for the defendant would occasion considerable further cost and would be some time away. The purpose of summary judgment is to avoid the legal costs associated with a trial where it is clear that a trial would serve no real purpose, because the plaintiff can prove its case by documentary evidence and the proposed defence has no real prospects of success.

The circumstances in which the discretion to refuse summary judgment may be exercised under s 64 are where the court considers that it is not ‘in the interests of justice’ to give summary judgment; or ‘the dispute is of such a nature that only a full hearing on the merits is appropriate’.

The only matter which the defendant has advanced that possibly could be said to fall within these parameters is her contention that the plaintiff, which is a credit union of which she is a member, has not acted properly towards her as a member. In my view, this contention overlooks the very many moratoriums that the plaintiff has granted to her since she first went into arrears in around May 2007.[43] The plaintiff has given her circumstances favourable consideration on many occasions. The fact that the borrower here is a member of the lender does not in the light of this history justify the further expenses and delay of a trial.
[43]Mr Jones’ affidavit of 22 February 2016 at [40]–[45].

Further, the plaintiff no doubt has obligations to its other members or shareholders. This loan account has been in arrears for more than 2120 days i.e. nearly six years; the defendant has made no payment since December 2014;[44] she does not advance any proposal by which the arrears are to be reduced; and the value of the land is significantly less than the amount now owed.[45] I referred to some of these matters earlier in this judgment as factors tending against adjournment. They are also circumstances that militate against the further cost and delay of a trial.
[44]Mr Jones’ affidavit of 15 July 2016 at [10].
[45]Mr Jones’ affidavit of 22 February 2016 at [84]–[85].

Costs

The plaintiff seeks that the defendant pay its costs of the proceeding on the standard basis. That is appropriate, because the plaintiff has been successful and orders in relation to the payment of costs usually follow the event. No reason has been shown by the defendant why an order that she pay the plaintiff’s costs should not be made. The only matter advanced by the defendant in opposition to the order is that she does not have the capacity to pay any costs. Capacity to pay is not generally considered a reason not to make an order for costs, as such an order determines only liability. I do not consider that it is a reason not to make a costs order against the defendant in this case. As I explained to the defendant at her request, there are a further two steps to the recovery of costs ordered to be paid. If the parties do not agree on the quantum of the costs, the amount may be determined on a taxation in the Costs Court, a division of this Court. If the amount so determined is not paid, the plaintiff is at liberty to seek to enforce that order by the usual means and the defendant is at liberty to seek time to pay, instalment payment or other orders in relation to payment.

Orders

I will make orders for the plaintiff to have possession of the land and for the defendant to pay the plaintiff’s costs of the proceeding.

Enforcement of the judgment

I confirm my comments in response to questions from the defendant at the conclusion of the first hearing that orders for possession are enforced by way of warrant issued by the Court if they are not voluntarily complied with. If the defendant wishes to seek time either to vacate the properties, or to attempt to sell them herself, or for other good reason seeks further time, then she should first contact the plaintiff and set out what she proposes. If the plaintiff does not agree with the proposal then the defendant may file a summons seeking a stay on enforcement of the judgment. Any such summons should be made returnable before me and should be supported by an affidavit setting out all the facts on which the defendant relies. I add that a person who obtains a stay on enforcement of a judgment over the opposition of the judgment creditor may still be required to pay the costs of the stay application.

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5 August 2016