GKQ Mortgages Pty Ltd v Forsyth

[2010] NSWSC 1305

CITATION:	GKQ Mortgages Pty Ltd v Forsyth & Anor [2010] NSWSC 1305
HEARING DATE(S):	10 November 2010
JURISDICTION:	Equity
JUDGMENT OF:	Pembroke J
EX TEMPORE JUDGMENT DATE:	10 November 2010
DECISION:	See judgment
CATCHWORDS:	EQUITY - cleans hands - knowingly false statement - direct connection with right sought to be protected - INJUNCTION - refusal - absence of clean hands
CATEGORY:	Principal judgment
CASES CITED:	Brimaud v Honeysett Instant Print Pty Ltd (1988) 217 ALR 44 Fast Funds Pty Ltd v Coppola; Coppola v Hall [2010] NSWSC 470 Myers v Casey [1913] 17 CLR
PARTIES:	GKQ Mortgages Pty Ltd Gavin Mark Forsyth & Keryn Leigh Forsyth
FILE NUMBER(S):	SC 2009/289985
COUNSEL:	G George - for the plaintiff P Moloney, solicitor - for the defendants
SOLICITORS:	Bransgroves Lawyers - for the plaintiff Moloney Lawyers - for the defendants

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

PEMBROKE J

WEDNESDAY 10 NOVEMBER 2010

2009/289985 - GKQ MORTGAGES v GAVIN MARK FORSYTH & ANOR

EX TEMPORE JUDGMENT

1 This is an application for an interim stay of a judgment for possession of land pending the hearing of the defendants' application to set aside a default judgment against them. That judgment was entered on 9 October 2010. In substance, the application is for urgent interlocutory relief to restrain the plaintiff from exercising its legal rights.

2 The facts are conveniently set out in the judgment of Ward J given on 15 October 2010. There is no need for me to repeat them.

3 On 4 November 2010 the defendants came before me in the Duty Judge's List. They were represented by Mr Moloney who filed in Court a Notice of Change of Solicitor and a Notice of Motion seeking ex parte interlocutory relief. After 4.00 pm on that day I granted an overnight injunction and directed service on the plaintiff by 6.00 pm.

4 On that application Mr Moloney made a brief reference to a prior application. In fact, on 15 October Ward J had already dismissed a substantially similar application and given comprehensive reasons for doing so. I was not informed that the writ of possession had issued on 19 May 2010. Nor was I informed that the first named defendant was an undischarged bankrupt. The Court file did not contain the Reasons for Judgment of Ward J, which only became available to me yesterday. Those reasons set out fully and carefully the many discretionary considerations that led her to dismiss the application. I propose to dismiss this application as well.

5 In doing so, I adopt the reasons of Ward J but there are four further matters which justify me in refusing to grant the injunctive relief which the defendants seek.

Re-Litigation

6 It is a settled principle of law that, with few exceptions, Courts do not permit the re-litigation of disputes. It is undesirable in the public interest and disruptive of an orderly system for the administration of justice. It may result in vexation and unfairness to the successful party in the previous proceedings. This principle applies equally to interlocutory orders: Brimaud v Honeysett Instant Print Pty Ltd (1988) 217 ALR 44. As McLelland J said in that case: “It would be conducive to great injustice and enormous waste of judicial time and resources if there were no limit on the power of a party to have any interlocutory application or order re-litigated at will.”

7 In this case, the defendants' application for interlocutory relief before Ward J was dismissed after a contested hearing. The reasons of Ward J are founded on discretionary considerations that favour the plaintiff. The defendants contend they are entitled to re-litigate the matter because there has been a material change of circumstances. That change is said, in substance, to be that the defendants have changed solicitor and that their new solicitor has become aware that the business purpose declaration provided to the plaintiff in connection with the loan contravened the Consumer Credit Code.

8 I do not regard this as sufficient to warrant any deviation from the general principle for two reasons. First, the dismissal of the application by Ward J was based on discretionary considerations which are as strong now as they were on 15 October. In fact, with the passage of time they are stronger. Second, the business purpose declaration contains a knowingly false statement by the defendants. I will deal with this issue further below.

Full and Frank Disclosure

9 The second ground for dismissing the defendants' interlocutory application is the absence of full and frank disclosure on their behalf. It is a principle of cardinal importance that legal practitioners fully and fairly inform the Court of all matters known to them which are material to any ex parte application. This applies particularly, of course, to a decision of another judge of this division, the effect of which is to dismiss a substantially similar application.

10 In a busy list such as the Duty Judge's List the Court relies on the sensible co-operation of legal practitioners, a willingness to realistically recognise and admit to weaknesses in the case being propounded, and faithful adherence to the obligation to give full and frank disclosure. If I had been given a fuller explanation of the application that was heard and determined by Ward J and been given an outline of her reasons, that would have cast a different complexion on the issues that I was required to determine. Equally, if I had been informed that the first-named defendant was an undischarged bankrupt, the course of events would have been different.

Clean Hands

11 The third ground for dismissing the application is the doctrine of clean hands. The first defendant, Mr Forsyth, gave evidence about this matter which has fortified me in the conclusion that I have reached.

12 The loan in question would not have been made if there had been no business purpose declaration. If the loan had not been made the property over which the security exists would not have been purchased. In that event, this litigation would not have arisen. A substantial amount of Court time and public and private expense would not have been spent on the dispute. This position has arisen because both defendants, with full knowledge of the falsity of their statement, stated on the business purpose declaration that the loan was wholly for business purposes. In fact, they knew that it was wholly for domestic and personal purposes. The property was to be, and became, their residence. If the defendants had been honest, they would not have completed the declaration. They would, presumably, be living in rented premises.

13 There are no mitigating factors. There is no suggestion of confusion on their part or deceptive or misleading conduct which induced them to make the statement. They understood what they were doing. It matters not that the plaintiff was complicit. That reflects poorly on the plaintiff but it does not detract from the blatant conduct of the defendants. I do not think that equity should assist a party in these circumstances. The defendants should not be in the position in which they now find themselves.

14 These matters are central because the supposed invalidity of the business purpose declaration, by reason of the name of the addressee on it, is the primary argument on which the defendants rely. The business purpose declaration only came into existence as a result of their own false statement. I adopt the statement by Isaacs J in Myers v Casey [1913] 17 CLR 90 at 124 to the following effect: “No court of equity will aid a man to derive advantage from his own wrong". This is a case where the right relied on, namely the defendants' right to possession and ownership of the property, which this Court is asked to protect, has “to some extent been brought into existence or induced by some legal or unconscionable conduct of the defendants so that the protection from what they claim involves protection for their own wrong". Myers v Casey (supra) at 124.

Bankruptcy

15 The fourth ground on which I rely, at least as against the first defendant, is the fact of his bankruptcy. By reason of his bankruptcy, the first defendant has no capacity to prosecute the Notice of Motion because s 58(1)(a) of the Bankruptcy Act 1966 vests all property in his trustee upon him becoming bankrupt.

Notice of Default

16 Finally, the second defendant also relies for her own part on the alleged absence of any notice of default. I do not need to resolve this issue. It depends on a finding that there was, in fact, no notice of default. The only factual foundation for the contention is the non-production by the plaintiff of any notice of default in response to a notice to produce dated 8 November 2010 that was called upon this morning. I would not necessarily draw the inference that there was no notice of default on the basis of those bare facts.

Orders

17 The current orders expire today. I need make no further order other than that the defendants should pay the costs of the proceedings to date. I stand the Notice of Motion over before the Registrar in Equity on Friday 12 November 2010. These reasons are not intended to suggest that the defendants’ substantive claim based on the form of the business purpose declaration does not have prospects of success. This is particularly so having regard to the reasoning and findings in Fast Funds Pty Ltd v Coppola; Coppola v Hall [2010] NSWSC 470 especially at [154] – [166].

oOo