Homestart Finance v Hayter

[2007] SASC 367

SUPREME COURT OF SOUTH AUSTRALIA

(Civil: Application)

HOMESTART FINANCE v HAYTER & ANOR

[2007] SASC 367

Reasons of Judge Lunn a Master of the Supreme Court

17 October 2007

MORTGAGES

Order for possession of land made in action under Part XVII Real Property Act - application by the mortgagors to set aside or stay order for possession pending other proceedings in the District Court by them against the mortgagee seeking relief under Consumer Credit Code being finalised - s 68(3) of the Code gives the District Court power to stay any enforcement proceedings - held the Supreme Court should allow the District Court under s 68(3) to deal with any stay and should not entertain the application made to it - no ground to vary or set aside a possession order under 6R 242 until the District Court had varied the credit contract under the Code - no jurisdiction under Part XVII to deal with disputes on amounts payable under the mortgage when it was not incidental to the relief of a possession order.

HOMESTART FINANCE v HAYTER & ANOR
[2007] SASC 367

1. JUDGE LUNN:     In these proceedings under Part XVII of the Real Property Act this Court made an order on 9 May 2007 that the defendants as the mortgagors of their property known as 44 Stakes Crescent, Elizabeth Downs deliver possession of it to the plaintiff as the mortgagee.  There have since been a number of unsuccessful applications by the defendants in this action to set aside or stay that order.  No warrant of possession has yet been executed over the property.

2. The defendants have instituted action number 1334/07 against the plaintiff in the District Court seeking relief under Part 4 of the Consumer Credit Code (“the Code”) on the grounds of hardship. S 8 of the Consumer Credit (South Australia) Act 1995 vests the jurisdiction under Part 4 of that Act in the District Court of South Australia.  It is not a jurisdiction exercisable by the Supreme Court. 

3. On 28 September 2007 the defendants issued an application in the District Court action seeking a stay of the warrant of possession in this Court pursuant to s 68(3) of the Act.  That section provides that in conjunction with proceedings under Part 4 of the Code: 

   The Court may, if it thinks appropriate in the circumstances, stay any enforcement proceedings under the credit contract, and make such other orders as it thinks fit, until the application has been determined.

   (“Court” in that section means only the District Court.)  The District Court Master who heard this application has disqualified himself and it is now necessary that the application be re-heard before another District Court Master.  That has not yet occurred.

4. On 4 October 2007 the defendants issued an application in this action seeking, inter alia:

   (3)A stay on all execution on the contract pending s 68(3) of the Consumer Credit Code …..

   This is identical to the relief sought in the earlier application in the District Court. The Supreme Court has no jurisdiction to grant relief under s 68(3). However, it does have jurisdiction, both inherent and under s 17 of the Enforcement of Judgments Act 1991, to stay its own processes of execution.  While I would be prepared to interpret the application for the stay to include any available basis of jurisdiction, it is unnecessary to take that step.  It may be that s 68(3) in conferring jurisdiction on the District Court to stay enforcement proceedings in other Courts, including the Supreme Court, impliedly excludes any other jurisdiction which the Supreme Court would have to similar effect.  It is not necessary to determine that point finally because even if the Supreme Court has the jurisdiction it is not appropriate in the circumstances of this matter for me to exercise that jurisdiction.

5. If this Court was to exercise the jurisdiction and to refuse a stay, it is probably still open to the defendants to pursue their application under s 68(3) of the Code in the District Court.  I doubt that a decision of this Court would produce an issue estoppel or a res judicata on the point which would oust the statutory jurisdiction of the District Court under s 68(3).  If the Supreme Court exercised its jurisdiction and refused the stay, a District Court Master would on considering an application in the District Court under s 68(3) be sitting on a de facto appeal against the decision of this Court.  It is not proper to put the District Court into that position which is contrary to the hierarchy of the Courts in this State.  The crux of the defendants’ case on the application for a stay is their prospects of success in the District Court action to vary the terms of the credit contract.  That is a matter best dealt with by the District Court.  Furthermore, as the defendants brought their application first in the District Court, it is an abuse of process for them subsequently and concurrently to seek the same relief in this Court.

6. Paragraphs 1 and 2 of the defendants’ application of 4 October 2007 seek the “overturning” of the warrant for possession and the order for possession.  These orders are sought under R 84.12.  That Rule has been repealed by R 8 of the Supreme Court Civil Rules 2006.  I treat it as an application under the equivalent R 242 of the Supreme Court Rules 2006.  That rule allows the Court to correct an error in a judgment at any time, or, if satisfied that the justice of the case so requires, allows the Court to vary or set aside a judgment.  It does not enable the Court to “overturn “ a warrant for possession which is a process of execution and not a judgment.  While it would allow the Court to review the order for possession made on 9 May 2007 no arguable ground for the Court to do so has been put forward.  Several previous applications to similar effect have been refused.  The affidavit of the first defendant in support of this application only puts forward that if the District Court proceedings to vary the terms of the credit contract are successful then the defendants would not have been in breach of the terms of the credit contract on which the order for possession was based.  (I do not need to deal with whether any orders under Part 4 of the Code can be retrospective.)  If and when the breaches of the mortgage on which the possession order was based are changed by the District Court then, but only then, will the defendants have a basis upon which to seek to set aside the possession order.  There is no proper ground at this stage to make any order to vary or set aside that possession order under R 242.  The only legal remedy available to the defendants at this stage is a stay under s 68(3) of the Act to which I have already referred.

7. The application also seeks orders in respect of costs which have apparently been debited by the plaintiff to the defendants’ account arising out of these proceedings.  These proceedings relate to the plaintiff’s entitlement to possession of the property in question.  They are not the vehicle for the determination of any dispute between the parties relating to the mortgage.  This Court will only enter into those disputes in a Part XVII action where it is necessary and appropriate to do so to allow the defendants to avoid a possession order by paying out the mortgage.  Here there is no suggestion that the defendants are seeking to pay out the mortgage.  Therefore, it is not for this Court in this action at the present time to conduct an accounting as to the amount properly payable by the defendants to the plaintiff under the mortgage.

8. For these reasons on 16 October 2007 I dismissed the defendants’ application of 4 October 2007.