Hubner v Australia and New Zealand Banking Group Ltd

[1999] QCA 161

IN THE COURT OF APPEAL	99.161
SUPREME COURT OF QUEENSLAND

Appeal No. 5245 of 1998

Brisbane

[Hubner v ANZ]

BETWEEN:

COLIN RICHARD HUBNER AND YVONNE HUBNER

(Defendants) Appellants

AND:

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED

(ACN 005 357 522)

(Plaintiff)	Respondent
de Jersey CJ Davies JA Thomas JA

Judgment delivered 7 May 1999.

Judgment of the Court.

APPEAL DISMISSED WITH COSTS

CATCHWORDS:	PRACTICE - Default judgment - whether irregularly and improperly obtained - whether writ specially endorsed under Order 6 Rule 7 or Order 6 Rule 11 - whether Registrar had power to enter default judgment under Order 31 Rule 7 - rights of registered mortgagee to bring ejectment against defaulting mortgagor under Order 6 Rule 7 after Land Title Act 1994 - rule-making power of the Court
Interchase Corporation Limited (In Liq.) v Grosvenor Hill
(Queensland)	Pty Ltd [1999] 1 Qd R 141

Metropolitan Permanent Building Society v McClymont [1983] 1 Qd
R 160
Suncorp Building Society v Chen [1987] 2 Qd R 113
Land Title Act 1994 section 78
Rules of the Supreme Court - Order 6 Rules 7, 11, 11B; Order 25 Rule

7; Order 31 Rule 7

Counsel:	Mr D.C. Fitzgibbon (Newcastle) for the appellants. Mr P.E. Hack for the respondent.
Solicitors:	D.M. Kennedy (Newcastle) for the appellants. Minter Ellison for the respondent.
Hearing Date:	9 April 1999

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

Appeal No. 5245 of 1998

Brisbane

Before	de Jersey CJ Davies JA Thomas JA
[Hubner v ANZ]
BETWEEN:

COLIN RICHARD HUBNER AND YVONNE HUBNER

(Defendants) Appellants

AND:

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED

(ACN 005 357 522)

(Plaintiff) Respondent

REASONS FOR JUDGMENT - THE COURT

Judgment delivered 7 May 1999

1. On 19 June 1997 a default judgment was given under the hand of the Registrar with the seal of

   the court affixed. It ordered that the plaintiff bank recover possession of a piece of land situated in

   Draper Street, Cairns. The judgment was against the appellants who were the mortgagors of the land

   under a registered mortgage.

2. The appellants made an unsuccessful application before Byrne J to set aside the judgment on

   15 September 1997. His Honour dismissed the application, holding that the appellants had not shown

   that they had a defence on the merits to the claim made against them. Seven months later the appellants filed a further summons seeking to set aside the default judgment. On this occasion the appellants

   contended that the judgment of 19 June 1997 had been irregularly and improperly obtained, and that

   they were entitled to have it set aside ex debito justitiae. That application was in due course dismissed

   by Jones J on 28 May 1998 and that order is the subject of the present appeal.

3. The notice of appeal recites 12 grounds. The court has been supplied with an outline of

   submissions containing 93 paragraphs, and a further written appellants' argument containing 148

   paragraphs. At the hearing of the appeal the appellants were represented by counsel, Mr Fitzgibbon,

   who adopted what the appellants had written and supplemented the submissions orally. The arguments

   range widely commencing with the allegation that the judgment is "contrary to statute, unconstitutional,

   manifestly wrong and denied the appellant's natural justice". Those allegations are refined into a number

   of specific arguments, and we shall attempt to deal with those which may be identified as the major

   points.

4. But first it will be necessary to summarise the evidence that was placed before the learned

   chamber judge. The action was commenced by the bank against the appellants by means of a specially

   endorsed writ. In it the bank claimed recovery of possession of land as mortgagee. After some

   preliminary proceedings the appellants entered an appearance, but they did not deliver a defence within

   10 days of the time limited for appearance. They would have been obliged to do so by Order 25 Rule

   7 if the writ of summons was specially endorsed under Order 6 Rule 7. The question whether the writ

   of summons in this case was so endorsed, or whether (as the appellants contend) it could only have

   been specially endorsed under Order 6 Rule 11, is the central issue raised in this appeal, although there

   are other points which will be noticed later.

5 On 19 June 1997, the bank filed an affidavit proving service, entry of appearance and default
by the appellants in delivery of a defence. It also presented a certificate that the action was not one to

which Order 6 Rule 11B of the Rules of the Supreme Court applied. The Registrar then entered the

default judgment.

1. Order 6 Rule 7 provides that in any action in which the plaintiff seeks to recover possession of

   any land, the writ of summons may be specially endorsed with particulars of the nature of the plaintiff's

   claim. Order 6 Rule 11 provides (inter alia) that in an action by a mortgagee or mortgagor, the writ of

   summons may be specially endorsed with a claim for various kinds of relief including sale, foreclosure

   and delivery of possession to the mortgagee. If the writ is so endorsed a default judgment such as that

   which was obtained here would not be available, as Order 6 Rule 11B provides that in any action in

   which the plaintiff claims any relief of the kind specified in Rule 11, no judgment shall be entered in

   default of appearance or of defence without the leave of the Court or a Judge. However, quite simply,

   the writ of summons was not endorsed under Order 6 Rule 11, the words pertinent to that rule not

   having been used.

2. Historically, claims for delivery of possession under Order 6 Rule 11 or its equivalent could only

   be brought as ancillary to claims for foreclosure or redemption. However, since amendments to the

   relevant rules[1], a writ may be specially endorsed by a mortgagee for delivery of possession without

   including a claim for foreclosure or other relief. It was submitted on behalf of the appellants that the only

   relief available to a mortgagee seeking possession is now under Order 6 Rule 11. However it seems

   to us that a mortgagee plaintiff desiring to obtain possession of land from a defaulting mortgagor is

   entitled to proceed under either Order 6 Rule 7 or Order 6 Rule 11, and that for the practical reasons mentioned by McPherson J in Metropolitan Permanent Building Society v McClymont[2], the

   preferred route of most mortgagees will be under Order 6 Rule 7.

   [1]           Such changes were made in the United Kingdom in 1936 and in Queensland in

   [2] [1983] 1 Qd R 160, 167-168.

3. If a writ is specially endorsed under Order 6 Rule 7, as on its face the present writ would seem

   to be, Order 31 Rule 7 permits the plaintiff to proceed as follows:

   "In an action for the recovery of land, if any defendant does not, within the time allowed for that purpose, deliver a defence, the plaintiff may enter final judgment that the person whose title is asserted in the writ of summons shall as against that defendant recover possession of the land, with the plaintiff's costs of action, upon the production of a certificate by the solicitor for the plaintiff or, in the case of a plaintiff in person, of an affidavit that the action is not one to which order 6, rule 11B applies."

4. The material shows that the requirements of that rule were fulfilled in the material presented to

   the Registrar on 19 June 1997.

5. The right of a plaintiff mortgagee to proceed in this way, at least prior to the Land Title Act

   1994 (Qld), is established by a number of Queensland authorities including Finance Allotments Pty

   Ltd v Young[3], Bank of New South Wales v Crow[4], Metropolitan Permanent Building Society v

   McClymont[5] and Suncorp Building Society v Chen[6].

   [3] [1961] Qd R 452.

   [4] [1979] Qd R 222.

   [5] [1983] 1 Qd R 160.

   [6] [1987] 2 Qd R 113.

6. The principal argument of the appellants was concisely stated by Mr Hubner in the proceedings

   before Jones J to the effect that when a mortgagee seeks possession of land it must go to a court or a

   judge, not a Registrar. It was submitted that section 78(2)(c)(i) of the Land Title Act 1994 ensures

   that in such matters the only recourse of a mortgagee is through a proceeding in a court by means of a

   judge or judges in open court of competent jurisdiction to obtain possession of the mortgaged lot.

7. Section 78 of the Land Title Act provides:

"(1)	A registered mortgagee of a lot has the powers and liabilities of a mortgagee under the Property Law Act 1974, part 7.
(2)	Without limiting subsection (1), but subject to the terms of the mortgage, if the mortgagor defaults under a registered mortgage, the mortgagee may-

(a)

take possession of the mortgaged lot in a way that does not contravene the Criminal Code, section 70; or

(b)

enter into possession of the mortgaged lot by receiving rents and profits; or

(c)

by a proceeding in a court of competent jurisdiction-

(i)	obtain possession of the mortgaged lot; or
(ii)	foreclose the right of the mortgagor to redeem the mortgaged lot; or
(iii)	obtain an order of the court for the sale of the mortgaged lot.

(3) The powers in this section are in addition to other powers exercisable by the
mortgagee." (Our emphasis).

1. The former section 60 of the Real Property Act 1861, which section 78 of the Land Title Act

   replaced, included the following:

   "May bring action for ejectment or may foreclose right of redemption. Provided also that it shall be lawful for any registered mortgagee whenever any principal or interest money annuity or rent charge shall have become in arrear to bring an action of ejectment to obtain possession of the said land either before or after entering into receipt of the rents and profits thereof and either before or after any sale of such land shall be effected under the power of sale given or implied in such bill of mortgage and any such registered mortgagee shall be entitled by suit or other proceedings in equity to foreclose the right of the mortgagor to redeem the said mortgaged lands." (Our emphasis).

2. The appellants' submissions question the jurisdiction of a Registrar to enter such a judgment, and

   it may be inferred that they also challenge the capacity of the rules to enable such a power to be

   exercised.

3. It is convenient to commence examination of this issue by reference to the Judicature Act 1876

   which confirmed the court's power to make rules of court. This was re-enacted by section 11 of the

   Supreme Court Act 1921 which provided for a rule-making procedure that has in substance been continued in Queensland ever since. Under that Act the Governor-in-Council (with the concurrence

   of two or more judges) was authorised to make "such rules of court as may be deemed necessary or

   convenient for regulating the procedure and practice of the Supreme Court".

4. In both the United Kingdom and in Queensland, and indeed in all the Australian states, rules of

   court were in place even before the Judicature Acts, providing for the entry of default judgments against

   defendants who did not appear within the times prescribed by the rules, or against defendants who did

   not deliver a defence within the prescribed time. Such rules reappeared with various amendments in

   rules made after the Judicature Act. In the United Kingdom the current rule permitting default

   judgments to be entered after non-delivery of a defence in claims for possession of land is Order 19

   Rule 5 (formerly Order 27 Rule 7). In Queensland Order 31 Rule 7 has been in its present form since

   14 December 1965. A similar rule preceded it, without the present requirement of a certificate that the

   action was not one to which Order 6 Rule 11B applies.

5. The history of the rule-making power in Queensland is set out in the judgment of Thomas J in

   Interchase Corporation Limited (In Liq.) v Grosvenor Hill (Queensland) Pty Ltd[7]. It is noted in

   the course of that history that in 1928 a statute was enacted giving the rules the same force and effect

   as the principal act. Again in 1991 the Supreme Court of Queensland Act provided (in section

   104(1)) that rules of court "in force under an Act immediately before the commencement of this section"

   should continue to have effect as if the 1991 Act had not been enacted.

   [7] [1999] 1 Qd R 141, 157-158.

6. The validity of Order 6 Rule 7 and Order 31 Rule 7 in their present form is beyond serious

   question. It is further to be noticed that these rules do not substitute the Registrar as a judicial officer

   to perform any function which must be performed by a court or a judge. Rather, they confer a right

   upon the plaintiff in certain events to enter the judgment. The Registrar's role in entering judgment and

   the pre-requisites to the proper exercise of that power are spelt out in Order 31 Rule 7 and various

   rules in Order 44, including Rules 1, 3 and 5. The material shows that the power was exercised in this

   instance in conformity with the rules.

7. In our view when a mortgagor defaults under a registered mortgage, the mortgagee may bring

   an action which is the equivalent of an action of ejectment, and if it is brought in the Supreme Court the

   writ of summons may be specially endorsed under Order 6 Rule 7. Such a claim may be made whether

   or not there is an attornment clause in the mortgage - Metropolitan Permanent Building Society v

   McClymont, and Suncorp Building Society v Chen8. Those decisions were given in the context of

   section 60 of the Real Property Act 1861-1986 which governed the rights of registered mortgagees

   to bring actions of ejectment until 1994. Whilst the language of section 78 of the Land Title Act 1994

   is slightly different, the relevant meaning is not. Section 60 of the Real Property Act recognised the

   right of the mortgagee "to bring an action of ejectment to obtain possession of the said land" while

   section 78 of the Land Title Act recognises the mortgagee's right to "obtain possession of the

   mortgaged lot...by a proceeding in a court of competent jurisdiction". An action for ejectment in the

   Supreme Court fulfils the requirement of the proceedings contemplated in both sections. An application

   to "recover possession of any land" under Order 6 Rule 7 likewise fulfils the requirements of both
   sections.

8. The appellants' submissions sought to place emphasis upon the words "by a proceeding in a

   court of competent jurisdiction" in section 78 of the Land Title Act, and to confine the "proceeding" to

   the act of the Registrar, erroneously identified by the appellants as supplanting the judicial authority of

   the court. Quite simply the proceeding in the court of competent jurisdiction was the present action.

   Any further steps in the conduct of that action taken in accordance with the rules of the Supreme Court

   were proceedings in a court of competent jurisdiction.

9. The argument based on lack of jurisdiction fails.

8 Above.

1. The same may be said in relation to the appellants complaint that they have been deprived of

   trial by a jury. This is not an absolute right and is regulated by statute and by the Rules of Court[9]. In

   a civil proceeding such a trial is obtainable only through compliance with the Rules of Court, and even

   then, in certain cases the court may dispense with such a mode of trial (compare Order 39 Rules 4-13).

   [9]           Matthews v General Accident, Fire and Life Insurance Corporation Limited [1970] QWN 37.

2. A further submission was made that Order 6 Rule 12 (1) states that "special endorsements of

   writs shall be in the forms in schedule 1", but the submission failed to advert to the continuing words in

   the sub-rule "or in such similar form as may be applicable to the case". The submission proceeded that

   Order 6 Rule 7 required the allegation in the endorsement that the bank was the registered proprietor

   in fee simple. It is true that Form 72, which gives three examples of special endorsements for recovery

   of possession of land commences with one on behalf of a plaintiff who is the registered proprietor in fee

   simple of the land in question. Other examples suggested by the form are of a plaintiff in lawful

   occupation of the land, and of a landlord whose tenant has breached a covenant for repair. The

   prescribed forms do not purport to cover the field and are illustrative only. The right of a mortgagee

   to make such a claim according to the facts of the particular case is recognised by section 78 of the

   Land Title Act and by the cases mentioned in paragraph 10 above.

3. Another submission is to the effect that the order was contrary to the principles of the separation of powers doctrine and beyond the judicial power which was said to have been delegated under the Australian Constitution by sections 71 and 79. It was further submitted that the court (or Registrar) was

   exercising power pursuant to the Banking Act 1959 (Cth) because the plaintiff bank held a license

   under a Commonwealth Act. That is simply an erroneous assertion. No argument has been presented

   which comes close to showing that the powers that were exercised under the relevant Rules of Court

   were exercised inconsistently with the Australian Constitution.

4. The proceedings before Jones J were essentially based upon attempts to show that the default

   judgment had been improperly or irregularly obtained. No appeal had been brought against Byrne J's

   decision in which his Honour ruled that the appellants had failed to raise a defence on the merits.

   However paragraph 9 of Mr Hubner's affidavit filed in the proceedings below makes reference to "the

   guarantee that makes the defendants liable" and contains a number of assertions that are not properly

   comprehensible without further evidence or explanation. The oral argument before Jones J was

   punctuated with occasional references to other pending proceedings that would seem to have been in

   train between Mr Hubner and the bank. It is difficult to tell whether there was any serious attempt to

   re-litigate the question of showing a defence on the merits, but the record shows that counsel for the

   bank made his client's position clear that he would oppose the re-litigation of that issue and would

   confine his submissions to the propriety and regularity of the judgment which he conceded the appellants

   were entitled to raise for determination. The outline of argument on appeal and the further argument on

   appeal go beyond the material that was before the learned chamber judge. Seemingly there was an

   attempt to assert some impropriety on the part of the bank in dealings concerning a guarantee which is

   said to have triggered the default under the appellants' mortgage. All that can be said at this point is that

   if the appellants were attempting to reactivate the issue of showing a defence on the merits, and

   assuming in their favour that they were entitled at that stage to do so, the material they presented failed
   to achieve that objective.

5. The appeal should be dismissed with costs.