Leppa v Australian and New Zealand Banking Group Ltd; Leppa v Australian and New Zealand Banking Group Ltd - [2012] SASC 81

SUPREME COURT OF SOUTH AUSTRALIA
(Appeal from a Master: Civil)
LEPPA v AUSTRALIAN AND NEW ZEALAND BANKING GROUP LTD; LEPPA v AUSTRALIAN AND NEW ZEALAND BANKING GROUP LTD
[2012] SASC 81
Judgment of The Honourable Justice White
21 May 2012
APPEAL AND NEW TRIAL - APPEAL - PRACTICE AND PROCEDURE - SOUTH AUSTRALIA - POWERS OF COURT - OTHER MATTERS
MORTGAGES - MORTGAGEE'S REMEDIES - POSSESSION - GENERALLY
The appellant borrowed money from the respondent secured by mortgages over three properties - orders for possession of the three properties were made in favour of the respondent after the appellant's defaults - the appellant appeals from a Master's decision not to set aside the orders for possession.
Whether the possession orders should be set aside - whether the Master erred by finding the National Credit Code was inapplicable to the loans - whether the respondent misled the Court as to the inapplicability of the National Credit Code - whether the appellant satisfies the test for ongoing hardship and protection under the National Credit Code - whether an extension of time to commence the appeals should be granted.
Held dismissing the appeal: the National Credit Code did not apply to the loans. Appeals lack substantive merit, extensions of time refused.
National Consumer Credit Protection Act 2009 (Cth); Consumer Credit (SA) Act 1995 (SA) s 5, s 6; Consumer Credit (Qld) Act 1994 (Qld); Consumer Credit Protection (Transitional and Consequential Provisions) Act 2009 (Cth) s 3, s 4; Supreme Court Civil Rules 2006 (SA) r 242, referred to.
Commonwealth Bank of Australia v Forshaw (1990) 55 SASR 247; Barker v Perpetual Trustees Australia Ltd (2003) 85 SASR 243, considered.

LEPPA v AUSTRALIAN AND NEW ZEALAND BANKING GROUP LTD; LEPPA v AUSTRALIAN AND NEW ZEALAND BANKING GROUP LTD
[2012] SASC 81
Appeal from a Master

WHITE J. The appellant owns three blocks of land. One is at 278 Payneham Road, Payneham and has a residential house on it. The other two are Lots 38 and 40 Nicholls Road, Norton Summit. They have cherry orchards on them.
The appellant has borrowed money from the respondent (the ANZ) secured by mortgages over each of these properties. His current total indebtedness to the ANZ is said to be of the order of $1.5m. The appellant has not made any payment to the ANZ, whether by way of principal or interest, since April 2010.
On 18 November 2011, a Master of this Court made orders requiring the appellant to give the ANZ possession of the three properties, so that it could exercise its power of sale under the mortgages. Twelve days later (on 30 November) the appellant applied to have each of the orders of 18 November set aside. The Master refused the appellant’s applications.
The appellant now appeals against the refusals. There are two appeals: one in respect of the order made in relation to the Payneham property and one in respect of the orders made in relation to the two properties at Norton Summit.
The appellant did not commence his appeals until 7 March 2012, some eight days outside the 21‑day period in which appeals of this kind must be commenced. Accordingly, he seeks an extension of time in which to commence the appeals. The ANZ opposes the grant of an extension.
The appellant represented himself on the appeal, as he did throughout the proceedings before the Master. However, the Master recorded that the appellant is admitted as a legal practitioner in this State and that, until about 10 years ago, he had practised for a time as a lawyer. Over the last 10 years, he has been engaged in primary production, including as an orchardist.
The grounds of appeal in the two notices of appeal are identical. First, the appellant asserts misrepresentation by the ANZ. No particularisation of the misrepresentation alleged was given. Secondly, the appellant contends that the National Credit Code (the National Code) under the National Consumer Credit Protection Act 2009 (Cth) applies to two of the loans secured by the mortgages. Thirdly, he asserts that he satisfies the test for ongoing hardship and protection under the National Code. It is implicit in the second and third grounds that the appellant contends that the Master erred by making a finding that the National Code was inapplicable to the two loans, and by failing to consider the application of the National Code’s hardship provisions in his case.
The Making of the Orders for Possession
The orders for possession of 18 November 2011 were made in the absence of the appellant. The affidavits which the appellant filed in support of his applications to set the orders aside did not provide any explanation for his absence, nor has his absence been explained in any subsequent affidavit.
The applications of the ANZ for possession orders were originally to be heard on 19 October 2011. At the hearing on that day, the appellant informed the Master that he had lodged a complaint or dispute with the Financial Ombudsman. Acting on that assertion, the Master adjourned the hearing of the applications to 30 November 2011 so as to allow the Financial Ombudsman to address the dispute.
However, following the receipt of an assertion by the ANZ that the appellant had misled the Court about the lodgment of a complaint with the Financial Ombudsman, the Master listed the ANZ’s applications for hearing on 18 November 2011, and made a number of incidental orders, including orders for presumptive service.
The appellant did not attend the hearing on 18 November. Affidavits of service indicate that the appellant was notified of the hearing, and he has not made any complaint that he was unaware of the hearing on that day. As indicated above, he has not sought to explain his absence.
In support of the applications to be heard on 18 November, the ANZ filed an affidavit which recorded and exhibited communications between it or its lawyers, on the one hand, and the Financial Ombudsman’s Service (FOS), on the other. That material indicated that the FOS had not received any complaint or dispute from the appellant, whether before or after 19 October 2011. The implication from the affidavit was that the appellant had misled the Court on 19 October when he said that he had lodged such a complaint.
The Master noted that the suggestion that the Court had been misled was serious and, further, that the appellant had not responded to the suggestion. However, he did not determine the applications for possession on that basis.
The Master was instead satisfied that the ANZ had established its entitlement to orders for possession, and that it was appropriate for the orders to be made. It is implicit in the Master’s reasons that he accepted that it was neither necessary nor appropriate for the Court to defer the making of the orders while the FOS considered a dispute or complaint of the appellant.
The Applications to Set Aside
By interlocutory applications filed on 30 November 2011, the appellant sought to have the orders for possession made on 18 November 2011 set aside. His underlying complaint was that the orders had been “improperly obtained”. That underlying complaint was based on his assertion that he had not misled the Court on 19 October 2011 because he had in fact, on 10 October 2011, posted a complaint to the Financial Ombudsman.
As it happens, the FOS has received a complaint from the appellant dated 10 October 2011, but it did not receive it until 2 December 2011. I note that that was two days after the appellant had filed his setting aside applications.
The appellant has not provided any explanation in affidavit form for those circumstances. He did, however, tell the Master in oral submissions that the letter of complaint dated 10 October 2011 had been posted before 19 October 2011. The Master did not consider it necessary to make findings about this claim, as he was, in any event, satisfied that the FOS did not receive a complaint until 2 December 2011. That being so, the Master was satisfied that the ANZ had not misled the Court as to the absence of any such complaint and, accordingly, he was satisfied that the order for possession had been “regularly made” on 18 November 2011.
In addition to being satisfied that the orders for possession had been regularly made, the Master considered that the appellant had not shown any defence to ANZ’s claims. He noted that the appellant was seeking time in which to retrieve his situation, either from payment for his cherries crop or by selling equipment. The appellant sought an extension of time to allow this to occur. The Master noted that these were similar to claims which the appellant had previously made in November 2010, and yet no payments had been made since then to the ANZ. As noted earlier, the appellant has not made any payments on any of his loans to the ANZ since April 2010.
The Master also made a finding that the appellant’s borrowings were for commercial purposes. The appellant had not pointed to any material, nor did he make any submission, to the contrary of that conclusion. Nor did he make any submission to the effect that his loans (or any of them) were subject to the National Code or its predecessor.
Finally, the Master noted that the appellant had not put forward any material which would enable the Court to find hardship of a kind to warrant interference with the right of the ANZ to exercise its securities and to enforce the orders of the Court.
Accordingly, the Master refused the appellant’s applications to have the orders for possession set aside and, apart from a short stay to facilitate an orderly transition, otherwise refused the appellant any relief.
Consideration of Appeal
The appellant sought the setting aside of the orders for possession under r 242(2)(b) of the Supreme Court Civil Rules 2006, which provides:
(2)     If satisfied that the justice of a case so requires, the Court may—
(a)     vary a judgment; or
(b)     set aside a judgment and reopen an action.
Example—
The Court might set aside a judgment and reopen an action if satisfied that the judgment is vitiated by a mistake.
The power under r 242(2) will usually be exercised in favour of an applicant if the Court concludes that the judgment in question was irregularly obtained. However, judgments regularly obtained may also be set aside under r 242.[1] Accordingly, the Master’s finding of regularity in this case did not preclude the exercise of the power in the appellant’s favour. It was nevertheless still incumbent for the appellant to show that the “justice of the case” required the possession orders to be set aside.
[1] Commonwealth Bank of Australia v Forshaw (1990) 55 SASR 247 at 254.
In the proceedings before the Master, the appellant sought, in effect, to invoke r 242(2) by showing that he had not misled the Court on 19 October, as the ANZ affidavit suggested. In doing so, the appellant appeared to be operating under the apprehension that the Master had made the possession orders on the basis that he had misled the Court. As seen above, this was a mistaken apprehension. The appellant also relied in part on the hardship which he said would result from his being dispossessed of the properties.
On the appeal, the appellant no longer referred to his own suggested misleading of the Court. Instead, he contended that it was the ANZ which had misled the Court, by making a misrepresentation to the Court about the character of two of its loans to him, being the loan secured by the Payneham property and a loan of $151,506.52, which is one of the four loans secured by the Norton Summit properties.
In relation to each application for possession, Mr Viola, the Manager of Lending Services – Commercial, of the ANZ, deposed that the provisions of the National Code did not apply to the loans in question, because they were not “credit contracts” as that term is defined in the National Code. Mr Viola also exhibited to his affidavits the principal documents evidencing the loan and the ANZ’s security. It is the statements that the National Code is inapplicable which Mr Leppa contends on the appeal were misrepresentations.
As it happens, the appellant has not shown that the application of the National Code to his loans would have any material consequence. However, I put that consideration to one side for the time being. I also put to one side for the moment the fact that the appellant is raising a new point on appeal which was not taken before the Master
For the reasons which follow, I am satisfied that the National Code is inapplicable to the two loans in question, and that the appellant’s claims of misrepresentation have not been established.
The National Code came into operation on 1 April 2010. This was after the loan in respect of the Payneham property (which was made in October 2009) and after the loan of $151,506.52 secured by the Norton Summit properties (made in July 2009). It was the Consumer Credit (SA) Code (the State Code),[2] being the code contained in the Appendix to the Consumer Credit (Qld) Act 1994 (Qld), which was applicable.
[2] See Consumer Credit (SA) Act 1995 (SA) s 5.
Section 6 of the State Code contained a detailed statement of the provision of credit to which that Code applied. Pertinently, for present purposes, s 6(1)(b) required that the credit be provided, or intended to be provided, wholly or predominantly for personal, domestic or household purposes. By s 6(4) investment by the debtor was stated not to be a “personal, domestic or household purpose”.
The loan in respect of the Payneham property is described as a “residential investment loan”. The meaning of this expression has not been explained in the affidavits, but it implies a loan made for the purposes of investment in residential property. As I understood the appellant’s oral submissions on the appeal, he accepted that, at least for a time, the loan in respect of the Payneham property was of that character. On its face, therefore, the loan in respect of that property was not subject to the State Code.
I acknowledge that there are some contrary indications. The loan purpose in the loan document is stated to be:
Consolidate ANZ P/loan C/card & EMA.
Again, the evidence did not indicate the meaning of each of these expressions, but it is reasonable to infer that the first two items referred to a personal loan and credit card debt respectively. The third expression appears to be a reference to an equity manager account. In my opinion, that stated purpose could be consistent with the loan being for non-investment purposes, but it is equally consistent with investment purposes.
The ANZ submitted that, had the appellant raised this issue before the Master, it could have led more evidence indicating the investment purposes of the loan. It said that it had not been necessary for it to do so, bearing in mind the basis upon which the appellant sought the setting aside of the Master’s decision. It said that it was prejudiced by the appellant raising the point for the first time on appeal.
I am not inclined to regard that prejudice as particularly significant. I would have thought it relatively easy for the ANZ to have marshalled the materials relating to the purpose of the loan and to have filed an affidavit exhibiting the relevant documents.
However, apart from some bare assertions from the bar table, the Court has no material from the appellant indicating that the inference to be drawn from the description on the loan document is inappropriate. As indicated above, that inference is that the loan was made for the purposes of investment in residential property. In addition, the loan documents contain an express acknowledgment by the appellant that the loan is not regulated by the “Consumer Credit Code” (which I understand to be a reference to the State Code).
On that basis, I conclude that the loan in respect of the Payneham property was not subject to the State Code.
As the loan in respect of the Payneham property was not subject to the State Code, it was not a “Carried Over Instrument” for the purposes of the National Consumer Credit Protection (Transitional and Consequential Provisions) Act 2009.[3] Accordingly, the National Code itself is inapplicable to it.
[3] Sections 3, 4.
The same conclusion may be reached with the same (and perhaps even more) force in relation to the loan secured by the Norton Summit properties. The documents exhibited to Mr Viola’s affidavit indicate that this was a “residential investment loan” and state expressly that the loan was made for “investment purposes”. In addition, the appellant acknowledged that it was not regulated by the “Consumer Credit Code”. Thus the State Code and, later the National Code itself, are inapplicable to it.
For this reason, the appellant does not make out his claim of misrepresentation by the ANZ. Further, the appellant does not make out his claim that the National Code applies to two of the loans secured by the mortgages. This makes it unnecessary to consider the third ground of appeal.
I add that I agree with the Master’s conclusion that the appellant has not provided any material which would enable the Court to find hardship sufficient to interfere with the exercise by ANZ of its right to enforce its securities. That is because the appellant has failed to provide the kind of material to which Bleby J referred in Barker v Perpetual Trustees Australia Ltd:[4]
[29]On the hearing of a substantive application under s 55A based on hardship to the mortgagor, the power of the court is to interfere with the exercise of the lawful rights of a mortgagee. It then behoves the mortgagor to make a true, full and frank disclosure to the court of all relevant circumstances. There must be a full and frank explanation by the mortgagor as to why the default has occurred. Where the application is based on circumstances of alleged temporary or permanent hardship or unexpected changes in circumstances, those circumstances must be fully explained, with no room for suggestion or inference that there may be some other reason for the default. When, as is usually the case, the mortgagor is seeking the indulgence of the court, it will be necessary to propose what the mortgagor suggests should be the fair and equitable terms on which the relief should be granted. The mortgagor cannot hope to avoid a sale without being required to comply with some material and perhaps ongoing terms and conditions.
[30]Where there has been a temporary lapse in payment of instalments payable under the mortgage and the mortgagor proposes to resume payments, the court should be satisfied that the mortgagor has a reasonable prospect of making those payments or of complying with the fair and equitable terms that the mortgagor proposes or that the court thinks fit to impose. The mortgagor must present sufficient information to enable the court to reach its own independent conclusion that that is the case. The mortgagor’s unsupported assertion to that effect will seldom be sufficient.
[31]If, when viewed as a whole, the mortgagor’s application appears to be no more than an attempt to delay and frustrate the exercise of the mortgagee’s rights, then the application for relief may well fail.[5]
[4] [2003] SASC 148; (2003) 85 SASR 263.
[5] Ibid at 269.
As the appeal lacks substantive merit, there is no point to the grant of an extension of time.
The ANZ has lodged a notice of alternative contention in relation to each appeal. In my opinion, it is doubtful that either notice raised matters appropriate for alternative contentions under r 285(4) of the Supreme Court Civil Rules 2006. However, as I consider that the appeals should be dismissed in any event, it is not necessary to consider them further.
Conclusion

For the reasons given above, I refuse the appellant extensions of time in which to commence the appeals. Accordingly, the appeals are dismissed.