Liberty Funding Pty Ltd v Official Trustee
[2004] VSC 545
•19 November 2004
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
PRACTICE COURT
No. 5244 of 2004
| LIBERTY FUNDING PTY LTD | Plaintiff |
| v. | |
| OFFICIAL TRUSTEE OF THE PROPERTY OF DAN MICHAEL SERBANESCU | Defendant |
| AN APPLICATION BY DAN MICHAEL NOMINEES PTY LTD |
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JUDGE: | BONGIORNO, J. | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 18 November 2004 | |
DATE OF JUDGMENT: | 19 November 2004 | |
CASE MAY BE CITED AS: | Liberty Funding v Official Trustee | |
MEDIUM NEUTRAL CITATION: | [2004] VSC 545 | |
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Courts - Practice and Procedure - Ejectment Action - Effect of Default Judgment against the Defendant - Procedure for Further Defendant to be Joined. RSC rr1.14, 9.07(3), 21.03
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr J. Evans | Russell Kennedy |
| For the Applicant | Mr J. Catlin | Wilmoth Field Warne |
HIS HONOUR:
This is the return of a summons filed in this proceeding on 8 November 2004 by a non-party, Dan Michael Nominees Pty Ltd. It seeks that a default judgment in this matter dated 6 May 2004 be set aside as being irregular. It particularised the irregularity as being that the wrong defendant was made a party, the proper defendant was not served, alternatively, the proceeding was void, (the last of those grounds being added by amendment permitted by me on 8 November 2004). It sought an order that the proceeding against the defendant be struck out and an order for costs.
Mr Catlin, of counsel who appeared on behalf of Dan Michael Nominees Pty Ltd, pointed to RSC r.1.14(2) as giving his client standing to seek the orders which he did. Rule 1.14(2) is a rule which extends standing before the Court with respect to the exercise of power under the Rules to any person who has a sufficient interest. Mr Catlin argued that his client had a sufficient interest because it was the registered proprietor of the land in respect of which the default judgment was entered. It held the land, 19 Lakeview Avenue, Rowville, as trustee of a family trust.
On 30 March of this year, Liberty Funding Pty Ltd issued a writ to recover possession of that land. It sued the Official Trustee as trustee of the property of Dan Michael Serbanescu, a bankrupt. It pleaded that Dan Michael Nominees Pty Ltd was the registered proprietor of the land, that it had mortgaged the land to the plaintiff and that it had made default under the mortgage, but that Dan Michael Serbanescu was in possession of the land. It alleged that he had become a bankrupt, and that the Official Trustee had become his trustee pursuant to s.160 of the Bankruptcy Act 1966. It also pleaded that the plaintiff was entitled to possession of the land pursuant to the provisions of the instrument of mortgage. Judgment was entered, as I have already said, in default of Appearance on 6 May 2004; such judgment being in Form 60H of the Rules of the Supreme Court.
Judgment for possession of land under the current rules of Court is substantially in the form which it used to take in an action for ejectment at common law. Whereas the form of judgment in an equity suit formerly ordered that the defendant yield possession, the form at common law was that the plaintiff recover possession, thus suggesting, at least, that possession was recovered against everyone, including the defendant. That this is so was acknowledged by the High Court in Plowman v. Palmer[1], where Isaacs, J. said of the form of a judgment in ejectment, (at 346 - 347):
"A relevant and vital distinction was said to exist between a common law judgment in ejectment and an order for delivery of possession in equity. But there is no material distinction. The form of a common law judgment in ejectment is that 'the said A.B. do recover against the said C.D. possession of the [land] in the said writ mentioned'. See: Cole on Ejectment pp. 786 and following. It is thus in terms limited to 'possession', and does not in general conclude title, and is stated to be as against the defendant, who is taken to hold the possession. The sheriff's duty, however, under the writ [that is, a writ of fieri habeas possessionum, as it was called] is to execute it so as to give the plaintiff complete and peaceable possession even to turning out third persons."
His Honour referred to an old case of Upton v. Wells 1 Leon, 145.
[1](1914) 18 C.L.R. 339.
Under the current rules of this Court, a judgment for possession is similar. That it entitles the plaintiff to peaceable possession against the world is undoubted, but it is subject to the Rules of Court, and those Rules, in at least two respects, need consideration on this application.
Firstly, RSC r.21.03(c) is the rule under which judgment in default of appearance is entered where the claim is a claim for other than money. It is in these terms with respect to land:
"Where a claim is made for the recovery of a debt, damages or any property, whether or not another claim is also made in the proceeding, and the plaintiff is entitled to judgment on that claim against any defendant in accordance with r.21.01 or 21.02, the plaintiff may:
(a)…………..
(b)…………..
(c)for the recovery of land, enter judgment for possession of the land against that defendant."
The rule is similar to the form of judgment to which Isaacs J. had referred to in Plowman v Palmer. But the apparent difficulty that a judgment in that form creates where someone other than the defendant is in possession is covered by the Rules, and in particular r.9.07(3). That rule permits a person who is in possession, but who is not sued, to be joined as a party to the proceeding at their request in order to defend their right to possession. The rule is in these terms:
"r.9.07 (1) ………….
(2) …………..
(3)Without limiting Rule 9.06(b), where a person not a party to a proceeding for the recovery of land is in possession by himself or by a tenant of the whole or any part of the land, the Court may order that he be added as a defendant."
That rule has existed, in substance, since at least the 1916 Victorian rules in which it was O.12 r.25. In the Rules which applied prior to the 1986 revision, it was O.12 r.12, which was in the same terms:
"Any person not named as a defendant in a writ of summons for the recovery of land may by leave of the Court or a Judge appear and defend, on filing an affidavit showing that he is in possession of the land either by himself or his tenant, and the Court or a Judge shall have power to strike out or confine appearances or defences set up by persons not in possession by themselves or their tenants."
It is that rule that the High Court was referring to in the case to which Mr Evans for the plaintiff referred, Burke v. Dawes[2]. In that case, Dixon, J. referred to O.12 r.25, and noted that the respondent there had applied to this Court under that rule for leave to appear and defend as a person in possession of the relevant land. An action for possession had been commenced against one person, judgment had been entered by default against him for failing to enter an appearance, and in due course the tenant came in and sought to be joined under the then O.12 r.25. His Honour noted that this Court had followed a case called Minnett v. Johnson (1900) 63 L.T. 506, and made an order that the judgment be set aside "so far as the same affects Emily Cummins", she being the person who came in and sought to be added. It also added her as a defendant. His Honour went on to say, at p.16:
"It appears from the Annual Practice that when one of several defendants in an action for the recovery of land fails to enter an appearance, a judgment may be signed against him which prevents his afterwards appearing, but is not a final judgment for the recovery of the land, and that this course was pursued under the provisions of the Common Law Procedure Act, which correspond to the present Rules."
[2](1938) 59 C.L.R. 1.
Having regard now to RSC r.21.03(c) as it presently stands, it is quite clear that judgment can be entered against one of several defendants who fails to appear, with effect not only against that defendant but also against anyone else in possession until such person invokes the application of those rules of court which enable him to defend his right to possession.
Where does that take us? It takes us to a consideration of Mr Catlin's argument that the judgment is irregularly entered. He put numerous arguments in respect of that point, but in particular, he said, the pleadings do not disclose a cause of action and the claim of the mortgagee should have been against his client.
To deal with the first of them, the statement of claim asserts that Dan Michael Serbanescu was in possession of the land, sues the trustee as his successor in title, (presumably pursuant to s.58(1) of the Bankruptcy Act), and seeks possession. In my opinion there is nothing whatsoever wrong with the statement of claim. On its face it is a series of appropriate allegations of fact which, if proved, would entitle the plaintiff to judgment for possession against the Official Trustee.
The second argument put by Mr Catlin is that the claim of the mortgagee should have been against his client. Whether that is so or not, that says nothing as to the validity of the claim against the Official Trustee. If Serbanescu was in possession of the property pursuant to an agreement between him and Dan Michael Nominees Pty Ltd, the official trustee would have been a proper defendant, and, for all anyone knows at this point, that may well have been the situation. If he was there as a tenant, again it would not be inappropriate that the Official Trustee be sued. There is nothing in the argument that this writ or the statement of claim, or that the judgment entered in default of appearance is irregular.
The application which ought to have been made by Dan Michael Nominees Pty Ltd was an application under r.9.07(3), as being in possession of the land by its tenant, the bankrupt. I doubt very much whether a party which sought to do what Dan Michael Nominees in this case sought to do has the standing conferred by RSC r.1.14(2) that Mr Catlin urged the Court to accept it has. But whether that is so or not, r.9.07(3) is clearly the rule under which Dan Michael Nominees Pty Ltd ought to have acted. It is the successor to the rule which was referred to in Burke v. Dawes and the rule which exists to prevent a party being ejected from premises where that party might have an answer to a claim in ejectment if such a claim was brought against him.
Accordingly, the summons which Mr Catlin's client has issued should be dismissed. The question then arises as to what further orders ought to be made. It is clear that, in order to have all matters in issue before the Court, Dan Michael Nominees Pty Ltd should be joined pursuant to r.9.07(3) as a defendant to this proceeding. Whether Mr Evans moves for that joinder, or whether Mr Catlin moves for that joinder, the Court, of its own motion, should itself make an order for joinder to prevent this proceeding becoming simply a steeplechase. There is no reason why that joinder should not occur instanter.
Accordingly, I shall order that Dan Michael Nominees Pty Ltd be added as a defendant to this proceeding. I will now hear counsel as to any further steps which need to be taken. As I understand it, there is no dispute that Dan Michael Nominees Pty Ltd is in default under the mortgage so as to entitle the plaintiff to judgment, but I will hear counsel on that.
(Discussion ensued on the basis that Dan Michael Nominees Pty Ltd could not resist judgment for possession against it.)
The orders I will make are that:
1.The summons be dismissed.
2.Dan Michael Nominees Pty Ltd be added as a defendant to the proceeding pursuant to RSC r.9.07(3).
3.There be judgment for the plaintiff against Dan Michael Nominees Pty Ltd for possession of the land.
(Discussion ensued.)
I have before me now an application to stay further execution on this matter, that is to say, further execution of an existing warrant for possession. It would be necessary to show exceptional circumstances for such a stay at this stage. I am not satisfied that such exceptional circumstances exist. There will be no stay in the matter.
(Discussion ensued re costs.)
I will order that the defendant, Dan Michael Nominees Pty Ltd, pay the plaintiff's costs of the summons and of this application.
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