Mavaddat v Westpac Banking Corporation - [2014] WASCA 128

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT : THE COURT OF APPEAL (WA)

CITATION: MAVADDAT -v- WESTPAC BANKING CORPORATION [2014] WASCA 128

CORAM: NEWNES JA
MURPHY JA

HEARD: 5 JUNE 2014

DELIVERED : 9 JULY 2014

FILE NO/S: CACV 96 of 2013

BETWEEN: MICHAEL MOOJAN MAVADDAT
First-named Appellant
FARIBA MAVADDAT
Second-named Appellant
AND
WESTPAC BANKING CORPORATION
Respondent

ON APPEAL FROM:
Jurisdiction              :  SUPREME COURT OF WESTERN AUSTRALIA
Coram  :SANDERSON M
File No  :CIV 1220 of 2013

Catchwords:

Delays in appeal - Failure to file appellant's case in time - Application for extension of time previously granted - Whether appellant failed to comply with order extending time - Whether appeal should be dismissed on basis that none of the grounds of appeal has a reasonable prospect of success - Appeal dismissed

Legislation:

Supreme Court (Court of Appeal) Rules 2005 (WA), r 43(2)(g)(i)
Rules of the Supreme Court 1971 (WA), O 72 r 5A

Result:

Appeal dismissed

Category: B

Representation:

Counsel:

First-named Appellant    :     No appearance
Second-named Appellant     :     No appearance
Respondent:     Mr D P Butler

Solicitors:

First-named Appellant    :     No appearance
Second-named Appellant     :     No appearance
Respondent:     Lavan Legal

Case(s) referred to in judgment(s):

Dodds v Kennedy [2011] WASCA 32
Monteleone v The Owners of the Old Soap Factory [2007] WASCA 79

REASONS OF THE COURT: This matter was listed before the court on 5 June 2014, pursuant to a registrar's notice to attend dated 14 May 2014:
1.To determine whether the appeal has been dismissed for failure to comply with the order made by Newnes JA on 22 January 2014.
2.If the appeal has not been dismissed, for the appellants to show cause why the appeal should not be dismissed pursuant to r 43(2)(g)(i) of the Supreme Court (Court of Appeal) Rules 2005 (WA) (Court of Appeal Rules) on the basis that none of the grounds of appeal has a reasonable prospect of succeeding.
The orders made by Newnes JA on 22 January 2014 were, relevantly, that:
Unless on or before 28 February 2014 the appellants do file and serve the appellants' case the appeal do stand dismissed and the appellants pay the respondent's costs of the appeal (including any reserve costs) to be taxed.
The background is as follows. The appellants jointly owned a property at 28 Simpson Street, Applecross. They had lived in it from 1998 until 2007, after which the property was used as an investment property. They obtained a business loan from the respondent (Westpac) pursuant to a loan agreement dated 11 July 2008, with a facility limit of $1.085 million. They mortgaged the property to secure the loan. The business loan was for the purposes of refinancing existing loans and for purchasing other investment properties.
Following a notice of demand on 9 November 2012, Westpac commenced proceedings for repayment of the debt and the possession of the property on 12 February 2013.
The matter was listed for a case management conference before Registrar Whitby on 25 March 2013, and orders were made that the matter be adjourned sine die.
Westpac applied for summary judgment on 22 May 2013, supported by an affidavit sworn by Ms May, a manager of Westpac. Ms May annexed the loan agreement, the mortgage and its general conditions, the certificate of title and a notice of demand dated 9 November 2012. The notice of demand included the following:
1.4Pursuant to a letter dated 13 May 2011 issued by Lavan Legal on behalf of the Lender to the Borrower and the Guarantor, the Lender agreed not to enforce the Securities in relation to defaults existing at that time provided, amongst other things that no further default occurred under or with respect to the loans.
1.5The Borrower is in default of its obligations under the loan Agreement with respect to the Loan in that the Borrower has failed to pay the required interest instalment due to the Lender on or before 2 May 2011, 1 June 2011 and 1 July 2011 as required by the Loan Agreement.
1.6The Lender issued a notice of demand on the Borrower dated 19 July 2011.
1.7The Borrower subsequently lodged a complaint with the Banking Ombudsman (Complaint).
1.8The Complaint has been finalised and the Lender is permitted to recommence its action to recover the loan including by enforcing the Security.
The notice of demand also stated:
2.1The Borrower is in default of its obligations under the loan Agreement with respect to the Loan.
2.2The Lender is entitled to demand from the Borrower payment of the whole of the balance owing by the Borrower to the Lender under the Loan pursuant to the Loan Agreement and the Security …
2.3The Lender requires and demands that the Borrower pay by close of business, Perth time, on Wednesday, 12 December 2012 … the amount specified below as payable by the Borrower to the Lender at its office at Level 8, 109 St Georges Terrace, Perth, Western Australia.
…
3.2If the Borrower fails to pay an amount equal to the aggregate of the Demand Amount the other amounts specified above payable by the Borrower under this notice of demand by close of business, Perth time, on the Payment Date, the Lender may (without prejudice to the Lender's powers to do so earlier) exercise any remedy or power or enforce any other right available to the Lender against the Borrower under the Loan Agreement, the Security, at law or in equity including, without limitation, exercising the power of sale of land and other property the subject of the Security.
The summary judgment application was listed for 11 June 2013 before Master Sanderson. Programming orders were made inter alia requiring the appellants to file any affidavits in opposition by 18 June 2013. The matter was ordered to be listed for hearing at a special appointment after 1 July 2013.
The first‑named appellant, on behalf of the appellants (who were then legally represented), swore an affidavit in opposition dated 21 June 2013, and filed it on 24 June 2013. Westpac filed a supplementary responsive affidavit on 2 July 2013, which included, amongst other things, bank statements recording the non‑payment of interest. The appellants filed a supplementary affidavit of the first‑named appellant on 24 July 2013. They also filed an affidavit by Don Tapper, their finance broker, sworn 23 July 2013.
The affidavits filed on behalf of the appellants made a number of generalised allegations. They alleged, in effect, that Westpac had issued an 'enduring default notice'; that the notice was based on an alleged non‑disclosure by the appellants; and that Westpac had no reasonable grounds to issue the notice. The first‑named appellant asserted, in effect, in his affidavit of 21 June 2013, without any particularity, that following the issue of the enduring default notice, Westpac had then demanded payment of $1.085 million within 24 hours; that it was impossible for him to comply with repayment in such a short time; and that the bank then immediately, unilaterally, varied the terms of the loan agreement.
It also appeared from the first‑named appellant's affidavit that around 2009 and 2010, the appellants were seeking further finance from Westpac, but the 'enduring default notice' presented a difficulty in them obtaining further finance (annexures MM‑4 and MM‑5). His affidavit also asserted that he was involved in a dispute with his former business partner, Ms Lee, who had a dispute with St George Bank, and that a tripartite settlement deed had been entered into with respect to those proceedings.
The appellants' affidavits did not annex the enduring default notice. Ms May's supplementary affidavit of 2 July 2013, annexed the enduring default notice dated 10 November 2008. It was in these terms:
We refer to your application for finance dated 21 June 2008.
Westpac Banking Corporation (the Bank) is in receipt of material information that we believe you were aware of but did not disclose to the Bank in your application for finance. The information relates to your professional standing & income generated as a licensed real estate agent and by extension, the cash flow from that professional standing & income generation.
Had this information been disclosed at the time of your application for finance the Bank would not have proceeded with the advance of the funds as described in the Business Finance Agreement ('BFA') dated 11 July 2008.
Whilst reserving all the rights and remedies under the BFA and the related security documents, the Bank is willing to continue the facility described in the BFA subject to all interest and fees being met when due.
Failure to meet any interest & fee payments as they fall due, or the amortisation arrangements that are due to commence from 26 June 2013 will constitute an event of default whereby the facility will become immediately due and payable.
The summary judgment application came on for hearing on 8 August 2013.
At the hearing on 8 August 2013 before Master Sanderson, the appellants' solicitor informed the court that his instructions had been terminated the preceding day. He asked for and was given leave to withdraw.
The master then invited the first‑named appellant to indicate the basis upon which the appellants were opposing summary judgment. The first‑named appellant requested an adjournment. He said that the way the solicitor had handled the matter was 'unsatisfactory' and that was why the appellants had asked the solicitor to be 'struck off'.
The master noted, in effect, that a considerable time had elapsed since the first‑named appellant's affidavit was filed on 21 June 2013, and that there was no material on which it would be appropriate to grant an adjournment. The master said, in effect, that the appellants' affidavit did not appear to even hint at a defence, and that parts of it were scandalous. The master nevertheless said, in effect, that he would give the first‑named appellant the opportunity to address the merits of the question of whether summary judgment should be granted, and to say anything about the contents of the appellants' affidavit. The first‑named appellant accused the master of bias.
The first‑named appellant said that it was 'very clear' that the appellants had a defence. In essence, he said, in effect, that:
•Westpac had issued an 'enduring default notice' based on the non‑disclosure of certain matters.
•Westpac took over St George Bank at a time when the appellants were settling litigation involving St George Bank and the first‑named appellant's former business partner, Ms Lee.
•The appellants took their complaints to the Financial Ombudsman service.
•The appellants made an arrangement with Westpac for the 'sale of the property to occur to pay their debts back'.
•There was currently a 'live offer' of which Westpac was aware.
•The appellants lost all of their equity in the property, which was supposed to be their 'egg nest [sic]'.
The first‑named appellant concluded:
We have taken all of our losses and agree with the bank that we will sell the property and it is being done at the moment with a live offer, counter offer, that has gone back. As I have said that before. And we have been negotiating with them behind - before coming to this court. We tried to settle the matter if it is possible on the basis of us agreeing to their certain terms and giving them judgment default and so forth so on, allowing the sale to go through as long as the matter is not - the judgment is not registered until 31 August, allowing any sale and settlement.
And, additionally, that the bank will accept a final figure of - on that we recommend as a final payment so that we don't take action against them for any losses in the future. Now, there is a merit and an arguable case and this is should not just be done on a summary judgment where, you know, issues of scandals and that comes up and becomes totally whitewashed and it doesn't become a case that is justifiable or justice is being done (ts 8).
The master in ordering summary judgment, delivered extemporary oral reasons, including the following:
The first thing to say is that the plaintiff has complied in all respects with the requirements of [O 14]. Insofar as the defendants are concerned, there are two matters. First, this morning the defendants indicated that they have terminated the instructions of the solicitor who has been acting for them. On that basis they seek an adjournment to obtain further legal advice. The fact is that this matter has gone on for some time. The application for summary judgment was made in May. It was programmed in June. An affidavit, which I assume to be the main affidavit of the defendants, was lodged on 25 June.
Any dissatisfaction with the defendant[s'] solicitor should have been apparent long before this morning. I am not satisfied it would be in the interest of justice to grant an adjournment. I say that for two reasons. One is that as the defendant[s'] evidence stands at the moment I can ascertain no basis upon which the application for summary judgment can be resisted. Further, it seems to me, having heard what the defendant, Mr Mavaddat, has to say that there is nothing in that which would provide a defence to this action. Turning then to the proceeding[s] themselves, it is the case that there are a series of vague allegations which I suppose might be said to amount misconduct made against the bank.
I can't ascertain from the affidavit material any basis upon which it can be said that there hasn't been default or that the loan isn't due and owing. Accordingly the proper order is that there be judgment for the plaintiff (2 ‑ 3).
On 29 August 2013, the appellants filed an appeal notice. The appellants' case was due to be filed by 26 September 2013. It was not filed in time and there was then no application to extend the time.
On 18 November 2013, the registrar issued a notice to show cause why the appeal should not be dismissed pursuant to r 43(2)(g)(ii) of the Court of Appeal Rules for failure to comply with the Rules in relation to the filing of the appellants' case. The matter was listed for hearing on 17 December 2013 for that purpose. On that occasion the first‑named appellant sought an adjournment on medical grounds. In addition, he said that he had still not obtained his files for the matter from his previous solicitor. An adjournment was granted.
The matter was listed again, on 22 January 2014, to show cause why the appeal should not be dismissed for failing to file and serve the appellants' case. On 21 January 2014, the appellants filed an application to extend time. The first‑named appellant also wrote to the court before 22 January 2014 asking for an adjournment of that hearing on the bases of 'ongoing medical problems', the recent receipt of files from his former solicitors, the 'burden' of dealing with ongoing Supreme Court matters and the fact that he had not received the notice of hearing until 14 January 2014. The listing nevertheless went ahead with the first‑named appellant attending. On 22 January 2014, Newnes JA made the orders referred to in [2] above.
The appellants' case was filed on 28 February 2014. It was emailed to the respondent's solicitors at 4.41 pm on 28 February 2014. The respondent contended that to the extent that service was effected at all, it was effected as at the next business day, being 4 March 2014, by reason of O 72 r 5A of the Rules of the Supreme Court 1971 (WA).
The matter was listed on 17 April 2014 to determine whether the appeal had been dismissed for the failure by the appellants to comply with the order of Newnes JA on 22 January 2014 and, if not so dismissed, for the appellants to show cause why the appeal should not be dismissed on the basis that none of the grounds of appeal had a reasonable prospect of succeeding. This hearing was again vacated upon application of the first‑named appellant.
The matter was further listed on 13 May 2014 on the same basis as the 17 April 2014 listing. The matter was vacated as there was no judge available for the hearing. On 9 May 2014, the second‑named appellant swore an affidavit annexing a medical report dated 27 October 2013 which indicated that she had developed persistent neuropathic right hemicranial pain as a result of a dental injury on 12 December 2009 and subsequent multiple surgeries; persistent pain and disability had been further aggravated by significant mood and sleep disturbance, and a recent deterioration related to stress. The report also stated that the second‑named appellant should not attend court hearings unless absolutely necessary due to her 'current state'. On 15 May 2014, Westpac filed submissions in relation to the registrar's notice to attend dated 14 May 2014 (see [1] above). The matter was listed for hearing on 5 June 2014.
The appellants' case comprises 15 grounds of appeal and associated submissions. The grounds of appeal may be divided into four areas:
(a)the appellants were denied natural justice by Master Sanderson because, in effect, he did not grant an adjournment when they requested it on 8 August 2013 (grounds 1, 2, 3, 8, 9 and 10);
(b)the master was biased (ground 7);
(c)the master misunderstood the principles relevant to a summary judgment application in that he failed to consider and determine whether there was an issue to be tried (grounds 8 and 14);
(d)the master erred in failing to identify that there was a genuine dispute that needed to go to trial (grounds 4, 5, 6, 11 ‑ 13 and 15).
As to the last‑mentioned complaint, concerning the existence of a genuine dispute, it involved, in substance, reliance on the matters referred to in [16] ‑ [17] above.
On 3 June 2014, by email communication with court staff, the first‑named appellant said that the appellants required an adjournment of the hearing on 5 June 2014 because they had only just received Westpac's submissions dated 15 May 2014. The first‑named appellant then filed an affidavit, sworn 4 June 2014, to the effect that he had not received the respondent's submissions of 15 May 2014 'until the 3rd of May 2014' [sic]. Presumably, he meant 3 June 2014. In opposition to the application for an adjournment, the respondent's solicitors filed an affidavit sworn 4 June 2014. The affidavit deposed to the transmission of certain emails sent to the court and to the appellants, including service of its submissions on 15 May 2014, without any record of any difficulty or delay in the transmission. The emails were annexed showing the dates and times.
On the morning of 5 June 2014, at 8.15 am, the first‑named appellant emailed court staff and said that he was 'at surgery waiting for doctor to arrival [sic]' and that he would wish the matter to be adjourned because he was too ill. At 11.17 am he faxed a document purporting, on its face, to be a medical certificate indicating that the first‑named appellant was being treated and was 'unfit to continue his usual occupation' for one day.
The matter came on for hearing at 11.30 am on 5 June 2014. The hearing on 5 June 2014 had been fixed for some time and had not been vacated.
There was no appearance by the appellants and no affidavit explaining their non‑attendance. The respondent appeared by counsel, but was not called upon. There was no adjournment and the court reserved its decision.
These reasons deal with the disposition of the two matters the subject of the registrar's notice dated 14 May 2014, and the reasons why an adjournment was not granted on 5 June 2014.
An adjournment was not granted for essentially the following reasons. The 'medical certificate' of the first‑named appellant was an unsworn statement in the most general of terms, which, even if admissible, did not purport to describe the nature of the condition or say that the first‑named appellant was too unwell to attend court. In the context of this particular matter and having regard to its history, some specificity was required. The medical certificate annexed to the second‑named appellant's earlier affidavit was dated some six months prior to the hearing on 5 June 2014. The unsatisfactory nature of the medical evidence, whilst not necessarily a complete answer to the question of whether the appellants were entitled to an adjournment, was of some significance and fell to be weighed in the context of the other considerations mentioned below.

It is difficult to conceive how an adjournment would have assisted the appellants on the determination of the question of whether the appeal had been dismissed pursuant to the orders of Newnes JA on 22 January 2014. As noted below, on the uncontradicted evidence, the springing order had taken effect. There has never been an application for an extension of time by the appellants beyond 28 February 2014. Also, the appellants had been granted considerable latitude in the past which has delayed significantly the proper dispatch of the appeal. Furthermore, the respondent's submissions of 15 May 2014 were brief and in substance raised nothing beyond fundamental points which the appellants would, in any event, have needed to have addressed in chief in dealing with the matters the subject of the registrar's notice, irrespective of the content of the respondent's submissions. For these reasons, we considered that an adjournment was not in the interests of justice.
As to the first matter to be determined pursuant to the registrar's notice dated 14 May 2014, the evidence is that the appellants' case was sent at 4.41 pm on 28 February 2014. Order 72 r 5A of the Rules of the Supreme Court 1971 (WA) provides, relevantly:
(2)A document that is sent to a person by a method in the Table to this rule is to be taken to be served on the person at the times dated opposite the method in the Table, unless the contrary is proved.
There follows a table which, in relation to sending a document by email, states:
If it is sent by email before 4.00 pm on a working day, on that day. Otherwise on the first working day after the email is sent.
It may be assumed, for present purposes (without deciding) that service by email was permissible. As the email attached to the appellants' case was sent to the respondent's solicitors after 4.00 pm on 28 February 2014, service was effected on the following business day pursuant to O 72 r 5A, unless the appellants proved that service had been effected prior to 4.00 pm on that day. There was no evidence of any service prior to 4.00 pm on 28 February 2014. Accordingly, by the operation of O 72 r 5A, the appellants' case was not served in accordance with the orders of Newnes JA made 22 January 2014. On this basis, the appeal was dismissed by reason of the operation of those orders. There has been no application since 28 February 2014 for an extension of time to serve the appellants' case in the event that the appeal was dismissed pursuant to the orders of Newnes JA on 22 January 2014.
Were it necessary to decide the matter, we would also be of the view that it is plain that none of the grounds of appeal has a reasonable prospect of succeeding for the following reasons.
As to the first complaint, concerning the denial of natural justice, the master evidently gave the appellants a fair hearing. The decision not to grant an adjournment was a discretionary decision and the appellants must establish that the primary court has expressly or impliedly made a material error of fact or law. Failure to give adequate weight or giving too much weight to a relevant consideration does not give rise to a relevant error, unless the failure really amounted to a failure to exercise the discretion actually entrusted to the court: Monteleone v The Owners of the Old Soap Factory [2007] WASCA 79 [36]. Moreover, special restraint must be exercised when the interlocutory order under appeal is one concerning practice and procedure: Dodds v Kennedy [2011] WASCA 32 [5] and the cases there cited. There was no arguably relevant error identified in the appellants' case which would justify this court to interfere in the exercise of the master's discretion in this matter.
As to the second area of complaint, this has no foundation at all, and the complaint of bias is mischievous, particularly when regard is had to the transcript of the hearing before the master in regard to this complaint.
As to the third area of complaint, again, it has no foundation. The master was plainly aware of the relevant principles.
As to the fourth area of complaint, concerning the alleged genuine dispute, nothing has been advanced in the appellants' case which would arguably indicate that the master erred in finding that no issue had been raised which indicated that the matter should proceed to trial rather than be dealt with by summary judgment. As the master, in effect, observed, the appellants' affidavits were expressed in general and unparticularised form. Even if the enduring default notice dated 10 November 2008 had not been issued on reasonable grounds (in relation to which the appellants' affidavits contain assertion rather than cogent evidence), that in itself does not demonstrate any arguable error in the master's conclusion that he could not ascertain 'from the affidavit material any basis upon which it can be said that there hasn't been default or that the loan isn't due and owing'. On the materials, there was no ascertainable dispute by the appellants that they had failed to pay interest in May, June and July 2011 as required by the loan agreement, and that, under the terms of the loan agreement, non‑payment of interest constituted an event default.
In any event, on the first basis referred to in the registrar's notice, the appropriate order is that the appeal is and be dismissed.