McLean v Westpac Banking Corporation - [2010] WASCA 124

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT : THE COURT OF APPEAL (WA)

CITATION: McLEAN -v- WESTPAC BANKING CORPORATION [2010] WASCA 124

CORAM: PULLIN JA
NEWNES JA

HEARD: 28 MAY 2010

DELIVERED : 5 JULY 2010

FILE NO/S: CACV 122 of 2009

BETWEEN: SHONA DIMITY McLEAN
Appellant
AND
WESTPAC BANKING CORPORATION
Respondent

ON APPEAL FROM:
Jurisdiction              :  SUPREME COURT OF WESTERN AUSTRALIA
Coram  :HASLUCK J
File No  :CIV 1914 of 2009

Catchwords:

Practice and procedure Notice to appellant to show cause why appeal should not be dismissed Rule 43(2)(g) of the Supreme Court (Court of Appeal) Rules 2005 (WA) Grounds of appeal manifestly defective Failure to prosecute application for leave to adduce new evidence No effective progress in appeal over period of seven months Turns on own facts

Practice and procedure Application for stay of enforcement of judgment Civil Judgments Enforcement Act 2004 (WA), s 15 Failure to show appeal has reasonable prospect of success

Legislation:

Civil Judgments Enforcement Act 2004 (WA), s 15
Supreme Court (Court of Appeal) Rules 2005 (WA), r 43(2)(g)

Result:

Appeal dismissed

Category: B

Representation:

Counsel:

Appellant: Ms L Horwood
Respondent: Ms A J Preece

Solicitors:

Appellant: L Horwood Solicitor
Respondent: Jackson McDonald

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

Avsar v Binning [2009] WASCA 219
Eastland Technology Australia Pty Ltd v Whisson [2003] WASCA 307; (2003) 28 WAR 308
Glew v Frank Jasper Pty Ltd [2010] WASCA 87
Ladang Jalong (Australia) Pty Ltd v Callander [2005] WASCA 203
Smolarek v Brian Keith McMaster As Administrator of Eznut Pty Ltd [2006] WASCA 216

JUDGMENT OF THE COURT: This appeal has been brought on pursuant to a registrar's notice to attend, dated 24 May 2010, requiring the parties to attend for the following purposes:
1.For the appellant to show cause why the appeal should not be dismissed under r 43(2)(g) of the Supreme Court (Court of Appeal) Rules 2005 (WA) (the Rules) on the ground that none of the grounds of appeal has a reasonable prospect of succeeding or, alternatively, the appellant has not complied with the Rules;
2.to consider the appellant's application for a stay of execution; and
3.for directions in relation to the appellant's application for leave to adduce additional evidence.

The background

It is necessary, before turning to those matters, to set out the relevant background.
The appeal arises out of a loan agreement made between the appellant and the respondent on or about 31 July 2008. In essence, the respondent agreed to advance to the appellant the sum of $560,000, repayable by the appellant by consecutive monthly payments over a period of 30 years, and the appellant agreed to secure the loan moneys by granting a mortgage over a property in Ledge Point. The mortgage was duly registered on or about 14 August 2008.
The loan money was advanced by the respondent but the appellant subsequently defaulted in repayments due under the loan agreement. On or about 6 April 2009, the respondent served a default notice requiring the appellant to rectify the defaults specified in the notice. The appellant failed to do so and the respondent brought proceedings for vacant possession of the Ledge Point property under the terms of the mortgage.
The appellant filed an appearance to the writ and the respondent then brought an application for summary judgment. That application came on for hearing before the primary judge on 21 September 2009. At that hearing the primary judge had before him affidavit evidence on behalf of the respondent verifying the respondent's claim. His Honour also had an affidavit of the appellant to which was annexed a large number of documents, apparently for the purpose of seeking judgment against the respondent. It is impossible to discern the basis upon which the appellant asserted she was entitled to judgment. It is sufficient, however, for present purposes to say that it was misconceived and that nothing contained in the appellant's affidavit or the documents annexed to it suggested that the appellant had a defence to the respondent's claim or that there was any issue in dispute which ought to be tried. It is significant that the appellant did not seek to raise in opposition to the summary judgment application the ground which she now seeks to raise on the appeal.
His Honour found that the respondent was entitled to judgment and ordered that the appellant deliver up vacant possession of the Ledge Point property within 28 days of service of the judgment.
The appellant filed an appeal notice on 12 October 2009. At that stage she was acting on her own behalf. The appellant's case was filed on 16 November 2009. The grounds of appeal contained in it were very lengthy and did not constitute proper grounds of appeal. It is unnecessary to reproduce them. They appear, however, to relate to matters referred to in the appellant's affidavit in opposition to the summary judgment application and not to the defence now sought to be raised.
The respondent filed the respondent's answer on 5 February 2010.
On 12 February 2010, the appellant's current solicitor, Ms Horwood, filed a notice of acting and, on 15 February 2010, the appellant and the solicitors for the parties appeared before the Court of Appeal Registrar. The registrar gave the appellant leave to file and serve an amended appellant's case by 8 March 2010.
On 19 February 2010, the appellant filed an application for a stay of the judgment of the primary judge and for leave to adduce further evidence. The application was filed in the appellant's own name rather than in the name of her solicitor. At the same time the appellant filed an affidavit which, although described as being in respect of both applications, was directed to the application for a stay and contained nothing in relation to the application for leave to adduce further evidence.
An amended appellant's case was filed by the appellant's solicitor on 10 March 2010. The grounds of appeal contained in it were as follows:
1.The appellant was acting in person and a miscarriage of justice has occurred as there is evidence of breaches of the Consumer Credit code and that evidence was not before the court.
2.There has been a miscarriage of justice in that the Respondent/Plaintiff lender knew or should have known of the misrepresentation as to the Appellant's capacity to service the loan.
The misrepresentation is:
(a)That the lender used misrepresented income figures on the loan application submitted on the Appellant's behalf to assess the entitlement to the loan;
(b)The misrepresentations were not made by the Appellant and were not in her hand writing;
(c)The Respondent's lender had an obligation to ensure that the Appellant had the income to support the application;
(d)The Appellant did not have the income to support the loan repayments;
(e)The appellant did not utilise the loan monies for an 'investment property' and that was misrepresented by the Respondent's agent 'RAMS';
(f)There have been breaches of the Consumer Credit Code and the original jurisdiction for said breaches is the State Administrative Tribunal;
(g)The Appellant has accordingly issued proceedings in the SAT matter CC88 [o]f 2010, that commenced on the 4th of February 2010 and are ongoing.
3.His Honour relied on the affidavit evidence of Kylie Renee Ryder of the 11th June 2009, before him ‑ however no evidence was before his Honour of the outstanding issues that had not been addressed by Kylie Renee Ryder or Respondent's lender:
i.Failed to provide documents despite requests (original loan details, loan application);
ii.The documents were only provided on the 9th of February 2010 by the respondent's lender following the Appellant's application to SAT as mentioned above.
4.His Honour relied on the loan document which is liable to be set aside or varied if the SAT proceedings result in a finding that the Respondent lender breached the Consumer Credit Code.
5.The Appellant will suffer a miscarriage of justice if the summary judgement is allowed to stand or is enforced.
The application for a stay of the judgment came on before Newnes JA for directions on 12 March 2010. At that hearing, his Honour pointed out to Ms Horwood, who appeared as counsel for the appellant, that the grounds of appeal were seriously deficient and referred her to the requirements of r 32 of the Rules. Newnes JA told her that the grounds of appeal would have to be completely reworked. To that end, his Honour made an order that the appellant file and serve any further amended appellant's case on or before 26 March 2010. His Honour also drew Ms Horwood's attention to the absence of any affidavit in support of the application to adduce further evidence. Ms Horwood said that a large volume of documents had only become available the previous week.
On the application for a stay of the judgment, the first respondent consented to an order that it was to give not less than 14 days written notice to the appellant before it entered into any contract of sale in respect of the property.
A substituted appellant's case was filed on 26 March 2010. The grounds of appeal in the substituted appellant's case are as follows:
1.The [Respondent] in this matter is a lender who advanced monies to the Defendant pursuant to a loan agreement governed by the Consumer Credit Act 1996 and the Consumer Credit (Western Australia) Code ('the Code').
2.The Plaintiff sought to rely on that loan and associated mortgage to obtain summary judgement.
3.The Supreme Court does not have jurisdiction to hear matters involving allegations of breaches of the Consumer Credit Code.
4.The Code applies to the loan agreement and mortgage as provided for in s 6 of the Code as the borrower is a natural person ordinarily resident in this jurisdiction, the credit was provided wholly or predominantly for a personal domestic or household purpose, a charge has been made for the provision of the credit and the credit provider provided the credit in the course of a business of providing credit.
5.Section 8 of the Code states that the code will apply to mortgages if such a mortgage secures an obligation under a credit contract which in this instance it does.
6.Under s 70 of the Code, the State Administrative Tribunal may in the instance of an unjust contract or mortgage, reopen the transaction giving rise to said contract or mortgage.
7.Under s 71 of the Code, the State Administrative Tribunal may reopen an account already taken between the parties, relieve the debtor from payment of any amount as the court having regard to the risk involved and all other circumstances, considers to be reasonably payable, set aside either wholly or in part or revise or alter an agreement made or mortgage given in connection with the transaction, order that the mortgagee discharge the mortgage, give judgement or make an order in favour of a party of such amount as, having regard to the relief (if any) which the Court thinks fit to grant, is justly due to that party under the contract, mortgage or guarantee.
[no paragraphs numbered 8 and 9]
10.State Administrative Tribunal has original jurisdiction in Consumer Credit Code matters by virtue of the Consumer Credit Act 1996, and the State Administrative Tribunal Act 2004 s 15 and 16.
11.The Enabling Act is the Consumer Credit Act 1996, by virtue of s 7 which grants original jurisdiction in matters concerning s 70 of the Code to the State Administrative Tribunal.
12.The Respondent seeks to rely on a loan agreement that is subject to being set aside under the Code in the State Administrative Tribunal and to allow them to rely on that agreement before the State Administrative Tribunal can exercise its original jurisdiction on the question as to whether the contract or mortgage was 'just' would lead to a miscarriage of justice and is sub judic [sic].
13.Principles of sub judice, ex justitiae debito apply and any Supreme Court proceedings that seek to rely on the agreement or mortgage ought to be stayed pending the outcome of the current SAT proceedings referred to in the Affidavit of Shona Dimity McLean filed 19 February 2010.
14.The Consumer Credit Act of 1996 refers to the 'Conferral of judicial functions' and s 7 of the Act (Section 7) states that the State Administrative Tribunal has original jurisdiction in respect of alleged breaches of the Consumer Credit Act and Code and only the State Administrative Tribunal may exercise original jurisdiction in matters concerning the following sections of the Code: 34(5), 36(6) or (7), 44(4), 47(3), 68 to 72, 74, 77, 79, 82(b), 83(1), 88, 89, 91(1)(a), 92, 93, 98, 99(3), 162(2) or Part 6 of the Code.
15.Because of the misrepresentations made to the Plaintiff lender in the application (per the affidavit of Shona Dimity McLean dated 19 February 2010) and the failure of the lender to ascertain the capacity of the Defendant to service the loan, the loan agreement was unjust and unfair and liable to be reopened, set aside, or have the related mortgage discharged and in those circumstances it is an abuse of process for the Plaintiff to seek summary judgement in this honourable court when related State Administrative Tribunal proceedings in respect of the same loan and mortgage are on foot.
16.A miscarriage of justice has occurred as there is evidence of breaches of the Consumer Credit code and that evidence was not before the court on the 21^st of September 2009 when Summary Judgment was granted in this matter.
(a)There has been a miscarriage of justice in that the Respondent/Plaintiff lender knew or should have known that the Appellant did not have the capacity to service the loan.
(b)The Appellant has accordingly issued proceedings in the SAT matter CC88 of 2010, that commenced on the 4^th of February 2010 and are ongoing.
17.His Honour relied on the affidavit evidence of Kylie Renee Ryder of the 11^th June 2009, before him - however no evidence was before his Honour of the outstanding issues that had not been addressed by Kylie Renee Ryder as the Respondent's lender:
i.Failed to provide documents despite requests from the Appellant (original loan details, loan application)
ii.The documents were only provided on the 9^th of March 2010 by the respondent's lender following the Appellant's aforementioned application to SAT.
18.His Honour relied on the loan document which is liable to be set aside or varied if the SAT proceedings result in a finding that the Respondent lender breached the Consumer Credit Code.
19.The Appellant will suffer a miscarriage of justice if the summary judgement is allowed to stand or is enforced.
On 10 May 2010, the respondent's solicitors filed an affidavit annexing an email sent to the appellant and her solicitor saying that, pursuant to the power of sale in the mortgage, an auction of the Ledge Point property had been arranged for 29 May 2010. On 24 May 2010, the Court of Appeal Registrar issued the notice to attend to which I referred earlier.
At the hearing on 28 May 2010, the application for a stay of the judgment of the primary judge was dismissed. We said we would provide reasons for our decision later. We will come to those reasons shortly, but before doing so it is convenient to consider the notice to show cause why the appeal should not be dismissed under r 43(2)(g) of the Rules.

The notice to show cause

It is immediately obvious that, as with the earlier grounds of appeal, none of the grounds of appeal in the substituted appellant's case complies with r 32(4) of the Rules. Indeed, they do not bear even a passing resemblance to properly drawn grounds of appeal. That is not a matter of pedantry. This court has pointed out on a number of occasions that on an appeal the appellant must demonstrate that there has been error of a recognised genre that falls to be corrected and which entitles the appellant to the orders sought. The grounds of appeal are a critical part of the process because they are the vehicle which guides the review process: Avsar v Binning [2009] WASCA 219 [37].
Adherence to the rules is not optional, or merely desirable, but obligatory. While it may be necessary on occasions to afford some degree of latitude to a litigant in person, even then the extent to which departure from the rules can be permitted is necessarily limited both as a matter of fairness to the other party, who must be adequately informed of the case they have to meet, and because the provision of acceptable grounds of appeal is fundamental to the exercise of the appellate function by the court: Glew v Frank Jasper Pty Ltd [2010] WASCA 87 [10]. The question of latitude does not, of course, arise where a legal practitioner is acting for the appellant. The court is entitled to expect that a legal practitioner will apply proper standards of professional competence to the task.
At the hearing on 28 May 2010, Ms Horwood said, in response to a question from the court, that the appellant had prepared the substituted grounds of appeal and that she (Ms Horwood) had made some minor amendments to them. Ms Horwood said that in the course of amending the appellant's case she did not have regard to the Rules, although she conceded that at the hearing on 12 March 2010 her attention had been specifically drawn to r 32 of the Rules. Ms Horwood accepted that the current grounds of appeal did not comply with the Rules. No explanation was offered.
It is clear that none of the current grounds of appeal has a reasonable prospect of succeeding and they are so defective that they must be struck out. The only question is whether the appeal should be dismissed. In considering that question, it is appropriate to turn to the case the appellant seeks to advance on the appeal.
That case, so far as it can be gleaned from the current grounds of appeal and from what we were told from the bar table, is that the primary judge erred in finding that the respondent was entitled to summary judgment in circumstances where the loan agreement and mortgage were liable to be set aside under s 71 of the Consumer Credit (Western Australia) Code, made under the Consumer Credit (Western Australia) Act 1996 (WA). As we understand it, the appellant contends that there exists evidence, not put before the primary judge, which establishes that at the time it was entered into the loan agreement was 'unjust' within the meaning of s 70 of the Code, with the result that the loan agreement and the mortgage are liable to be set aside by the State Administrative Tribunal (SAT) under s 71 of the Code in proceedings which the appellant has now instituted in that jurisdiction. (We note in passing that the application to SAT was made some four months after judgment was entered against the appellant.) The application is opposed by the respondent.
Section 70(1) of the Code provides, in effect, that SAT may reopen a transaction giving rise to a credit contract or mortgage if satisfied that at the time it was entered into the credit contract or mortgage was unjust (which 'includes unconscionable, harsh or oppressive': s 70(7)). In determining whether a term of a credit contract or mortgage was unjust at the time it was entered into, SAT must have regard to the public interest and to all of the circumstances of the case, and it may have regard to fourteen specified factors and 'any other relevant factor': s 70(2). One of the specified factors to which it may have regard is:
(l)[W]hether at the time the contract, mortgage or guarantee was entered into or changed, the credit provider knew, or could have ascertained by reasonable inquiry of the debtor at the time, that the debtor could not pay in accordance with its terms or not without substantial hardship.

Section 71 of the Code provides SAT with extensive powers on reopening a transaction, including setting aside or altering an agreement or mortgage, relieving the debtor from payment of any amount in excess of such amount as the Court considers reasonably to be payable, or making an order in favour of any party of such amount as the Court thinks fit.
Pursuant to s 7 of the Act, the jurisdiction under s 70 and s 71 of the Code is exercisable only by SAT.
We should add that the Code applies only to the provision of credit which is wholly or predominantly for personal, domestic or household purposes: s 6(1)(b) of the Code. It appears that whether the loan was for such a purpose, and therefore whether the Code applies, is a matter in issue between the parties. We were informed that that had recently been the subject of argument on a preliminary issue in SAT and the decision has been reserved.
The only explanation of the factual basis of the appellant's application to SAT is contained in the affidavit filed in support of her application to this court for a stay of the enforcement of the judgment. In that affidavit the appellant says that, on '18 January 2009' [sic, 18 January 2010], she lodged an application under the Code at SAT in relation to the transaction. The appellant does not annex a copy of the application but she does annexe a copy of a document entitled 'Statement of Issues, Facts and Contentions' which she has apparently filed in SAT in relation to the application. The appellant does not depose to the truth of the contents of that document. Apart from stating that the appellant had not been in any form of paid employment since approximately 2001, the document appears to be directed to the question of whether the loan funds were for the appellant's personal use and does not deal with the substantive grounds of the application to SAT.
In the affidavit, the appellant goes on to say (relevantly):
10.It would be unjust to allow the [respondent] to dispose of my property which the [respondent] has a mortgage over in connection with the loan the subject of this action. I inherited, and has never been an investment property, [sic]
11.I inherited the property, and it has never been an investment property, and advice I have received since lodging the appeal suggests, and I do believe, that the [respondent] breached the consumer credit code by failing to ascertain whether I had the capacity to pay back the loan repayments under the loan agreement I entered into with the [respondent].
12.In fact, at the time the [respondent] advanced the money it should have been obvious that I did not have that capacity and they have breached the code by advancing monies to me and taking a security over the property in those circumstances and these issues have to be considered by the State Administrative Tribunal if justice is to be served
13.At the time I had not been in paid employment for 10 years and I did not have any financial records, not even tax returns as I had not filed, and still have not filed, a tax return since 1998
14.If the [respondent] sells the property I can never be compensated adequately even if I am awarded monetary damages as it is a unique property with a lifetime of memories attached to it.
Putting aside questions of admissibility, it therefore appears that the appellant's contention that the loan agreement was unjust is based upon the proposition that, at the time it was entered into, the respondent knew, or ought to have known, that the appellant did not have the financial capacity to make the loan payments: that had the respondent made appropriate inquiries into her ability to service the loan before making it, those inquiries would have revealed that the appellant did not have the financial capacity to do so.
That in turn seems to rest on the proposition that a lender is under a duty, before making a loan, to satisfy itself of the capacity of a borrower to repay the loan. We were not referred to any provision of the Act or Code (or any other relevant legislative provision) which imposes such a duty. What appears, however, from s 70(2)(l) of the Code is that whether the lender knew or could reasonably have ascertained that the borrower could not pay in accordance with the terms of the loan is a factor that SAT may take into account in determining whether, in all the circumstances, a transaction is unjust.
As we have mentioned, the case the appellant seeks to advance on the appeal was not put to the primary judge and it depends upon evidence which was not before his Honour. No satisfactory explanation has been offered for the failure to raise the matter before the primary judge. Nor has any explanation been provided for the failure to pursue the application to adduce further evidence. Despite the fact that it is essential to the appeal, the appellant has allowed the application to languish. Nothing has been done since it was filed, without any supporting affidavit, on 19 February 2010 and the further evidence on which the appellant seeks to rely has still not been identified.
Ms Horwood told us that the documents which the appellant wishes the court to receive as evidence on the appeal became available to the appellant in the early part of March 2010. Ms Horwood said that she had been told what was contained in the documents but she had not looked at them. Apparently the documents were produced by the respondent in the SAT proceedings and consist of contract documents and associated material in the possession of the respondent. We were not told whether or to what extent any of that material was already in the possession of the appellant although, given the nature of the case the appellant seeks to advance, it is inconceivable that no relevant evidence was available to her. The appellant must, for instance, have been aware of whether any (and if any, what) information was sought from her by the respondent, and whether she provided any (and if any, what) information, in relation to her financial capacity. Nevertheless, no steps have been taken to disclose any of the relevant evidence.
Thus the point has now been reached where the third attempt to prepare proper grounds of appeal has been entirely unsuccessful. Nothing of any use could realistically be salvaged from it. To draw proper grounds of appeal it would be necessary to start afresh. In addition, whilst the appellant's application to adduce further evidence, which is essential to the appeal, has now been on foot for more than three months, and more than two months have passed since the appellant came into possession of what are said to be the relevant documents, still the evidence concerned has not been disclosed. The appellant's solicitor has not even looked at the documents. At least so far as the court is concerned, whether or not any new evidence (if admitted on the appeal) would assist the appellant can be no more than a matter of speculation.
In short, the appeal has made effectively no progress since it was instituted on 12 October 2009, more than seven months ago. It appears the responsibility for that must lie at the feet of the appellant herself up to 12 February 2010, when her current solicitor came on the record. Whether, since that time, the fault lies with the appellant herself or her solicitor, or is to be apportioned between them in some way, it is not possible to say on what is before us. We do not think it matters. The appellant has had ample opportunity to put her case in order. No satisfactory explanation has been provided for her singular failure to do so. In the meantime, the respondent has been left with an effectively inert appeal hanging over it.
In the circumstances, we do not consider it to be in the interests of justice to afford the appellant yet another opportunity to put the grounds of appeal in a proper form. Rather, the interests of justice require that this sorry saga be brought to an end. Accordingly, we would dismiss the appeal.

Stay of the judgment of the primary judge

On 28 May 2010, we dismissed the application for a stay of the order of the primary judge that the appellant give vacant possession of the property to the respondent. We said we would give our reasons later. The following are our reasons.
Under s 15 of the Civil Judgments Enforcement Act 2004 (WA), a person against whom a judgment is given may apply for an order suspending the enforcement of the judgment. The court may only make such an order if there are special circumstances that justify it doing so: s 15(3).
The principles applicable to an application under s 15 are not materially different from those which applied to an application for a stay of execution before the introduction of the Act: see Ladang Jalong (Australia) Pty Ltd v Callander [2005] WASCA 203 [3]; Smolarek v Brian Keith McMaster As Administrator of Eznut Pty Ltd [2006] WASCA 216 [33]. The general principles were summarised by Murray and Parker JJ in Eastland Technology Australia Pty Ltd v Whisson [2003] WASCA 307; (2003) 28 WAR 308 [9]. It is unnecessary to set them out. Suffice it to say that the ordinary rule is that a successful litigant at first instance is entitled to enforce the judgment pending the determination of any appeal and the court will not prevent it from doing so unless special circumstances are shown justifying the departure from the ordinary rule. In considering whether a stay should be granted, a relevant consideration is whether the appeal has reasonable prospects of succeeding. A stay will generally not be granted unless the appellant establishes that the appeal has reasonable prospects of succeeding.
In the present case, there is no basis upon which it could be concluded that the appeal has reasonable prospects of succeeding. The prospects of success turn on the new evidence on which the appellant seeks leave to rely. Due to the appellant's tardiness in pursuing that application for leave, the evidence has not been disclosed and, accordingly, whether or not it would assist the appellant can be no more than a matter of speculation. The prospects of obtaining leave to rely on it also remain entirely unknown.
In our view, the basis for the intervention of the court to prevent the respondent enforcing the judgment was not made out. It was for that reason we dismissed the application.

Conclusion

We would dismiss the appeal.