Moore v BNY Trust Company of Australia Ltd

[2012] WASCA 188

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT :   THE COURT OF APPEAL (WA)

CITATION:   MOORE -v- BNY TRUST COMPANY OF AUSTRALIA LTD [2012] WASCA 188

CORAM:   MURPHY JA

HEARD:   28 SEPTEMBER 2012

DELIVERED          :   28 SEPTEMBER 2012

FILE NO/S:   CACV 85 of 2012

BETWEEN:   TERENCE MOORE

First Appellant

MARLENE FORREST-MOORE
Second Appellant

AND

BNY TRUST COMPANY OF AUSTRALIA LTD
Respondent

ON APPEAL FROM:

Jurisdiction              :  SUPREME COURT OF WESTERN AUSTRALIA

Coram  :MASTER SANDERSON

Citation  :BNY TRUST COMPANY OF AUSTRALIA LTD -v- MOORE [2012] WASC 255

File No  :CIV 2223 of 2011

Catchwords:

Civil procedure - Application for a stay of summary judgment - Mortgage of home - Bank alleged to have engaged in unconscionable conduct

Legislation:

Nil

Result:

Application allowed subject to payment into court

Category:    B

Representation:

Counsel:

First Appellant               :     Mr J M Healy

Second Appellant          :     Mr J M Healy

Respondent:     Mr B C Smith

Solicitors:

First Appellant               :     Rowe Bristol Lawyers

Second Appellant          :     Rowe Bristol Lawyers

Respondent:     Gadens Lawyers

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

BNY Trust Company of Australia Ltd v Moore [2012] WASC 255

Permanent Mortgages Pty Ltd v Vandenberg [2010] WASC 10 (S)

Permanent Mortgages Pty Ltd v Vandenberg [2010] WASC 10; (2010) 41 WAR 353

Schreuder v Murray [2009] WASCA 75

Tradesman Technologies Pty Ltd v Ameduri [2012] WASCA 168

MURPHY JA:

(This judgment was delivered extemporaneously on 28 September 2012 and has been edited from the transcript).

Introduction

1. This is an application for a stay of summary judgment entered in favour of the respondent (the bank) against the appellants.  Summary judgment was granted on 24 July 2012, and orders were made to the effect that the appellants pay the bank approximately $659,000 and deliver up possession of their property in Halls Head, within 28 days.  The master's reasons for judgment are recorded in BNY Trust Company of Australia Ltd v Moore [2012] WASC 255.

2. The appeal was commenced on 9 August 2012.  On 3 September 2012, the Principal Registrar of the Supreme Court sealed a Property (Seizure and Delivery) Order.  The Sheriff's office has indicated that execution is to take place on 4 October 2012.  This is an urgent application to forestall execution on the property.

3. Generally speaking, the primary findings of fact made by the master are not in dispute and are summarised in [5] ‑ [14] of the master's reasons.  There is no dispute that the appellants had considerable financial commitments and were experiencing cash flow difficulties.  They wished to discharge a then existing mortgage debt, in respect of which certain defaults had previously occurred.  They borrowed a sum of $360,000 from the bank.  They mortgaged their property to secure the loan from the bank.  They subsequently defaulted under the loan facility, and have failed to repay the principal and accrued interest on the loan.

4. There is evidence that the value of the property is unlikely to exceed $450,000 (Taylor affidavit 27 September 2012).  The judgment debt, with interest, is now approximately $676,000.

The proposed grounds of appeal

1. The appellants' principal contention is that the master erred in failing to find that, on the evidence, there was a serious issue to be tried in relation to whether the bank had engaged in unconscionable conduct, either under the general law or under s 51AC of the Trade Practices Act 1974 (Cth) (since repealed). Amongst other things, the appellants contend that the evidence reveals, in effect, that:

   (a)the bank knew that the appellants could not afford to repay the loan;

   (b)the bank engaged in 'asset lending' in that it had no regard to the ability of the appellants to service the loan;

   (c)the bank failed to comply with its own credit policy guidelines; and

   (d)the bank failed to comply with aspects of the Consumer Credit (Western Australia) Code as it applied at the time that the transaction occurred.

2. Reference is also made to the fact that the appellants borrowed from the bank an amount (according to the master of approximately $45,000) in excess of the sum that they needed to repay their then existing mortgage.

3. The appellants allege three other errors. One is that an affidavit relied on by the bank, sworn by Mr Taylor on 31 May 2012, was inadmissible because it did not set out the grounds of his information and belief in accordance with O 14 r 2(2) of the Rules of the Supreme Court 1971 (WA). The second is that the master erred in finding that the bank had reviewed the appellants' loan application. The third is that the master should have found that certain amounts, charged for defaults, were penalties.

Principles

1. A suspension order may be made under s 15 of the Civil Judgments Enforcement Act 2004 (WA). The court also has power under its rules (pt 5 r 43(2) of the Supreme Court (Court of Appeal) Rules 2005 (WA)) to grant an interim order in the form of a stay of execution pending the hearing of the appeal. Pullin JA outlined the relevant legal principles in Tradesman Technologies Pty Ltd v Ameduri [2012] WASCA 168 [22] as follows:

   (a)The successful litigant is ordinarily entitled to enforce a judgment pending the determination of any appeal.

   (b)It is for the applicant for a stay to move the court to a favourable exercise of its discretion. Under s 15(3) this court may only make a suspension order if there are 'special circumstances' that justify doing so and in an application for a stay under the rules this is also a usual requirement.

   (c)The central issue will be whether the grant of a stay is perceived to be necessary to preserve the subject matter or the integrity of the litigation or whether a refusal of a stay could create practical difficulties in respect of the relief which may be granted on appeal.  This may shortly be described as requiring the court to consider whether the right of appeal will be rendered nugatory if a stay is not granted.

   (d)If it can be demonstrated that the right of appeal will be rendered nugatory if a stay is not granted, the stay will generally still be refused unless it can be established that the appeal has ultimately reasonable prospects of success.

   (e)Finally, the stay may still be refused where it appears that the balance of convenience does not lie in favour of the applicant where, for example, the grant of a stay will occasion hardship to the respondent which may not be alleviated by the terms upon which the stay may be granted:  Eastland Technology Australia Pty Ltd v Whisson [2003] WASCA 307; (2003) 28 WAR 308.

2. A consideration of an applicant's prospects of success are, to some extent, interdependent with the balance of convenience:  Schreuder v Murray [2009] WASCA 75 [7].

Disposition

1. The property in this case has been the appellants' home for 13 years.  The appellants are aged 62 and 68 respectively. 

2. If the appellants were to succeed in the appeal, they would be given leave to defend the bank's claims for possession of the property.  If the bank obtained possession and sold the property in the meantime, the substantive relief claimed in the appeal would be rendered nugatory. 

3. On the question of prospects, I accept that, for present purposes, it is arguable that the evidence is capable of disclosing certain arguable contraventions based on s 51AC of the Trade Practices Act.  It is unnecessary to go beyond that for present purposes.  However, as the appellants acknowledged, some recognition also needs to be given to the real prospect that any relief available to the appellants might well be conditioned upon the repayment of some or all of the indebtedness which (subject to the penalty point) is not disputed.  See in this regard, for example, Permanent Mortgages Pty Ltd v Vandenberg [2010] WASC 10; (2010) 41 WAR 353 [385] ‑ [406], and Permanent Mortgages Pty Ltd v Vandenberg [2010] WASC 10 (S) [53] ‑ [55]. I will also assume, for present purposes, that the penalty point has some prospect of success, but there is no evidence that its quantum is likely to be very significant. In relation to the admissibility of Mr Taylor's affidavit, the ground as framed would seem to me to have poor prospects of success as the affidavit principally annexes business records, company searches and the like. Nevertheless, I accept that the inferences to be drawn from the material are relevant to the unconscionability allegation. I will assume, without deciding, that the alleged error of fact as to what the bank reviewed, is arguable.

4. As to the balance of convenience, on the one hand, the appellants will lose possession of their house if a stay is not ordered.  On the other hand, the appellants borrowed the bank's money, used it to pay previous debts and to meet other financial commitments (at least to the extent of $315,000) and they have not paid it back.  Although the bank obtained the property as security, even if it were now sold, the bank would be out of funds by over $225,000.  The appellants also refer to the prospect of joining the broker, but they have not moved with any alacrity in asserting their rights in that regard, and I place no real weight on that consideration.

5. Taking all these factors into account, I would be prepared to grant a stay on condition that the appellants pay into court the sum of $225,000.

6. I will hear the parties on precise orders.