Morel v Bank of Queensland

[2015] QCA 58

SUPREME COURT OF QUEENSLAND

CITATION:

Morel v Bank of Queensland [2015] QCA 58

PARTIES:

MARIANNE CLARE MOREL
(applicant)
v
BANK OF QUEENSLAND LIMITED
ACN 009 656 740
(respondent)

FILE NO/S:

Appeal No 5380 of 2013
SC No 3378 of 2012

DIVISION:

Court of Appeal

PROCEEDING:

Application for Extension of Time/General Civil Appeal

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

17 April 2015

DELIVERED AT:

Brisbane

HEARING DATE:

21 November 2014

JUDGES:

Holmes, Fraser and Morrison JJA
Separate reasons for judgment of each member of the Court, each concurring as to the orders made

ORDERS:

1.     The application for an extension of time within which to appeal is refused.

2.     The applicant pay the respondent’s costs, to be assessed on the standard basis.

CATCHWORDS:

APPEAL AND NEW TRIAL – PROCEDURE – QUEENSLAND – TIME FOR APPEAL – EXTENSION OF TIME – where the applicant borrowed $1,501,850 from the Bank of Queensland Limited through six different loans from 2007 to 2009 – where the applicant defaulted on the repayments – where the Bank commences proceedings to recover the amount outstanding – where the Bank applied for a default judgment – where the Registrar entered default judgment – where the applicant filed an application to set aside the default judgment – where the application was dismissed – where the applicant seeks to challenge the order dismissing the application – where the applicant did not lodge the appeal in time – where the applicant applied for an extension of time to appeal – whether there is an adequate explanation for the delay – whether there are merits of the proposed appeal – whether there is good reason to relieve the applicant of the consequences of not filing in time

Uniform Civil Procedure Rules 1999 (Qld), r 748(a)

Beil v Mansell (No 1) [2006] 2 Qd R 199; [2006] QCA 173, cited
Chapman v State of Queensland[2003] QCA 172, cited
Clarke v Japan Machines (Australia) Pty Ltd (No 2) [1984] 1 Qd R 421, cited
Harvey v McWatters (1948) 49 SR (NSW) 173; [1948] NSWStRp 58, cited
Inglis v Commonwealth Trading Bank of Australia (1971) 126 CLR 161; [1972] HCA 74, cited
Queensland Trustees Limited v Fawckner [1964] Qd R 153, cited
Spencer & Anor v Hutson & Ors[2007] QCA 178, cited

COUNSEL:

The applicant appeared on her own behalf
G Coveney for the respondent

SOLICITORS:

The applicant appeared on her own behalf
HWL Ebsworth for the respondent

1. HOLMES JA:  I agree with the reasons of Morrison JA and the orders he proposes.

2. FRASER JA:  I agree with the reasons for judgment of Morrison JA and the orders proposed by his Honour.

3. MORRISON JA:  Between 5 January 2007 and 3 March 2009 Ms Morel borrowed funds from the Bank of Queensland Limited.  There were six loans, three in 2007, one in 2008 and two in 2009.  The total amount borrowed was $1,501,850.

4. The loans were secured over properties at 125 and 127 White Street, Wavell Heights, held in Ms Morel’s other name, Katherine Cheryl Clarke.  The mortgages were “all monies” securities.

5. Ms Morel defaulted in the repayments under the loans.  After giving notices in respect of the defaults, the Bank commenced proceedings to recover the amount outstanding, at that time $1,414,046.61, and possession of the two mortgaged lots.

6. The Bank applied for default judgment, supported by an affidavit deposing in detail as to the defaults and the amount outstanding.  The Registrar entered default judgment on 13 September 2012.

7. On 26 September 2012 Ms Morel filed an application to set aside the default judgment.  That application was dismissed on 28 February 2013.

8. Ms Morel seeks to challenge the order dismissing the application, but she did not lodge an appeal within the 28 days required under r 748(a) of the Uniform Civil Procedure Rules 1999 (Qld). Subsequently on 14 June 2013 she applied for an extension of time to appeal.

9. The issues raised by this application are:

   (1)is there an adequate explanation for the delay;[1]

   (2)what are the merits of the proposed appeal;[2]

   (3)is there good reason to relieve Ms Morel of the consequences of not filing in time?[3]

   [1]Beil v Mansell (No 1) [2006] 2 Qd R 199 at 207-208; Spencer & Anor v Hutson& Ors [2007] QCA 178 at [28]. (Spencer)

   [2]Chapman v State of Queensland [2003] QCA 172 at [3]; Queensland Trustees Limited v Fawckner [1964] Qd R 153 at 163-164.

   [3]Spencer at [28].

   Adequate explanation for the delay?

10. Ms Morel’s reasons for the delay before the appeal period expired were:

    ·she “wrote all of the Appeal documents … and handed same to a solicitor within time but he did not file them”;

    ·when she realised that “he was not going to handle this the 28 days was almost up”.[4]

    [4]Affidavit of Ms Morel, AB 275, paragraph 4.

11. The reasons for the delay after the appeal period expired are:

    ·she has been heavily involved in resisting enforcement of the judgment and trying to get the bank to respond to her offers;[5]

    ·she had a matter in QCAT to attend to;[6]

    ·she had limited time available when at work;[7]

    ·a solicitor she approach declined to act when she could not put up the requested funds;[8]

    ·she had many pressures at work and home, including trying to start a job and a new business, having her house ready for inspection, and dealing with family matters.[9]

    [5]Affidavit paragraph 4, AB 275.

    [6]Affidavit paragraph 6, AB 275.

    [7]Affidavit paragraph 8, AB 276.

    [8]Affidavit paragraph 8, AB 276.

    [9]Affidavit paragraphs 5 and 11, AB 275 - 276.

12. I do not regard the explanation as adequate in the circumstances.

13. The documents had been drawn (in some form) before the appeal period expired.  Even when the proposed solicitor withdrew there was evidently still some time before the period expired.  No attempt was made to try to file the notice of appeal.

14. In the 11 weeks since the period expired, it seems Ms Morel has taken no further step to either finalise the documents (if they required that) or to file them.  She has deposed to pressures elsewhere, resisting enforcement and dealing with medical issues, family and work matters, but that cannot provide an adequate explanation in circumstances where the documents had been drawn some time before.

    What are the merits of the proposed appeal?

15. The merits require an assessment, as best it can be done at this stage, of the likelihood of the appeal succeeding.  That appeal would be from the decision to dismiss Ms Morel’s application to set aside the default judgment.

16. Ms Morel’s proposed defences were set out in a document entitled “Defence”,[10] read before the primary judge.  Whilst entitled a Defence, it is not a proper pleading, but in a general narrative form.  The proposed grounds of defence are:

    (a)the proceedings were not properly served, and therefore the default judgment should have been set aside;[11]

    (b)the Bank was guilty of imprudent lending, or unconscionable conduct; it should not have lent her as much as it did;[12]

    (c)the Bank Manager had completed her loan application, increasing the figures for her income and assets, and understating her expenses;[13]

    (d)the Bank had acted unconscionably by compounding interest and adding incorrect fees and charges;[14]

    (e)the loan agreements should be varied, to reduce the interest rates, reverse the accrued default interest, remove the cross-collateralisation, and permit retention of Lot 125 until the dispute with the builder over Lot 127 is resolved;[15]

    (f)the Bank should be prevented from selling the properties in view of Ms Morel’s protracted but unsuccessful attempts to sell them;[16]  alternatively Ms Morel should be permitted more time to sell;[17] and

    (g)the Bank should be ordered to provide proper valuations of the properties, instead of using low valuations in their attempt to realise the mortgaged lots.[18]

    [10]AB 242.

    [11]Paragraph 40, AB 251.  See also AB 86.

    [12]Paragraphs 7 and 31-35, AB 243 and 249.  See also AB 59.

    [13]Paragraphs 8-12, AB 244.  See also AB 72.

    [14]Paragraphs 26-30, AB 248-249, 253.  See also AB 109-110.

    [15]Paragraph 13, AB 245.

    [16]Paragraphs 16-17, and 23-25; AB 245-248.

    [17]Paragraphs 18-20, AB 246.

    [18]Paragraphs 21-22, AB 247.  See also AB 109-110.

    Non-service

17. In my respectful view, the learned primary judge was right to find that there was nothing in the service point, and that the default judgment was regularly entered.  Affidavits showed that service occurred in the way permitted by the order made on 23 July 2012, namely:

    “Emailing the documents to [email protected]; and

    Posting the Documents by prepaid registered post to Marianne Clare Morel at 127 White Street, Wavell Heights QLD 4012.”[19]

    [19]AB 263.

18. Much effort was spent by Ms Morel attempting to show that the letter sent by registered post was returned by Australia Post to the sender.  However the order merely required that the documents be emailed to Ms Morel at a particular email address, and posted to Ms Morel at a particular postal address.  Both those steps occurred.  Under the order that was “deemed good and sufficient service”.

    State of Ms Morel’s evidence before the primary judge

19. As things stood at the hearing before the learned primary judge, Ms Morel had not sworn the truth of the proposed defences, except to the extent that the allegations were referred to in earlier affidavits.  This was restricted to:

    ·an assertion that her income had been wrongly stated in the loan application,[20] and exhibiting (though not affirming) letters of complaint to the Australian Federal Police,[21] Australian Securities and Investment Commission[22] and Financial Ombudsman Service;[23]

    ·a bare assertion that there were issues of imprudent lending and extraordinary interest rates.[24]

    [20]Ms Morel’s affidavit filed 26 September 2012, page 2, AB 59.

    [21]AB 71.

    [22]AB 74.

    [23]AB 76.

    [24]Affidavit in the name of Ms Clarke, filed 23 January 2013, page 3, AB 87.  This affidavit exhibited correspondence with the Financial Ombudsman, and other documents, all without proving the truth of their contents.

20. However, no doubt conscious of Ms Morel’s position as a self-represented litigant, the learned primary judge did not let his findings turn on that.

    Loans, securities, default and non-repayment admitted

21. Significantly, before the learned primary judge Ms Morel did not contest that she borrowed from the Bank in the amounts claimed, and secured by the registered mortgages relied on by the Bank.  Nor did she contest that she had defaulted in repayments, and a substantial sum remained unpaid.

22. Indeed, she said in her material that she had deliberately stopped repayments “pending a sensible resolution” with the Bank, which she hoped to achieve by applying for relief to the Financial Ombudsman Service.[25]  In submissions to the primary judge Ms Morel said that she could pay most of her mortgage payments, but she had “stopped paying because [she] can’t get any agreement out of the bank as to the arrears and they won’t stop this action”.[26]

    [25]Paragraph 6, AB 243.  The relief was to vary the loan agreements.

    [26]AB 13.

    Relief sought by Ms Morel

23. The relief sought by Ms Morel did not include setting aside the bank’s mortgages.  True it is that she complained about being lent more than she should have been allowed, and that the debt was increased by inappropriate levels of interest, arrears and charges, but even then she sought only that the debt be adjusted by rewriting the loan agreements, and staying enforcement.[27]  That approach was continued in this Court.[28]

    [27]AB 13.  In submissions to the learned primary judge she was seeking to have the bank vary the loan agreements by at least incorporating the arrears: “The problem is with the arrears.  The bank will not include the arrears because they’re undervaluing the houses and I believe that to be unconscionable”.

    [28]Ms Morel’s submissions, paragraph 15.

    The imprudent lending allegations

24. Given the matters referred to above in paragraphs [16] to [23], there was ample support for the learned primary judge’s conclusion that:

    “… the essential ground of a suggested defence appears to be encapsulated in [Ms Morel’s] phrase “imprudent lending”.  As I understand the contention, it is that the Bank should not have granted her loan application because it ought to have been apparent to the Bank that she would not be “able to service the loan”.

    It was not explained how that contention, assuming it to be factually true, might arguably afford a defence to the Bank’s claim, whether under the general law, or pursuant to statute.”[29]

    [29]AB 18 – 19.

25. The Bank is a registered mortgagee, attempting to exercise its rights in the face of admitted default and non-repayment of its debt.  The defences alleged by Ms Morel, and the relief she seeks, do not seek to attack the foundation of the mortgages but to rewrite the loan agreements, and enjoin the bank from enforcing against the secured properties.  As such they would not stand in the way of the Bank’s claim.[30]

    [30]Inglis v Commonwealth Trading Bank of Australia (1971) 126 CLR 161; Harvey v McWatters (1948) 49 SR (NSW) 173; Clarke v Japan Machines (Australia) Pty Ltd (No 2) [1984] 1 Qd R 421.

    Is there good reason to relieve Ms Morel of the consequences of not filing in time?

26. In my view no good reason has been shown to relieve from the consequences of not filing in time.  There are several reasons for that conclusion.

27. First, the default judgment was regularly entered and, as the learned primary judge found, there is no arguable defence that would resist the Bank’s claim.

28. Secondly, and in any event, Ms Morel has tried for some years to achieve her desired outcome, without success.

29. Ms Morel first invoked the processes of the Financial Ombudsman Service in September 2010, seeking that the Bank’s facilities be varied.  She raised all her allegations of imprudent lending and improper banking practices.  In December 2011 the Ombudsman declined to exercise his powers.[31]

    [31]AB 100.

30. In 2012 she raised her allegations again, with the Financial Ombudsman,[32] the Australian Federal Police,[33] and ASIC.[34]  They declined to intervene.  She also complained again to the Bank.[35]

    [32]AB 76; seeking that the Ombudsman use its powers to rewrite the loans: AB 77.

    [33]AB 71.

    [34]AB 74.

    [35]AB 194.

31. The 2011 decision of the Ombudsman[36] reveals some detail of Ms Morel’s circumstances.  In July 2009 Ms Morel sought assistance from the Bank for financial hardship, based on her inability to work due to medical reasons.  The Bank granted relief, reviewed periodically, until June 2010.  In August 2010 a further request for relief was declined as the total outstanding had increased from $1,320,286 to $1,429,438 over that time, and Ms Morel did not have the ability to service the debt.  However the Bank offered to suspend collection activity until October 2010, to permit the sale of one of the mortgaged properties.  Ms Morel was dissatisfied with that offer and referred the matter to the Ombudsman.  In April 2011 the Bank offered to refinance the loans, but that offer was not accepted by Ms Morel.

    [36]AB 123-137.

32. Thirdly, there is no reason to think that Ms Morel has the ability to service the loans, and that is nothing to do with the Bank’s conduct.

33. Since 2007 Ms Morel has been embroiled in a long running, and costly, dispute with a builder over the construction of a house on Lot 125.  One of the loans ($400,000 in 2007) was to finance the construction of a house on this lot.  The dispute is still being dealt with in Queensland Civil and Administrative Tribunal,[37] presently in its Appeal Division, after Ms Morel failed at first instance.  In order to gain possession of the house Ms Morel was ordered to put up a bank guarantee of $68,583.71, but she was unable to do so.  She has been unable to sell it.[38]

    [37]AB 133-134.

    [38]AB 242-243; proposed defence, paragraph 24, AB 247.

34. After the dispute over Lot 125 commenced Ms Morel made a decision to build a house on Lot 127, “to replace the problem house” on Lot 125.[39]  Notwithstanding that it has been marketed for a number of years,[40] Ms Morel has not achieved a sale.

    [39]Proposed defence paragraph 38, AB 250.

    [40]Proposed defence paragraph 24, AB 247; 2nd affidavit by Ms Morel, paragraph 33, AB 281.

35. Ms Morel’s medical problems have constrained her ability to generate income sufficient to meet the repayments, let alone the arrears.  The medical problems have also affected her ability to conduct the QCAT proceedings and properly market the properties.[41]  They have nothing to do with the Bank’s lending and taking security.

    [41]Proposed defence, paragraph 38, AB 250.

36. In my view Ms Morel would be ill served by a conclusion that left her locked into costly litigation with doubtful prospects of success.

    Conclusion and Disposition

37. I would propose the following orders:

    1.The application for an extension of time within which to appeal is refused.

    2.The applicant pay the respondent’s costs, to be assessed on the standard basis.