MORRIS FINANCE LTD v SUSAN WYZENBEEK (First Defendant) and NATIONAL AUSTRALIA BANK LTD (Second Defendant)
[2018] VCC 1028
•9 July 2018
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
Case No. CI-17-05876
| MORRIS FINANCE LTD | Plaintiff |
| v | |
| SUSAN WYZENBEEK and NATIONAL AUSTRALIA BANK LTD | First Defendant Second Defendant |
---
JUDGE:HIS HONOUR JUDGE COSGRAVE
WHERE HELD: Melbourne
DATE OF HEARING: 26 June 2018
DATE OF JUDGMENT: 9 July 2018
CASE MAY BE CITED AS: Morris Finance Ltd v Wyzenbeek & Anor
MEDIUM NEUTRAL CITATION: [2018] VCC 1028
RULING
---
Subject: PRACTICE AND PROCEDURE
Catchwords: PRACTICE AND PROCEDURE – judgment and orders – reinstatement – summons on originating motion – whether application made pursuant to Order 21 or Order 45 of the County Court Civil Procedure Rules 2008 (Vic)
Legislation Cited: County Court Civil Procedure Rules 2008 (Vic)
Cases Cited:Bailey v Marinoff (1971) 125 CLR 529; Kostokanellis v Allen [1974] VR 596; Pollard v Incorporated Nominal Defendant [1972] VR 955; Rosing v Ben Shemesh [1960] VR 173
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr C Yam (solicitor) | SLF Lawyers |
For the Defendant | Dr G Boas | Madgwicks |
HIS HONOUR:
Issue
1 The primary issue in this case is whether the court, pursuant to the application by the first defendant, Susan Wyzenbeek (“Wyzenbeek”), by summons filed 21 June 2018, should set aside the orders it made in favour of the plaintiff, Morris Finance Ltd (“MFL”), on 13 June 2018, and reinstate the deed of agreement entered into between the parties on 18 May 2018.
2 The orders primarily challenged were those relating to the judicial sale of Wyzenbeek’s property at 250 Warburton Highway, Wandin North, in Victoria (“the property”).
Background
3 On about 18 January 2016, MFL and Wyzenbeek entered into a commercial lease agreement (“the commercial agreement”) relating to a Holden motor vehicle (“the Holden vehicle”). The agreement included clauses which provided for the costs and expenses of enforcement, indemnity in favour of MFL, the grant of a power of attorney by Wyzenbeek and a charging clause in favour of MFL.
4 After entering into the commercial agreement, MFL registered a caveat over the property to protect its interest as chargee.
5 On about 14 September 2016, MFL entered default judgment against Wyzenbeek in the Magistrates Court in the sum of $100,000.00 together with interest of $2,394.52, plus costs of $1,925.80.
6 On about 19 October 2017, Chris Hickey, Senior Recoveries Administrator at MFL, deposed that Wyzenbeek had not discharged her obligations to MFL under the commercial agreement, nor had she delivered up to MFL the Holden vehicle. This failure had occurred notwithstanding demand by MFL and attempts by MFL to repossess the Holden vehicle.
7 In December 2017, MFL filed an originating motion against Wyzenbeek seeking judicial sale of the property.
8 On about 17 May 2018, Glenn Sadler, Operations Manager Compliance and Risk for MFL, deposed that MFL’s judgment against Wyzenbeek in the Magistrates Court remained unsatisfied.
9 On 18 May 2018, MFL and Wyzenbeek entered a deed of settlement (“the deed”). The recitals to the deed noted that the parties had entered into a commercial lease agreement in January 2016 under which MFL leased to Wyzenbeek a Holden vehicle; under the lease agreement, title to the vehicle remained with MFL; MFL had issued an originating motion in December 2017 against Wyzenbeek seeking judicial sale of the property; by application filed on 9 May 2018, Wyzenbeek applied to remove a caveat lodged over the property by MFL; MFL and Wyzenbeek had agreed to settle both the originating motion and the caveat removal application pursuant to the terms set out in the deed.
10 Pursuant to clause 3 of the deed, Wyzenbeek agreed to pay MFL the sum of $100,000.00. Wyzenbeek was to pay $50,000.00 by 5:00 pm on 25 May 2018, and the balance was to be paid in accordance with clause 7 of the deed. Clause 7 allowed for MFL to apply the proceeds of sale from the Holden vehicle to the outstanding debt. If either the repossession agent could not locate the vehicle, or if it did and the proceeds of sale were not sufficient to pay the outstanding balance, then Wyzenbeek was to pay the outstanding balance and MFL was to transfer legal title and ownership to her.
11 On 18 May 2018, pursuant to the deed, Judge Woodward dismissed the proceedings with a right of reinstatement.
12 Wyzenbeek defaulted on the terms of the deed. Clause 10 of the deed provided that if there were an event of default, then MFL could apply to the court to reinstate the proceeding and Wyzenbeek would not oppose the court making the reinstatement order.
13 On 5 June 2018, MFL issued a summons seeking orders that the proceeding it commenced by originating motion in December 2017 be reinstated and that the summons on originating motion filed in December 2017 be heard together with the reinstatement application. A fair reading of MFL’s summons makes clear that it was expecting to argue for both the reinstatement and the relief set out in the December summons at the same hearing. MFL served the 5 June summons and supporting affidavit, also sworn on 5 June 2018, the day it was issued.
Consideration
14 Wyzenbeek complained that neither the plaintiff’s summons, the supporting affidavit of Christopher Yam, nor the covering letter serving the court documents, gave Wyzenbeek notice of MFL’s intention to seek judgment in default of defence at the hearing. Nor did MFL comply with the requirement in Order 21 of the County Court Civil Procedure Rules 2008 (Vic) (“the Rules”) that a party not enter judgment in default of appearance unless there is filed a notice to the Registrar requesting a search for an appearance by the defendant.
15 Wyzenbeek contended that the two orders sought by MFL in its summons were needed because the earlier consent orders operated to dismiss the proceeding with a right of reinstatement. This was said to mean that the proceeding resumed both for MFL and Wyzenbeek. At the time of settlement and entering the deed, Wyzenbeek had an outstanding summons filed on 9 May 2018.
16 Benjamin Lunardi, Wyzenbeek’s solicitor, believed that the scope of MFL’s 5 June summons was limited to the issue of reinstatement rather than obtaining an order for the settlement sum or an application for judicial sale. In his email to MFL’s solicitors on 1 June 2018, four days before the issue of MFL’s summons, he referred to Clause 10.2 of the deed and stated his position that, if an event of default occurred, the plaintiff was only entitled “to reinstate the proceeding and has no right to obtain an order for the settlement sum”. By letter sent the same day, MFL denied Lunardi’s assertion as misconceived and said it was entitled to exercise all rights against his client.
17 Ultimately, Wyzenbeek argued before me that in circumstances where:
· MFL’s solicitors were aware that Wyzenbeek had not agreed to the proposed minutes of consent order suggested by MFL in the attachment to its letter of 8 June 2018;
· Wyzenbeek’s solicitors had previously contested the scope of clause 10.2 as it related to obtaining an order for the settlement sum under the deed;
· MFL’s solicitors had not responded to Wyzenbeek’s summons; and
· the hearing on 13 June 2018 proceeded ex parte
it was not appropriate for MFL to seek judgment in default of appearance without first confirming that Lunardi’s firm was still acting for Wyzenbeek in connection with both the hearing and the proceeding generally in the event that the proceeding was reinstated.
18 Wyzenbeek also referred to the fact that MFL was aware both before and at the hearing on 13 June 2018 that, pursuant to the deed and the court orders made on 18 May 2018, Wyzenbeek had a right of reinstatement in respect of her summons issued on 9 May 2018 seeking removal of MFL’s caveat over the property.
19 MFL disputed that it sought a default judgment against Wyzenbeek under Order 21 of the Rules. MFL argued that its summons of 5 June 2018 was clear in setting out its intention to seek reinstatement (in accordance with the terms of the deed after the occurrence of an event of default) and the order for judicial sale.
20 An important point which Wyzenbeek did not address in its submissions, was that MFL’s reference to its December summons was inextricably linked to its application for judicial sale made pursuant to Order 45 of the Rules. This was the provision which MFL relied upon, not Order 21. MFL noted that the court could set aside judgments entered under Orders 21, 22, and 49 of the Rules if one party were not present. However, the same could not be said for applications made under Order 45 of the Rules.
21 Moreover, MFL argued that the court could not set aside the order made on 13 June 2018 because it was a final authenticated order. Hence, save for the slip rule which had no present application, the order could be challenged only in the Court of Appeal. MFL referred to authorities including Bailey v Marinoff[1] and Pollard v Incorporated Nominal Defendant.[2]
[1](1971) 125 CLR 529.
[2][1972] VR 955.
22 In my opinion, the better view of the matter is that propounded by MFL. Its application was not for a judgment in default of appearance or defence. Rather, it was an application to reinstate a proceeding upon the breach of terms of settlement by the other party by reason of the latter’s failure to make payment in accordance with the terms of the deed. MFL’s proceeding was one brought pursuant to Order 45 of the Rules.
23 Insofar as Wyzenbeek placed the reliance it did on Order 21 of the Rules, that reliance was misconceived. First, Order 21 applies only to a proceeding commenced by writ: Order 21.01(1). Secondly, given that Wyzenbeek filed an appearance to MFL’s application, there was no judgment in default of appearance (as put by Wyzenbeek in her oral and written submissions).
24 As to the merits of the defence, Wyzenbeek contends that, consistent with the principles set out in cases such as Rosing v Ben Shemesh[3] and Kostokanellis v Allen:[4]
[3][1960] VR 173.
[4][1974] VR 596.
· she explained her failure to appear at the hearing on 13 June;
· she acted quickly to set aside the judgment; and
· any prejudice to MFL was not serious and could be compensated by an appropriate order for costs.
25 Wyzenbeek submitted that her affidavit material revealed that it would rely upon lack of good faith, unconscionable conduct, and negligent misstatement in its defence on the merits to MFL’s claim.
26 A major flaw in Wyzenbeek’s submissions was that, because the judgment against her was not entered pursuant to Order 21 of the Rules, then the authorities and principles of law she relied upon were inapplicable and irrelevant.
27 While it is not necessary to reach a conclusive view on the issue, MFL is probably correct to argue that the order made in this court on 13 June 2018 is a final order which, subject to the slip rule, cannot be challenged other than on appeal to the Victorian Court of Appeal.
Conclusion
28 Subject to hearing from the parties, I propose to order that the first defendant’s summons filed 21 June 2018 be dismissed and the first defendant pay the plaintiff’s costs of the application, such costs to be taxed on a standard basis in default of agreement.