Mueller v Que Capital Pty Ltd
[2015] WASCA 155
•7 AUGUST 2015
MUELLER -v- QUE CAPITAL PTY LTD [2015] WASCA 155
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2015] WASCA 155 | |
| THE COURT OF APPEAL (WA) | 07/08/2015 | ||
| Case No: | CACV:33/2015 | 24 JULY 2015 | |
| Coram: | MURPHY JA | 24/07/15 | |
| 10 | Judgment Part: | 1 of 1 | |
| Result: | Application allowed | ||
| B | |||
| PDF Version |
| Parties: | KARL PAUL MUELLER QUE CAPITAL PTY LTD SMARTCARD FINANCIAL SERVICES PTY LTD |
Catchwords: | Practice and procedure Application for a stay of orders made in primary court Turns on own facts |
Legislation: | Nil |
Case References: | Que Capital Pty Ltd v Mueller [2015] WADC 6 Tradesman Technologies Pty Ltd v Ameduri [2012] WASCA 168 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA TITLE OF COURT : THE COURT OF APPEAL (WA) CITATION : MUELLER -v- QUE CAPITAL PTY LTD [2015] WASCA 155 CORAM : MURPHY JA HEARD : 24 JULY 2015 DELIVERED : 24 JULY 2015 PUBLISHED : 7 AUGUST 2015 FILE NO/S : CACV 33 of 2015 BETWEEN : KARL PAUL MUELLER
- Appellant
AND
QUE CAPITAL PTY LTD
First Respondent
SMARTCARD FINANCIAL SERVICES PTY LTD
Second Respondent
ON APPEAL FROM:
Jurisdiction : DISTRICT COURT OF WESTERN AUSTRALIA
Coram : SWEENEY DCJ
Citation : QUE CAPITAL PTY LTD -v- MUELLER [2015] WADC 6
File No : CIV 3634 of 2010
Catchwords:
Practice and procedure - Application for a stay of orders made in primary court - Turns on own facts
Legislation:
Nil
Result:
Application allowed
Category: B
Representation:
Counsel:
Appellant : In person
First Respondent : Mr J Burke
Second Respondent : Mr J Burke
Solicitors:
Appellant : In person
First Respondent : MDS Legal
Second Respondent : MDS Legal
Case(s) referred to in judgment(s):
Que Capital Pty Ltd v Mueller [2015] WADC 6
Tradesman Technologies Pty Ltd v Ameduri [2012] WASCA 168
- MURPHY JA:
Introduction
1 On 24 July 2015, I heard an application by the appellant for a stay of orders made against him in the District Court by Sweeney DCJ. I ordered a stay. These are my reasons.
2 On 29 January 2015, Sweeney DCJ delivered reasons for judgment in Que Capital Pty Ltd v Mueller [2015] WADC 6. Her Honour dismissed a claim by the first respondent (Que Capital) against the appellant (Mr Mueller), but found that Mr Mueller was liable to the second respondent (Smartcard) and entered judgment in favour of Smartcard against Mr Mueller in the sum of $505,198.92.
3 Smartcard applied for enforcement orders in the District Court against certain personal property of Mr Mueller situate at 12 William Street, Midland, and for enforcement orders against his interest in four pieces of real property - the Midland property, two properties in Toodyay and a property in Koongamia.
4 On 13 February 2015, the District Court made a property (seizure and sale) order authorising the sheriff to seize and sell Mr Mueller's interest in the Midland property (from which Mr Mueller's business is conducted) and one of the properties in Toodyay (which is his home).
5 On 5 March 2015, Mr Mueller applied for a stay of the orders in the District Court pending the determination of the appeal. He swore affidavits in support of the application dated 5 and 20 March 2015. The parties exchanged written submissions in relation to the stay application. On 2 April 2015, Mr Mueller also filed an application requesting an extension of time in which to respond to the respondents' submissions, and for the hearing of the stay application to be adjourned for a period of 28 days from 14 April 2015.
6 On 14 April 2015, the matter was adjourned and certain further programming orders were made. The appellant filed further submissions on 13 May 2015, and the respondent filed further submissions on 19 May and 23 July 2015.
7 All references to paragraph numbers below are references to paragraph numbers in the reasons of Sweeney DCJ.
Background
8 The primary judge's reasons included the following findings. On or about 2 September 2008, Mr Mueller entered into a loan contract with Que Capital, by which he borrowed $101,200 for three months at 6% interest per month. The principal sum and interest was due to be paid by 5 December 2008. By way of security for the loan Que Capital took an unregistered second mortgage over three of Mr Mueller's properties, being the Midland property, a block of land in Vestia Walk, Stirling (Vestia Walk), and a house in Charles Street, Midland (Charles Street). Que Capital also lodged a caveat over those properties.
9 On 4 September 2008, Que Capital and Smartcard executed a document described as a deed of assignment, the objective intention of which was for Que Capital to assign the debt under the loan agreement to Smartcard. Her Honour found, however, that the deed of assignment was 'defective'.
10 The purpose of the loan from Que Capital was to enable Mr Mueller to carry out renovations to the property from which he conducted his business in Midland. The renovations took longer than expected and cost more than expected. Mr Mueller defaulted on the loan. Mr Melzer of Que Capital kept in touch with Mr Mueller, seeking progress reports on the steps he was taking to discharge the debt and encouraged him to sell properties or refinance in order to repay the loan.
11 By letter dated 5 September 2008, Que Capital informed Mr Mueller that the debt had been assigned to Smartcard and provided the bank details of Smartcard for the purpose of making payment to that entity.
12 Mr Mueller testified that the Vestia Walk property was sold on about 28 August 2009, but the sale proceeds were taken by the prior mortgagee and none of the sale proceeds were paid to Que Capital.
13 The debt remained unpaid and on 14 October 2009, Que Capital entered into a second loan contract with Mr Mueller. Her Honour said of this loan:
On 14 October 2009, Que Capital entered into a second loan contract with Mr Mueller, purporting to loan him the amount he already owed which, by then, was $182,132, for a period of two months at interest of 3.34% per month. The fact that the debt had at least purportedly been assigned to Smartcard about a year earlier was overlooked by Mr Melzer. No money actually changed hands. The purpose of that further loan was to convert a loan significantly in default to a current loan, in order to give a more favourable impression to a prospective lender as Mr Mueller attempted to refinance. It neither reduced, nor increased, the debt he owed. And the reduction in interest was simply to avoid effectively charging him compound interest, because the outstanding interest as at that date had been converted into principal. The reduced rate meant interest continued to accrue at about $200 per day. It is not suggested that Mr Mueller believed he was paying less interest as a result of that agreement [8].
14 Subsequently, Mr Mueller sold a further property in Boya, the net proceeds of which, $59,000, were paid to Que Capital. Mr Mueller testified that he sold two more properties, one in Railway Parade, Midland, and the Charles Street property. Because property values had dropped, there were no excess funds from the sale of those properties to be paid to Que Capital.
15 It is apparent from the District Court file that Que Capital commenced proceedings against Mr Mueller in the District Court on 24 November 2010. The indorsement of claim was to the effect that Mr Mueller had borrowed monies from Que Capital under the loan agreement of 14 October 2009, and had failed to repay it. It is also apparent from the District Court file that in 2012, Smartcard was joined as a second plaintiff to the District Court action, and claimed against Mr Mueller as, allegedly, the assignee of the debt under the 2008 loan agreement. In this regard, the primary judge's reasons recorded:
Smartcard's claim is based upon the loan agreement entered into on 2 September 2008 between Mr Mueller and Que Capital, purportedly assigned to Smartcard on 4 September 2008. Section 20 of the Property Law Act1969 requires express notice in writing of such an assignment to be given to the debtor in order to effectively pass title in the debt. The plaintiffs plead that written notice of the assignment was given to Mr Mueller on or about 5 September 2008 by way of letter. Smartcard's case is that Mr Mueller has breached the terms of the loan agreement by failing to repay the principal sum and the outstanding interest.
…
The plaintiffs only rely upon the later loan agreement of 14 October 2009 between Que Capital and Mr Mueller in the alternative, in the event that this court finds that the assignment of the debt to Smartcard was ineffective. If the assignment of the debt to Smartcard was effective, then plainly the loan agreement of 14 October 2009 was entered into by the wrong party, namely Que Capital, and Que Capital seeks no relief in those circumstances. Irrespective of what loan agreement might be upheld, Que Capital accepts that the debt is ultimately owing to Smartcard [11], [14].
16 As indicated earlier, the primary judge dismissed the claim by Que Capital, but upheld the claim by Smartcard. In a section of her Honour's reasons headed 'Which loan contract applies?', her Honour said:
The deed of purported assignment executed on 4 September 2008 between Que Capital and Smartcard was plainly defective because, while their objective intention to assign the debt was plain enough, and the evidence establishes that was their subjective intention as well, the purported assignment was merely described in the recitals to the deed and not in the operative clauses. Nor did the deed purport to assign the caveatable interest in the land the subject of the unregistered mortgage.
Had it been in issue, it is arguable that, notwithstanding the defects, an objective bystander could only have concluded that the parties agreed that the debt the subject of the loan agreement of 2 September 2008 was assigned to Smartcard [170] - [171].
17 Her Honour referred to a 'deed of rectification' between Que Capital and Smartcard entered into on 9 May 2013. Her Honour said:
In any event, however, on 9 May 2013 Smartcard and Que Capital executed a deed of rectification, rectifying the original deed so as to effectively assign the debt from Que Capital to Smartcard, including any interest owing pursuant to the loan agreement.
The deed of rectification also assigned the caveatable interest in the properties the subject of the unregistered mortgage. Little turns upon that, given that Que Capital always released each property from the caveat when necessary to enable a sale to go through, but Mr Mueller does complain that Que Capital should have asserted its rights as caveator in relation to the sale of one of his properties. I deal with that issue later.
The usual position at law is that rectification of a deed takes effect retrospectively from the date of the original deed: Issa v Berisha [1981] 1 NSWLR 261, 265. The two parties to the agreement having voluntarily and by agreement rectified the deed of assignment, the intervention of the court is unnecessary and no plea for rectification was required. In this case, financially, no third party is affected by the rectification of the agreement. It makes little difference to Mr Mueller which loan document is relied upon, either leading to equally ruinous results. There is no reason not to give effect to the deed of rectification.
As I commented to counsel during the trial, if it made a very significant difference and if Mr Mueller's position were considerably better under the later loan agreement, then issues of estoppel against Smartcard might have become relevant, such that it could not in fairness deny the existence of a later, less onerous contract entered into by Que Capital. On the facts and on the calculations in this case, however, there is no practical need to consider such an issue and it was not raised by the pleadings, such as they are.
There is the further requirement that express notice in writing must be given to the debtor [171] - [175].
18 Her Honour also found that Que Capital had given notice of the assignment to Mr Mueller by letter dated 5 September 2008. In making this finding, her Honour noted:
I have considered the fact that the second loan was written in the name of Que Capital and, indeed, the legal proceedings were initially instituted in the name of Que Capital. I accept Mr Melzer's evidence, however, that he simply overlooked the fact that this particular debt had been assigned when he wrote the second loan. When full instructions were taken by his lawyers following the issue being ventilated in the Ombudsman's investigation, Smartcard was added as a party to these proceedings (by leave of the court in September 2012).
…
I find that it was Mr Melzer's intention to assign the debt, he saw no difficulty or impediment in assigning the debt, he believed he had done so by the deed of assignment executed between Que Capital and Smartcard and he saw no reason not to notify the customer of the correct bank details to which the loan repayment should be made. Given that he plainly prepared the letter of assignment and its attached notice of assignment, I find he then posted them to Mr Mueller. There has never been any advantage to Mr Melzer or Que Capital to hide the fact of the assignment. If the assignment was valid, then Smartcard was owed the debt. If it was not, then Que Capital was owed the debt [183], [185].
19 In relation to the deed of rectification, her Honour found that the effect of it was that, as of 4 September 2008, the debt was assigned to Smartcard [190].
20 This appears to be a reference to the debt under the loan agreement dated 2 September 2008 - see [171], [282], [285].
21 Her Honour accordingly gave judgment for Smartcard in respect of the original loan plus interest, and dismissed the claim by Que Capital in respect of the further loan agreement of 14 October 2009.
Grounds of appeal
22 The appellant's case, in substance, discloses grounds of appeal to the following effect:
1. Sweeney DCJ was guilty of apprehended or actual bias.
2. The judge erred in finding that the notice of assignment was given to Mr Mueller in September 2008.
3. The judge erred in finding that Mr Melzer had mistakenly overlooked the assignment in 2008, when the 2009 loan agreement was entered into.
4. The judge erred 'in not recognising the importance of a $1 million error made in the appellant's statement of assets and liabilities'.
5. The judge erred in finding at [78] that it 'matters little to the plaintiffs' substantive case' whether the debt was owed to Smartcard or to Que Capital.
6. The judge erred in stating that Que Capital provided withdrawal of caveats.
7. The judge erred in not recognising the importance of Mr Smith's, of Smartcard, statement that he had no dealings with Mr Mueller [88].
8. The judge erred at [186] 'in making excuses for the respondents claiming the possibilities why the appellant may not have read the notice given [by] the first respondent'.
9. The judge erred at [159] - [160] in finding, in effect, that it did not matter to the appellant, in September 2008, whether the original loan was made to him by Que Capital or by Smartcard.
10. The judge erred in failing to find that Mr Melzer's failure to point out the mathematical error made by Mr Mueller constituted unconscionable conduct.
11. The judge erred in 're-admitting a deed of rectification done three years after the start of proceedings in the District Court and rejected by the registrar'.
23 The appellant has also more recently alleged that the loan ought not be enforced because Smartcard did not hold an Australian Credit Provider's Licence.
Disposition
24 The relevant principles were outlined by Pullin JA 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.
25 Having considered carefully all of the materials provided by the parties, my preliminary view is that it is difficult to see that grounds 1, 3, 4, 6, 7, 8, 9, 10 and 11 would have any real prospect of success. It has been unnecessary to form a view as to whether Smartcard was required to hold an Australian Credit Providers' Licence.
26 However, ground 5 does seem to raise a point which may have some strength at the hearing of the appeal. The point might arguably be expressed this way.
27 On the judge's findings, it arguably appears that:
(a) the appellant entered into a loan agreement with Que Capital on 2 September 2008, pursuant to which Que Capital advanced to the appellant $101,200 for three months at 6% interest per month (original loan);
(b) there was no valid assignment of the original loan to Smartcard on 4 September 2008, and hence the debt remained with Que Capital;
(c) the original loan was not repaid; and
(d) on 14 October 2009, Que Capital and the appellant agreed, in effect, that Que Capital would capitalise the unpaid interest on the original loan, and roll it over. They (arguably on the judge's findings) agreed that the original loan would be replaced on terms that the appellant would repay the sum of $182,132 in two months plus interest thereon at 3.34% per month (second loan).
28 If that were the effect of the judge's findings, it is arguable that the 'deed of rectification' would not have somehow retrospectively worked an assignment of the original loan from Que Capital to Smartcard, because it had been discharged on 14 October 2009. In other words, the judge arguably erred in finding that it 'matters little to the plaintiffs' substantive case' whether the debt was owed to Smartcard or to Que Capital as alleged in ground 5. A consequence of that might be that, as alleged in ground 2, the judge erred in finding that any relevant notice of assignment was given to Mr Mueller in September 2008. Accordingly, on a provisional view, it would appear at least arguable that her Honour erred in entering judgment in favour of Smartcard, and Smartcard has no right to sell the appellant's properties as it currently proposes to do.
29 In these circumstances, there were sufficient grounds to order a stay and a stay was so ordered.
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