National Australia Bank Limited v Block

[2011] QDC 164

[2011] QDC 164

DISTRICT COURT

CIVIL JURISDICTION

JUDGE ROBIN QC

No 3895 of 2010

NATIONAL AUSTRALIA BANK LIMITED ACN 004044937	Plaintiff
and
PHILLIP ROSS BLOCK	Defendant

BRISBANE

..DATE 09/08/2011

ORDER

CATCHWORDS

District Court of Queensland Act 1967 s 86(5) Uniform Civil Procedure Rules 1999 r 171, r 181, r 280, r 292, r 293

Cross-applications - defendant's application for summary judgement on the plaintiff's claim and his counterclaim for damages (of nearly $2 million) - plaintiff sought dismissal thereof and summary judgement on its claim for moneys secured and possession of mortgaged premises - too late for plaintiff to seek transfer of proceeding to Supreme Court - plaintiff's request for adjournment of part (only) of its claim (to meet a late allegation that a relevant loan had been "securitised") rejected when defendant sought adjournment of the whole - defendant's application dismissed with costs on indemnity basis - alleged securitisation said to result in plaintiff suffering no "loss"
HIS HONOUR:  There are two applications before the court.  The defendant's was filed on the 15th of June 2011.  It seeks that the "application by the plaintiff be dismissed," and "damages of $1,919,349.20 be ordered according to counterclaim."

It also seeks indemnity costs.  The plaintiff's application, filed the 11th of July 2011, seeks dismissal of the defendant’s, also judgment under rule 292 for the relief sought in the claim and statement of claim, which seek a money judgment and also possession of mortgaged premises, which the court understands are the residence of the defendant and his household.

There's an alternative claim for striking out of certain paragraphs of the defence and counterclaim under rule 171.  Indemnity costs are sought. 

Ms Ahern, representing the plaintiff, early in the rather lengthy hearing today sought an adjournment of that part of the application which related to a home loan which the plaintiff apparently made to the defendant.  It is a separate loan transaction from another one which established a line of credit.  The plaintiff's case is that both sets of obligations and, indeed, any other financial obligations of the defendant to it were secured by its registered mortgage.  Ms Ahern submitted that default under any set of obligations rendered the mortgage in default and the mortgage enforceable.

The reason for adjournment was to enable the plaintiff to make inquiries in relation to the home loan transaction regarding the assertion in the defendant's pleading, which was filed on the 27th of April, 2011, that the loans in question have been securitised.  The meaning of that, essentially, is that at least the equitable interests on the lender side have been sold for amalgamation in some more or less sophisticated way with other like "securities" for marketing to interested investors.

The defendant says that the consequences of that securitisation, which he believes has occurred in relation to both transactions, are that the plaintiff bank, as it was initially put, cannot have suffered any damages from his default.  I understand the argument made by Mr Forrester to be that the bank has effectively covered itself against any loss by the sale involved in the securitisation and perhaps by the opportunity to gain further financial benefits from acting to administer those transactions which have become the subject of securitisation.

The bank is not claiming damages.  It is claiming recovery of possession of the mortgaged property and amounts owing under contract - according to the claim, $371,795.57 in respect of what I understand to be the home loan, and $62,633.46 in respect of what's called a "line of credit".  The bank has evidence before the court that the latter has never been the subject of securitisation in the form of the affidavit of Mr Gration, who appears to be an officer of the bank in a relevant position, basing himself on what computerised records show and do not show.  The same kind of evidence is not presently available in respect of the home loan.

...

HIS HONOUR:  What are the particular circumstances inducing the plaintiff to seek an adjournment in respect of the home loan aspect of its claim, which in principle could be ordered - although, with respect, that seemed to me rather untidy and inappropriate, especially in light of Mr Forrester's urging that everything be kept together?   The explanation for it is new information emanating from the defendant's side, most of which strikes me as hearsay that it would be very difficult to test, Which refers to CUSIP - that's C-U-S-I-P - numbers said to distinguish the home loan from every other like "security"

in the world, and possibly indicate that it's been the subject of securitisation.

There are issues to be argued out, it seems, if, contrary to Ms Ahern's instructions, securitization has occurred.  I would think there's very much an onus on the defendant to show that the claim presently being pursued by the bank, which Ms Ahern says is being pursued by it without instruction from anyone else, is liable to be defeated by any securitization that may have occurred.

A suitable and reasonably early date to which the plaintiff's application, so far as it seeks relief in respect of its own claim, may be adjourned as the 2nd of September 2011.
The defendant's application, in my view, ought to be dismissed today.  The basis of it is said to be rule 280 and the plaintiff's default in responding in the time allowed by the rules for pleading in response to the defence and counter claim.  The plaintiff took (the defendant would say arrogated to itself) another couple of weeks to respond.

The defendant’s pleading, which purports to be prepared by Mr Block himself, is the longest defence and counterclaim I have seen in the court.  It consists of 58 numbered pages to the end of the attachments and there follow another 35 pages of annexures the bulk of which are couched in language which is often quaint, difficult to understand and I'm inclined to think inappropriate.

I have established a lengthy record in the court of willingness to entertain applications that a plaintiff failing to comply with rules of court or orders about the conduct of a proceeding might suffer the penalty of the claim being dismissed without determination on the merits.

I've been very strong and I believe consistent, however, in reluctance to penalise a defendant who might perform in a similarly deficient way by entering a judgment against such a defendant in favour of a plaintiff or claimant for a claim which on the merits and injustice may be utterly insupportable.

So far as the counterclaim is concerned, it's the defendant, Mr Block, who's the plaintiff and the plaintiff bank which is the defendant; see rule 181.

Accepting the extent to which the plaintiff might have been delinquent, that would not, in my view, lead to any judgment against it on the counterclaim or, indeed, on its own claim as the plaintiff being appropriate.  Therefore, the first part of the defendant's application that the "application," by the plaintiff, which in the context can only be construed as referring to its claim, must fail.

The other aspect to the rules which Ms Ahern acknowledged might be appropriate to support the defendant's application is rule 293 which provides for summary judgment in favour of defendants.

The claim appears an entirely unremarkable one by a mortgagee and the defendant comes nowhere near the section 293 test which is the one in the General Steel case, in my opinion.  I hasten to say that Mr Forrester, as I understood him, wasn't relying on rule 293.

So far as the plaintiff suffering judgment on the counterclaim

is concerned, it is a claim for unliquidated damages.

There's no evidence before the court to support the amount claimed which Mr Forrester appeared to explain as essentially one of unjust enrichment of the plaintiff through its transactions with Mr Block which the document in various places suggest don't involve real money or any cost to the plaintiff at all but have somehow resulted in enormous financial benefits to it which the defendant is entitled to recover.

That's not the kind of order I would contemplate making on the basis of the plaintiff bank being a couple of weeks late in responding to a pleading which is replete with problems.

If the claim for nearly $2 million is said to be based on rule 292 then, in my opinion, it's equally weak.  It couldn't be said that the bank is not entitled to a trial on the merits about it.

The defendant's application ought to be dismissed and will be and with costs which I think ought to be ordered on the indemnity basis, that being the one that the defendant suggested in his application was appropriate if he succeeded.

So, on the defendant's application filed 15th of June 2011 the court's orders are that it be dismissed and the defendant be ordered to pay the plaintiff's costs of and incidental to it to be assessed on the indemnity basis.

The plaintiff's application, paragraph one of which has been incidentally dealt with in the foregoing, is adjourned to the 2nd of September 2011 and costs are reserved.

...
HIS HONOUR:  The further orders are that the plaintiff file and serve any further affidavits to be relied - of evidence to be relied on by the 17th of August 2011; the defendant file and serve any further affidavit evidence to be relied on by him by the 26th of August 2011; the plaintiff to file and serve any affidavit material in response by the 31st of August 2011.

The last thing I ought to mention is that the quantum of the counterclaim will have been noticed.  That led to some discussion as to whether the matter should go to the Supreme Court - in which Ms Ahern expressed an interest.

Section 86 of the District Court of Queensland Act 1967, however, gave the bank a window of opportunity of 14 days only after the filing of the large counterclaim for applying to a Supreme Court Judge for transfer to that Court of the whole proceedings or of the counterclaim.

No such application having been made within the time prescribed by subsection (5) this court has jurisdiction to hear and determine the whole proceeding, "notwithstanding any enactment to the contrary," which would over-ride the ordinary cap on this court's monetary jurisdiction of $750,000.

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