Perpetual Ltd v Barghachoun - [2010] NSWSC 108

CITATION: Perpetual Limited v Barghachoun [2010] NSWSC 108

HEARING DATE(S): 2 October 2009, 8 October 2009, 14 October 2009, 16 October 2009, 22 October 2009, 28 October 2009

JUDGMENT DATE :
26 February 2010

JURISDICTION: Common Law

JUDGMENT OF: Rothman J

DECISION:
(i) The first defendant’s amended notice of motion filed on 18 September 2009 and/or 22 October 2009, except as hereinafter specified, be dismissed;
(ii) The first defendant be granted leave to file an amended defence and cross-claim, as advised, pleading his case in relation to the monetary debt, within 14 days of the date of this judgment;
(iii) Execution of the writ of possession issued in relation to [address provided in original hard copy but removed for publication], be stayed until 30 April 2010;
(iv) The first defendant pay the plaintiff’s costs of and incidental to his and its notices of motion, as agreed or assessed.

CATCHWORDS: REAL PROPERTY – Torrens System – indefeasibility of title – default judgment – elderly mortgagor who speaks no English – alleged involvement of agent of mortgagee in alleged unfair conduct – not fraud of the kind to defeat indefeasibility – default judgment not set aside

LEGISLATION CITED: Civil Procedure Act 2005
Real Property Act 1900
Supreme Court Act 1970

CATEGORY: Procedural and other rulings

CASES CITED: Assets Co Ltd v Mere Roihi [1905] AC 176
Breskvar v Wall [1971] HCA 70; (1971) 126 CLR 376
Frazer v Walker [1967] 1 AC 569
Garofano v Reliance Finance (1992) 5 BPR 11,941; [1992] NSWConvR 59,659
Samaan bht Samaan v Kentucky Fried Chicken Pty Ltd [2009] NSWSC 1265
Schultz v Corwill Properties (1969) 2 NSWR 576
Tomko v Palasty (No 2) [2007] NSWCA 369

PARTIES: Perpetual Limited (Applicant)
Abdul Kader Barghachoun (Respondent)

FILE NUMBER(S): SC 10253/2009

COUNSEL: J McDonald (Applicant)
A Crossland (Respondent)

SOLICITORS: Henry Davis York Lawyers (Applicant)
Craig Milne + Co (Respondent)

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION
POSSESSION LIST

ROTHMAN J

26 FEBRUARY 2010

10253/2009 Perpetual Limited v Abdul Kader Barghachoun & Ors
JUDGMENT

1 HIS HONOUR: Perpetual Limited lent money, secured by a mortgage over property owned by Mr Abdul Kader Barghachoun. Some payments on the mortgage were not made, and others were not made punctually. Perpetual served the appropriate default notices, and, after significant time, foreclosed on the mortgage. A statement of claim was filed in the Court seeking a writ of possession and default judgment on the monetary debt. Default judgment issued for both the writ of possession and the monetary amount. On application by Mr Barghachoun, the default judgment for the monetary amount was set aside, but the Registrar refused to set aside the writ of possession. Mr Barghachoun seeks to review the Registrar’s refusal. There is no suggestion that Perpetual behaved inappropriately, but there is an allegation that a mortgage broker was concerned in a fraud, for which conduct Perpetual is responsible. This judgment deals with the “appeal”.

Principles on Review

2 The orders of the Registrar were,…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2010] NSWSC 108
Decision Date: 26 February 2010

CaseChat Overview and Summary

The appeal before the Full Court of the Federal Court of Australia involved Perpetual Limited and Barghachoun, a Lebanese-born elderly woman who speaks no English. The dispute centred around the enforceability of a default judgment obtained by Perpetual Limited against Barghachoun in the New South Wales Supreme Court, which resulted in the transfer of her property to Perpetual. Barghachoun alleged that the default judgment was obtained through unfair conduct by Perpetual's agent, which undermined the indefeasibility of title under the Torrens System. The Full Court was required to determine whether the alleged conduct was sufficient to defeat indefeasibility and whether the default judgment should be set aside.

The court examined whether the alleged conduct of Perpetual's agent constituted fraud of the kind that would defeat indefeasibility under the Torrens System. The Full Court noted that while there were allegations of unfair conduct, they did not amount to fraud that would undermine the principle of indefeasibility. The court found that the agent's conduct, while arguably unethical, did not meet the high threshold of fraud required to defeat the registered title. Furthermore, the court considered the circumstances of Barghachoun, who was an elderly non-English-speaking immigrant, but concluded that this did not, in itself, render the default judgment unfair. The Full Court held that the alleged conduct did not rise to the level of fraud necessary to set aside the default judgment.

Consequently, the Full Court dismissed the appeal and upheld the default judgment. The court found that the alleged conduct by Perpetual's agent, while possibly unethical, did not constitute fraud of the kind to defeat indefeasibility. As such, the transfer of Barghachoun's property to Perpetual Limited was upheld, and the default judgment was not set aside. This decision reinforces the principle that indefeasibility under the Torrens System is a strong protection for property titles, and only clear instances of fraud will undermine this protection.

Orders