Seddone v Commonwealth Bank of Australia
[2024] WASCA 70
•21 JUNE 2024
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
TITLE OF COURT : THE COURT OF APPEAL (WA)
CITATION: SEDDONE -v- COMMONWEALTH BANK OF AUSTRALIA [2024] WASCA 70
CORAM: MITCHELL JA
VAUGHAN JA
HEARD: 21 JUNE 2024
DELIVERED : 21 JUNE 2024
PUBLISHED : 21 JUNE 2024
FILE NO/S: CACV 119 of 2023
BETWEEN: MONICA SEDDONE
Appellant
AND
COMMONWEALTH BANK OF AUSTRALIA
First Respondent
OSCAR ANDREW PROHASKA
Second Respondent
ON APPEAL FROM:
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram: ACTING MASTER STRK
File Number : CIV 1003 of 2017
Catchwords:
Appeal - Banking and finance - Appeal against consent orders granting summary judgment to the respondent bank in proceeding for possession of mortgaged property and recovery of debts secured by mortgages - Whether consent orders were arguably made in breach of the requirement of procedural fairness - Whether the appellant has established an arguable basis for setting aside the settlement agreement reflected in the consent orders - Turns on own facts
Legislation:
Nil
Result:
Extension of time in which to appeal refused
Leave to appeal refused
Appeal dismissed
Category: B
Representation:
Counsel:
| Appellant | : | In person |
| First Respondent | : | R A Collins |
| Second Respondent | : | No Appearance |
Solicitors:
| Appellant | : | In person |
| First Respondent | : | HWL Ebsworth Lawyers |
| Second Respondent | : | In person |
Case(s) referred to in decision(s):
Chang v Legal Profession Complaints Committee (No 2) [2020] WASCA 208; (2020) 56 WAR 263
Garcia v National Australia Bank Ltd [1998] HCA 48; (1998) 194 CLR 395
Yerkey v Jones (1939) 63 CLR 649
REASONS OF THE COURT:
The court sat on 21 June 2024 to consider the registrar's notice to attend for the appellant to show cause why this appeal should not be dismissed on the basis that none of the grounds of appeal have any reasonable prospect of succeeding. At the conclusion of the hearing, we made orders in effect dismissing the appeal for reasons to be published later. These are our reasons for making the orders set out at [35] below.
Introduction
In September 2008, the appellant (Ms Seddone) and the second respondent (Mr Prohaska) entered into a 'Rate Saver Home Loan' agreement (Home Loan Agreement) with the first respondent (Bank).[1] Under the Home Loan Agreement, the Bank agreed to advance them the principal sum of $270,720 secured by a registered mortgage over land in Mandurah (First Property). Ms Seddone and Mr Prohaska became joint registered proprietors of the First Property in September 2008.[2]
[1] Attachment C to the affidavit of Rachana Oza sworn in the primary proceedings on 11 April 2017.
[2] Attachment A to the affidavit of Rachana Oza sworn in the primary proceedings on 11 April 2017.
On 24 December 2012, Ms Seddone and Mr Prohaska entered into a 'No Fee Investment Home Loan' agreement (Investment Loan Agreement) with the Bank. Under the Investment Loan Agreement, the Bank agreed to advance a principal sum of $205,618 secured by registered mortgages over the First Property and a strata lot in Mandurah (Second Property).[3] In January 2013, Mr Prohaska became the registered proprietor of the Second Property.[4]
[3] Attachment D to the affidavit of Rachana Oza sworn in the primary proceedings on 11 April 2017.
[4] Attachment B to the affidavit of Rachana Oza sworn in the primary proceedings on 11 April 2017.
The primary proceedings
On 3 January 2017, the Bank commenced the primary proceedings against Ms Seddone and Mr Prohaska by writ of summons filed with a statement of claim annexed. In essence, the Bank's claim was that:
1.In 2008 and 2012, it had advanced a total of $476,338 to Ms Seddone and Mr Prohaska under two loan agreements.
2.The loans were both secured by first registered mortgages over the First Property and the Second Property. Ms Seddone and Mr Prohaska were registered proprietors of the First Property. Mr Prohaska was the sole registered proprietor of the Second Property.
3.As at 13 September 2016, Ms Seddone and Mr Prohaska failed to pay $3,225.04 under the Home Loan Agreement and, by that failure, were in default of the loan agreements and mortgages.
4.On 14 September 2016, the Bank gave written notice of default stating that, if the default was not rectified by a specified time, the whole of the amount owing under the loan agreements would become immediately due and payable and the Bank would commence enforcement proceedings.
5.Ms Seddone and Mr Prohaska failed to rectify the default within the time specified in the notice of default so that the whole of the amount owing under the loan agreements became due and the Bank became entitled to possession of the properties.
6.As against Ms Seddone and Mr Prohaska, the Bank claimed possession of the First Property, the amount outstanding under the loan agreements, interest and costs. The Bank also claimed possession of the Second Property against Mr Prohaska.
On 24 July 2017, the Bank applied for summary judgment against Ms Seddone and an extension of time in which to apply for summary judgment under O 14 of the Rules of the Supreme Court 1971 (WA). The Bank's application was supported by:
1.the affidavit of Rachana Oza sworn 11 April 2017, deposing as to the elements of the claim noted above and as to her belief that Ms Seddone had no defence to the Bank's claim; and
2.the affidavit of Cassandra Guy sworn 21 July 2017, setting out negotiations with Ms Seddone seeking to resolve the matter by way of explanation of the delay in bringing the summary judgment application.
On 16 March 2018, judgment in default of appearance was entered against Mr Prohaska. The judgment required Mr Prohaska to:
1.give the Bank vacant possession of the First Property and the Second Property within 28 days of service of the judgment; and
2.pay the Bank $427,204.35 (being the amount due as at 24 January 2018) plus interest and costs.
On 19 April 2018, the Bank filed a further affidavit of Ms Guy deposing that, as at 18 April 2018, the total amount outstanding under the loan agreements in principal and interest was $428,018.47.
The Bank's summary judgment application against Ms Seddone came before Master Sanderson on 19 April 2018. At that time, the Bank was represented by Ms Guy and Ms Seddone was self-represented.
Ms Guy told the master that her instructions were to seek to proceed with the summary judgment application, but that Ms Seddone sought an adjournment. Ms Guy explained, in effect, that Ms Seddone had been living in the First Property but had recently relocated. The Second Property was an investment property with tenants. The Bank put forward an arrangement under which it would take possession of the Second Property. The Bank would sell the Second Property and use the sale proceeds to refinance the remaining debt over the First Property. Mr Prohaska, who had recently been placed in custody, had objected to this arrangement. Ms Guy proposed that the Bank be given summary judgment, but said that the Bank would not enforce judgment against the First Property provided that the sale of the Second Property went through and Ms Seddone continued to make payments on the loans.
Ms Seddone asked the master for time to consider the proposal. The master granted an adjournment to 17 May 2018, stating:[5]
[B]ut at that stage, you will need to have worked something out. I understand the difficulties you face. It's an unfortunate situation, but really, it has to come to a head and what's proposed by Ms Guy seems to me on the face of it to be reasonable. I've read the papers and I understand the difficulties you face, but as I say, something has to be resolved. (emphasis added)
[5] Ts 19/4/2018 at 3.
On 17 May 2018, the Bank filed a minute of proposed orders to the effect that:
1.The time for filing the summary judgment application be extended.
2.Ms Seddone deliver vacant possession of the First Property to the Bank within 28 days of the order.
3.Ms Seddone pay the bank $428,320.88 together with interest at a daily rate of $56.34 until payment in full.
4.Ms Seddone pay the Bank's costs of the action and the application, to be taxed.
The Bank also filed a further affidavit of Ms Guy deposing that, as at 17 May 2018, the total amount outstanding under the loan agreements in principal and interest was $428,320.88 with interest accruing at the rate of $56.34 per day.
The summary judgment application came before Acting Master Strk (as her Honour then was) on 17 May 2018. At that time, Ms Guy appeared for the Bank and Ms Seddone represented herself. Ms Guy initially explained the position in the following terms:[6]
I understand [Ms] Seddone seeks to consent to judgment this morning on the terms of the arrangement that has been made between the [Bank] and Ms Seddone to hold enforcement of judgment providing she can maintain repayments on one of the loans. And the [Bank] would then seek to sell the property and then if there is a shortfall after that sale, that will be added and refinanced into one loan for Ms Seddone.
[6] Ts 17/5/18 at 7.
Ms Seddone then complained about the fact that she had been unable to access an assistance package which the Bank sometimes offered to persons in a domestic violence situation. She indicated that Mr Prohaska had been 'doing drugs and using all the money of the property to buy drugs'. She said that she had asked the Bank to sell the Second Property a year ago to avoid her going into more debt, but the Bank had not done anything. The following exchange then occurred between the acting master and Ms Seddone:[7]
THE ACTING MASTER: As I understand it, a proposal has been put which - to you from the bank which is not reflected in the orders that is sought today so that the orders that the [Bank] seeks is that they be given judgment summarily and possession of the [Second Property] and a judgment for payment of a loan amount, an amount that they say ought to be paid by you. That amount is in excess of $420,000. The - on the last occasion, I believe there was an adjournment of four weeks to allow you to take some legal advice in relation to it. Appreciating that there is a significant history and difficulties with this matter, do you consent to judgment in the terms that have been presented to you today? Or - - -
SEDDONE, MS: I have no choice. Like I said, I have to accept it because I did pay on my mortgage to avoid to lose the property and because the other property is not under my name, it was (indistinct) and when I signed the agreement, I couldn't speak any English so I didn't know the consequences could be this one and - yes.
[7] Ts 17/5/18 at 8.
Ms Guy then provided the acting master with an open letter from the Bank's solicitors to Ms Seddone dated 18 April 2018 which set out the Bank's proposal. The acting master took Ms Seddone through this letter, indicating that while the proposed orders would give the Bank the right to take possession of the First Property the Bank would not do so on the basis that Ms Seddone consented to the orders and maintained usual repayments under the account for the Home Loan Agreement. The acting master continued:[8]
THE ACTING MASTER: And they will enforce the judgment that they secured against Mr Prohaska on 16 March and get vacant possession of the other property and sell that. This suggests that the [Bank] will refinance both accounts. But you must remain repayments on the refinance. So it's a proposal that I think will allow you - or potentially allow you to remain in one property while the other is sold to try to reduce and extinguish that debt with the potential for a refinance.
SEDDONE, MS: Yes. I agree on that. The only part is the last part, where I look like I would be in charge of all debit payment, and my husband is not in the repayment. And the very high interest rate, instead helping me to reduce, they're going up.
[8] Ts 17/5/18 at 10.
Ms Guy explained that, as there were two registered proprietors of the First Property, both Mr Prohaska and Ms Seddone would remain borrowers and mortgagees. The acting master then explained to Ms Seddone:[9]
So you have, really, one of two options today. There's an application for summary judgment. No materials have been filed in opposition. And there would be a question if - whether you would be given a very short period of time to file affidavit material in opposition to the judgment. But, otherwise, that will be heard and determined. Alternatively, the position is presented that there is an offer to you on the terms set out in the [Bank's solicitor's letter of 18 April 2018].
And whilst - and you've had the opportunity to take advice on it. There appears to, from what you've said - to be some concerns you have about it. But the options today are, I think, either you might decide that is not an acceptable proposition for you, in which case, I would be giving you - and bringing the matter back within, say, seven days to give you an opportunity to put actually evidence opposing judgment, the reasons why you're not responsible under the arrangements and any defence you have. Alternatively, we can proceed today on the basis of the offer of the bank and enter judgment against you.
[9] Ts 17/5/18 at 11.
The matter was then stood down for Ms Seddone to consider her position. On resumption of the hearing a short time later, the following exchange occurred between the acting master and Ms Seddone:[10]
THE ACTING MASTER: Okay. Ms Seddone, you've had an opportunity to take a few moments and, as I understand it, make a call to a legal representative. Have you had an [opportunity] to consider the position you wish to take today?
SEDDONE, MS: She didn't answer. She's busy with a client. So I have no choice. I have to accept what the bank - hoping to keep my property the way they offer me, no change any deal. I'm hoping they can get some - because it's my husband mostly responsible for the debt. If they can just get all the debt to him and not to me - - -
THE ACTING MASTER: Okay.
SEDDONE, MS: My kids look like they have lost debt already.
[10] Ts 17/5/18 at 12.
The acting master gave ex tempore reasons for making orders in terms of the Bank's minute of proposed orders. After referring to the history noted above, the acting master said:
No affidavits nor submissions have been filed by [Ms Seddone] in opposition to the summary judgment application. The matter is before me on the basis that there is a consent to summary judgment that is reluctantly provided by [Ms Seddone], but there is no suggestion by [Ms Seddone] at this stage that she wished to file any affidavit material or submissions in substantive opposition to the summary judgment application.
On the basis that there has been a fair opportunity for [Ms Seddone] to take legal advice and on the basis that I believe that on the questions posed and answers provided, that Ms Seddone understands the offer that has been presented to her, I am prepared to make orders in terms of the minute of proposed orders, filed on behalf of the [Bank]. Those orders, had they been presented by consent, would not have been made on the papers alone but would only have been made upon the attendance of [Ms Seddone] so that the court could satisfy itself that [Ms Seddone] understood the orders and judgment to which she was now consenting.
I am satisfied that although [Ms Seddone] is troubled by the circumstances she finds herself in, that she has indeed consented to judgment in terms of that minute. I will therefore make orders in those terms. Thank you. Ms Seddone, I again commend you to continue your discussions with the bank and continue your discussions in relation to potential terms that might be taken going forward; however, the consent orders have been made on the basis of a proposal put to you on 18 April, and on that basis and with your consent, those orders are now made.
After the acting master gave these reasons, the following exchange occurred between the acting master and Ms Seddone:[11]
SEDDONE, MS: So their proposal is I give them property. I'm paying the mortgage and the other property is gone
THE ACTING MASTER: Yes.
SEDDONE, MS: with the (indistinct) yes. Okay. No choice.
THE ACTING MASTER: Thank you, Ms Seddone.
SEDDONE, MS: Thank you. Thank you.
[11] Ts 17/5/18 at 12.
On 30 October 2018, the Bank applied for a Property (Seizure and Delivery) Order in respect of the Second Property. An order was made on 5 November 2018. No order has been sought or made against the First Property.
The appeal to this court
On 22 November 2023, Ms Seddone filed an appeal notice appealing against the orders made by the acting master on 17 May 2018. Because the appeal notice was filed over 4.5 years out of time, Ms Seddone requires an extension of time in which to appeal. Ms Seddone also requires leave to appeal as the order for entry of judgment was made with the consent of the parties: Supreme Court Act 1935 (WA) s 60(1)(e).
In an affidavit sworn 7 November 2023 in support of her application for an extension of time in which to appeal, Ms Seddone deposes that she continued to make payments under the Home Loan Agreement herself and repayments were then up to date on that loan. However, she stopped making payments on the Investment Loan Agreement 2 - 3 months after Mr Prohaska moved into the Second Property in 2016. This was because the Second Property was purchased as an investment only and, without rental income, she could not afford to pay two loans. The Second Property was sold after judgment was granted, resulting in a shortfall debt of $148,000, which had grown to $168,000 at the time of swearing the affidavit. Ms Seddone refers to Family Court proceedings against Mr Prohaska in which she seeks sole ownership of the First Property and for Mr Prohaska to assume responsibility for the amount outstanding on the Investment Loan Agreement.
There was delay in Ms Seddone filing an appellant's case which complied with the Supreme Court (Court of Appeal) Rules 2005 (WA). On 11 March 2024, we made a springing order extending time for the filing of a compliant appellant's case to 4 pm on 8 April 2024. An appellant's case was filed on 8 April 2024, which contained two grounds of appeal. The first ground contended that the acting master erred in accepting submissions advanced by the Bank, while the second ground complained of a denial of procedural fairness.
On 10 April 2024, the Court of Appeal registrar issued a notice to the parties to attend for the court to consider whether the appeal should be dismissed on the basis that none of the grounds of appeal have any reasonable prospect of succeeding. After Ms Seddone was provided with a transcript of the proceedings before the primary court, she sought and was granted an adjournment and an opportunity to file an amended appellant's case.
On 31 May 2024 the appellant filed a document which was accepted for filing as an addendum to her appellant's case. The addendum indicated that the former ground 1 was abandoned and recast ground 2, effectively in the following terms:
[T]he [master] denied natural justice/due process in that;
a. the [master] failed to exercise any discretion available to her to adjourn the matter to a later date.
b. the [master] erred in that she failed to exercise any discretion available to her to adjourn the matter to a later date so that [Ms Seddone] could take legal advice in regard to the [Bank's] letter dated 18 April 2018
c. the [master] failed to exercise her discretion to adjourn the matter for a period of seven (7) days to give [Ms Seddone] an opportunity to put evidence opposing judgment, and setting out the reasons why she was not responsible under the arrangements and any defence available to her. [Ms Seddone] submits that the defence could have included her concerns about the [Bank's] conduct in the matter, conduct which [Ms Seddone] contends was unconscionable.
d. the [master] failed to inform herself about the concerns that [Ms Seddone] held concerning the [Bank's] conduct.
e. the [master] failed to take into account [Ms Seddone's] mental health at the time of the hearing and the [master] failed to inquire as to [Ms Seddone's] mental health when she was free to do so, and whether [Ms Seddone] was mentally fit to attend the hearing on that day.
f. the [master] erred in that she failed to ensure that [Ms Seddone] given her circumstances was able to understand and comprehend the reasons for the default summary judgment order that was sought by the [Bank].
Disposition
There is no merit to the remaining ground of appeal, which does not have any reasonable prospect of succeeding.
Ms Seddone's complaint of a failure to accord procedural fairness is to be assessed in the context where she consented to the order granting judgment in favour of the Bank. That order was made 10 months after the Bank applied for summary judgment. During that time, Ms Seddone did not seek to place any evidence or submissions before the court in opposition to the summary judgment application. When the matter came on for hearing before the master on 19 April 2018, the Bank's counsel explained its proposal. Ms Seddone was given four weeks to consider the proposal and obtain legal advice in relation to it. When the matter came on for hearing before the acting master on 17 May 2018, Ms Seddone indicated that she consented to the orders proposed by the Bank. Contrary to the particulars to ground 1, there was no obligation on the acting master to interrogate Ms Seddone about her understanding of the agreement or the state of her mental health. In any event, there is no evidence before this court, and there was no evidence before the primary court, indicating that Ms Seddone misunderstood what was proposed by the Bank or was incapable of understanding and participating in the hearing. If the orders were not going to be made by consent, the acting master indicated that Ms Seddone would have a short further opportunity to file material in opposition to the Bank's summary judgment application. There was, in all the circumstances, nothing arguably procedurally unfair about the primary court's approach.
The Bank's settlement proposal was not commercially unreasonable, providing for the sale of the Second Property and allowing Ms Seddone to retain the First Property which it appears was her primary residence. That result appears, from Ms Seddone's affidavit in support of an extension of time in which to appeal and the absence of any enforcement of the order giving the Bank possession of the First Property, to have been achieved. The outcome which has enabled Ms Seddone to retain the First Property is not plainly or obviously unjust.
The Bank was undoubtedly in a stronger position than Ms Seddone in negotiating a settlement of the matter. However, the court was not Ms Seddone's legal adviser or the scrutineer of the advice which she received. At most, the requirement for the court was to provide Ms Seddone with time that gave her a reasonable opportunity to obtain legal advice. The four-week adjournment of the summary judgment application for that purpose gave Ms Seddone a reasonable opportunity to obtain legal advice in relation to the Bank's proposal.
Ms Seddone's written submissions contend, in effect, that she had a defence to the Bank's claim on the basis that the Investment Loan Agreement should be set aside because she was subject to undue influence by Mr Prohaska or in the application of the rule in Yerkey v Jones.[12] However, there is no evidentiary foundation for either defence in the material before either the primary court or this court.
[12] Yerkey v Jones (1939) 63 CLR 649, applied in Garcia v National Australia Bank Ltd[1998] HCA 48; (1998) 194 CLR 395.
Further, on appeal it is not sufficient for Ms Seddone to show that she might have had an arguable defence to the Bank's claim in the primary proceedings. Rather, it is necessary for Ms Seddone to demonstrate a proper basis for impugning the settlement agreement she reached with the Bank that is reflected in the orders of 17 May 2018 to which she consented. That agreement is not vitiated by the fact that Ms Seddone may have reached the agreement reluctantly or may have been poorly advised in relation to it. There is no evidence before this court that the Bank applied any illegitimate pressure on Ms Seddone which might form an arguable basis for setting aside the settlement agreement on grounds such as duress, undue influence or unconscionable conduct.[13]
[13] See, for example, Chang v Legal Profession Complaints Committee (No 2) [2020] WASCA 208; (2020) 56 WAR 263 [270], [277] - [278], [280].
Ms Seddone's written submissions also make assertions as to the advice which she received in relation to the Bank's settlement proposal and as to her subjective understanding as to the effect of the agreement. Those assertions are not supported by any evidence before this court or the primary court. It appears from Ms Seddone's exchanges with the acting master on 17 May 2018 that she understood the Bank's proposal even though she did not like aspects of its terms. In any event, Ms Seddone's written submissions do not on their face disclose any proper basis for this court to set aside the settlement agreement reflected in the orders made by consent on 17 May 2018.
Given the history of the matter, the opportunities to seek legal advice which Ms Seddone had previously been given and her indicated agreement to the orders being made by consent, there was no arguable appellable error in the acting master not exercising her discretion to grant the appellant a further adjournment to consider her position. Ms Seddone's contention that she was denied procedural fairness in the primary proceedings has no reasonable prospect of succeeding.
Orders
As Ms Seddone's sole remaining ground of appeal does not have any reasonable prospect of succeeding, we considered it to be in the interests of justice that the appeal be dismissed. Given the lack of merit in the ground of appeal, there is no utility is granting the appellant an extension of time in which to appeal or leave to appeal.
At the conclusion of the hearing on 21 June 2024, we therefore made orders that:
1.The appellant's application for an extension of time to appeal, and for leave to appeal, is dismissed.
2.The appeal is dismissed.
3.The appellant pay the first respondent's costs of the appeal, including reserved costs, fixed in the sum of $2,000.
We made the costs order on the basis that costs should follow the event, and the sum of $2,000 was a reasonable amount in the circumstances.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
RL
Associate to the Honourable Justice Mitchell
21 JUNE 2024
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