Serobian v Commonwealth Bank of Australia - [2009] NSWCA 350

NEW SOUTH WALES COURT OF APPEAL

CITATION:
Serobian v Commonwealth Bank of Australia [2009] NSWCA 350
This decision has been amended. Please see the end of the judgment for a list of the amendments.

FILE NUMBER(S):
40246 of 2009

HEARING DATE(S):
19 October 2009

JUDGMENT DATE:
19 October 2009

EX TEMPORE DATE:
19 October 2009

PARTIES:
Shahen Serobian - First applicant
Christine Serobian - Second applicant
Commonwealth Bank of Australia - Respondent

JUDGMENT OF:
McColl JA Basten JA Handley AJA

LOWER COURT JURISDICTION:
Supreme Court

LOWER COURT FILE NUMBER(S):
CA40246/09

LOWER COURT JUDICIAL OFFICER:
Sackville AJA (7 September 2009); Campbell JA (17 September 2009); Hodgson JA (12 October 2009)

COUNSEL:
C Serobian (in person) - Applicants
P J Dowdy - Respondent

SOLICITORS:
Unrepresented (in person) - Applicants
Henry Davis York - Respondent

CATCHWORDS:
PROCEDURE – review of decisions of single judges of appeal – three applications made and refused for a stay of writ of possession of family home – whether error shown in each refusal to grant stay

LEGISLATION CITED:
Contracts Review Act 1980 (NSW)
Supreme Court Act 1879 (NSW)
Uniform Civil Procedure Rules 2005 (NSW)
Trade Practices Act 1974 (Cth)

CASES CITED:
Brimaud v Honeysett Instant Print Pty Ltd (1988) 217 ALR 44
Commonwealth Bank of Australia v Shahen Serobian [2009] NSWSC 302
Fox v Percy [2003] HCA 22; (2003) 214 CLR 118
Inglis v Comonwealth Trading Bank of Australia [1972] HCA 74; (1972) 126 CLR 161
Kiri Te Kanawa v Leading Edge Events Australia Pty Ltd [2007] NSWCA 274
Lo and Anor v Iverach and Anor [2009] NSWCA 92
Rahme v Commonwealth Bank of Australia [1993] HCA 62; (1993) 117 ALR 618
Serobian v Commonwealth Bank of Australia [2009] NSWCA 309
Serobian & Anor v Comonwealth Bank of Australia Ltd (New South Wales Court of Appeal, Sackville AJA, 7 September 2009, unreported)
Serobian v Commonwealth Bank of Australia (New South Wales Court of Appeal, Hodgson JA, 12 October 2009, unreported)
Transglobal Capital Pty Ltd v Yolarno Pty Ltd [2004] NSWCA 136; (2004) 60 NSWLR 143
Vaughan v Dawson [2008] NSWCA 169

TEXTS CITED:

DECISION:
Motion is dismissed with costs

JUDGMENT:

IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40246/09
SC 50219/07
McCOLL JA
BASTEN JA
HANDLEY AJA
Monday 19 October 2009

SHAHEN SEROBIAN & ANOR v COMMONWEALTH BANK OF AUSTRALIA

Judgment ex tempore

McCOLL JA: By notice of motion filed on 13 October 2009 the applicants, Shahen Serobian and Christine Serobian, seek an order that a writ of possession issued by the respondent, the Commonwealth Bank of Australia dated 24 April 2009 be stayed. They also seek to “refer” to this Court the judgments of Sackville AJA, Campbell JA and Hodgson JA in which, in the exercise of the powers of a single Judge of Appeal, each has refused the relief the applicants seek.
Background
The respondent brought proceedings in the Supreme Court of New South Wales against the applicants to recover $8,007,806.85 being moneys lent and advanced to them and secured by mortgage dated 13 December 2004 over their property at 1/30A Addison Road, Manly (the “Manly property”). The respondent also sought a writ of possession of the Manly property.
The monies the respondent sought to recover represented the sum of two facilities, one of $4.8 million made available to the applicants personally, and another of $2 million made available to their company, Schypsl Pty Ltd, the latter having been guaranteed by the applicants.
The applicants cross-claimed for orders that the guarantees they had executed in the respondent’s favour for the debts for Schypsl and another company, Refnok Pty Ltd, be set aside either pursuant to s 7(1) of the Contracts Review Act 1980 (NSW) or s 87 of the Trade Practices Act 1974 (Cth).
On 24 April 2009, Hammerschlag J found in favour of the respondent, gave judgment for the respondent against the applicants jointly and severally in the amount claimed, ordered that a warrant for possession of the Manly property might be issued forthwith, dismissed the cross-claim and ordered the applicants to pay the respondent’s costs of the proceedings including the costs of the cross-claim: Commonwealth Bank of Australia v Shahen Serobian [2009] NSWSC 302 (“Serobian 1”). It appears that judgment for possession was entered on 13 May 2009 and leave was given to the respondent to issue a writ of possession forthwith.
A notice of appeal was filed on 24 July 2009, a notice of intention to appeal having been earlier filed.
Since the primary judgment was delivered, the applicants have made at least four applications for a stay of the primary judge’s orders. Each has been rejected. It appears the first application was made by notice of motion dated 25 May 2009 to a judge of the Equity Division who declined to order a stay but indicated such an application could be made to the Court of Appeal: see Serobian & Anor v Commnwealth Bank of Australia Ltd (New South Wales Court of Appeal, Sackville AJA, 7 September 2009, unreported at [2]) (“Serobian 2”).
The second application for a stay was made by notice of motion filed in this Court on 24 August 2009. It was heard by Sackville AJA on 7 September 2009. It appears the notice of motion first came before his Honour on 31 August 2009, on which day his Honour adjourned the matter for a week to enable the applicants to obtain legal advice, in particular to advance arguments suggesting that their appeal had arguable prospects of success: Serobian 2 (at [14]).
When the matter came before his Honour a week later the applicants appeared unrepresented. The material upon which they relied, an affidavit of 24 August 2009, went principally to questions of the hardship which could ensue if the applicants were required to give up possession of their home, the Manly property. Sackville AJA concluded (at [9]) that nothing put before him indicated that there was an arguable case in relation to the aspect of the judgment for the principal sum of $4.8 million. His Honour also noted (at [11]) that the applicants had not made any payments to the respondent in respect to the advance for a considerable period and were living in a home “said to be worth about $4 million without paying any occupation rent or equivalent amount”.
His Honour had previously inquired of the applicants’ then legal representative whether the applicants would be prepared to give an undertaking to pay an occupation rent or equivalent during the period of any stay. He noted (at [11]) that no such undertaking was forthcoming with the consequence that if a stay were to be granted the Bank would suffer “what appears to be further irretrievable losses”. His Honour dismissed the notice of motion of 24 August 2009.
During the week in which the second stay application was heard, the sheriff issued a notice to vacate on 3 September 2009, giving until 10am on Monday, 21 September 2009 for all those residing in the Manly property to leave: see Serobian v Commonwealth Bank of Australia [2009] NSWCA 309 (at [8]) (“Serobian 3”).
The matter next came before Campbell JA on 17 September 2009 on which occasion the applicants again sought a stay as well as an order for interrogatories. His Honour ordered that the execution of the writ of possession for the Manly property be stayed until 10am today, 19 October 2009, in order to allow the occupants of the property to leave it in an orderly fashion: Serobian 3 (at [41], [43]).
It appears from annexure C to Mrs Serobian’s affidavit sworn on 12 October 2009 that the sheriff gave notice on 1 October 2009 that the occupants of the Manly property must vacate the premises without delay, and in any event, no later than 10.30am this coming Thursday, 22 October 2009. Otherwise, action to evict will proceed without further warning.
Campbell JA dismissed the motion seeking a stay and interrogatories with costs. It is unnecessary to set out in detail his Honour’s comprehensive analysis of the background and the applicants’ prospects of success on appeal. In short, his Honour concluded (at [18]) that the legal argument upon which the applicants had relied to resist the respondent’s claim under the $4.8 million facility had no prospects of success on appeal. That legal argument related to the mode of witnessing the applicants’ execution of the mortgage relating to the Manly property.
His Honour also recorded (at [19]) the fact that the primary judge had not accepted the applicants’ evidence because he formed the view that neither the applicants, nor their son, was a truthful witness, and also because the respondent’s evidence was supported by factors in the surrounding circumstances as well as because the relevant bank officers who gave evidence were “entirely unshaken in cross-examination”.
Campbell JA noted the difficulties on appellate review concerning factual findings made by a trial judge as set out in Fox v Percy [2003] HCA 22; (2003) 214 CLR 118, and recorded (at [21]) that Mrs Serobian had not pointed to any of the matters identified in that case which would enable an appellate court to interfere with a primary judge’s factual findings. Campbell JA also observed that consistently with McLelland J’s observations in Brimaud v Honeysett Instant Print Pty Ltd (1988) 217 ALR 44 (at 46), any application to revisit an interlocutory order should be founded on a material change in circumstances or the discovery of new material, and that in the instant case, neither of those conditions had been satisfied in relation to Sackville AJA’s order. Rather, he concluded (at [23]), Mrs Serobian was seeking another opportunity to put arguments that she had not put to Sackville AJA and that circumstance alone would have justified him in peremptorily dismissing the application.
Notwithstanding that view, Campbell JA carefully considered, and rejected, each of the arguments Mrs Serobian then advanced. His Honour concluded (at [40]) that the applicants had to face up “to the practical reality that they may need to move out of their home”.
His Honour also observed (at [45]) that should any further application for a stay be made, Mrs Serobian would need to take into account the extent which he had considered the matter and also the principles in Brimaud to which he had earlier referred.
The fourth application for a stay came before Hodgson JA pursuant to a notice of motion filed on 6 October 2009 seeking a stay of execution of the writ of possession until February 2010, or until “judiciary [sic] review concluded”: Serobian v Commonwealth Bank of Australia (New South Wales Court of Appeal, Hodgson JA, 12 October 2009, unreported) (“Serobian 4”). His Honour concluded that there was no evidence of a material change of circumstances since the application before Campbell JA nor any evidence not previously presented which could not reasonably have been presented on that occasion.
His Honour dealt with, in addition, and disposed of adversely to the applicants, matters they raised concerning fresh proceedings they had commenced in the Supreme Court against the respondent, an assertion that the primary judge had erred in saying that the applicants only raised two matters in defence to the claim for repayment of the $4.8 million facility and a particular complaint about the whereabouts of $275,000 said to be the result of the sale of a property at The Entrance. Notwithstanding those matters, Hodgson JA concluded there was nothing which would cause him to depart from the manner in which Campbell JA had dealt with the previous application in his careful and comprehensive judgment.
His Honour dismissed the notice of motion filed on 6 October 2009.
Principles of law
The Court of Appeal may order that the decision below or the proceedings under the decision be stayed: r 51.44 Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”). A Judge of Appeal may exercise the powers of the Court of Appeal to make any order or give any direction in any appeal or other proceedings: s 46(2)(b), Supreme Court Act 1970 (NSW). The three judgments the applicants seek to refer to the Court of Appeal sitting as a bench of three were, as I have said, each given in exercise of the powers under subs 46(2)(b). The Court of Appeal may discharge or vary a judgment given by a Judge of Appeal or ancillary order made or direction given by a Judge of Appeal pursuant to s 46(4) of the Act. Application to the Court for a variation or discharge of an order of a Judge of Appeal must be made on notice of motion filed either within 14 days after the date on which the order is made or within such extended time as the Court may fix: UCPR 51.58.
Although the applicants’ motion of 13 October 2009 asks the three judgments be “referred to the Full Court”, it should be treated as an application for a discharge or variation of their Honours’ orders and an application to the Court to grant, instead, the stay sought on each of those occasions.
I note that the application to discharge or vary the orders made by Sackville AJA and Campbell JA are out of time, each having been made more than 14 days after the date on which the orders in each case were made. The respondent does not take any point in respect of that. In my view the Court should extend the time within which the application for discharge or variation of those orders may be made.
An application for the variation or discharge of an order of a Judge of Appeal is not an appeal: s 19(2), Supreme Court Act; UCPR 51.2. In order to succeed, the applicant for variation or discharge must demonstrate that the judge erred in principle or that the judge’s decision was plainly wrong: see Transglobal Capital Pty Ltd v Yolarno Pty Ltd [2004] NSWCA 136; (2004) 60 NSWLR 143 (at [4]–[6]); Kiri Te Kanawa v Leading Edge Events Australia Pty Ltd [2007] NSWCA 274 (at [14]) (per Giles JA, Ipp and Basten JJA agreeing); Lo and Anor v Iverach and Anor [2009] NSWCA 92 (at [29]) (Allsop P, Giles and Macfarlan JJA).
The fundamental principles related to a grant of a stay pending appeal were conveniently summarised by Campbell JA in Vaughan v Dawson [2008] NSWCA 169 (at [16]) as follows:
“16 It is unexceptional principle that a successful party is prima facie entitled to the fruits of his judgment. That principle has recently been re-affirmed in this Court in Kalafair Pty Limited v Digitec (Australia) Pty Limited [2002] NSWCA 383; (2002) 55 NSWLR 737 at [28]. What that ‘prima facie entitlement’ means, in practical effect, however, is that the onus is on an applicant for a stay to make out a case that it is suitable for the court to award a stay. This is recognised in Alexander v Cambridge Credit Corporation Limited (1985) 2 NSWLR 685 at 694, when the court held that it was for the applicant to demonstrate a proper basis for a stay that will be fair to all parties.”
In elaboration of the last proposition, I would note that where a stay is sought to restrain the enforcement of a mortgage, the fact that the applicants failed to tender payment or to offer to submit to a condition of payment, while not a bar to the grant of a stay of judgment for possession, may be “a very weighty consideration militating against the grant of such relief”: Rahme v Commonwealth Bank of Australia [1993] HCA 62; (1993) 117 ALR 618 (at 619) per Deane J; see also Inglis v Commonwealth Trading Bank of Australia [1972] HCA 74; (1972) 126 CLR 161 (at 164).
Consideration
The applicants before this Court have relied on four affidavits all sworn by Mrs Serobian. In chronological order, they are that of 24 August 2009 which was before Sackville AJA, an affidavit of 14 September 2009, which I would infer was before Campbell JA, one dated 5 October 2009 which I would infer was before Hodgson JA, and finally the affidavit of 12 October 2009 sworn in support of the motion presently being considered.
I do not think I do any injustice to the first of those affidavits, that of 24 August 2009, to say that in my view, Sackville AJA accurately summarised its contents as supporting the proposition that if the Bank were to secure possession of the Manly property, the applicants and members of their family would suffer hardship.
The affidavit of 14 September 2009 was to similar effect although it extended to assertions about the conduct of various officers of the Bank, which it is not necessary to recount in detail. Suffice it to say, the applicants through that affidavit sought to assert that it was not their conduct which led to the default in respect of which judgment was recovered, rather it was a default they attributed to the Bank.
The affidavit of 5 October 2009, filed on 6 October, also details to a large extent matters of hardship. It should be noted that it is apparently common ground that one of the applicants’ children, their daughter, Linette Serobian, is doing her higher school certificate exams which have either just commenced or are about to commence. Those examinations finish on 12 November 2009. The affidavit also deposes to the same daughter suffering from headaches. The respondent accepts it cannot controvert that proposition on the basis of any information presently available.
The affidavit then seeks to explore in detail matters relating to the proper valuation of the Manly property and makes a number of assertions in relation to the primary judgment, taking issue with the extent to which the primary judgment dealt with the applicants’ arguments below, and complains that the primary judge did not consider all the evidence, and in short, that the primary judge was in error.
There are a number of annexures to that affidavit. It is unnecessary to refer to them in detail. I would note that one complaint the applicants appear to make concerns the primary judge’s treatment of medical records relating to Mrs Serobian. To the extent to which there is a factual controversy about that, that will no doubt, if relevant, be dealt with in due course on appeal.
To the extent that I understand the proceedings below, it was sought to assert that Mrs Serobian was unwell at the time of a meeting which took place on or about 22 October 2004. Those medical records do not appear to me to relate specifically to that date, albeit they may refer to a medical condition which may have persisted then.
The final affidavit of 12 October 2009 complains about the three judgments the Court is now reviewing and repeats the matters relating to the applicants’ daughter, the complaint made before Hodgson JA about the extent to which Hammerschlag J considered the applicants’ defences, and makes a number of particular complaints about statements of accounts, the charging of default interest, the matter relating to the $275,000, which as I have said was raised before Hodgson JA and again makes some particular complaints about Hammerschlag J’s judgment.
The respondent relied upon two affidavits, the first being paragraphs 1, 2, 5 and 6 of an affidavit of Robert Ralston. Mr Ralston is the manager credit risk solutions in institutional and business banking for the respondent and has the day-to-day responsibility and conduct of the Serobians’ matter on behalf of the Bank. According to his affidavit sworn on 9 October 2009, the amount due and owing by each of the applicants as at that date under the mortgage of 13 December 2004 in respect of the facilities held by the applicants with the Bank (excluding any liability as guarantors of Schypsl) was $8,715,712.66, with interest accruing on that amount at a daily rate of $3,305.44. He expressed the opinion that in order to minimise the bank’s ongoing exposure he considered it necessary to attempt to sell the Manly property before the end of this year. He referred to advice from a real estate agent that it would be necessary to get possession of the property before the end of October to allow time to conduct a suitable marketing campaign of at least four weeks duration.

The second affidavit upon which the respondent relied was that of the respondent’s solicitor, Laura Jane Farley, sworn 27 August 2009. She deposes to the fact that there has been no repayment of principal or interest made by the applicants in respect to their facilities with the Bank since July 2007, and also to the fact that they have paid no occupation rent whilst residing in the property since that date. She attached to her affidavit correspondence from the respondent’s solicitors to the applicants asking that rent be paid, and swears that no rent payments have been made in response to that letter. She also attaches a written offer made on 9 March 2009 and given to the applicants’ legal representative during the hearing of the case in which the respondent said that if the applicants consented to the orders sought by the Bank in the proceedings prior to 4pm on 10 March 2009, the respondent was willing to consent to a stay of eviction from the Manly property for a period of ten weeks. She deposes to the fact that that offer was not accepted. She also attaches some valuations of the property which it is unnecessary to detail.

Both parties have relied upon written submissions. In the case of the Serobians, Mrs Serobian reiterates the matters of hardship in particular relating to her daughter and her higher school certificate exams. She also raises other matters of hardship relating to distressing events which have taken place in relation to relatives, and asserts that a stay should be granted pending the investigation of matters relating to the case by statutory authorities.
Insofar as the three judgments in relation to which the review is sought is concerned, Mrs Serobian appears to assert in her written submissions that Sackville AJA erred in so far as he concluded that the applicants had not demonstrated any arguable prospects of success on appeal. She refers to “points attached to an affidavit”, which I would infer is a reference to the affidavit of 24 August 2009, and to some “handwritten submissions”, and asserts that the applicants should have been able to stay the writ of possession pending appeal due to hardship. In my view, those submissions do not disclose any error of the nature of that to which I have earlier referred which would warrant a variation or discharge of a judgment of a single judge of this Court, and I would reject that application so far as Sackville AJA’s judgment is concerned
Insofar as Campbell JA’s decision is concerned, the applicants submit that his Honour correctly concluded (at [14]) that of the two facilities made available, the one for $2 million had been made available to their company, whereas, they complain, Hammerschlag J erred in concluding that the $2 million was for personal use. It is not the function of this Court on an application pursuant to s 46(4) to come to a factual conclusion as to which of those conclusions might be accurate. I do note, however, that Hammerschlag J referred (at [63] – [65]) to item 14 of the Terms Schedule Facility relating to $2 million, and then to the Security Schedule as including, in relation to that $2 million facility, a first registered mortgage over the Manly property. I would infer that it is on that basis, among others, that Mr Ralston has sworn his affidavit of 9 October 2009 referring to the entirety of the sum to which I have earlier referred as being owing under the mortgage secured over the Manly property
The other two matters of complaint, so-called, by the applicants in relation to Campbell JA’s judgment relates to [28] of his Honour’s judgment where he deals with an allegation that the Bank failed to follow its practice in relation in various respects. The submissions which the applicants rely upon in respect of that paragraph make an allegation of a grave nature in relation to the Bank and the loan agreement document. There is no evidence of which I am aware before the Court which would sustain that assertion, and it does not point to error in Campbell JA’s rejection of that matter in relation to the stay application which he was then considering.
The next matter to which reference is made in the submissions in relation to Campbell JA’s judgment (at [32]) is Mrs Serobian’s medical records, to which I have already referred when dealing with the affidavit evidence. The written submissions assert this is a major part of the applicants’ case and demonstrates Fox v Percy error. For my part I cannot see that those medical records would assist the applicants in establishing any point of error within the principles of appellate review set out in Fox v Percy. I am of the view that no error has been demonstrated in Campbell JA’s order for judgment dismissing the application for a stay.
The final judgment of which complaint was made is the judgment of Hodgson JA. I have referred to the substance of his Honour’s reasons. The first complaint made in the written submissions concerning that judgment relates to a complaint about not being able to cross-examine Mr Ralston. It appears from the matters which have been discussed today when Mr Ralston’s affidavit was sought to be tendered, and indeed from the written submissions, that the paragraphs in relation to which cross-examination was sought were not read by the Bank, and I see no error in relation to his Honour’s treatment of that material.
There is also complaint relating to the proposed value for which the Bank might sell the Manly property. It does not relate to any matter in Hodgson JA’s judgment.
The final matter of complaint in relation to Hodgson JA relates to his Honour’s conclusion (Serobian 4: at [5]) that the material relied upon by the applicants before him showed no material change of circumstance and did not include any additional evidence that was not reasonably available on previous occasions. Having read the affidavits which preceded Hodgson JA’s decision and appear to have been those relied upon in the earlier applications, I can see no error in his Honour’s conclusion that there was no new material evidence. In my view the applicants have not demonstrated any error in his Honour’s decision to dismiss the application with costs.
For those reasons, in my view, the applicants’ notice of motion to vary or discharge the orders earlier made by this Court should be dismissed.
BASTEN JA: The notice of motion of 13 October 2009 before this Court has been treated as if it were, in effect, an application to review earlier decisions of this Court in relation to the availability of a stay extending beyond 19 October 2009 with respect to the orders of the trial judge made on 24 April 2009.
I agree with the Presiding Judge that no relevant error has been demonstrated, particularly in the last of those judgments being the judgment of Hodgson JA, refusing to extend the stay of the orders which had been granted by Campbell JA. Even if the matters were at large, I would not be satisfied on the material before this Court that a further stay should be granted. I agree that the notice of motion should be dismissed with costs.
HANDLEY AJA: I also agree with the reasons of the other judges that the motion should be dismissed with costs.
McCOLL JA: The order of the Court is that the motion be dismissed with costs.
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AMENDMENTS:

26/10/2009 - add date of judgment to cover sheet - Paragraph(s) cover sheet

LAST UPDATED:
26 October 2009