St George Bank Limited v Hu and Lam; St George Bank Limited v Lam and Registrar General (ACT)
[2012] ACTSC 10
•January 31, 2012
ST GEORGE BANK LIMITED v JIM HU AND OLIVIA LAM;
ST GEORGE BANK LIMITED v OLIVIA LAM AND REGISTRAR GENERAL (ACT)
[2012] ACTSC 10 (31 JANUARY 2012)
PRACTICE AND PROCEDURE – inherent jurisdiction – dispute between bank and customer – application by plaintiff bank for permanent stay – court satisfied that in interests of justice to grant stay – permanent stay ordered.
Jurisdiction of Courts (Cross-Vesting) Act 1987 (NSW)
Supreme Court Act1933, s 30
Court Procedures Rules 2006, rr 1169, 1433, 1450
Tringali v Stewardson Stubbs & Collett Pty Ltd [1965] NSWR 416
Tringali v Stewardson Stubbs & Collett Ltd (1965) 66 SR (NSW) 335
Batistatos v Roads and Traffic Authority of New South Wales (2006) 226 CLR 256
No. SC 192 of 2010
SC 376 of 2009
Master Harper
Supreme Court of the ACT
Date: 31 January 2012
IN THE SUPREME COURT OF THE )
) No. SC 192 of 2010
AUSTRALIAN CAPITAL TERRITORY )
BETWEEN:ST GEORGE BANK LIMITED
ACN 005 513 070
Plaintiff
AND: JIM HU
First Defendant
OLIVIA LAM
Second Defendant
ORDER
Judge: Master Harper
Date: 31 January 2012
Place: Canberra
THE COURT ORDERS THAT:
the proceeding be permanently stayed.
the counterclaim by the second defendant be permanently stayed.
all previous orders as to costs be vacated.
IN THE SUPREME COURT OF THE )
) No. SC 376 of 2009
AUSTRALIAN CAPITAL TERRITORY )
BETWEEN:ST GEORGE BANK LIMITED
ACN 005 513 070
Applicant
AND: OLIVIA LAM
First Respondent
AND:REGISTRAR GENERAL (ACT)
Second Respondent
ORDER
Judge: Master Harper
Date: 31 January 2012
Place: Canberra
THE COURT ORDERS THAT:
Caveat number 1553610 be removed.
This is an application by the plaintiff bank for a permanent stay of the action, including the claim by the plaintiff and a counterclaim by the second defendant.
The principal action by the plaintiff was commenced in the District Court of NSW in November 2007. The plaintiff claimed against the defendants as statutory successor to Advance Bank Limited, which had made a loan to the defendants which they had not repaid. The amount claimed was $125,603.00.
The defendants were married to each other but are now divorced. The first defendant Jim Hu is said to be living overseas. As far as I have been able to ascertain, he has never been served with any process and has not participated in the proceedings.
The statement of claim was amended during April 2008. There is a defence by the second defendant, and a crossclaim. The plaintiff’s claim against the second defendant is that she guaranteed a loan to her then husband, which has not been re-paid. She does not admit signing the guarantee or other relevant documents. She says that any moneys advanced were advanced solely to the first defendant for his benefit, and that she obtained no financial benefit. She says that she did not understand what she was signing. She says that if she guaranteed the loan, her guarantee was procured by unconscionable conduct on the part of the bank. In addition, by way of defence, she says that in September 2002 she made an enquiry of the bank and was informed that she had no liability to the bank. She was given an instrument of discharge of mortgage and in the faith of what she was told by the bank, settled family law proceedings with her former husband, thereby acting to her detriment.
In August 2009 the second defendant filed a crossclaim. She sought indemnity from the first defendant in respect of any liability she might be found to have to the bank. Additionally she sought declaratory relief against the bank, generally in the form of a declaration that she had no liability to the bank.
On the second defendant’s application, in December 2009 the action was removed from the District Court to the Supreme Court of NSW, and transferred to this court pursuant to the Jurisdiction of Courts (Cross-Vesting) Act 1987 (NSW).
The second defendant swore an affidavit in the District Court proceedings in January 2009. She deposed that she was born in 1960 in Taiwan. She came to Australian in the late 1970s. She became an Australian citizen in 1982. She gained a science degree at Adelaide University, and later graduated as a Master of Business Administration in Canberra. She has lived in Australia since, except for a period between 1987 and 1990 when she worked in the United States and in England.
She deposes that she met the first defendant in the late 1980s. They lived together. They jointly purchased a residential unit, where she still lives, at Bruce, and a commercial property at Moorebank in NSW which was rented to a tenant. Both properties were bought with loans from Civic Advance Bank Limited secured by mortgage. The Moorebank property was bought during 1989 and the Bruce unit during 1990.
The defendants were married in December 1993. The marriage was not a success. They separated in mid-1994.
They sold the property at Moorebank in 1995. The second defendant says that they paid off the loan in respect of that property. That mortgage was discharged.
The first defendant left Australia and worked overseas from 1997. He returned to Canberra in 1999 for further study. He stayed at the Bruce unit, graduating in September 2000. He left Australia permanently in July 2000.
The second defendant says that in September 2002 they spoke about obtaining a divorce. The second plaintiff declined to sign divorce documents because their financial position was “not finalised”. The first defendant told her that he had paid off his Australian loans. He gave her the name of an employee of the plaintiff bank to telephone to confirm this. She telephoned the person, who confirmed that it was correct, and told her that she could come in to the bank’s commercial centre to collect a discharge of mortgage document. She made an appointment, went in and collected the discharge. She asked the employee to confirm that she had no further liability to the bank. The employee made some enquiries, returned and confirmed that this was the position. A copy of the discharge of mortgage was annexed to her affidavit. It is dated 12 September 2002 and was registered on 12 March 2003.
It is apparent that on 17 February 2003 an application was made for a new certificate of title. The application was lodged by the second defendant and appears to have been signed by both defendants. It must have been supported by a statutory declaration, which is not in evidence before me. The Registrar-General in due course issued a substitute certificate of title, enabling the discharge of mortgage over the Bruce unit to be registered. It is clear that the plaintiff bank held the original certificate of title throughout this period and was unaware of the issue of the substitute certificate.
A manager with the plaintiff bank has deposed that Advance Bank Limited made a loan to the first defendant in 1994 for a term of five years, guaranteed by the second defendant and secured by a registered first mortgage over the Bruce unit. In 1999 the loan facility was rolled over for another five years, on the same security. When the facility expired in July 2004 the bank demanded payment. He deposes that the bank is unable to explain how the defendants obtained a discharge of mortgage. He says that the bank knew nothing about an application for the issue of a new certificate of title.
In October 2007, Federal Magistrate Brewster made an order in chambers in the Federal Magistrates Court of Australia that the present defendants take all steps to cause the first defendant’s interest in the Bruce property to be transferred to the second defendant, and dispensed with service on the first defendant. A transfer, apparently signed by both defendants, was registered on 24 October 2007. The bank was not asked to consent to the transfer and did not do so. The bank somehow found out about the transfer and on 7 November 2007 lodged a caveat, about a week before starting proceedings in the District Court.
In March 2009 the second defendant applied to the Registrar-General for a lapsing notice in respect of the caveat. This prompted the bank to commence proceedings in this court for an order that the caveat remain in place until the District Court action was determined. In May 2009 I ordered that the caveat not be removed until further order. The caveat therefore remains in place.
The second defendant has been unrepresented since mid-2010.
In December 2010 a Deputy Registrar directed that the action be listed for hearing before me on 29 June 2011.
On that date, the plaintiff was represented by counsel. The second defendant appeared in person and sought an adjournment, supported by a medical certificate. I heard some evidence and stood the matter over part heard until 24 August. On that date I referred the matter to a Deputy Registrar for neutral evaluation, and vacated the hearing date. I was later informed that the neutral evaluation procedure had not been of assistance in resolving the matter, which has been back before me for mention a number of times.
The bank has now decided not to pursue its claim further provided that the second defendant does not pursue her counterclaim and that no orders are made as to costs. The plaintiff agrees in those circumstances to the caveat being removed.
The means of achieving that outcome proposed by the plaintiff is a permanent stay of the claim and the counterclaim.
The solicitor now acting for the plaintiff bank, Mr Brackenreg deposes that the bank has come to the view that it is not viable to continue with its proceedings, without conceding any weakness in the bank’s case. Mr Brackenreg says that from his contact with the second defendant, in court and during the neutral evaluation, he has observed her behaviour to be erratic, and has become concerned for her wellbeing. He believes that for the matter to proceed further may be deleterious to the second defendant’s health. My more limited observations of the second defendant in court are consistent with Mr Brackenneg’s evidence of his observations, and I share his concern.
I am persuaded from the written materials I have seen that the bank has a case against the second defendant with reasonable prospects of success. That is not to say that the plaintiff must inevitably succeed at trial.
I have carefully examined the counterclaim. The relief sought by the second defendant in the counterclaim amounts to no more than she would achieve if she were successful in defending the plaintiff’s claim. That is to say, if the plaintiff’s claim goes away, there is no further matter to be determined in the counterclaim.
It seems to me extraordinarily unlikely that the second defendant will reach a position where she will be able to defend the claim at trial without legal representation. There seems no likelihood that she will obtain, or be able to afford, legal representation.
I am satisfied that the bank’s proposal is considerably more in the second defendant’s interests than in those of the bank. I am persuaded that the proceedings should be brought to an end as proposed by the bank.
The Court Procedures Rules 2006 do not give the court the power to order a permanent stay of proceedings. The power to order a stay, though not specifically a permanent stay, is contemplated by s 30 of the Supreme Court Act 1933, and by, for example, Rules 1169 and 1433 of the Court Procedures Rules. Rule 1450, which applies where there has been a failure to comply with the rules in relation to a proceeding, empowers the court to make any order dealing with the proceeding generally that it considers appropriate.
I am satisfied that courts, including this court, retain an inherent jurisdiction which includes the power to order a permanent stay of proceedings where to do so is appropriate in the interests of justice. This was discussed by Else-Mitchell J in Tringali v Stewardson Stubbs & Collett Pty Ltd [1965] NSWR 416 at [418] where his Honour said:
. . . the Court’s power to stay an action is not confined to closed categories of cases, of which vexatious suits is one illustration. It is a power which is exercisable in any situation where the requirements of justice demand it, but it is a sound rule of practice adopted by all superior courts to allow an action honestly instituted to be litigated by normal and regular means if this can be done without injustice.
The Court of Appeal said in the same case on appeal at (1965) 66 SR (NSW) 335 at [344]:
. . . there can be no doubt that this court has an inherent jurisdiction to endeavour to ensure that the pursuit of its ordinary procedures by litigants does not lead to injustice and for this purpose to grant in the exercise of its discretion a stay of proceedings, whether permanent or temporary, upon such conditions or terms (if any) as may seem appropriate in the particular circumstances, and that this is a jurisdiction which may be exercised at any stage of the proceedings where it appears to be demanded by the justice of the case. However, it must always be borne in mind that a stay of proceedings must not be lightly granted.
The continuing existence of an inherent jurisdiction to grant a permanent stay of proceedings at common law, in addition to such specific powers as may be conferred by statute or rules of court, was confirmed by the High Court of Australia relatively recently: Batistatos v Roads and Traffic Authority of New South Wales (2006) 226 CLR 256.
Whilst reported examples of the exercise of the inherent jurisdiction of a court to order a permanent stay of proceedings have generally related to cases which are vexatious or hopeless, the category of situations where the jurisdiction can be exercised is not closed, and must remain open at least so as to extend to situations where it is clearly in the interests of justice that such an order be made. I am satisfied that the present circumstances are in that category.
The plaintiff’s action against the second defendant will be permanently stayed, as will the second defendant’s counterclaim against the plaintiff. No orders will be made as to costs, except that any previous orders (before or after the transfer to this court) will be vacated.
In the proceedings bought by the bank in relation to the caveat, the order preventing the Registrar General from removing the caveat will be lifted. The Registrar-General may remove the caveat immediately. There will be no order as to the costs of those proceedings.
I certify that the preceding thirty two (32) numbered paragraphs are a true copy of the Reasons for Judgment herein of Master Harper.
Associate:
Date: 31 January 2012
Counsel for the plaintiff: Mr GT Brackenreg
Solicitors for the plaintiff: Meyer Vandenberg Lawyers
Solicitors for the second defendant: In person
Date of hearing: 11 November 2011
Date of decision: 31 January 2012