FEDERAL COURT OF AUSTRALIA
Van der Kooij v Mystate Financial Limited [2014] FCA 350
Citation: Van der Kooij v Mystate Financial Limited [2014] FCA 350 Parties: ALEXANDER VAN DER KOOIJ, JEANNE ADA VAN DER KOOIJ and DAVID TATANA v MYSTATE FINANCIAL LIMITED ABN 89 067 729 195 File number: VID 1083 of 2013 Judge: TRACEY J Date of judgment: 7 April 2014 Catchwords: CONTRACT – default on loan agreement – whether promissory note constituted payment – mortgagee’s duty to obtain best price reasonably possible on sale of property
PRACTICE AND PROCEDURE – application for summary judgment of originating application and cross-claim – whether applicant has reasonable prospects of successfully prosecuting or defending whole or part of the proceeding – whether prospect of success more than fanciful
Legislation: Federal Court of Australia Act 1976 (Cth) ss 31A, 52
Federal Court Rules 2011 (Cth) r 26.01Cases cited: Boston Commercial Services Pty Ltd v GE Capital Finance Australasia Pty Ltd (2006) 236 ALR 720 – cited
Brien v Dwyer (1978) 141 CLR 378 – applied
Commercial and General Acceptance Limited v Nixon (1981) 152 CLR 491 – considered
Jefferson Ford Pty Ltd v Ford Motor Company of Australia Ltd (2008) 167 FCR 372 – cited
Shaw Excavations Pty Ltd v Portfolio Investments Pty Ltd (2000) 9 Tas R 444 – cited
Spencer v The Commonwealth (2010) 241 CLR 118 – considered
Upton v Tasmanian Perpetual Trustees Ltd (2007)158 FCR 118 – consideredDate of hearing: 7 April 2014 Place: Melbourne Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 28 Counsel for the Applicants: Mr I Hone Solicitor for the Applicants: Ian G Hone Counsel for the Respondent: Mr N Wallace Solicitor for the Respondent: Page Seager Lawyers
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
VID 1083 of 2013
BETWEEN: ALEXANDER VAN DER KOOIJ
First Applicant/First Cross-RespondentJEANNE ADA VAN DER KOOIJ
Second Applicant/Second Cross-RespondentDAVID TATANA
Third ApplicantAND: MYSTATE FINANCIAL LIMITED ABN 89 067 729 195
Respondent/Cross-Claimant
JUDGE:
TRACEY J
DATE OF ORDER:
7 APRIL 2014
WHERE MADE:
MELBOURNE
THE COURT ORDERS THAT:
1.Pursuant to Rule 26.01 of the Federal Court Rules 2011 (Cth) and s 31A of the Federal Court of Australia Act 1976 (Cth) judgment be entered for the respondent on the applicants’ originating application dated 14 October 2013.
2.Pursuant to Rule 26.01 of the Federal Court Rules 2011 (Cth) and s 31A of the Federal Court of Australia Act 1976 (Cth) judgment be entered for the respondent against the first and second applicants on the cross-claim dated 20 November 2013 in the sum of $107,658.03.
3.The first and second applicants pay to the respondent interest on the sum of $107,658.03 from 20 November 2013 pursuant to s 52 of the Federal Court of Australia Act 1976 (Cth).
4.The applicants pay the respondent’s costs of the proceeding including all reserved costs such costs to be taxed failing agreement.
Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
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Details
- Case
- [2014] FCA 350
- Decision Date
CaseChat Overview and Summary
The case of Van der Kooij v Mystate Financial Limited involved the respondents seeking summary judgment against the applicants. The dispute centred on the applicants' failure to repay two loans provided by the respondents in 2005 and 2010. The applicants defaulted on their obligations, leading the respondents to file an interlocutory application for summary judgment under section 31A of the Federal Court of Australia Act 1976 (Cth). The legal issues before the court included determining whether the applicants had "no reasonable prospect" of successfully prosecuting or defending the proceeding, as required by section 31A. The court also needed to assess whether the exercise of the power to summarily terminate the proceeding was justified.
The court considered the legislative intent behind section 31A, which was to strengthen the power of the court to deal with unmeritorious matters. The court highlighted that the phrase "no reasonable prospect" should be interpreted in a manner consistent with its legislative purpose. The High Court in Spencer v The Commonwealth (2010) 241 CLR 118 emphasised that the power to dismiss a proceeding summarily must not be exercised lightly. The court needed to determine whether the applicants had more than a "fanciful" prospect of success, considering both legal and factual issues. Given the undisputed facts and the clear terms of the loan agreements, the court concluded that the applicants had no reasonable prospect of success. Therefore, the application for summary judgment was granted.
The final orders of the court were that summary judgment be entered in favour of the respondents on both the originating application and the cross-claim. This decision effectively terminated the proceeding against the applicants, affirming that they had no reasonable prospect of successfully prosecuting or defending the claims against the respondents.
The court considered the legislative intent behind section 31A, which was to strengthen the power of the court to deal with unmeritorious matters. The court highlighted that the phrase "no reasonable prospect" should be interpreted in a manner consistent with its legislative purpose. The High Court in Spencer v The Commonwealth (2010) 241 CLR 118 emphasised that the power to dismiss a proceeding summarily must not be exercised lightly. The court needed to determine whether the applicants had more than a "fanciful" prospect of success, considering both legal and factual issues. Given the undisputed facts and the clear terms of the loan agreements, the court concluded that the applicants had no reasonable prospect of success. Therefore, the application for summary judgment was granted.
The final orders of the court were that summary judgment be entered in favour of the respondents on both the originating application and the cross-claim. This decision effectively terminated the proceeding against the applicants, affirming that they had no reasonable prospect of successfully prosecuting or defending the claims against the respondents.
Orders
Orders of the court
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Background
Background to the litigation
The exercise of the power summarily to terminate a proceeding must be exercised with caution: see Spencer v The Commonwealth (2010) 241 CLR 118 at 131, 141. In Spencer, Hayne, Crennan, Kiefel and Bell JJ said (at 141) that:“… full weight must be given to the expression as a whole. The Federal Court may exercise power under s 31A if, and only if, satisfied that there is ‘no reasonable prospect’ of success. Of course, it may readily be accepted that the power to dismiss an action summarily is not to be exercised lightly. But the elucidation of what amounts to ‘no reasonable prospect’ can best proceed in the same way as content has been given, through a succession of decided cases, to other generally expressed statutory phrases, such as the phrase ‘just and equitable’ when it is used to identify a ground for winding up a company. At this point in the development of the understanding of the expression and its application, it is sufficient, but important, to emphasise that the evident legislative purpose revealed by the text of the provision will be defeated if its application is read as confined to cases of a kind which fell within earlier, different, procedural regimes.”Their Honour’s had earlier observed (at 140) that:“Because s 31A(3) provides that certainty of failure (‘hopeless’ or ‘bound to fail’) need not be demonstrated in order to show that a plaintiff has no reasonable prospect of prosecuting an action, it is evident that s 31A is to be understood as requiring a different inquiry from that which had to be made under earlier procedural regimes.”What is required, according to French CJ and Gummow J (at 132), is that the Court brings to bear “a practical judgment …. as to whether the applicant has more than a ‘fanciful’ prospect of success”. That judgment may be informed by issues of law or fact and be influenced by the extent to which factual issues may be in dispute.THE FACTUAL BACKGROUND The respondent filed five affidavits in support of its summary judgment application. No material has been filed by the applicants. The relevant facts are undisputed and are drawn from the respondent’s affidavits. In 2005 and, again, in 2010 the respondent bank provided the first and second applicants with loan facilities. The first was for $279,340 and the second for $121,000. The first and second applicants defaulted on their obligations pursuant to both of the loan facilities. Both loan contracts provided that the first and second applicants were to repay the loans by making repayments in accordance with a schedule. Both provided that the borrower was in default under the loan contract if he or she did not make a repayment in full by the date it fell due. Each prescribed that, in the event of default, the respondent was to tell the borrowers what they were required to remedy the default. Each stipulated that, if the borrower did not comply with the default notice, he or she became liable to pay the respondent the balance of the loan immediately.
Evidence
Evidence Before The Court
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Decision
Reasons for decision
By interlocutory application dated 21 February 2014 the respondent moved the Court for an order for summary judgment to be entered on both the originating application and its cross-claim. The orders were sought pursuant to s 31A of the Federal Court of Australia Act 1976 (Cth). Argument on the application took place this morning. I have determined to grant the application.SUMMARY JUDGMENT Section 31A relevantly provides that a party to a proceeding may obtain summary judgment by satisfying the Court that the other party has “no reasonable prospect” of successfully prosecuting or defending the whole proceeding or any relevant part of the proceeding. The purpose of the provision was to strengthen “… the power of the court to deal with unmeritorious matters by broadening the grounds on which federal courts can summarily dispose of unsustainable cases”: see Boston Commercial Services Pty Ltd v GE Capital Finance Australasia Pty Ltd (2006) 236 ALR 720, 731 (Rares J); Jefferson Ford Pty Ltd v Ford Motor Company of Australia Ltd (2008) 167 FCR 372 at 392, 406. The exercise of the power summarily to terminate a proceeding must be exercised with caution: see Spencer v The Commonwealth (2010) 241 CLR 118 at 131, 141. In Spencer, Hayne, Crennan, Kiefel and Bell JJ said (at 141) that:“… full weight must be given to the expression as a whole. The Federal Court may exercise power under s 31A if, and only if, satisfied that there is ‘no reasonable prospect’ of success. Of course, it may readily be accepted that the power to dismiss an action summarily is not to be exercised lightly. But the elucidation of what amounts to ‘no reasonable prospect’ can best proceed in the same way as content has been given, through a succession of decided cases, to other generally expressed statutory phrases, such as the phrase ‘just and equitable’ when it is used to identify a ground for winding up a company. At this point in the development of the understanding of the expression and its application, it is sufficient, but important, to emphasise that the evident legislative purpose revealed by the text of the provision will be defeated if its application is read as confined to cases of a kind which fell within earlier, different, procedural regimes.”Their Honour’s had earlier observed (at 140) that:“Because s 31A(3) provides that certainty of failure (‘hopeless’ or ‘bound to fail’) need not be demonstrated in order to show that a plaintiff has no reasonable prospect of prosecuting an action, it is evident that s 31A is to be understood as requiring a different inquiry from that which had to be made under earlier procedural regimes.”What is required, according to French CJ and Gummow J (at 132), is that the Court brings to bear “a practical judgment …. as to whether the applicant has more than a ‘fanciful’ prospect of success”. That judgment may be informed by issues of law or fact and be influenced by the extent to which factual issues may be in dispute.THE FACTUAL BACKGROUND
Ratio Decidendi
Legal Principle Established
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