Westpac Banking Corporation Ltd v Macabil Pty Ltd (No 2)

[2020] NSWSC 436

Supreme Court

New South Wales

Medium Neutral Citation:	Westpac Banking Corporation Ltd v Macabil Pty Ltd (No 2) [2020] NSWSC 436
Hearing dates:	23 April 2020
Date of orders:	23 April 2020
Decision date:	23 April 2020
Jurisdiction:	Common Law
Before:	Davies J
Decision:	1. Judgment for the plaintiff, Westpac Banking Corporation ACN 007 457 141, for possession of the land comprised in Certificate of Title Folio Identifier 8/SP84261 being the land situated at and known as 8/5 Dixon Place Lismore NSW 2480.  2. The Defendant is to pay the plaintiff’s costs of the proceedings.
Catchwords:	LAND LAW – possession of land – mortgages – default – whether defence discloses any defence to the claim– dispute concerning the amount payable – where plaintiff seeks possession of land not monetary judgment – where money is owed on the loan agreement notwithstanding – where no defence to claim – summary judgment entered     CIVIL PROCEDURE – service – whether effected – where registered office not attended – where business runs own risk of not receiving notice
Legislation Cited:	Corporations Act 2001 (Cth) ss 109X, 601AD, 601AH National Credit Code s 88 Real Property Act 1900 (NSW) s 57
Cases Cited:	Agar v Hyde (2000) 201 CLR 552 Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87 General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 Spencer v The Commonwealth (2010) 241 CLR 118; [2010] HCA 28 Westpac Banking Corporation Ltd v Macabil Pty Ltd [2020] NSWSC 176
Category:	Procedural and other rulings
Parties:	Westpac Banking Corporation Limited (Plaintiff) Macabil Pty Ltd (Defendant)
Representation:	Counsel: L Hatton (Plaintiff) B Nott (by leave) (Defendant)   Solicitors: Thomson Geer Lawyers (Plaintiff) Self-represented (Defendant)
File Number(s):	2019/177341
Publication restriction:	Nil

Judgment

1. On 23 December 2011 the plaintiff entered into a loan agreement with the defendant as trustee for the Macabil Trust. The loan agreement provided for a loan of $390,000 for a period of two years to expire on 22 November 2013. A guarantee to the extent of $468,000 was provided by the directors of the Defendant, Diane Champion and Jeffrey Champion.

2. Further security for the loan was a mortgage over two properties owned by the defendant being units 7 and 8 “Wilson College” at 5 Dixon Place, Lismore.

3. It appears that the loan was not repaid on 22 November 2013. However, on 16 February 2014 a variation of the agreement was entered into whereby the loan was to be repaid on 8 January 2016. Both the guarantee and the mortgages continued as security for the variation.

4. The loan was not repaid in January 2016 or at all. It appears that possession was taken by the plaintiff of one of the mortgaged properties being unit 7. That property was sold and completion of the sale occurred on 27 September 2018.

5. On 21 October 2018 the defendant was deregistered.

6. On 25 January 2019 the plaintiff served a notice pursuant to both s 88 of the National Credit Code and s 57(2)(b) of the Real Property Act 1900 (NSW). When there was a failure to respond to those notices the present proceedings commenced on 6 June 2019. Since the defendant had been, and remained, deregistered at that time, the proceedings named the Australian Securities and Investments Commission (ASIC) as defendant because under s 601AD of the Corporations Act 2001 (Cth), on deregistration all the company’s property vests in ASIC.

7. The statement of claim sought only possession of unit 8 at 5 Dixon Place, Lismore.

8. At some time prior to 3 July 2019 the defendant was reinstated. The effect of reinstatement pursuant to s 601AH is that the company is taken to have continued in existence as if it had not been deregistered. Accordingly, on 3 July 2019 the plaintiff filed an amended statement of claim removing ASIC as the defendant and substituting the defendant.

9. On 16 July 2019 the defendant was served with the amended statement of claim by its being forwarded to the registered office of the defendant at 64 Hazlemount Lane, Tucki Tucki.

10. A notice to occupiers was served on 28 October 2019. It was served by being left with a person who gave her name as Belinda Nott, who was said to be the Administration Officer for the college at 5 Dixon Place.

11. On 25 November 2019 a defence was filed with the affidavit verifyied by Belinda Nott. Ms Nott annexed to her affidavit a resolution of the directors of the defendant, Jeffrey and Diana Champion, authorising Ms Nott to act on behalf of the company in all dealings with the plaintiff including matters in the present proceedings.

12. The defence said this:

1.   I dispute the amount payable in the Statement of Claim.

2.   There is a genuine dispute of the amount payable.

3.   The defendant or their representatives have not been severed (sic) with a statement of claim, nor the Amended Statement of Claim and are not aware of any facts which the plaintiff relies on.

4.   The defendant only became aware of the statement of claim when they were served with a Notice to Occupier on or about 29 October 2019.

13. The matter came before the Registrar on 10 December 2019. On that occasion the Registrar made an order that the defendant was to file any affidavit material it wished the court to rely on in respect of its defence by January 2020. The plaintiff was given leave to file a notice of motion to strike out the defence.

14. On 10 February 2020 the plaintiff filed a notice of motion seeking to strike out the defence and seeking an order for summary judgment for possession of the property.

15. The matter came before me on 4 March 2020. I gave leave to Ms Nott to appear on behalf of the defendant. She explained that she had not filed an affidavit in accordance with the Registrar’s directions because she was waiting on some information to come back from Suncorp Bank and information from the plaintiff. She said that Suncorp required a further three weeks to provide the information.

16. I endeavoured to find out from Ms Nott what her defence was in the light of the way the defence had been pleaded. She said this:

Your Honour, the initial amount that was borrowed was 390 thousand dollars. There was an amount of 150 thousand dollars that they got from the sale of one of the other units which was paid down off the principle, which is one of the questions in our defence, because we cannot fathom how they got back to 406 thousand dollars which was in their pleadings, when the original loan was 390, less 150, took it back to 240 odd thousand and increased it up 160 thousand dollars. That was one of the issues we raised in our affidavit that has not yet been lodged. In relation to how they got to the principle amount, an amount of 406 thousand dollars.

17. When I asked her what her defence was to the remainder of the principal of $240,000, Ms Nott said that the defendant was happy to repay that if it was agreed that was the principal. She also said that there was a refinancing in process. She asked if she could lodge an amended defence.

18. I struck out the defence: Westpac Banking Corporation Ltd v Macabil Pty Ltd [2020] NSWSC 176. I gave leave to the defendant to file and serve an amended defence by 25 March 2020. I said that the plaintiff’s notice of motion for summary judgment was to be heard on 1 April 2020 if no defence was filed or such a defence did not disclose a proper defence to the claim.

19. On 1 April 2020 Mr Baddams, solicitor, appeared for the defendant. He had recently been retained. He sought, in effect, an extension of time to file and serve a defence and any cross-claim which he foreshadowed. The cross-claim was said to be in relation to the sale of unit 7 and the way that sale was conducted.

20. Because of considerable restrictions on work and living activity as a result of the coronavirus, I made orders sought by Mr Baddams. That provided for the filing of a defence and any cross-claim by 15 April 2020 and any evidence by the defendant in response to the plaintiff’s notice of motion by the same date. I said that the plaintiff’s notice of motion would be heard on 23 April 2020, the adjourned date.

21. It appears that Mr Baddams then ceased to act in the matter. However, a defence filed on 16 April 2020 gave a clear indication of having been prepared with legal assistance. No affidavit was filed or served by the defendant except the affidavit verifying the defence.

22. The defence admits all of the matters pleaded in the statement of claim except for three things. First, it does not admit that the company was in default. Secondly, it does not admit that a s 88 notice was served. Thirdly, it does not admit that on 3 July 2019 the plaintiff was informed by ASIC that the company had been reinstated.

23. The only substantive defence is found in paragraph 5 of the defence as follows:

The Defendant does not admit paragraph 5. The defendant disputes the amount payable as it does not represent the initial loan amount plus interest less repayments less the settlement amount of Lot 7 SP84261. The plaintiff has paid monies on the settlement of the Lot 7 SP84261 that were not the sole liability of the defendant, namely water rates to Lismore Water in the amount of $35,539.73 and $274.56. These expenses are expenses owing by other owners (66%) and the Strata Owners Corporation 84261. Furthermore the property was sold to friend of the Agent (Ray White Lismore) and was not sold for market value, thus increasing and distorting the amount owing.

24. The principles to be applied on an application for summary judgment are well known. It would have to be found that the defence is so obviously untenable that it cannot possibly succeed or is manifestly groundless or discloses a defence which the Court is satisfied cannot succeed: General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129.

25. In Spencer v The Commonwealth (2010) 241 CLR 118; [2010] HCA 28 French CJ and Gummow J quoted with approval what the High Court had earlier said in Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87 at 99:

The power to order summary or final judgment is one that should be exercised with great care and should never be exercised unless it is clear that there is no real question to be tried.

26. In Agar v Hyde (2000) 201 CLR 552, the plurality said at [57]:

Ordinarily, a party is not to be denied the opportunity to place his or her case before the court in the ordinary way, and after taking advantage of the usual interlocutory processes. The test to be applied has been expressed in various ways, but all of the verbal formulae which have been used are intended to describe a high degree of certainty about the ultimate outcome of the proceeding if it were allowed to go to trial in the ordinary way.

27. It is clear from paragraph 5 of the defence that, consistently with what Ms Nott told me at the directions hearing in March, that the real dispute between the parties is the amount payable in the light of the sale of unit 7. It is not suggested, however, that nothing is payable. Further, although default has not been admitted (I note that it has not been denied) it is clear from the plaintiff’s evidence that the amount was due to be repaid on 8 January 2016 and the full amount has not been repaid. Nothing in the defence asserts that no amounts are owing to the plaintiff. It is significant in that regard that the plaintiff does not seek a monetary judgment in the proceedings but only possession of the land.

28. The plaintiff’s evidence discloses that a s 88 notice was issued to the defendant by being addressed to ASIC on 25 January 2019 at a time when the defendant had been deregistered. In any event, the plaintiff had sent letters of demand on the same day to each of the directors of the defendant. Ms Nott claims that those letters were never received because there is no post to the registered office of the company.

29. If a company chooses to have a registered office at a place where no post is delivered, the company has to take the risk that it will not, in fact, receive documents which are posted to it. Section 109X of the Corporations Act provides that a document may be served on a company by leaving it or posting it to the company’s registered office.

30. In those circumstances, the defence filed 16 April 2020 discloses no defence to the plaintiff’s claim. Further, the evidence satisfies me that the loan was made, the expiry date of the loan was extended to 8 January 2016 by the variation entered into on 16 February 2014, that there was a default under the loan agreement, most particularly by a failure to repay at the expiry date.

31. There is evidence that the amount outstanding under the loan agreement is $425,889.25. This is disputed by the defendant, but the defendant has not filed any affidavit setting out what the defendant says is owing, nor in what way the plaintiff’s figure is incorrect. There is no evidence about what are said to be erroneous payments from the sale of unit 7, as is asserted in the defence.

32. Even if, taking the defendant’s evidence at its highest, the amount said to be owing by the plaintiff of more than $400,000 is not the correct amount, the evidence satisfies me that there is money outstanding under the loan agreement. Ms Nott acknowledges that money is owing. The loan agreement is secured by the mortgage, and if there is a default in payment under the loan agreement or the mortgage, the plaintiff is entitled to possession of the property.

33. I am satisfied, therefore, that the plaintiff is entitled to judgment for possession of the land.

34. I make the following orders:

1. Judgment for the plaintiff, Westpac Banking Corporation ACN 007 457 141, for possession of the land comprised in Certificate of Title Folio Identifier 8/SP84261 being the land situated at and known as 8/5 Dixon Place Lismore NSW 2480.

2. The Defendant is to pay the plaintiff’s costs of the proceedings.

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Decision last updated: 27 April 2020