Westpac Banking Corporation v Chadha
[2012] SASC 178
•5 October 2012
Supreme Court of South Australia
(Civil)
WESTPAC BANKING CORPORATION v CHADHA & ANOR
[2012] SASC 178
Reasons for Ruling of The Honourable Justice Gray (ex tempore)
5 October 2012
MORTGAGES - MORTGAGEE'S REMEDIES - POSSESSION - PROCEEDINGS TO OBTAIN
MORTGAGES - MORTGAGEE'S REMEDIES - GENERALLY
PROCEDURE - JUDGMENTS AND ORDERS - IN GENERAL - OTHER MATTERS
An application for possession was issued by Westpac Banking Corporation - on 10 September 2012, a Master of the Supreme Court made orders for possession - the defendants, who were self represented, lodged an appeal against that decision seeking an interim stay of order one of the orders for possession - the property the subject of order one is the home of the defendants - the defendants have yet to institute proceedings claiming equitable and other relief against Westpac Banking Corporation - the defendants sought to raise their substantive concerns in opposition to the possession proceedings - whether the defendants should be given an opportunity to institute proceedings claiming equitable and other relief.
Held: The possession proceedings were not a suitable vehicle for a consideration of the defendants’ claims for equitable and other relief - the defendants should have the opportunity to issue those proceedings and have the strength of their claims assessed prior to the order for possession taking effect in respect of their home property - interim order granted staying order one of the order of possession until 12.00 pm on 16 November 2012 - if the interim order is not extended, the order will lapse at that time.
Commercial Bank of Australia v Amadio (1983) 151 CLR 447, considered.
WESTPAC BANKING CORPORATION v CHADHA & ANOR
[2012] SASC 178Civil
Gray J.
This proceeding involves an application for possession issued by Westpac Banking Corporation.
On 10 September 2012, Judge Withers, a Master of the Court, made orders for possession in the following terms:
This application for summary possession was initiated by summons filed on 4 July 2012. The following background is taken largely from the affidavits of Ms Dichiera, an officer of the plaintiff, filed in support of the application on 4 July 2012 – FDN 3 – and on 27 August 2012 – FDN 7.
…
The defendants from 1992 owned and operated a fashion business called Rishi Fashions. They also owned property at Millswood and at Goodwood. The defendants entered into a number of transactions with the plaintiff to borrow moneys. What is described as the first loan was entered into on 13 December 2007. It was for an amount of $72,800.00 as a first home loan which was repayable over 22 years and 8 months and in addition there was an equity loan of the same date in the amount of $300,000.00. These loans were described as refinance of existing home loans and were secured by mortgages over three properties, namely a property at Erskine Street, Goodwood and properties at 2 Lanor Avenue, Millswood and 68 Weller Street, Millswood (also known as 2A Lanor Avenue, Millswood).
The second loan also entered into on 13 December 2007 comprised a number of separate loans. Firstly, there was a second home loan for $552,000.00 repayable in 22 years and 1 month. Secondly, there was a third home loan of $135,800.00 similarly repayable. Additionally, there was a fourth home loan of $102,100.00 repayable in 11 years and 5 months. All loans were secured by the mortgages over the earlier described three properties. Copies of the relevant agreements are contained in Exhibit “RD5” to the first affidavit of Ms Dichiera – FDN 3. The loan documents were signed by each defendant on 13 December 2007.
It appears that all of these loans were properly serviced over a period of approximately four years. From the second affidavit of Ms Dichiera – FDN 7 – the loans first fell into arrears as follows:
- First home loan – January 2012
- Equity loan – January 2012
- Second home loan – September 2011
- Third home loan – September 2011
- Fourth home loan – January 2012
The defendants then borrowed further moneys from the plaintiff by way of an investment property loan entered into on 14 July 2010 for the amount of $150,000.00 repayable over five years. It was secured by the existing mortgage over 2A Lanor Avenue and Erskine Street and by a new debt and interest guarantee by Rishi Fashions Pty Ltd supported by a fixed and floating charge over the assets of that company. The documentation was signed by each defendant on 14 July 2010. A copy of the relevant documentation is contained in Exhibit “RD7” of the affidavit of Ms Dichiera – FDN 3. The investment property loan first fell into default in February 2012: see second affidavit of Ms Dichiera.
The Master provided detailed reasons for his order. The Master reviewed the facts in some detail and relevantly concluded:
In December 2007 the defendants approached a finance broker who was able to obtain finance for the defendants from the plaintiff. There then occurred the series of loans which are earlier described in these Reasons. The defendants assert that the plaintiff granted the loans to the defendants in violation of the National Credit Code and principles of unconscionable equity. They assert that the plaintiff knew or ought to have known of the defendants’ predicament that they were not in a position to repay the loans. The defendants assert that they live in their property at Millswood with a daughter and a disabled daughter and two grandchildren, that they suffer depression and stress because they have lost their business and are facing the loss of their home, and that they suffer anxiety. They seek relief and justice “on the grounds of public interest”. The defendants relied on the cases of Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 and Blomley v Ryan (1956) 99 CLR 362 at 415.
No evidence was put before the Court of any special disability on the part of the defendants at the time they borrowed funds from the plaintiff, nor was there any evidence put forward that demonstrated that Rishi Fashions was in a vulnerable state at the time that the plaintiff advanced money to it. There was no evidence of any ill health of the defendants at the time the funds were borrowed. The defendants relied on two sets of written submissions, one filed on 14 August 2012 being FDN 6 and the other handed upon the day of argument on 29 August 2012.
The Master then addressed the decision of the High Court in Commercial Bank of Australia v Amadio,[1] being the authority on which he understood the defendants to rely. From that review, the Master concluded:
As the courts have explained, there may be a variety of circumstances which may amount to special disadvantage but there must be something “special” about the disadvantage to give rise to a potential claim for equitable relief.
In this case the defendants have not put forward any circumstance capable of amounting to a special disadvantage that gives them an arguable defence to the plaintiff’s claim for summary possession. For the plaintiff to be deprived of its remedy of a summary possession order, it is necessary for the defendants to demonstrate that they have a dispute of substance to justify the Court directing pleadings and referring the summons into the ordinary trial list for determination: see Moonta Town Corporation v Rodgers & Rodgers (1980) 26 SASR 143 at 160. For the Court to make such an order, it needs to be satisfied that the defendants have raised an arguable defence supported by some evidence which, if accepted, could give rise to such a defence.
In my view, the defendants have not provided to the Court any material which would give rise to an arguable defence. There is no evidence of the defendants suffering any special disadvantage at the time they entered into their loan arrangements with the plaintiff. Indeed, the evidence shows that the defendants were able to service the loans for a period of some years following their execution. It was not until the end of 2011 or early 2012 that payment of the loans fell into arrears.
It appears, although there is no satisfactory evidence about this, that the defendants’ fashion business failed, and that the defendants by reason of being unable to pay rent on their business premises were forced to close down the business in March 2012. It also appears that the defendants’ property development of 17 Erskine Street, Goodwood did not result in the cash profit they expected. But these are all events after the loans were entered into and cannot bear on whether or not the defendants suffered a special disadvantage at that time they borrowed the money. In my view, there is no case advanced of special disadvantage such that the defendants might arguably have a claim for equitable relief on the principles of unconscionable conduct on the part of the plaintiff.
No evidence has been advanced by the defendants of any breach of the National Credit Code, nor has any submission been put that would arguably justify relief under that code.
As the defendants have not advanced matters that would fall into the category of serious dispute or arguable defence requiring determination in the ordinary course, the plaintiff is entitled to an order for summary possession of the two subject properties.
[1] Commercial Bank of Australia v Amadio (1983) 151 CLR 447.
The defendants, Rajesh and Sarita Chadha, have lodged an appeal against that decision on 20 September 2012. An affidavit filed in support of the appeal exhibits two medical certificates, one in respect of each defendant. The certificate in respect of Rajesh Chadha notes a primary condition as major depression. In the case of Sarita Chadha, again a note of a primary condition of major depression is recorded.
The defendants seek an interim stay of order one of the orders for possession made on 10 September 2012.[2] The defendants are presently unrepresented in the proceedings. The property the subject of this order is the home of the defendants. The defendants have yet to institute proceedings claiming equitable and other relief against Westpac Banking Corporation. It appears that they have sought to raise their substantive concerns in opposition to the possession proceedings. Those proceedings are not a suitable vehicle for a consideration of the defendants’ claims for equitable and other relief.
[2] Order one was in the following terms:
The Defendants, Rajesh Chadha and Sarita Chadha, give the Plaintiff possession within 28 days of the service of a copy of this order on them of the land subject to Memorandum of Mortgage, Registered No. 10912714 and Memorandum of Mortgage, Registered No. 10957045, being:
(1)Description of land – 2 Lanor Avenue, Millswood in the State of South Australia.
(2)Title Reference – Volume 5934; Volume 83
I consider that the defendants should have the opportunity to issue substantive proceedings and have the strength of their claims for relief assessed prior to the order for possession taking effect in respect of their home property. I am prepared to grant an interim order as sought to allow this to occur. In that respect I grant an interim stay of order one of the order of possession made on 10 September 2012 until 12.00 pm on 16 November 2012. If the interim order is not extended, it will lapse at that time.
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