Westpac Banking Corporation v McLean - [2012] WASC 182

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION: WESTPAC BANKING CORPORATION -v- McLEAN [2012] WASC 182

CORAM: KENNETH MARTIN J

HEARD: 29-30 MARCH 2012

DELIVERED : 30 MARCH 2012

PUBLISHED : 31 MAY 2012

FILE NO/S: CIV 2439 of 2009
CIV 2443 of 2009

BETWEEN: WESTPAC BANKING CORPORATION
Plaintiff
AND
SHONA DIMITY McLEAN
Defendant

Catchwords:

Banker and customer - Registered mortgages - Default on loan - Demand for possession - Facts admitted - Allegation of loans being 'securitised' - No defence

Legislation:

Credit Act 1984 (WA)
Property Law Act 1969 (WA)
Rules of the Supreme Court 1971 (WA)
Transfer of Land Act 1893 (WA)
Trade Practices Act 1974 (Cth)

Result:

Judgment for plaintiff

Category: B

Representation:

Counsel:

Plaintiff: Mr B C Smith
Defendant: In person

Solicitors:

Plaintiff: Gadens Lawyers
Defendant: In person

Case(s) referred to in judgment(s):

National Australia Bank v Norman [2012] VSC 14
Westpac Banking Corporation v Mason [2011] NSWSC 1241

KENNETH MARTIN J:
(This judgment was delivered extemporaneously on 30 March 2012 and has been edited from the transcript.)

I am dealing with two actions, CIV 2439 of 2009 and CIV 2443 of 2009. Both matters involve the same parties, namely Westpac Banking Corporation (the Bank) as plaintiff and Ms Shona McLean as defendant. On the face of it the two actions present routine security enforcement and debt recovery actions brought by a bank against its borrower customer. In each instance the Bank seeks possession, as a secured creditor by registered first mortgage, of residential properties owned by Ms McLean. The Bank's mortgages are registered in accordance with the Transfer of Land Act 1893 (WA).
The Bank filed summary judgment applications in each action. Affidavits filed on behalf of the defendant, by an amended defence, sought to raise the one defence issue of alleged 'securitisation' of the Bank's loans and mortgages. I ordered that the actions be determined substantively at a trial, rather than under O 14 of the Rules of the Supreme Court 1971 (WA) (RSC). They have come on for an urgent trial on that basis. The two actions were heard together. They have been dealt with on common affidavit evidence from each party in each action.
The plaintiff adduced evidence at the trial by affidavits sworn by Mr Peter Scalzi of 13 November 2009, which respectively are exhibits 1 and 2. Uncontroversially, they contain the loan documentation, mortgage security documents and extracts from the bank statements for the loan accounts of Ms McLean. Through its evidence, the Bank showed the initial advances of funds to Ms McLean, her subsequent default in repayment and the accrual of interest over time on both loans.
Four further affidavits from Mr John Pastro, a bank officer, were relied upon by the Bank. Mr Pastro in two affidavits, sworn 28 October 2011 in each action (exhibits 3 and 4), seeks to respond on behalf of the Bank to the securitisation defence raised by Ms McLean. Mr Pastro's affidavits were submitted on the basis of his attaching…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2012] WASC 182
Decision Date: 31 MAY 2012

CaseChat Overview and Summary

In the matter of Westpac Banking Corporation v McLean, the dispute arose from a default on a loan secured by a mortgage over property. The plaintiff, Westpac Banking Corporation, sought an order for possession of the property after the defendant, Ms McLean, admitted default in repayment. The case was heard in the Supreme Court of New South Wales. The primary legal issue before the court was whether the allegation that the loans had been securitised constituted a valid defence to Westpac's claim for possession.

The court examined the defence of securitisation in light of previous cases, including Westpac Banking Corporation v Mason and National Australia Bank v Norman. In these cases, the courts had held that the securitisation of a loan did not deprive the bank of its right to enforce the loan agreement and seek possession of the mortgaged property. In the present case, the court found that Ms McLean had not provided any evidence to support the claim that the loans had been securitised. Consequently, the court determined that the securitisation defence was without merit and did not prevent Westpac from enforcing its rights under the loan agreement and mortgage.

Given the admission of default and the lack of a valid defence, the court ruled in favour of Westpac Banking Corporation. The final order of the court was that Westpac was entitled to an order for possession of the property. The court's decision reinforced the principle that the legal interests of the parties in such proceedings are governed by the loan agreement and the registered mortgage, regardless of any alleged securitisation.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

Two judgments recently delivered in Australia at first instance, in the context of summary judgment applications, address a so‑called 'defence' of securitisation. In Westpac Banking Corporation v Mason [2011] NSWSC 1241 McCallum J assessed a securitisation defence. She said [10]:The only substantive defence pleaded is that the plaintiff has no locus standi, and cannot enforce the terms of the loan agreement and mortgage or keep the benefits of enforcement, by reason of the alleged 'securitisation' of the loan agreement and mortgage. McCallum J noted between [12] ‑ [16] assertions about equitable interests, penalty, violation of the Trade Practices Act 1974 (Cth) by reference to misleading and deceptive conduct or unconscionable conduct or the obligation to join third parties, in terms of the enforcement of a debt, if securitisation had taken place. Her Honour then observed (by reference to similar defence averments as are seen in the amended defences filed on Ms McLean's behalf here) [20]:It may be doubted whether there was a proper basis for pleading the factual premise of the defence that the loan has been securitised. McCallum J said further [28]:It follows that the debt can be enforced, and can only be enforced at the suit of the plaintiff [that is, the legal owner of the debt]. And at [29] ‑ [30]: The short answer to the defence is, accordingly, that whatever the position between the plaintiff and any third party so far as any equitable interest or equity is concerned, the legal interests of the parties to these proceedings are governed by the loan agreement and the registered mortgage. A debt is owed by the defendants to the plaintiff and the land stands charged with that debt.Default being admitted by the defendants in repayment of the sum secured by the mortgage, it follows inexorably that the plaintiff is entitled to an order for possession, there being no other defence raised to that entitlement. Judd J in National Australia Bank v Norman [2012] VSC 14, on a summary judgment application, rejected a 'securitisation' defence. At [29] and [30] the submissions by the defendant debtors (Mr and Mrs Norman) about securitisation being a defence and various matters are seen; see also [31] and following in his Honour's reasons. The issue was resolved by Judd J at [38] ‑ [39]:A generous interpolation of the defendants' attack on the bank for wrongfully dealing with the loan accounts, mortgage and title had three basic components. First, a general complaint that there was unauthorised dealing with their property; second, that insofar as the bank may have dealt with their loan accounts, mortgage and title, the defendants did not benefit from the proceeds; third, that as a consequence of the securitisation the bank has no title to seek repayment or possession of the property under the mortgage. A threshold difficulty with this part of the defendants' case is that there was no evidence of any on‑sale of the loans or securitisation by the bank. The alleged improper dealing was mere assertion.I note the close analogy to the facts in the present case.