Westpac Banking Corporation v Webb
[2019] VSC 121
•28 February 2019 (given ex tempore, revised)
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
MORTGAGE RECOVERY LIST
S CI 2017 02770
| WESTPAC BANKING CORPORATION (ACN 007 457 141) | Plaintiff |
| v | |
| GRAEME LEE WEBB | Defendant |
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JUDGE: | Ierodiaconou AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 28 February 2019 |
DATE OF RULING: | 28 February 2019 (given ex tempore, revised) |
CASE MAY BE CITED AS: | Westpac Banking Corporation v Webb |
MEDIUM NEUTRAL CITATION: | [2019] VSC 121 |
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PRACTICE AND PROCEDURE – Application to set aside judgment in default of defence – Whether defendant has a defence on the merits – Supreme Court (General Civil Procedure) Rules 2015 r 21.07 – Civil Procedure Act 2010 ss 7–9 – Kostokanellis v Allen (1974) VR 596 – Bills of Exchange Act 1909 (Cth) – Promissory notes – Application for stay of execution of warrant – Supreme Court (General Civil Procedure) Rules 2015 r 66.16 – Abikhair v Ali [2018] VSC 93 – Maher v Commonwealth Bank of Australia [2008] VSCA 122 – Whether special circumstances warranting stay of execution.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr C Melberes | Thomson Geer |
| For the Defendant | Self-represented |
HER HONOUR:
By summons filed this day, Mr Webb, the defendant, seeks to have a default judgment obtained by Westpac Banking Corporation (‘Westpac’), the plaintiff, set aside. Mr Webb also seeks to permanently stay the warrant of possession. The Sheriff will evict him sometime within the next 14 days, perhaps as early as tomorrow.
Background
Westpac filed a writ and statement of claim in this proceeding on 20 July 2017. It alleged that it advanced Mr Webb monies under a loan agreement dated 26 October 2009. It says that Mr Webb is the registered proprietor of the land described in Certificate of Title Volume 10351 Folio 720, being land in Narre Warren South (‘the property’). This was confirmed by a title search.[1] Westpac claims that Mr Webb mortgaged the property to it. Westpac claims Mr Webb is in default under the loan agreement and mortgage. It says it required him to pay arrears by notice to him dated 24 January 2017 and he did not. That as at 11 July 2017, the amount outstanding was $317,617.[2] Westpac claimed possession of the land, the monies outstanding and interest.
[1]Exhibit C to the Borg affidavit, sworn on 28 February 2019.
[2]With interest continuing to accrue.
On 8 August 2017, Mr Webb filed an appearance.
On 1 December 2017, Westpac obtained a judgment for the recovery of the property in default of defence.
On 17 July 2018, Westpac caused a warrant of possession to be issued in respect of the property.
This afternoon, Mr Webb filed the summons and a supporting affidavit, affirmed this day (‘the Webb affidavit’).
Westpac relies upon an affidavit of Raimonda Borg, paralegal, sworn this day (‘the Borg affidavit’).
Setting aside a default judgment — applicable principles
Rule 21.07 of the Supreme Court (General Civil Procedure) Rules 2015 (‘the Rules’) is the applicable rule. It provides that the Court may set aside or vary any judgment given under Order 21. Rule 21.02 is the mechanism for a plaintiff to obtain a default judgment where a defendant does not serve a defence in time. In this proceeding no defence was served and Westpac consequently obtained a default judgment.
The principles concerning r 21.07 and predecessor rules are well established. See, for instance: Kostokanellis v Allen[3] (‘Kostokanellis’). Kostokanellis identifies four factors for the Court to consider in the exercise of its discretion as to whether it sets aside a default judgment that has been regularly obtained, as is the case here. These four factors are addressed further below. In Kostokanellis, the Full Court stated that the judge is required to determine:
the just way to which the court’s discretion should be exercised. To do this must involve weighing up the extent to which the defendant is prejudiced by allowing the order and judgment to stand and the prejudice to the plaintiff in setting them aside. In many cases the situation will be that the plaintiff will not suffer any prejudice that cannot be remedied by an appropriate order as to costs… if the defendant does show on affidavit a prima facie defence on the merits it would seem that usually he will be seriously prejudiced if he is debarred from being able to present his defence at a trial of the action. One cannot tell until this has been done whether or not the defendant will succeed in such a defence. While it is undoubtedly relevant to the judge to consider what explanation the defendant has for not appearing…the weight to be attached to his explanation will depend on the circumstances…However, it does not necessarily follow that if the explanation [for non-appearance] does not amount to something which can be categorized as a ‘sufficient reason’ the defendant’s application should fail. It must depend on all the circumstances.[4]
[3](1974) VR 596.
[4]Ibid, [605] (Gowans, Crockett, Harris JJ).
The Civil Procedure Act 2010 (‘CPA’) is also relevant. The overarching purpose of the CPA is to facilitate the just, efficient, timely and cost effective resolution of the real issues in dispute.[5] Section 8 of the CPA provides that the Court must give effect to the overarching purpose in the exercise of its powers. Section 9 of the CPA provides that the Court must further the overarching purpose by having regard to, amongst other things, the just determination of the proceeding, the efficient conduct of the business of the Court, the efficient use of judicial and administrative resources, minimising delay and dealing with proceedings in proportion to their complexity and the amount in dispute. Section 9(2) of the CPA requires the Court to have regard to the extent to which parties have used reasonable endeavours to resolve the dispute by agreement or to limit the issues in dispute, and also the degree of promptness with which parties have conducted the proceeding.
[5]CPA s 7.
Whether to set aside default judgment — submissions and analysis
The four factors to be considered in determining whether to set aside a default judgment are addressed as follows in relation to Mr Webb’s application.
a) Does Mr Webb have a defence on the merits?
Mr Webb’s submissions
Mr Webb does not dispute that he entered into the loan agreement and mortgage and that monies were advanced. He says that as at 17 October 2018, he owed Westpac $343,968.85. His primary defence is that he provided Westpac with a promissory note dated that day and that satisfies the debt. The promissory note says that Westpac has 72 hours in which to protest the promissory note and if it does not, then it is taken to be accepted. He says Westpac did not contest the promissory note and thus it is taken to have accepted it and the loan has been repaid.
Mr Webb submits that if the promissory note is not refuted or returned then this satisfies the debt claimed by the mortgagee, being Westpac. He refers to s 34 of ‘the conveyancing act’ and states it is Victorian legislation. Mr Webb referred to the Constitution pt V, stating that promissory notes are legal tender.
Mr Webb also says that Westpac did not lend him this money because it creates it out of nothing, it did not actually have the money it loaned him.
Westpac’s submissions
Westpac says it did not accept the promissory note as payment for the debt. The debt is still outstanding. The Borg affidavit evidences that the current amount owing under the loan and mortgage is $350,696.69, with the last payment being received on 8 November 2016.
Analysis
Mr Webb admits that he owed Westpac money under the loan and mortgage. Indeed, that is why he says he gave it the promissory note.
I accept that promissory notes exist. See, for instance, ss 89–94 of the Bills of Exchange Act 1909 (Cth):
89 Promissory note defined
(1) A promissory note is an unconditional promise in writing made by one person to another, signed by the maker, engaging to pay, on demand or at a fixed or determinable future time, a sum certain in money, to or to the order of a specified person, or to bearer.
…
However, in this case, there is no evidence that the document which Mr Webb says is a promissory note discharged his debt to Westpac. Westpac did not accept the promissory note. The loan remains outstanding.
Mr Webb made many assertions about the illegality of banks, and extracted sections of the Imperial Acts Application Act 1922 to his affidavit. I am satisfied this Court has jurisdiction in this proceeding. As to any attacks on the Court’s authority, see: Joosse v Australian Securities and Investment Commission.[6] Some of the other matters referred to in the Webb affidavit are nonsensical:
I state that valuable consideration to the promissory note is the constructive trust activated in the trading of my birth certificate in Boston without my knowledge or consent which is fraud.[7]
[6](1998) 159 ALR 260; see also, Sill v City of Wodonga [2017] VSC 671; [2018] VSCA 195.
[7]The Webb affidavit, [9].
There is no ‘Conveyancing Act’ in Victoria referred to by Mr Webb. There is the Conveyancers Act2006 but that does not assist Mr Webb. Threats of complaints to the Royal Commission into the Banking Industry (which is now finalised)[8] or to the Australian Securities and Investments Commission or calls upon his Member of Parliament for assistance, do not provide a defence on the merits.
[8]This was a reference to the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
For completeness, I will address the assertion that there is a tenant in the property. Mr Webb says that the person who is the tenant is his girlfriend, Ms Vasileva. She lives there and does not pay rental monies but contributes to the household in other ways. If Ms Vasileva has her own interests to protect, then that is a matter for her as to what action she takes.
I am not satisfied that there is a defence on the merits.
b) What is the reason for the failure of Mr Webb to file a defence in time?
Mr Webb’s submissions
Mr Webb says that he was unaware that he was required to file a defence. He filed a notice of appearance, and then waited to be notified of a hearing date to appear before the Court. He submits that no notice was forthcoming.
Westpac’s submissions
Westpac says there is no reason as to why a defence was not filed, save for a misunderstanding of the rules. Its judgment was entered into regularly. The application was made by summons for judgment in default of defence.
Analysis
The judgment was entered regularly.
Mr Webb did file an appearance. I accept his explanation that he was unaware that he needed to file a defence.
c) Has the application to set aside been made promptly after the default judgment came to the knowledge of Mr Webb?
Mr Webb’s submissions
Mr Webb says that he became aware of the default judgment after receiving a telephone call from Westpac’s solicitor, but he thought it was all lies as he had not had the opportunity to attend Court to defend the proceeding. Later, in October 2018, the Sherriff took steps to take possession. Then he heard nothing more. He filed this summons today ahead of the Sherriff potentially taking possession tomorrow.
Westpac’s submissions
Westpac says that the Webb affidavit was first affirmed on 23 October 2018. This date is then crossed out and it is reaffirmed today. Mr Webb has therefore been aware of the default judgment for over four months, and has not made the application promptly.
Analysis
Mr Webb has not made the application promptly. He was aware from at least October 2018 that he needed to do so after the Sherriff first attempted to take possession. That is consistent with what he said in Court and the initial date on his affidavit of 23 October 2018.[9]
[9]See also Borg affidavit, [11].
d) If the judgment is set aside, would Westpac be prejudiced in any respect which could not be adequately compensated for by a suitable award of costs?
Mr Webb’s submissions
Mr Webb does not think he should pay any costs.
Mr Webb submits that Westpac committed fraud because it obtained ex parte judgment behind his back. I asked him if he was still an undischarged bankrupt. Mr Webb claimed the Australian Taxation Office is an illegal entity and that the Deputy Commissioner of Taxation bankrupted him, and so he does not see himself as a bankrupt. Mr Webb disputes he should have to pay Westpac’s costs because he says that the default judgment was based on Westpac’s fraud.
Westpac’s submissions
Westpac says it will be prejudiced by any further delay. It says its mortgage and equity are being eroded. On 16 November 2016 a trustee in bankruptcy was appointed in respect of Mr Webb.[10] It has not made an up to date search as to whether Mr Webb remains a bankrupt.
[10]Exhibit A to the Borg affidavit.
Analysis
This may be a circumstance where any prejudice to Westpac is met by a costs order. That is unlikely to be the case if Mr Webb is still a bankrupt. However, that much is unclear.
Conclusion
Given that there is no defence on the merits, there has been substantial delay by Mr Webb in his application to set aside the default judgment, and it has been entered regularly, I will dismiss his application to set it aside.
Stay of execution — applicable law
Derham AsJ set out the following principles in Abikhair v Ali, which I adopt.[11]
Pursuant to r 66.16 of the Rules and the inherent jurisdiction, the Court has a discretionary power to stay execution of a judgment, but only on grounds which are relevant to a stay of enforcement of proceedings. The jurisdiction does not extend to grounds which are matters of defence, which ought to have been raised in the proceeding itself. The Court is required to take into account all the circumstances of the case and is not bound by decisions on other sets of facts.
The Court has a wide discretion, is required to take into account all the circumstances of the case and the discretion is not circumscribed by rigid rules. The circumstances that will justify a stay of execution are special circumstances which go to the enforcement of the judgment. Prima facie a successful party is entitled to the benefit of the judgment obtained and the presumption that the judgment is correct. It is in those circumstance that the applicant bears the onus of establishing special circumstances warranting the stay of that right.
[11][2018] VSC 93, [22]–[25] (citations omitted).
The principles in Maher v Commonwealth Bank of Australia[12] (‘Maher’) are applicable and I adopt them as follows.
[12][2008] VSCA 122.
In Cellante and Ors v G Kallis Industries Pty Ltd (‘Cellante’), Young CJ (with whom Brooking J agreed), cited with approval the observation of Mahoney JA (with whom Moffit P and Glass JA agreed) in Re Middle Harbour Investments Ltd (in liq) that:
… where an applicant for a stay has not demonstrated an appropriate case but has left the situation in the state of speculation or of mere argument, weight must be given to the fact that the judgment below has been in favour of the other party.
Young CJ concluded that an applicant for a stay under r 66.16 must show special or exceptional circumstances to take the case out of the general rule that an appeal does not operate as a stay.
…
In Cellante, Young CJ stated that special circumstances would ‘exist where for whatever reason, there is a real risk that it will not be possible for a successful appellant to be restored substantially to his former position if the judgment against him is executed’.[13]
[13]Ibid [21], [22], [25] (citations omitted).
Stay of execution — submissions and analysis
Mr Webb’s submissions
Mr Webb seeks a permanent stay of the warrant of execution. He has been in the property for 10 years. He submits that the default judgment was fraudulently obtained behind his back. If the promissory note was not accepted then Westpac should have notified him of this and he would have made alternate arrangements.
Westpac’s submissions
Westpac says that a stay would prejudice creditors of bankrupt’s estate.
Analysis
As I said above, whether or not Mr Webb is currently a bankrupt is unclear. However, he has not established any special circumstances warranting a stay. The judgment was not entered fraudulently and the bank was not obliged to accept his promissory note.
Conclusion
This is a difficult time for Mr Webb as he will shortly be evicted from his property. However, he owes more than $300,000 to Westpac, and it has a mortgage over his property. The default judgment was regularly entered. Mr Webb does not have a defence on the merits to Westpac’s claims in this proceeding. There are no special circumstances which warrant staying the warrant for possession. For the reasons set out above, I will not set aside the default judgment nor will I stay the warrant of possession. Mr Webb’s applications will be dismissed.