Westpac Banking Corportion v Thurairajah; Thurairajah v Westpac Banking Corporation

[2009] NSWSC 442

CITATION:	Westpac Banking Corportion v Thurairajah; Thurairajah v Westpac Banking Corporation [2009] NSWSC 442
HEARING DATE(S):	10/05/09
JUDGMENT DATE :	21 May 2009
JURISDICTION:	(1) Common Law Division (2) Equity Division
JUDGMENT OF:	Barrett J
DECISION:	In Common Law Division proceedings, notice of motion dismissed with costs. In Equity Division proceedings, items 1, 2, 3 and 4 of notice of motion dismissed with costs; balance stood over to Registrar's List.
CATCHWORDS:	MORTGAGES - mortgages and charges generally - rights and liabilities of mortgagor and mortgagee - mortgagor seeks order setting aside default judgment for possession - draft defence shows no viable grounds of defence - application dismissed
LEGISLATION CITED:	Real Property Act 1900, ss 57(2)(b), 58 Uniform Civil Procedure Rules 2005, rule 10.6
CATEGORY:	Principal judgment
PARTIES:	(1) Westpac Banking Corporation - Plaintiff Harinee Thurairajah - Defendant (2) Harinee Thurairajah - Plaintiff Westpac Banking Corporation - Defendant
FILE NUMBER(S):	SC (1) 15255/07; (2) 2590/09
COUNSEL:	(1) Mr P J Dowdy - Plaintiff Defendant in person (2) Plaintiff in person Mr P J Dowdy - Defendant
SOLICITORS:	(1) Henry Davis York - Plaintiff Thurai Rajah Lawyers - Defendant (2) Thurai Rajah Lawyers - Plaintiff Henry Davis York - Defendant

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BARRETT J

THURSDAY 21 MAY 2009

15255/07 WESTPAC BANKING CORPORATION v HARINEE THURAIRAJAH
2590/09 HARINEE THURAIRAJAH v WESTPAC BANKING CORPORATION

JUDGMENT

1 In Common Law Division proceedings 15255/07, the plaintiff is Westpac Banking Corporation and the defendant is Harinee Thurairajah. In Equity Division proceedings 2590/09, the plaintiff is Harinee Thurairajah and the defendant is Westpac Banking Corporation. Each of the proceedings concerns a mortgage granted by Ms Thurairajah to Westpac over land held under the provisions of the Real Property Act 1900. It will be convenient to refer to the parties as “the mortgagor” and “the mortgagee”.

2 On 20 October 2008, the mortgagee obtained judgment by default for possession of the land the subject of the mortgage. A writ of possession was issued on 29 October 2008 and subsequently executed. On 7 March 2009, the mortgagee exercised the power of sale arising under s 58 of the Real Property Act and entered into a contract for the sale of the property.

3 On 6 April 2009, the mortgagor lodged a caveat on the title to the property. In consequence of action then taken by the mortgagee, a lapsing notice in respect of the caveat was served on the mortgagor.

4 On 19 May 2009, I heard an application made by the mortgagor in the Common Law Division proceedings for an order that the judgment for possession obtained by default be set aside and an application by the mortgagor in the Equity Division proceedings for an order extending the operation of her caveat and an order restraining action by the mortgagee to proceed to completion under the contract for sale entered into by the mortgagee.

5 I deal first with the application made in the Common Law Division proceedings. The judgment for possession was a default judgment. The mortgagor entered no appearance. She complains that she had no notice of the proceedings. In fact, an order for substituted service was made, following a series of unsuccessful attempts by the mortgagee to effect personal service. I have reviewed the evidence tendered in support of that application. It was, without doubt, sufficient to warrant the making of an order for substituted service.

6 In accordance with that order, the statement of claim was served by affixing a sealed copy with a cover sheet to the front door of the mortgaged property. Service was thus validly and regularly effected. In any event, there is a provision of the mortgage, clause E.1, saying that the mortgagee may serve court documents in various alternative ways, including by leaving them at the mortgaged property. Under rule 10.6 of the Uniform Civil Procedure Rules 2005 therefore, service in that way, which corresponded with the method required by the order for substituted service, is taken “for all purposes (including for the purposes of any rule requiring personal service) to constitute sufficient service”.

7 There thus being no issue concerning service, I turn to the other central question upon the application for an order setting aside the default judgment, that is, whether the mortgagor has shown that she has an arguable defence or, putting it another way, that she has reasonable prospects of success in the proceedings.

8 By its statement of claim, the mortgagee pleaded (a) the existence of a loan agreement and the making of advances; (b) the grant of the mortgage of the property as security for the loan; (c) default by the mortgagor in due payment of principal and interest; (d) initial default on 30 January 2007 in the sum of $2,447.22; (e) demand by the mortgagee on 12 April 2007 pursuant to s 57(2)(b) of the Real Property Act for the sum of $4,574.64; (f) failure by the mortgagor to pay in response to the demand; (g) demand by the mortgagee on 11 June 2007 for payment of $414,039.85, being the whole of the moneys then owing and payable; (h) failure by the mortgagor to pay in response to that demand; and (i) default by the mortgagor under the mortgage entitling the mortgagee to possession of the property.

9 In accordance with a direction made by the Chief Judge in Equity when these present applications first came before the court, the mortgagor has filed a draft defence. The only allegations in the statement of claim that are admitted are the incorporation of the mortgagee and its entitlement to sue, that the mortgagor is the registered proprietor of the property and that the mortgagee advanced moneys to the mortgagor. There are specific denials of the allegations of default. Surprisingly, it is not admitted that the moneys advanced are secured by the mortgage.

10 The gravamen of the proposed defence, to the extent that it is discernible at all, appears from particulars repeated several times in the draft defence in these terms:

"Plaintiff failed to, neglected to, and refused to, comply with the redraw facility and applicable law."
"Plaintiff failed to, neglected to, and refused to, allow the defendant to pay out the redraw facility and release the mortgage."

11 It is difficult to know precisely what to make of this. It seems, however, that two matters are put forward by way of defence. First, that the mortgagee wrongfully refused to make funds available under a redraw facility applicable to the mortgagor's loan and, second, that the mortgagee wrongfully refused to allow the mortgagor to redeem.

12 The booklet of loan terms put into evidence by the mortgagee envisages the availability of a redraw facility if, among other things, the borrower signed a redraw authority. The mortgagor has put into evidence the loan offer made to her. It refers to the booklet of loan terms I have mentioned. The letter says that, in the event of inconsistency, the loan offer terms prevail.

13 The mortgagor, in her affidavit, refers to the loan offer document, annexure B, as "a true copy of the redraw facility". That document does not, however, refer to redrawing. Indeed, there is an explicit statement:

"This is a single drawdown loan. You can only draw it in one instalment."

14 The document goes on to say:

"There may be options which you have not selected which are listed in the booklet. If you would like any of those options, please contact us.”

15 A close reading of the loan offer does not reveal any reference to the inclusion of any redraw facility. However, the mortgagee's evidence is that a redraw facility was activated on the mortgagor's account on 13 May 2008. But, as the applicable terms and conditions make clear and as one would logically expect, there can be no redrawing if and while the account is fully drawn. Bank statements put into evidence show that the account was at all material times fully drawn, or very nearly so, with the result that redrawing was, in fact, not available, except occasionally for a very small sum.

16 There is, in the evidence, no support at all for the proposition that the mortgagee failed to, or refused to, allow re-drawings that it ought to have allowed. On the contrary, the evidence is clearly that, although a re-draw facility was in place from May 2008, the mortgagor herself never put the account into the state necessary for redrawing to be possible under the facility, that is, a state where the drawn down debt was less than the account limit, so that there was a balance to which the mortgagor could resort by way of redrawing. In saying this, I leave to one side, as immaterial, the occasions on which there were available balances of trivial amounts of no practical consequence. There is, in any event, no evidence that the mortgagor actually sought to draw down those trivial amounts by way of redraw.

17 If and to the extent that the mortgagor might have defended the possession proceedings on the basis that the mortgagee neglected and refused to comply with the redraw facility – and it is far from clear to me that that would have been a defence – the mortgagor has failed to show the existence of an arguable defence or reasonable prospects of her successfully defending on that basis.

18 There is then the mortgagor's allegation that the mortgagee wrongfully refused to allow her to redeem the mortgage. The mortgagor put into evidence a request she had submitted to the mortgagee by facsimile dated 1 August 2007. There is no doubt that the mortgagee received the request, which was a request for release of the security. There is a question, to which I shall come, about when it was received.

19 By means of the request, the mortgagor gave notice of her desire to pay out in full two loan accounts, one of which is the account to which the loan offer already mentioned related. Her request nominated 2pm on 2 August 2007 as the required settlement time. As I have said, the document was dated 1 August 2007. The nominated contact point for the mortgagee was identified as solicitors "Legal Group 525 Pty Limited T/A TRL", with contact phone number 9634 XXXX and fax number 9659 XXXX. This is the mortgagor's own legal practice. She is a solicitor, who, according to Law Society records, practises under the name “Thurai Rajah Lawyers”, which would explain the "TRL" reference. Her practice telephone number, as recorded by the Law Society, corresponds with that in the request document.

20 The mortgagor says, in her affidavit, that she never received any reply to the faxed discharge request. She then proceeds to recount a number of oral requests for a discharge figure, including to so-called "bank agents" who were present when the writ of possession was executed. She wrote to the mortgagee at a GPO box in Sydney on 26 October 2007, following up the request for a discharge. She spoke to an unnamed man at an unidentified branch in or about early December 2007 and on several unspecified visits to unspecified bank premises between February and May 2008, which eventually, she says, resulted in her coming into contact with a bank officer called Asanga and his manager Dewang.

21 The mortgagor sent an email to Asanga on 19 June 2008. In it she asked whether the re-draw facility was in place. She also asked whether the interest rate had been reduced. Dewang replied on 20 June 2008 as follows:

“Hi Harinee. Can you please tell me your customer number or your BSB and account number. I think the redraw is available but there is an error on the account and it's on collections. I am still investigate [sic] the problem. By any chance did you release any security for this loan? Cheers.”

22 The mortgagor wrote to Dewang on 4 July 2008, directing her letter to the mortgagee at an address in Castlereagh Street, Sydney. She referred to the discharge request of 1 August 2007 (by then some eleven months earlier) which it appears she had not previously mentioned to Dewang. She said that, if the redraw facility was not available, she wished to have a discharge figure. She says that she had no response to this letter.

23 The mortgagor then deposes to having visited the bank branch – presumably the Castlereagh Street branch – on a number of occasions between August and November 2008, attempting to see Dewang. She says that she did not manage to make contact with him, despite having left several messages asking that he contact her.

24 I turn now to the contents of the mortgagee's filing system. According to the mortgagee's business records, the discharge request said by the mortgagor to have been faxed to the mortgagee on 1 August 2007 was received by fax on 8 August 2007 at approximately 12.46pm. There are fax transmission markings on the copy put into evidence by the mortgagee showing transmission on that date and at that time to an acknowledged fax number of the mortgagee, but without identification of a sender or sender's fax number. By then, of course, 8 August 2007, the anticipated settlement date of 2 August 2007 mentioned in the request was well and truly in the past.

25 On 14 August 2007, an officer in a section of the mortgagee dealing with discharges of mortgage contacted an officer in the recoveries section, seeking approval for discharge of the mortgagor's mortgage and saying that settlement was not yet booked. Clearance was given on that day. On 31 August 2007 discharge documents were forwarded to the mortgagee's settlement clerks in preparation for settlement.

26 On 14 September 2007, an officer of the mortgagee phoned the number given as the number for the mortgagor's solicitor in the discharge request document; the number, that is, of what has been shown to be the mortgagor's own legal practice, even though it was not identified in that way in the request document. The mortgagee's officer did this with a view to arranging settlement. The only response was by voice mail. The caller left a message asking for an update on the settlement date. No return call was received. The officer of the mortgagee phoned again on 18 September 2007. Again there was only a voice mail response. The officer left an urgent request for contact, as there was a need to know whether settlement was proceeding, or whether the bank would have to move for vacant possession. Again there was no call back.

27 The mortgagor, in her own evidence, says that she goes to the particular office premises only as occasion requires. They are premises she shares with others. She is not contactable there, on her own evidence, except when she happens to be in attendance there for some particular purpose.

28 The evidence makes it clear that in early August 2007 the mortgagor lodged by fax with the mortgagee a request for discharge. The mortgagor says that this happened on 1 August 2007. The mortgagee says that it happened on 8 August 2007. In view of the fax transmission markings on the mortgagee's copy, I find that the transmission occurred on the later date.

29 The mortgagor's evidence about what happened next requires analysis. Having given, on her account, one day's notice of her desire to discharge, she was content to go on for many months, making spasmodic contact with the mortgagee, which culminated in her correspondence with Dewang, who, as his email of 20 June 2008 shows, did not really know anything about her case and did little or anything in relation to it. In any event, the mortgagor's concern at that stage (June/July 2008) was with having a redraw facility available and obtaining a reduction in the interest rate. The correspondence with Dewang was on the basis that, if she did not obtain these benefits, she wished to pay off the loan.

30 The mortgagee's records show that the discharge request was received on 8 August 2007 and that steps were taken thereafter to prepare discharge documents and arrange an appointment to settle. The mortgagor had provided, in the request document, details of her solicitor (in fact herself, although that did not appear) and the solicitor's phone number. A bank officer called the solicitor's phone number on two occasions. Voice mail answered. On each occasion a message was left, asking about settlement of the discharge. No contact was made with the mortgagee in response. It chose not to pursue the question of discharge further.

31 On the evidence before me, it simply cannot be found that there is any arguable case that the mortgagee denied, or obstructed, redemption by the mortgagor. The mortgagee acted reasonably and appropriately in response to the request of early August 2007. It did not pursue the matter after two phone calls to the nominated solicitor produced no result. It was entitled to think the request was not being pursued.

32 Above all, and fundamentally, however, the mortgagor has not shown that she was at any time, past or present, ready, willing or able to redeem. She did not tender any sum of money. In this State a mortgagor has a statutory right to redeem at any time. To the extent that the amount necessary to obtain a discharge is uncertain or in dispute, the mortgagor may resort to the established procedure of tendering what he or she considers to be due and, if that is not accepted, initiating a redemption action. The mortgagor in this case took none of these steps. As I have said, the fundamental step of offering to pay, or tendering payment, was entirely lacking.

33 The second of the matters raised by the defendant's draft defence – in essence, denial of the right to redeem – even if relevant by way of defence to the mortgagee's action for possession, has simply not been established.

34 In summary, the defendant has not, by her draft defence, pleaded any even remotely arguable ground of defence to the mortgagee's possession action. Nor does the evidence establish the matters on which she relies.

35 The prospects of success on the mortgagor’s part must be rated as zero. Nothing she has brought forward calls into question in any material way the adequacy or regularity of steps taken by the mortgagee to obtain possession, or the availability of the mortgagee's right to possession or power of sale.

36 The mortgagor's notice of motion in the Common Law Division proceedings seeking an order setting aside the judgment for possession obtained by the mortgagee will be dismissed.

37 I turn, therefore, to the summons in the Equity Division proceedings. Several orders are sought there. One is an order that the mortgagee provide to the mortgagor a "proper discharge amount to facilitate a discharge of" the mortgage. Because the mortgagee has exercised the power of sale by entering into a contract for sale, the right of redemption is no longer available to the mortgagor. This claim will therefore be dismissed.

38 Another order sought is an injunction restraining the mortgagee from dealing with the land until the termination of the notice of motion to set aside the default judgment for possession. Since that determination has now been made, this aspect of the summons falls away and the claim will be dismissed.

39 Also sought is an order extending the operation of the mortgagor's caveat. Again, however, this envisages an order only until determination of the notice of motion in the Common Law Division proceedings, with the result that the claim will be dismissed.

40 Finally, and leaving aside orders of purely procedural significance, there is a claim for an order "that the plaintiff's damages in this matter be assessed forthwith". On the face of things, that claim is an extant and continuing claim.

41 The disposition is as follows:

(1) In proceedings 15255/07, the defendant's notice of motion filed on 30 April 2009 is dismissed with the costs.
(2) In proceedings 2590/09, the claims in items 1, 2, 3 and 4 of the summons filed on 30 April 2009 are dismissed with costs, and the balance of that summons is stood over to the Registrar's list on 4 June 2009.

42 Interlocutory orders were made in the Equity Division proceedings up to 12 noon today. Those orders will cease to be operative at that point. I need only let nature take its course in that respect.

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