Bank of Queensland Limited v Arthur Lloyd Burgess [2011] NSWSC 154 (16 March 2011)

Last Updated: 14 April 2011

Supreme Court New South Wales

Case Title:	Bank of Queensland Limited v Arthur Lloyd Burgess
Medium Neutral Citation:	[2011] NSWSC 154
Hearing Date(s):	2 March 2011
Decision Date:	16 March 2011
Jurisdiction:
Before:	Harrison AsJ
Decision:	(1) The notices of motion filed 23 February 2011 and 25 February 2011 are dismissed. (2) Each party is to pay its/his own costs. (3) The matter is to be listed for a status conference on 17 March 2011 at 9.00 am before the Registrar.
Catchwords:	PROCEDURE - civil - pleadings - strike out; application - whether reasonable cause of action is disclosed in statement of claim
Legislation Cited:	Uniform Civil Procedure Rules 2005 Real Property Act 1900 Consumer Credit Code (Qld)
Cases Cited:	Bega Co-operative Society Limited v Milk Authority of the Australian Capital Territory (Federal Court, Neaves J, 12 May 1992, unreported; Bruce v Odhams Press Ltd [1936] 1 KB 697 Charlie Carter Pty Ltd v Shop, Distributive and Allied Employees' Association of Western Australia (1987) 13 FCR 413 Commonwealth of Australia v Griffiths [2007] NSWCA 370; [2007] 70 NSWLR 268
Texts Cited:
Category:	Procedural and other rulings
Parties:	Bank of Queensland Limited - Plaintiff Arthur Lloyd Burgess -Defendant
Representation
- Counsel:	Counsel: R Schneider (Sol) - Plaintiff T Iskra - Defendant
- Solicitors:	Solicitors: HWL Ebsworth Lawyers - Plaintiff KP Carmody & Co - Defendant
File number(s):	2010/322767
Publication Restriction:

Judgment

1. HER HONOUR: There are two notices of motion before the Court. By notice of motion filed 23 February 2011, the plaintiff seeks, firstly, an order pursuant to Rule 14.28 of the Uniform Civil Procedure Rules 2005 (UCPR) that the defence be struck out; secondly, pursuant to Rule 13.1 of the UCPR (a) judgment for the plaintiff against the defendant for possession of the land comprised in Certificate of Title Folio Identifier xxx/xxxxxx and commonly known as xxx xxxxxx xxxxxx, Stockinbingal in the State of New South Wales ('the property"); (b) an order that the plaintiff have leave to issue a write of possession forthwith in respect of the property; and (c) judgment against the defendant in the sum of $76,486.35 plus interest.
   
2. By notice of motion filed 25 February 2011, the defendant seeks an order that the statement of claim filed 29 September 2010 be struck out on the ground that it discloses no course (sic) of action.
   
3. The plaintiff is the Bank of Queensland Limited ('the Bank"). The defendant is Arthur Lloyd Burgess. The Bank relied on the affidavit of Sharon Gresham dated 21 February 2011 and Alison Dodds sworn 28 February 2011. The defendant did not rely upon any affidavit evidence.
   

Summary judgment

4. Rule 13.1 of the Uniform Civil Procedure Rules 2005 provides:
   

"13.1 Summary judgment

(1) If, on application by the plaintiff in relation to the plaintiff's claim for relief or any part of the plaintiff's claim for relief:

(a) there is evidence of the facts on which the claim or part of the claim is based, and

(b) there is evidence, given by the plaintiff or by some responsible person, that, in the belief of the person giving the evidence, the defendant has no defence to the claim or part of the claim, or no defence except as to the amount of any damages claimed,

the court may give such judgment for the plaintiff, or make such order on the claim or that part of the claim, as the case requires.

(2) Without limiting subrule (1), the court may give judgment for the plaintiff for damages to be assessed.

(3) In this rule, a reference to damages includes a reference to the value of goods."

5. Rule 13.4(1) of the UCPR provides that the court may dismiss proceedings generally, or in relation to any claim for relief, in three circumstances. These are, if the proceedings are frivolous or vexatious, or if no reasonable cause of action is disclosed, or if the proceedings are an abuse of the process of the court.
   
6. Rule 14.28(1) of the UCPR provides that the court may at any stage of the proceedings order that the whole or any part of a pleading be struck out if the pleading firstly, discloses no reasonable cause of action or defence or other case appropriate to the nature of the pleading, secondly, has a tendency to cause prejudice, embarrassment or delay in the proceedings, or thirdly, is otherwise an abuse of the process of the court.
   
7. Rule 14.28(2) provides that the court may receive evidence on the hearing of an application for an order under subrule (1).
   
8. In Commonwealth of Australia v Griffiths [2007] NSWCA 370; [2007] 70 NSWLR 268, Beazley JA (with whom Mason agreed) said:
   

"11 The general principles relating to the summary disposal of proceedings are well-known: see General Steel Industries Inc v Commissioner for Railways (NSW) & Ors [1964] HCA 69; (1964) 112 CLR 125 at 129. If it is demonstrated that there is a real question to be tried, the matter is inappropriate for the entry of summary judgment: Dey v Victorian Railway Commissioners [1949] HCA 1; (1949) 78 CLR 62. The tests stated in the authorities as to whether it is appropriate that a case be disposed of by the entry of summary judgment include statements such as that the matter is "so obviously untenable that it cannot possibly succeed"; "manifestly groundless" or "would involve useless expense": see General Steel Industries at 129.

12 The summary disposal of proceedings or part thereof deprives a party of the right to a contested hearing. For that reason it is said that the requirement for establishing that there is no triable issue is demanding: Air Services Australia v Zarb (Court of Appeal, 26 August 1998, unreported). In Webster & Anor v Lampard [1993] HCA 57; (1993) 177 CLR 598, Mason CJ, Deane and Dawson JJ said at 602:

'... the issue before the learned Master on the application for summary judgment was not whether [the plaintiffs] would probably succeed in their action against [the defendant]. It was whether the material before the Master demonstrated that that action should not be permitted to go to trial in the ordinary way because it was apparent that it must fail. The power to order summary judgment must be exercised with 'exceptional caution' and 'should never be exercised unless it is clear that there is no real question to be tried.' (Citations omitted)"

The pleadings

The statement of claim

9. By statement of claim filed 29 September 2010, the plaintiff pleads as follows:
   

"1. The defendant is the owner of the property at xxx Stockinbingal in the State of New South Wales being the land comprised in Certificate of Title Folio Identifier xxx/xxx (the Property).

2. The defendant obtained a loan (xxx) (the Loan) from the Bank of Queensland Limited (the Bank).

3. The defendant mortgaged the property to secure the obligations under the loan by a mortgage registered number Axxxx (the Mortgage).

4. The Mortgage meant that if the defendant defaults under the loan, the Bank can:

(a) take possession of the property;

(b) obtain a judgment against the defendant for the amount the defendant owes the Bank under the loan.

5. The defendant is in default of the loan by breach of the terms of the loan that require payment of monthly instalments of principal and interest.

Particulars of default

Failure to pay the following amounts due:

$238.40

due 9 July 2010

$453.23

due 9 August 2010

$453.23

due 9 September 2010

6. Notice of default pursuant to s 57(2)(b) of the Real Property Act (NSW) was served on the defendant on or about 12 May 2010.

7. Notice of default pursuant to s 80 of the Consumer Credit Code was served on the defendant on or about 12 May 2010.

8. Given the defendant's default, the Bank now claims for:

(a) possession of the property; and

(b) the full amount of the loan, being $68,665.02 as at 16 September 2010; and

(c) continuing interest and fees in accordance with the loan; and

(d) costs."

The defence

10. By defence filed 10 December 2010, the defendant pleads as follows:
    

"1. The Defendant admits paragraphs 1, 2, 3 and 4 in the Pleadings and Particulars of the Statement of Claim.

2. In respect of paragraph 5 of the Pleadings and Particulars, the Defendant denies any default which has not been remedied in particular states that the particulars of default do not relate to the Notice of Default described in paragraphs 6 and 7 of the Pleadings and Particulars.

3. The Defendant admits paragraphs 6 and 7 of the Particulars and Pleadings.

4. The Defendant denies paragraph 8 of the Particulars and Pleadings.

5. In further answer to the Statement of Claim, the Defendant alleges that he applied and was granted relief under the Consumer Credit Code with respect to future loan payments due to ill health and unemployment.

6. The Defendant also alleges that the Plaintiff failed to provide to the Defendant a notice of change as provided for in Section 67 of the Code.

7. The Defendant further alleges that the Defendant only became aware that the plaintiff considered that the Defendant was in breach of the Loan Agreement when he received a telephone call alleging he was in arrears with respect to the loan agreement whereupon he recommenced loan repayments.

8. The Defendant further denies having been given a written notice under Section 80 of the Code and accordingly alleges the plaintiff is not entitled to begin enforcement against the Defendant."

11. Paragraph [3] of the defence is inconsistent with paragraph [8]. Paragraph [3] admits receipt of the s 80 notice where paragraph [8] denies having been given a written notice under s 80.
    
12. The defendant submitted that the statement of claim should be struck out because it does not comply with Rule 14.15 of the UCPR. Rule 14.15 reads:
    

"14.15 Pleadings concerning possession of land

(1) This rule applies to proceedings on a claim for possession of land.

(2) The plaintiff must plead specifically the following matters:

(a) the nature of any instrument (such as a certificate of title, conveyance, will, trust instrument, mortgage or lease) from which the plaintiff's claim is alleged to be derived,

(b) if any such instrument is alleged to impose an obligation on the defendant whose breach has given rise to the plaintiff's claim (such as an obligation to pay money to the plaintiff), the existence of that obligation and the occurrence of any such breach,

(c) if any such instrument is alleged to confer a right on the plaintiff that vests at a specified time or is contingent on the occurrence of a specified event, the existence of that right and the occurrence of any such time or event,

(d) if the plaintiff's right to possession arises from the defendant's failure to pay money to the plaintiff, particulars of the date on which the failure began, the amount of money currently unpaid and the method by which that amount has been calculated,

(e) if the plaintiff's right to possession arises from any other act or omission by the defendant, particulars of the date on which the act or omission occurred and the nature of the act or omission,

(f) if the plaintiff's right to possession is not exercisable until the plaintiff has given notice to the defendant of the plaintiff's intention to exercise that right, the date on which, and the terms in which, such notice was given.

(3) The defendant must plead specifically every ground of defence on which he or she relies, including:

(a) any claim for relief against forfeiture, and

(b) any claim for rectification, and

(c) any claim for relief under the Contracts Review Act 1980 ,

and it is not sufficient for a defendant to merely state that he or she is in possession of the land (whether personally or by a tenant) and relies on that possession."

13. The defendant says that the notice of default was issued on 12 May 2010 yet the statement of claim refers to defaults occurring in the months of July, August and September 2010. So according to Counsel for the defendant, the statement of claim is defective because the notice was served prior to the defaults occurring in July, August and September 2010. Further, counsel for the defendant submitted that the statement of claim does not particularise how the sum of $68,665.02 was calculated and the pleading is defective.
    
14. In response, the plaintiff's solicitor referred to Annexure 1 of the Supreme Court Common Law Practice Note 6. Relevantly it reads as follows:
    

ANNEXURE 1

Supreme Court Short Form of Statement of Claim for Possession [and Debt] against a Borrower/Mortgagor

RELIEF CLAIMED

1. Judgment for the Plaintiff, [name of Lender], for possession of the land comprised in [Title/Folio numbers] being the land situated at and known as [address].

2. #Judgment for the Plaintiff, [name of Lender], against the [role of party, eg Defendant] for $[amount].

3. The [role of party, eg Defendant] pay the Plaintiff's costs.]

PLEADING AND PARTICULARS

1. You are the owner of property at [address/folio identifier etc].

2. You obtained a loan from [name of Lender] on [date]. ["Lender"]

3. You mortgaged your property as security for this loan by a mortgage [number].

4. This mortgage means that if you default under your loan, the Lender can:

(a) take possession of your property; and

(b) obtain a judgment against you for the amount you owe the Lender.

5. You are in default of your loan by breach of [specify breach to comply with requirements concerning pleadings in Rule 14.15 Uniform Civil Procedure Rules 2005].

Particulars of default

Failure to pay the following amounts due [if applicable].

$ due

Non-monetary default by virtue of [if applicable]

6. Notice of default pursuant to s80 of the Consumer Credit (New South Wales) Code, has been served. [if notice required]

Particulars

Notice dated ______________

OR

6. Notice pursuant to s80 of the Consumer Credit (New South Wales) Code is not required. [if notice is not required]

7. Given your default, the Lender now claims against you, judgment for:

(a) possession of your property.

(b) the full amount of your loan, being $ ... as at ... [if claimed]; and

(c) continuing interest and fees in accordance with the loan [if claimed];

(d) costs."

15. The plaintiff's solicitor submitted that the pleading in the statement of claim complies with the Supreme Court short form of a statement of claim for possession. In regards to the defendant's submissions that the notice of demand is not mentioned in the statement claim and the defaults pleaded are ones occurring after the notice of demand, the plaintiff submitted that paragraph [5] of the short form (paragraph [5] of the plaintiff's statement of claim) is temporal. That is paragraph [5] refers to the breach or breaches of the loan agreement as at the date when the statement of claim is filed. I agree with this submission. Service of the notice of demand is not mentioned in the Short Form of Statement of Claim.
    
16. In any event, the notice of demand issued on 12 May 2010. It relevantly states:
    

" 1. WE ADVISE THAT YOU ARE IN DEFAULT UNDER YOUR CONTRACT AND MORTGAGE BECAUSE YOU HAVE FAILED TO PAY THE FOLLOWING AMOUNTS DUE UNDER THE CONTRACT AND MORTGAGE:

Arrears in the amount of $1,181.94 as at 12 May 2010

2. TO REMEDY THE DEFAULT, YOU MUST PAY TO USE, ON OR BEFORE THE DEADLINE, THE FOLLOWING AMOUNT:

(a) The total amount of the arrears of $1,181.94

(b) Legal costs of this Default Notice $650.00

TOTAL AMOUNT $1,831.94

Deadline: 18 June 2010

3. IF YOU FAIL TO REMEDY THE DEFAULT ON OR BEFORE THE DEADLINE THEN:

(a) An acceleration clause operates under the Contract and consequently all moneys owing under your Contract and as secured by the Mortgage (not just the amounts set out above) will become automatically due and payable by you on the next business day after the Deadline. This will be the amount required to pay out your Contract and Mortgage at that time which (calculated as at 12 May 2010) is the sum of $67,762.98 (this sum may change according to the date it is paid) together with the amount of any further debits made after this date to your account including any further interest payable and any further enforcement expenses.

(b) We may, without any further notice to you, take enforcement action to recover the debt owing under the Contract and the Mortgage, which includes but is not limited to commencing proceedings in a Court to recover the total amount owing under the Mortgage and Contract or to take steps to take possession of, sell, appoint a receiver, or foreclose in relation to the property subject to the Mortgage, namely xxx xxxxxxxxx xxxxxx, Stockinbingal in the State of New South Wales and more particularly all that land described in Certificate of Title Reference xxx/xxxxxx.

4. A SUBSEQUENT DEFAULT OF THE SAME KIND AS SPECIFIED IN PARAGRAPH ONE OF THIS NOTICE THAT OCCURS ON OR BEFORE THE DEADLINE AS SPECIFIED IN THIS NOTICE MAY BE THE SUBJECT OF ENFORCEMENT PROCEEDINGS AGAINST YOU WITHOUT FURTHER NOTICE, IF THE SUBSEQUENT DEFAULT IS NOT REMEDIED ON OR BEFORE THE DEADLINE AS SPECIFIED IN THIS NOTICE."

17. The defendant stated that he has paid the amount referred to in paragraph [2(a)], however paragraph [4] of the notice warns that if there is a subsequent default of the same kind as specified in paragraph [1] then the plaintiff can issue enforcement proceedings without further notice. In evidence, there is a copy of the defendant's bank account records that show a further default.
    
18. So far as the defence is concerned, the operative parts are paragraphs [5] and [6]. They plead that the defendant alleges that he applied for and was granted relief under the Consumer Credit Code with respect to future loan payments due to ill health and unemployment and that the plaintiff failed to provide him with a notice of change as provide for in s 67 of the Code. Section 67 reads:
    

67 Notice of change

(1) A credit provider that enters into an agreement with the debtor on any such application must, not later than 30 days after the date of the agreement, give to the debtor, and any guarantor under a guarantee related to the contract, a written notice setting out -

(a) particulars of the change in the terms of the credit contract; and

(b) any information required by the regulations.

Maximum penalty-50 penalty units.

(2) The credit provider may, under subsection (1), give a person particulars only of a matter as changed instead of particulars of the change, but only if the credit provider-

(a) makes it clear to the person that the matter has changed;

or

(b) issues to the person a new set of terms and conditions relating to the credit contract.

19. The plaintiff referred to s 170 of the Code. It reads:
    

"170 Effect of noncompliance

(1) A credit contract, mortgage or guarantee or any other contract is not illegal, void or unenforceable because of a contravention of this Code unless this Code contains an express provision to that effect.

(2) Except as provided by this section, this Codes does not derogate from rights and remedies that exist apart from this Code."

20. According to the plaintiff's solicitor, the non-compliance of s 67 does not mean that the contract is unenforceable. I agree with that proposition. However, the defendant pleads that he made an application to the plaintiff under s 66 of the Code, which provides for changes in the contract on the grounds of hardship, for a change because of illness and unemployment and secondly, that he did not receive a notice of change from the plaintiff pursuant to s 67 of the Code. However, the pleading is not just about where a notice was served but rather whether there had been a change in the contract. This is a matter for evidence at trial.
    
21. In my view, neither the statement of claim nor the defence plead claims that are hopeless. Nor do they plead no reasonable cause of action, nor do they cause embarrassment, delay, nor are they an abuse of process. They should be permitted to go to trial. It is important to keep in mind the overall purpose of pleadings is that for each party to know the case they have to meet. These pleadings fulfil that task. Further, s 56 of the Civil Procedure Act 2005 provides:
    

"(1) The overriding purpose of this Act and of rules of court, in their application to civil proceedings, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings.

(2) The court must seek to give effect to the overriding purpose when it exercises any power given to it by this Act or by rules of court and when it interprets any provision of this Act or of any such rule.

..."

22. Rather than the parties incurring the Court's time and expending legal costs they could have cured any defects in the pleadings by making amendments without the need for court intervention.
    
23. Costs are discretionary. Both parties' motions were unsuccessful. In my view, the appropriate order for costs is that both parties pay its/his own costs.
    

The Court orders

(1) The notices of motion filed 23 February 2011 and 25 February 2011 are dismissed.

(2) Each party is to pay its/his own costs.

(3) The matter is to be listed for a status conference on 17 March 2011 at 9.00 am before the Registrar.

**********