PIANTA v NATIONAL AUSTRALIA BANK SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL MAHONEY, PRIESTLEY and CLARKE JJA 22 June 1994, 22 June 1994 [1994] NSWCA 253 APPLICATION for extension of time to file appeal and for stay of orders pending appeal — No sufficient explanation of failure to lodge appeal in time — No appropriate likelihood of success in appeal to warrant orders. JUDGES — Duty to enforce the law — Otherwise judiciary will be seen as arbitrary in operation. Mahoney JA This is an application brought on motion seeking two orders: first, that the time be extended to institute an appeal against a decision of Hodgson J handed down on 2 September 1993; and, secondly, that a writ of possession issued in the Supreme Court in that proceeding be stayed, that is, I assume, the execution of it be stayed pending the hearing of the appeal. The motion was filed, it would appear, on 21 June 1994, that is, yesterday, and arrangements were made to bring it before the court as a matter of urgency, upon representations made to the court; the court was informed this morning that the urgency derives from the fact, it is said, that the writ of possession is to be executed or enforced at noon today. The facts, as far as they appear from the material which is now before the court, may relevantly be summarised as follows. In January 1989 the Messrs Pianta (as I shall call them for brevity) purchased the subject property for some $240,000 and, it would appear, overdraft facilities were extended in an amount of $30,000. Subsequently, some months following the purchase, other properties were sold and it is said by Mr Joseph Henry Pianta, whose affidavit of 17 June is before the court, that amounts of some $133,000 were repaid. That, on a rough calculation, would leave a capital indebtedness of some $87,000 and, of course, amounts outstanding for interest. I should add parenthetically that when the matter came before the court this morning an affidavit was filed on behalf of the respondent bank, an affidavit of Mr Kemp of 22 June 1994. It indicates that there are amounts outstanding owing by the Messrs Pianta of the order of some $300,000, and that a valuation of the property some time ago showed that it was, in the opinion of the valuer, worth some $230,000. These figures are, I think, to be taken broadly, but they are the only figures that emerge from the evidence before the court. The present situation arises because, in proceedings heard by Hodgson J in September 1993, an order was made in favour of the bank that it have possession of the subject property. The claim for possession arose, it would appear from the terms of his Honour's judgment, by reason of a default which had been committed by the Messrs Pianta under the relevant mortgage. His Honour ordered that the writ not be executed prior to 30 September 1993. On 1 December 1993 the writ of possession was issued and it was scheduled to be executed on 18 March 1994: that appears to have been ultimately the date on which it was to be executed. 2 UNREPORTED JUDGMENTS Thereafter Mrs Pianta, the wife of one of the applicants and the mother of the other, set up a claim that she was entitled to an interest in the property and that for that reason orders should be made staying the execution of the writ, no doubt for the purpose of enabling her to come in and defend the proceedings. Application was made on 16 March 1994 to Ireland J for that purpose. His Honour, on 17 March, declined to stay the execution of the writ. Proceedings then took place before his Honour Studdert J in relation to the matter and his Honour effectively rejected the claim by Mrs Pianta insofar as it would have resulted in the stay of the execution of the present writ. I do not attempt to categorise his Honour's reasoning in that regard. Mrs Pianta's claim, as a basis for staying the execution of the writ of possession, was pressed in various ways. On 23 May 1994 she made an application for leave to appeal against the judgment of Studdert J in that regard. The application was dismissed by this Court. Proceedings were continued by Mrs Pianta but, so far as here relevant, to no effect. She has taken proceedings in the Equity Division as well as before Studdert J, but those proceedings have not been effective to stay the execution of the present writ for possession nor, so far as it appears, could they have been. As late as yesterday she made a further application for a stay of the writ. The application came before his Honour Brownie J and the application was dismissed. On 1 June 1994 the evidence before the court discloses that the notice to vacate the premises, preparatory to the execution of the writ of possession, was issued by the Office of the Sheriff, scheduling the possession for 12.00 noon on 22 June 1994. The court has been informed, and it appears from the material before the court, that no appeal was lodged against the decision of Hodgson J given against the Messrs Pianta. No satisfactory explanation has been given as to why a notice of appeal was not lodged. It is proper to note that in the affidavit of Mr Joseph Henry Pianta it is said that at the hearing before Hodgson J the applicant parties were not represented. It is said that in a period leading up to the proceedings the parties were represented by and advised by a solicitor but he was dismissed for what Mr Pianta says was incompetence", upon the ground that the solicitor had not followed the instructions given to him, was not prepared for the hearing and "would do us more harm than good". (In fairness to the solicitor, I should note that, of course, the court has not heard his version of the matter. But the evidence before the court in this regard is that which I have stated). Following the dismissal of that solicitor another solicitor was retained. According to Mr Pianta's affidavit, that solicitor advised: "... that he would not be able to instruct a barrister in time to properly defend the case and to press our cross-claim. This solicitor and barrister exerted considerable pressure on my son and I to settle the matter with the respondent bank on terms disadvantageous to us in the circumstances. The solicitor and barrister declined to represent us according to our instructions and at the time we had no alternative other than for my son to appear for us both." I cite these matters because Mr Lumley for the applicants in the present application has referred, as he was properly entitled to do, to the fact that before Hodgson J the applicants were not represented. URJ PIANTA v NATIONAL AUSTRALIA BANK (Mahoney JA) 3 The basic application now made by the bank in the proceeding was for possession. The present applicants' cross-claim was a claim based essentially upon the Contracts Review Act, although a claim based upon s57 of the Real Property Act was also pressed. When the matter came before Hodgson J he made an order as sought by the bank, for possession, and rejected the cross-claim. It is proper to note that in the judge's judgment he concluded that the Messrs Pianta did sufficiently understand that they were giving land as security for the loan that they were taking, including obtaining possession and ultimately sale if there was default in repaying the loans. His Honour said: "T do not think that the defendants are entitled to relief on the ground they were not given a detailed explanation of the practical effect of their being unable to make interest payments." His Honour then referred to a thirteen page memorandum of detailed terms which apparently constituted part of or an addition to the mortgage. The terms of the mortgage are not before this Court. His Honour said in relation to these detailed terms: "The defendants did not have any reasonable opportunity to negotiate, and they certainly suffered from lack of bargaining power." His Honour then said: "Accordingly, insofar as the rights of the Bank may depend on any unusual or harsh terms in that memorandum, there could be grounds for relief under the Contracts Review Act; but I do not think that the term providing for possession on default can be regarded as an unusual or harsh term." His Honour then referred to CL1 of the memorandum. That clause provided that a certificate given by the bank as to certain matters should be conclusive evidence of the truth of it. His Honour considered that clause a provision which was harsh and therefore unjust within s7 of the Contracts Review Act and indicated that he would not enforce such a provision. However, his Honour indicated that apart from CL1 he did not consider that any particular term of the mortgage relevant to the proceedings was unjust for the purposes of the Contracts Review Act, and he said that the evidence disclosed compliance with the formalities required by the rules. He formed the conclusion, therefore, that the plaintiff was entitled to judgment for possession. I have not sought to set out all of the details of the judgment but it is proper to record at least those matters to which I have referred. As I have said, no notice of appeal was filed against his Honour's judgment. The explanation given, and I think the only explanation as far as the material extends, is that contained in the affidavit of Mr Joseph Henry Pianta, namely that his health suffered as a result of the proceedings and "up until now I have been unable to face the effects of the decision of his Honour Mr Justice Hodgson". The fact is, however, that, as I have indicated, several proceedings have been taken by and on behalf of Mrs Pianta. She has sought in various ways, based as I understand it upon a claim that she is entitled to a proprietary interest in the property, to stay the execution of the writ of possession. It has not been suggested that this has been done without the knowledge of the present applicants and these steps taken on her behalf have extended, as I have indicated, from some time in March 1994 at least until the present time, up to yesterday. In the circumstances I would not conclude that a satisfactory explanation has been given for failure to lodge a notice of appeal against the decision of Hodgson J in proper time. 4 UNREPORTED JUDGMENTS However, it was then submitted by Mr Lumley for the applicants that the notice of appeal indicated that there were good and arguable grounds and that they might have a reasonable prospect of success in the appeal. The submission was that accordingly leave to appeal should be granted and the execution of the writ of possession should be stayed in the meantime. It is not possible, on the terms of the material before the court, to form any view as to the prospects of success of any appeal brought on these grounds. More accurately, it would be my conclusion that, having regard to the grounds set forth in the proposed notice of appeal, I do not think that there would be a reasonable prospect of success in any appeal. The first two grounds set up a claim that there had been a statement by an officer of the bank, amounting to fraudulent misrepresentation. Mr Lumley frankly conceded, when asked, that that issue had not been litigated before the trial judge and those grounds could hardly succeed on any appeal. The notice of appeal then refers to grounds relating to the Contracts Review Act and to claims that his Honour erred in finding, for example, that the applicants were not entitled to relief on the ground that they were not given a detailed explanation of the practical effect of their being unable to make interest payments. In view of his Honour's finding that they knew relevantly what was the effect of default in that regard, I cannot see that there could be any reasonable prospect of succeeding on that basis. Ground 4 sets up that his Honour erred in finding that no explanation was given of the detailed terms of the Memorandum of Mortgage - that, more accurately, his Honour erred in law in not finding that this constituted grounds of relief. In my opinion his Honour's statement of the position was one against which there can hardly be any real prospect of success on appeal. His Honour set out the relevant findings, that is the findings relevant to an application for possession. I do not think that, taking his Honour's judgment at its best in favour of the applicants, there would be any such conclusion reached as would prevent the bank succeeding in its claim for possession. Reference was then made to s57 of the Real Property Act. It was contended that the notice that was given did not comply with the terms of the Act. It was accepted by Mr Lumley, for the purposes of the argument, that that section requires notice only relating to sale and not relating to the taking of possession. The present application relates only to possession. I see no reasonable prospect of success upon that ground. I have referred, perhaps at unnecessary length, to the terms of the proposed notice of appeal. In the circumstances I do not think that the notice of appeal, upon the material which has been put before the court, discloses any such case as would warrant the grant of an extension of time to file it and the stay of the order for possession in the meantime. The provisions of the Real Property Act in question have been considered by this Court on a number of occasions in recent years, and I think it is sufficient to say that the technicalities set up by the Act in relation to the enforcement of mortgages by the taking of possession do not assist - and there would be no reasonable prospect of their assisting - the applicants in the present case. Therefore, I conclude that there is not the appropriate likelihood of success in the appeal to warrant the orders that have been sought in this regard. Mr Lumley has, quite properly, referred to the personal circumstances of Mr and Mrs Pianta. Mr Pianta is, he says, now seventy-five years of age and his wife is seventy-four years of age. Speaking for myself, I do not regard that as being advanced years; speaking purely for myself I think that may be described as the URJ PIANTA v NATIONAL AUSTRALIA BANK (Priestley JA) 5 best years of life. But putting that aside, I am conscious of the effect which at that stage in life eviction from a property will have. It is said that the default has occurred by reason of drought and by reason of the floor price of wool being removed. For myself, I cannot but be sympathetic to a person who has been put in that situation: having purchased the property in 1989 in the manner to which I have referred and then being faced with the drought and the difficulties referred to. I can only sympathise with a family which, being unable to meet the obligations they have incurred, must leave the property which they have bought. But this Court's function is to enforce the law. In considering the present application I have given careful consideration to whether the terms of the law can be adjusted so as to accommodate the personal circumstances of the Pianta family. Unfortunately I do not think that it can. I think that the right of the bank to have possession is a right which clearly exists and must clearly be enforced. The House of Lords has in recent years considered the position of judges and their right to accommodate the law to their personal reactions to personal circumstances of the parties. In Duport Steels Ltd v Sirs [1980] 1 WLR 142 at 169, Lord Scarman referred to the problems to which this would give rise. His Lordship: at 168-169: said: "Tn our society the judges have in some aspects of their work a discretionary power to do justice so wide that they may be regarded as law-makers. The common law and equity, both of them in essence systems of private law, are fields where, subject to the increasing intrusion of statute law, society has been content to allow the judges to formulate and develop the law. The judges, even in this, their very own field of creative endeavour, have accepted, in the interests of certainty, the self-denying ordinance of 'stare decisis', the doctrine of binding precedent: and no doubt this judicially imposed limitation on judicial law-making has helped to maintain confidence in the certainty and even-handedness of the law. Within these limits, which cannot be said in a free society possessing elective legislative institutions to be narrow or constrained, judges, as the remarkable judicial career of Lord Denning himself shows, have a genuine creative role. Great judges are in their different ways judicial activists. But the constitution's separation of powers, or more accurately functions, must be observed if judicial independence is not to be put at risk. For, if people and Parliament come to think that the judicial power is to be confined by nothing other than the judge's sense of what is right (or, as Selden put it, by the length of the Chancellor's foot), confidence in the judicial system will be replaced by fear of it becoming uncertain and arbitrary in its application. Society will then be ready for Parliament to cut the power of the judges. Their power to do justice will become more restricted by law than it need be, or is today." Unfortunately I do not think the court can assist the Messrs Pianta in this application. In my opinion the application should be dismissed with costs. Priestley JA Mahoney JA has stated the circumstances which make this application one of fundamental importance to Mr Pianta and his wife and their son. As against that, from the bank's point of view the matter is one which is more in the ordinary daily routine. Because of this consideration if there was any prospect that could be regarded as having any element of realism about it of the appeal succeeding if leave to appeal were granted I would be in favour of granting this application. 6 UNREPORTED JUDGMENTS However, I have not been able to see that there is any prospect of that kind. Any appeal would fall in two parts. One part would deal with the bank's technical right to possession of the land. At the hearing before Hodgson J there was no dispute that there had been default under the mortgage by the defendants. That lack of dispute may have been due to the fact that the defendants were not legally represented. That does not detract from the fact that had there been any real possibility of disputing default the defendants in the circumstances could be relied upon to have raised it. In other words it seems reasonably safe to take as correct the fact that there was default in the mortgage at the time when the matter came before Hodgson J. That factual situation, as it seems to me, means that none of the grounds which were urged upon us this morning by counsel for the plaintiffs in regard to what I call the technical right to possession of the bank could have any prospect of success. The reality of the matter, looking at this part of the case, is that a considerable sum of money, on any view of the rights and wrongs of counting in the interest as part of the bank's debt, is owing to the bank, the bank has the land as security for that debt and on ordinary notions is entitled to get possession of the land as part of the process of realising its security for repayment of the money owing to it. The other part of the case on appeal would concern the Contracts Review Act. The grounds of appeal in regard to that aspect of the case are not very particular but it is apparent from reading Hodgson J's reasons for his decision that notwithstanding the absence of legal representation on behalf of the defendants before him he gave careful consideration to anything that could be said in their favour. He recognised that there were grounds for relief under the Contracts Review Act in certain circumstances. He expressed his opinion on the basis that there had been no explanation to the defendants of the detailed terms of the mortgage at the time they entered into it and he found in their favour that could lead to the court using its powers under the Contracts Review Act notwithstanding that they had had a solicitor acting for them at the time of the purchase in respect of the which mortgage was raised. What he said was that as a result, in so far as the rates of the bank may depend on any unusual or harsh terms in part of the mortgage that had not been explained to the defendants, there could be no grounds for review of the rates under the Contracts Review Act, but he went on to say that he did not think that the quite separate term providing for possession on default could be regarded as an unusual or harsh one. I do not think there can be any doubt about that proposition as stated by Hodgson J. It is an absolutely standard term of mortgages and one which I would think most people borrowing money from banks on a mortgage of property would be bound to understand even though their understanding of it may not be a lawyer's understanding and might be only a general one. Nevertheless it is one of the very basic facts which ordinary people cannot avoid being familiar with when borrowing money on mortgage. Hodgson J went on to say that although there was the one clause of the mortgage which he did consider to be harsh and which he would not act upon, he did not think that any term of the mortgage relevant to the proceedings for possession was unjust for the purposes of the Contracts Review Act. Nothing has been said to us in the submissions that have been put to us this morning that has given me any reason to think that his Honour was in error in reaching that conclusion. URJ PIANTA v NATIONAL AUSTRALIA BANK (Mahoney JA) 7 His Honour also mentioned the length of time that the claimants had been in default under the mortgage, which was something over two years when the matter came before him. He did not lay any moral blame for this upon the defendants. He said that default had occurred due to most unfortunate circumstances entirely outside the defendants' control. That seems to be entirely true and there is no blame at all attached to the defendants' conduct in relation to their inability to repay the bank but the unfortunate circumstances referred to by Hodgson J led to the further unfortunate circumstances from the point of view of the claimants today that they are unable to repay the bank money which it is owed. On the law, as it stands, that has the consequence that the bank is entitled to possession of the mortgaged land. There being in my view no prospect of success on appeal, I agree with Mahoney JA this application must be dismissed. Clarke JA I agree with both the judgments which have been given. Mahoney JA The application is dismissed with costs. Application dismissed with costs. Counsel for the Claimant: RR Lumley Solicitors: Monte Gildea Counsel for the Opponent: M Watton Solicitors: Dibbs Crowther and Osborne