New South Wales Supreme Court CITATION : National Australia Bank Limited v Convy [2007] NSWSC 1039 HEARING DATE(S) : 10 and 11 September 2007 JUDGMENT DATE : 11 September 2007 JUDGMENT OF : Harrison J DECISION : Stay granted until midnight on 15 October 2007 on the writ of possession for the property at 37A Abbott Street, Cammeray. The defendant to pay the plaintiff's costs of and incidental to this notice of motion. CATCHWORDS : MORTGAGES – mortgagor's application to stay execution of a writ of possession – five previous applications – application made at eleventh hour - proposal by mortgagor to refinance – adequacy of evidence to support the proposal – no question that if security property sold mortgagee would be repaid in full – two month delay – further stay granted LEGISLATION CITED : Uniform Civil Procedure Act 2005 - s 56 Grose v St George Commercial Credit Union Limited (1991) NSW ConVR 55-586 CASES CITED : Inglis & Anor v The Commonwealth Trading Bank of Australia (1972) 126 CLR 161 Harvey v McWatters (1948) 49 SR (NSW) 173 Parist Holdings Pty Limited v Perpetual Nominees Limited [2006] NSWSC 599 PARTIES : National Australia Bank Limited (plaintiff) Louise Melissa Convy (defendant) FILE NUMBER(S) : SC 12882 of 2006 COUNSEL : D C McCallum (defendant) SOLICITORS : Dibbs Abbott Stillman (plaintiff) Sweeney Tiggemann (defendant) IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION POSSESSION LIST HARRISON J 11 September 2007 12882 of 2006 National Australia Bank Limited v Louise Melissa Convy JUDGMENT – EX TEMPORE 1 HARRISON J: On 16 September 2004 the defendant entered into a home loan contract with the plaintiff for the finance of a property at 37A Abbott Street, Cammeray, in Sydney. By 29 March 2005 the defendant had defaulted under the home loan contract when she failed to pay an instalment in the sum of $3,673.34. It is unnecessary for present purposes to repeat the history between that date and 15 June 2006 when the plaintiff commenced the present proceedings seeking recovery of the debt and, in aid of that claim, an order for possession of the property. 2 The defendant was served with the present proceedings on 7 July 2006. This matter has had an indifferent history since that time. On 6 November 2006 the plaintiff filed an application for the entry of judgment by default. This court granted judgment in favour of the plaintiff by default on 28 November 2006. As soon thereafter as 15 December 2006 the defendant was given notice by the sheriff of his intention to take possession of the property on 15 January 2007. Three days before, on 12 January 2007, the defendant made an ex parte application for a stay. 3 The matter came before Hall J. His Honour made an order staying the writ of possession until 9 February 2007 and made ancillary orders in relation to the filing and serving of the notice of motion and supporting affidavits. 4 The matter was relisted before the Registrar on 9 February 2007. On that day the matter was referred to Patten AJ. Orders were made by him staying the writ of possession until 16 February 2007. Much in the way that the matter was dealt with by Hall J, his Honour ordered the filing and service of the motion and supporting affidavits. 5 The matter was listed before the Registrar on 16 February 2007. On 5 March 2007, no motion or affidavit in support having before then been filed by the defendant, the sheriff served a second notice to vacate upon the defendant indicating that he proposed to take possession of the premises on 15 March 2007. Two days before that, on 13 March 2007, the defendant served the plaintiff with a further notice of motion and supporting affidavits seeking a stay of execution of the writ until 15 April 2007. 6 The matter came before Hidden J on 14 March 2007. His Honour made orders on that day staying execution of the writ until 15 April 2007. That date passed without anything having occurred. On 24 April 2007 the sheriff served a notice upon the defendant of an intention to take possession of the property on 3 May 2007. One day before that, on 2 May 2007, the defendant filed a notice of motion and affidavit in support seeking a further stay of execution of the writ until 30 May 2007. The matter came before Hulme J who made an order staying the writ until 30 May 2007. 7 On 19 June 2007 the sheriff served a notice to vacate the premises upon the defendant indicating a proposal to take possession of the property on 25 June 2007. Three days before that, on 22 June 2007, the defendant served the plaintiff with a notice of motion and affidavit in support seeking a further stay until 31 July 2007. 8 The matter came before Adams J on 22 June 2007. In due course his Honour made orders staying execution of the writ of possession until 23 July 2007. That stay passed without further order of this court or other application for a stay. On 30 August 2007 the sheriff served a further notice upon the defendant indicating a proposal to take possession of the property on behalf of the plaintiff on 11 September 2007. 9 Yesterday, at approximately 4.00pm, the defendant filed a notice of motion and supporting affidavits in aid of an application for yet a further stay. Much of the relief sought in the notice of motion can be ignored because Ms Pike, on behalf of the plaintiff, appeared in opposition to the defendant's application. This latest notice of motion seeks a stay of execution of the writ of possession until midnight on 15 October 2007. 10 I have read the affidavits of the defendant and of David Sweeney each sworn 10 September 2007. I have also had regard to the terms of an affidavit sworn by the defendant on 13 March 2007 that was relied upon in an earlier application. That affidavit reveals that the defendant had been subject to unfortunate personal circumstances to all of the details of which it is presently unnecessary to refer. 11 They include, however, the fact that the defendant's business, from the net proceeds of which she had been making monthly payments in reduction of principal and interest to the plaintiff, suffered a downturn following an assault upon her that prevented her from attending to the business in the way that she would have preferred. It should not pass without notice, however, that the defendant's first default occurred at a time before the alleged assault, although after some other matters of significance to her had occurred. 12 Writing extra curially, Bryson J, as he then was, drew attention to the status of applications of the sort made by the present defendant in an article in 11 Aust Bar Rev at page 1 entitled, "Restraining Sales by Mortgagees and a Curial Myth". At page 17 his Honour said this: "Applications are often made at a remarkably late stage, when auctions have been advertised, expense has been incurred, and it is likely that people interested in making bids have given time and attention to what they are to do. Litigation and withdrawals from sale have a depressing effect on renewed attempts to sell property. Mortgagees often put forward the difficulty that the value of the security is about to be exhausted or already has been exhausted, and the circumstances in which this difficulty is put forward can vary greatly. A mortgagee who lent the whole value of the property, or kept a narrow margin between the value and the amount lent which was soon used up by a high rate of interest, has less claim for consideration of this difficulty than a mortgagee who lent with a prudent security margin which has been exhausted in the course of patient attempts to obtain payment. The parties often seem to feel some emotional involvement, the borrower to his home or his farm or his development project, the lender to his money and its prompt return, and these feelings are usually underlain by real needs. Are the needs of dependants for housing or a wish to carry through a project on which much effort has been expended relevant at all, or is the court's attention rightly limited to achieving justice by seeing to repayment as contracted?" 13 I raised some of these matters yesterday with counsel for the defendant and drew attention to the principle referred to in Inglis & Anor v The Commonwealth Trading Bank of Australia (1972) 126 CLR 161. That case has long stood for the proposition that as a general rule an injunction will not be granted restraining a mortgagee from exercising powers conferred by a mortgage and in particular a power of sale unless the amount of the mortgage debt, if this is not in dispute, is paid or unless, if the amount is disputed, the amount claimed by the mortgagee is paid into Court. 14 No such offer is made by the defendant in the present case. As Walsh J said in that case at page 169: "The case falls fairly, in my opinion, within the general rule applicable when it is sought to restrain the exercise by a mortgagee of his rights under the mortgage instrument. Failing payment into court of the amount sworn by the mortgagee as due and owing under the mortgage, no restraint should be placed by order upon the exercise of the respondent mortgagee's rights under the mortgage." 15 It goes without saying that in the present case the defendant has no claim by way of set off or similar against the plaintiff. She seeks in her favour the exercise of a discretion based upon slim evidence to suggest that she proposes, and has an ability, to refinance in a way that will discharge the present mortgage and satisfy her proprietary and contractual obligations to the plaintiff. 16 Briefly, the evidence in support of the present application is that the defendant made an attempt to refinance with a proposed mortgagee but ran into trouble when a credit reference inquiry about her revealed the existence of debts to others in the sum of approximately $30,000. The incoming mortgagee was unprepared to lend money to the defendant on the security of the property in excess of 80 per cent of that mortgagee's valuation of it. 17 The defendant's intention had been to pay off the outstanding debts to third parties, reduce the current mortgage and refinance at a time when less than 80 per cent of the valuation of the property would be required. The long and the short of the present application is that the defendant will not be in a position to discharge the debts to third parties and discharge the current mortgage with a new loan not in excess of 80 per cent of the proposed mortgagee's valuation of the property until (nominally) 15 October 2007, which is the date to which she seeks a stay. 18 It should not pass without notice that the present application is unsupported by evidence from the proposed mortgagee. Instead there is evidence of a hearsay nature about conversations with a mortgage broker about the likelihood that finance of the sort upon which the defendant proposes to rely will be produced or will be available by the date in question. 19 No acceptable evidence of the defendant's financial position has been produced anywhere which would permit me to form a view about the reasonableness of the proposal and the plaintiff is placed in the position at the eleventh hour of having to respond to the defendant's application without any proper opportunity to test it or otherwise deal with it. Moreover, I was referred to no authority that assisted me to form a view about the merits of the defendant's position. This is so even notwithstanding that Bryson J's article is awash with suggestions about how the discretion may be exercised in a way that would ameliorate the harshness of the rule in Inglis and the cases that followed it. 20 Timely attention to the present application would, no doubt, also have revealed the decision of Hamilton J in this court in Parist Holdings Pty Limited v Perpetual Nominees Limited [2006] NSWSC 599. In that case, in a most instructive way, his Honour dealt with the principles that might inform applications such as the present as to how best to accommodate an otherwise strict application of the rule in Inglis and similar cases including significantly Harvey v McWatters (1948) 49 SR (NSW) 173. At paragraphs 16 and 17 of that case his Honour made the following comments. "[16] Over the last 15 years, there have been various expressions of judicial opinion which are to the effect that the requirement in Inglis should be widened. For this to be done, it will need to be found either that there should be an additional exception to the general rule or that the time has come when the general rule should itself be revised and restated. [17] Those proposed modifications include a relaxation of the rule to permit injunctive relief: (1) where the plaintiff claims that he can redeem the mortgage within a fairly short time by carrying out an on its face reasonable refinancing proposal; (2) where the plaintiff has a demonstrable capacity to secure or at least refinance the mortgage debt." 21 His Honour drew upon comments made by Bryson J in Grose v St George Commercial Credit Union Limited (1991) NSW Conv R 55-586. In that case his Honour suggested that the rule in Harvey, if literally applied, could wreak hardship. His Honour suggested that it should not be taken to be intended to prevent injunctive relief where there was a realistic prospect of refinancing. No doubt, the evidence would need to establish that the mortgagor claimed to be able to redeem the matter within a fairly short time and that the refinancing proposal was rather likely to be fulfilled. I commend that case and the discussion it contains to the parties in this case, particularly the defendant. 22 As I have said, this application was made almost at the last possible hour. It is not for me to speculate about the reasons for this because there may clearly have been more than one. A timely application supported by reference to authority and appropriate evidence not only makes the task of the court easier but definitively increases the prospect that a full consideration of the application can be made in a principled way. 23 Having regard to relevant and modern authority, applied to the facts as they present themselves, it was put to me that this case was "extraordinary". On one, possibly unintended, level, that is an accurate assessment. On another, however, it seems to me to be an example, unfortunately, of the way that applications of this type are not infrequently presented in this court. 24 One of the guiding principles governing litigation in this Court can be found in s 56 of the Uniform Civil Procedure Act 2005. Disposition of cases in a way that is just, quick and cheap provides an overarching framework for the court and practitioners alike. However, the history of this matter suggests that nothing has happened quickly. Moreover, prolongation of this litigation has undoubtedly incurred costs in a way that means that it has not been cheap. I note in passing that the plaintiff, of course, would be entitled to the costs of the whole of this litigation in accordance with the terms of its security and to the extent that the valuation of the property continues to outpace the debt as it fluctuated from time to time, it suffers no particular or general prejudice. 25 The issue is, having regard to the history of this matter, whether or not, in the light of the principles to which I have referred and the possible exceptions to the harsh general rule that constrain the exercise of my discretion, it would be just in the circumstances to grant the stay which the defendant seeks. Again, although the evidence was not particularly satisfactory, it seems likely for the foreseeable future, (and by that I mean the period from 15 October this year if a campaign for the sale of the property on behalf of the plaintiff were commenced on that day) that the plaintiff will be adequately protected by the margin between the value of the property and the debt it secures. 26 The present application is opposed by the plaintiff and having regard to the matters to which I have referred that is unsurprising. 27 The defendant gives evidence that she has nowhere to live if she is cast on the street with her two dogs today. That, no doubt, is a matter that was drawn to the attention of the judges who have dealt with her previous applications. The lateness of this application puts that evidence in a light less favourable to the plaintiff than it might otherwise appear. However, even though a resort to a balance of prejudices, which might potentially afflict the competing interests in this case, is not the proper test, or is not the only test, there seems little doubt that if one had resort notionally to a balance of convenience it would favour a grant of the stay which the defendant seeks. 28 The plaintiff for its part would appear to have been more than forthcoming, despite its opposition to the defendant's persistent applications. This may well be the result of a confidence on its part that the value of the property remains a fruitful source for recovery of the defendant's outstanding indebtedness, even in the face of a continuing delay and accruing interest. 29 There must come a time when applications by the present defendant for concessions from this court, over the reasonable objections and opposition of the present plaintiff, will come to an end, but the lateness of the application and the number of them do not alone or together constitute a basis for rejecting a claim for extension of time when the circumstances of the case indicate that it would be just to make the order sought. 30 I am in no position, nor should I be taken to be attempting, to constrain any other judge of this court before whom another similar application may come. The defendant and her legal advisers must by now be particularly aware that a further extension has become increasingly unlikely. 31 I make the following orders: 1. I stay until midnight on 15 October 2007 the writ of possession for the property at 37A Abbott Street, Cammeray. 2. I order the defendant to pay the plaintiff's costs of and incidental to this notice of motion. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.