Supreme Court New South Wales Medium Neutral Citation: Jensen v Bank of Queensland (No 2) [2013] NSWSC 1325 Hearing dates: 5 July 2013 Decision date: 20 September 2013 Jurisdiction: Common Law Before: Adams J Decision: 1. The whole of the statement of claim is struck out. 2. The plaintiffs to pay the defendant's costs. Catchwords: MORTGAGES - possession - mortgagee exercises power of sale - claims of fraud and improper conduct made by mortgagors against mortgagee - re-litigate issues already determined by the Court - res judicata - alleged sale at undervalue - mere negligence insufficient PRACTICE AND PROCEDURE - application to strike out statement of claim or in the alternative parts of the statement of claim - frivolous or vexatious statement of claim - statement of claim struck out Legislation Cited: Uniform Civil Procedure Rules 2005 Real Property Act 1900 The Constitution Consumer Credit Code Banking Code of Conduct Cases Cited: Bank of Queensland Ltd v Jensen [2011] NSWSC 1566 Jensen v Bank of Queensland [2011] NSWCA 36 Jensen v Bank of Queensland [2011] NSWCA 132 Jensen v Bank of Queensland Limited [2011] HCASL 92 Jensen v Bank of Queensland [2012] HCASL 72 Bank of Queensland v Hoerman [2011] NSWSC 73 Paula Jensen v Bank of Queensland Ltd [2011] NSWCA 37 Jensen v Bank of Bank of Queensland [2011] NSWCA 71 Ultimate Property Group Pty Limited v Lord [2004] NSWSC 114; 60 NSWLR 646 Pendlebury v Colonial Mutual Life Assurance Society Ltd (1912) 13 CLR 676 Commonwealth Bank of Australia v Hadfield [2001] NSWCA 440; (2001) 53 NSWLR 614 Category: Interlocutory applications Parties: Paula Ann-Charlotte Jensen (First plaintiff) Helena Jensen (Second plaintiff) Bank of Queensland (Defendant) Representation: Counsel: DJ Barnett (Defendant) Solicitors: Self-represented (First plaintiff) Self-represented (Second plaintiff) Dibbs Barker (Defendant) File Number(s): 2011/135313 Judgment Introduction 1On 27 April 2011 the plaintiff, Paula Ann-Charlotte Jensen sued the Bank of Queensland for the return of property in Castle Hill, the reimbursement of financial losses "caused by the taking of that property without proper litigation" and the repayment of personal expenses "since being made homeless on 3rd December 2009 which include rent, replacing my clothes and personal necessities taken from me" together with interest of 15 per cent. The amount claimed is $4 million. On 5 July 2013 Helena Jensen was joined as second plaintiff to the statement of claim, on her application. By notice of motion filed 10 May 2013 the defendant sought an order to dismiss the proceedings, pursuant to r 13.4 of the Uniform Civil Procedure Rules 2005 or that the whole statement of claim be struck out or, alternatively, certain paragraphs in the statement of claim, words in one of those paragraphs, and the paragraphs claiming relief (summarised above). The defendant also sought an order setting aside a notice to produce. I ordered that the motion be determined on written submissions and set out a timetable for them to be filed and served. The facts pleaded 2The following is a summary of the facts pleaded in the statement of claim. In respect of the paragraphs sought to be struck out as one of the alternative orders, they have been set out in full and italicised - 1. The Bank of Queensland obtained a default judgment against us without proper service of initiating documents, and without proof of their allegations of debt. 2. Before the appeal of the interlocutory judgment had been heard, the Bank of Queensland proceeded to sell the property. 3. The property was advertised as vacant land although there was a substantial house, brick sheds and an extensive brick wall erected on the property, with concrete and paved areas, extensive retaining walls and other landscaping. 4. The advertisement misrepresented the property as a vacant block of land. 5. The auction was advertised to take place at 2pm but was actually held at 12 noon. 6. Any prospective purchasers planning to attend the auction at 2pm were excluded from bidding. 7. I sent a fax to the real estate agent notifying them of the on-going litigation concerning the property and faxed them a copy of the notice I had received from the NSW Supreme Court Registry regarding my Appeal. 8. Interested parties attended the auction and told all who were present that there was on-going litigation including an Appeal. 9. The property was valued at $1,575,000 in 2005 by the Bank. 10. The bank obtained a default judgment for approximately $920,000. 11. The bank accepted $590,000 at the auction. 12. The Bank of Queensland should have waited for the final determination of the disputes between the parties before they proceeded to sell the property. 13. The Bank of Queensland have failed to properly advertise the property, thereby failing to realise the best possible price for the property, obviously expecting to then make further claims against me for any short-fall. 14. The on-going litigation includes an application to re-open the alleged mortgage contract on grounds of unconscionability and possible fraud, application for leave to Appeal the interlocutory judgment, an application with the High Court of Australia regarding portions of the dispute that could not be dealt with in the NSW Supreme Court or Court of Appeal as the matters were deemed to be outside the jurisdiction of those courts, a cross-claim regarding the taking of all our personal possessions as well as the belongings and tools of the trade of other people who are interested parties with legal and equitable interests in this property. 3In its defence of 26 May 2011, the defendant denied paragraphs 1, 4, 12, and 14 of the statement of claim. In respect of paragraph 2 the defendant admitted that on 19 June 2010 an auction of the property took place and that, pursuant to its power of sale, it entered into a contract of sale for the price of $590,500 and alleged it was entitled to act in this way. So far as paragraph 3 is concerned the defendant denied that the property was advertised as vacant land, agrees that there were buildings on the property but they were dilapidated, dangerous and unfit for occupation and alleged, in substance, that the advertisement was not misleading. In respect of paragraph 5 the defendant admitted that the auction time of 2pm on 19 June 2010 appeared on some advertisements but that this was a mistake, that the auction occurred at 12 noon, that, in respect of each advertisement including a mistaken time, the correct time also appeared and that a number of advertisements referred only to the correct time. The defendant did not admit paragraphs 6, 7 and 8 of the statement of claim and said they were irrelevant. In respect of paragraph 9 the defendant admitted that the valuation obtained by it on or about 31 May 2005 valued the property in its condition at that time at $1,375,000 but that, as at 19 June 2010 the position was as stated in the response in paragraph 5. Paragraph 10 of the statement of claim was admitted. Paragraph 11 of the statement of claim was denied, except as admitted in respect of paragraph 4. Paragraph 13 of the statement of claim was denied. Finally, the defendant denied that there is any entitlement to the relief claimed and, in the alternative, if there is an entitlement, the defendant is entitled to set off the amount of any such relief against the unsatisfied judgment debt. Submissions of the plaintiffs 4The first plaintiff filed only one set of relevant submissions, dated 12 April 2013 and filed on 29 April 2013. She referred to copies of evidence filed by the defendant "in another case" which describes the property in terms which mirror "exactly what I have claimed in these proceedings", pointing to the stark contrast with the description of the property as contained in the advertisements for the auction. The first plaintiff submitted that this demonstrates that the defendant had no tenable defence. The document, which is part of a quotation dated 28 February 2010 to pack and store items from "the home approx 8 bedrooms plus living areas that are full of items plus a 4 car garage", was attached to the submission. The first plaintiff, in support of the allegation that the defendant accepted far too small a sum for the property, asserted that a property with similar land size upon which was erected a "very small derelict house" sold for $2,500,000 soon after the "sham auction of our property". A number of other claims were made concerning the value of the property. The submission went on to contend that the sale of the property was illegal because there was no validly executed mortgage document, since it was improperly witnessed, and because valid caveats had been lodged. Further arguments relating to the position of the caveators and the effect of the caveats were briefly set out. The submission then moved to an argument that s 30 of the Real Property Act 1900 (which appears to be completely irrelevant) allows for the return of the property to the rightful owner in the event of fraud in the transfer. The penultimate contention is that, since the defendant had no tenable defence, the Court should give default judgment in favour of the plaintiffs. The submissions conclude with a reference to the Universal Declaration of Human Rights and a general submission that "[any] action without lawful basis is null and void and the effects of such action must be reversed in the interests of justice". 5The submissions of the second plaintiff are in very similar terms and do not need to be set out. Procedural history 6The course of the litigation was helpfully set out by Schmidt J in Bank of Queensland Ltd v Jensen [2011] NSWSC 1566, particularly at [1], [2] and [5]-[13]. This may be summarised as follows. In about June 2005 the bank as lender and Paula Jensen, Helena Jensen and Paul Jensen (now deceased) as borrowers entered into a loan agreement for the advance of $825,000 to them, secured by mortgage over the property. On 22 January 2009 the bank commenced proceedings for possession and sought judgment in the sum of $869,902.58 plus interest and costs. In May 2009 an order for substituted service was made and service of the statement of claim was effected in accordance with that order. In June and July 2009 defences were filed. The defendants alleged that the property formed part of the "territory of the Principality of Snake Hill" which was not subject to the jurisdiction of the Supreme Court, the amount claimed was disputed, hardship and ill health were alleged as were theft and fraud together with breaches of various international covenants, the Australian Constitution and various legislation. 7In July 2009 Hoeben J (as his Honour then was) ordered that the defences be struck out and, in September 2009, default judgment was entered. The sheriff took possession of the property in December 2009. In January 2010 Paula Jensen filed a notice of motion seeking orders setting aside the default judgment or that enforcement be stayed. Schmidt J described this motion and its disposition as follows - "Allegations of fraud and lack of service, as well as claims as to the existence of the Principality, were advanced. Ms Jensen did not appear to pursue her motion and eventually a further adjournment application was refused and on 13 May 2010, Davies J dismissed the motion (see Bank of Queensland v Jensen (Supreme Court of New South Wales, Davies J, 13 May 2010, unreported). On 18 June 2010, Ms Jensen sought an injunction and/or stay of the orders made by Hoeben and Davies JJ, pending an appeal. This application was refused by Bergin CJ in Equity." Leave to appeal from the orders of Hoeben J and Davies J was refused: Jensen v Bank of Queensland Ltd [2011] NSWCA 36. A second application for leave to appeal from the decision of Davies J was dismissed on 6 May 2011: Jensen v Bank of Queensland [2011] NSWCA 132. On this leave application, Paula Jensen contended that the security documents contained forged signatures of the mortgagors and there had been non-compliance with the Consumer Credit Code and the Banking Code of Conduct. Hodgson JA (with whom McColl and Macfarlan JJA agreed) held that the forgery allegation "does not have sufficient apparent plausibility to justify reopening the matter and giving leave to appeal". In relation to the Consumer Credit Code and Banking Code of Conduct contentions, his Honour said that this had no "prospect of leading to a different result in the case", and further concluded, "There is no plausible prima facie case made out that this mortgage, considered in its terms, was in any sense unconscionable". Special leave to appeal to the High Court in respect of the dismissals was refused: Jensen v Bank of Queensland Limited [2011] HCASL 92 and Jensen v Bank of Queensland [2012] HCASL 72. Schmidt J noted (supra at [13]) that the sale of the property has been completed and the mortgagors were therefore no longer the registered proprietors with any legal interest in the property and the bank was no longer a mortgagee in possession. 8By notice of motion dated 13 October 2010 the plaintiffs applied, amongst other things, for leave to file a cross-claim seeking the setting aside of all judgments and restitution to the former position, immediate possession of the property and leave to set aside the default judgment and file an amended defence. Schmidt J refused these applications: see [2011] NSWSC 1566 at [18], [21] - [24], [32], [37], [42], [46] and [50] - [71]. The defence, as summarised by her Honour in substance raised matters already determined, ultimately by the refusal of leave to appeal. Schmidt J also dismissed a summons filed by the second plaintiff seeking orders that the Court reopen the loan agreement, on the basis that these claims amounted to an attempt to re-litigate issues already determined and for discretionary reasons: ibid at [76] - [80]. Consideration 9Dealing first with the submissions of the first and second plaintiffs, it is clear that the contentions which deal with matters of fact are immaterial. The relevant allegations of fact are those which are contained in the statement of claim. The other submissions make it clear that the plaintiffs wished to raise matters which have already been the subject of decisions in this Court which are res judicata or otherwise from which they are now estopped from raising. 10It should be noted that, by the way, that the defendant took steps to obtain relief in respect of the caveats which have been lodged over the property. This was determined in the defendant's favour by Gzell J: Bank of Queensland v Hoerman [2011] NSWSC 73. Paula Jensen was a party to these proceedings from which she unsuccessfully appealed: Paula Jensen v Bank of Queensland Ltd [2011] NSWCA 37; Jensen v Bank of Queensland [2011] NSWCA 71. 11It is clear, so far as the relief claimed is concerned that it is based upon allegations, essentially, that the default judgment was illegally or irregularly obtained, a matter which has been dealt with, one way or another by the abovementioned judgments of Davies J from which appeal was unsuccessful, and which was also refused by Schmidt J, in respect of which appeal was also unsuccessful. It is not, therefore, open to the plaintiffs to rely on the matters set out in paragraphs 1 and 2 of the pleadings. The same is true of paragraph 12 and the claim made in paragraph 14, the latter of course seeking to reopen the entire range of disputatious matters which have been determined against them. Since the relief claimed depends upon reopening of that litigation, it cannot now be claimed. It follows that those paragraphs seeking relief must be struck out together with paragraphs 1, 2, 12 and 14. They constitute an abuse of the process of the Court. Paragraphs 7 and 8 are argumentative and simply irrelevant to the remaining claim, namely the alleged sale at an undervalue and must also be struck out. 12The case alleging sale at an undervalue is also misconceived. As Young CJ in Eq pointed out in Ultimate Property Group Pty Limited v Lord [2004] NSWSC 114; 60 NSWLR 646 at [26], there is no common law duty in negligence which makes a mortgagee liable for common law damages for failing to obtain a good price for a mortgaged property. In Pendlebury v Colonial Mutual Life Assurance Society Ltd (1912) 13 CLR 676, the mortgagor sued the mortgagee in damages alleging that it had been guilty of wilful default or neglect when selling the mortgaged property. On appeal to the High Court, it was held that there was recklessness demonstrating a lack of good faith, Isaacs J (at 700) making it clear that mere negligence or carelessness in carrying out the sale was not sufficient to attract liability (see also Griffith CJ at 692). It perhaps is worth noting that the relief claimed by the plaintiffs is not, at all events, available on a cause of action for breach of duty of good faith; the only available relief is an account: Commonwealth Bank of Australia v Hadfield [2001] NSWCA 440; (2001) 53 NSWLR 614 at [45] - [48]. 13It is clear that the mere fact that the property was valued in 2005 at a sum very much greater than that accepted at an auction which occurred years later does not suggest of itself any unconscionable conduct or a failure to take reasonable steps to obtain a proper price. The difference in description alleged in paragraphs 3 and 4 of the statement of claim is ambiguous, since the precise language of the advertisement is not particularised and the actual character of the building (as distinct from its size) is not alleged. The mere fact that there was an error in some of the notices of the auction as to time does not, to my mind, take the matter any further. The statement of claim does not therefore allege facts from which, if true, it would follow that the defendant acted with reckless disregard of the plaintiffs' interests. It follows that the remainder of the allegations in the statement of claim must be struck out. 14The statement of claim does not disclose any cause of action capable of being litigated. Having regard to the plaintiffs' submissions, no practical purpose can be served by permitting any repleading. To strike out all the allegations as well as relief but permit repleading would simply be to leave open the possibility of further vexatious but costly proceedings. Orders (1)The whole of the statement of claim is struck out. (2)The plaintiffs to pay the defendant's costs. ********** 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. Decision last updated: 20 September 2013