National Australia Bank Ltd v Swed (No. 2) [2015] NSWSC 1322

Supreme Court New South Wales

Medium Neutral Citation: National Australia Bank Ltd v Swed (No. 2) [2015] NSWSC 1322 Hearing dates: 18, 19 & 20 November 2014, 17 December 2014 & 1 April 2015 Date of orders: 18 September 2015 Decision date: 18 September 2015 Jurisdiction: Common Law Before: Davies J Decision: 1. Judgment for the Defendant. 2. The Plaintiff is to pay the Defendant's costs. Catchwords: REAL PROPERTY – possession of land – mortgages – default – wife gains access to husband's accounts – defalcations to satisfy wife's gambling addiction – whether transactions authorised – whether husband complied with Banking Electronic Funds Transfer Code of Conduct – whether husband complied with bank's Terms and Conditions – whether husband acted with "extreme carelessness" Legislation Cited: Real Property Act 1900 (NSW) Cases Cited: Tobin v Ezekiel [2012] NSWCA 285; (2012) 83 NSWLR 757 Category: Principal judgment Parties: National Australia Bank Ltd (Plaintiff) Joul Swed (Defendant) Representation: Counsel: P Newton (Plaintiff) R A Parsons (Defendant)

Solicitors: Gadens Lawyers (Plaintiff) V L Macri Lawyers (Defendant) File Number(s): 2012/37848

Judgment 1. In these proceedings the Plaintiff seeks possession of the Defendant's property at 00 XXXXX YYYYY, Heckenberg and a judgment for the amount said to be owing to the Bank. The proceedings arise out of a loan initially made to the Defendant on 9 February 2004. At that time the Bank advanced the sum of $400,000 to the Defendant. Of that sum $398,328.85 was paid to the New South Wales Land and Housing Corporation, the vendor to the Defendant of the property. That loan settled on 9 February 2004. 2. On about 26 April 2006 that loan facility was restructured with a variable rate home loan facility to the Defendant for the same principal sum. 3. On or about 4 February 2008 that restructured facility was itself restructured to become an NAB Choice Package Home Loan. Under this facility it was possible for the borrower to redraw money from the loan account from time to time. 4. The Defendant also had an NAB Flexi Account known as a key card account with the Bank. That account was opened in about June 2004. 5. The Defendant defaulted under the home loan by failing to make payments when due. A notice under s 57(2)(b) of the Real Property Act 1900 (NSW) was served on the Defendant on or about 1 November 2011. It required him to pay arrears at that date of $54,709.99 together with enforcement expenses of $697.72 making a total of $55,407.71. The Defendant did not make the payments. 6. On 3 January 2012 the Plaintiff demanded the whole of the loan then outstanding on the basis of the failure to comply with the s 57(2)(b) notice. When that demand remained unmet the present proceedings commenced by the filing of a Statement of Claim on 2 February 2012. 7. Although the Defendant engaged his present lawyers to act for him they simply served a Notice of Appearance on the Plaintiff's solicitors, such Notice of Appearance being unsealed by the Court. 8. On 17 April 2012 the Plaintiff's solicitors sent a letter to the Defendant's solicitors warning them that they intended to apply for default judgment on the basis of not having been served with a sealed copy of an Appearance and in the absence of a defence. Default judgment was then obtained on 23 May 2012. An eviction was scheduled to take place on 26 July 2012. On 25 July 2012 the Plaintiff's solicitors received a letter from the Defendant's solicitors saying that the Defendant had lodged a complaint with the Financial Ombudsman's Service. The following day, the day when the eviction was due, the Defendant's solicitors filed a Notice of Motion seeking a stay of the eviction. A stay was granted until 6 August 2012. It was subsequently extended, and on 7 September 2012 default judgment was set aside. 9. The Defendant filed a Defence on 3 October 2012 where he admitted the loan agreement and the mortgage but denied that he was in default. He admitted to receiving the s 57(2)(b) notice. 10. The Defendant filed a Cross-Claim on the same day as the Defence asserting that the Defendant had wrongly debited amounts other than mandated payments. The disputed transactions occurred between March 2008 and December 2009. 11. Ultimately, after various investigations were carried out, the Defendant came to believe that his wife who resided with him, was responsible for having accessed his accounts through the telephone banking system, withdrawn the monies and used them for gambling purposes. The Defendant claimed to know nothing of his wife's use of the accounts or the money. 12. The principal issue in the case is whether the Defendant and his wife are to be believed that she obtained access to the accounts and misappropriated the funds without the Defendant's knowledge. The second issue is whether the Defendant was in breach of the Telephone Banking Terms and Conditions that formed part of his arrangement with the Bank. The Bank asserts that he contravened the security arrangements in clauses 34.4 and 39.4 of those Terms and Conditions, that he acted with extreme carelessness in failing to protect his PIN and telephone banking password, or voluntarily disclosed them to his wife.