Evolution Lifestyles Pty Limited atf Evolution Property Trust v Clarke (No 2) [2016] NSWSC 769

Supreme Court New South Wales

Medium Neutral Citation: Evolution Lifestyles Pty Limited atf Evolution Property Trust v Clarke (No 2) [2016] NSWSC 769 Hearing dates: 8 June 2016 Decision date: 14 June 2016 Jurisdiction: Common Law Before: Button J Decision: (1) The notice of motion of the plaintiff of 18 May 2016 is dismissed. (2) The plaintiff must pay the costs of the first defendant of the proceedings before me. Catchwords: PROCEDURE – civil – application for judgment for possession of land – substantive hearing date impending and previously expedited – revisitation of question of quantum of occupation fee Legislation Cited: Contracts Review Act 1980 (NSW) National Consumer Credit Protection Act 2009 (Cth), Sch 1, ss 76, 88 Cases Cited: O'Brien v Bank of Western Australia Limited [2013] NSWCA 71 Category: Procedural and other rulings Parties: Evolution Lifestyles Pty Limited atf Evolution Property Trust (Plaintiff) Toni Maria Clarke (First Defendant) Shayne Tapper (Second Defendant) Representation: Counsel: M Klooster (Plaintiff) P Santone (First Defendant)

Solicitors: Cordato Partners (Plaintiff) Vaarzon-Morel Solicitors (First Defendant) File Number(s): 2015/243815

Judgment Introduction 1. By way of a notice of motion filed on 18 May 2016, Evolution Lifestyles Pty Limited (the plaintiff) has sought four orders. They are as follows: 1. Judgment for the Plaintiff for possession of the land comprised in Folio Identifier XX/XXXX being the land situated at and known as XX XXXXX XX, Rutherford, NSW. 2. An order that the Plaintiff have leave to issue a writ of possession forthwith upon the making of Order 1 above. 3. In the alternative, an order that the First Defendant pay a weekly occupation fee of $370 as an estimate of the market value rent for the Property until further order of the Court. 4. Costs. 1. At the end of the hearing, counsel for the plaintiff informed me that, if I were to make order 1, his client would give an undertaking not to seek to enforce it for a period of four weeks from the date of my judgment. 2. Default judgment for a monetary sum only has already been entered against the second defendant, Mr Tapper. I was informed at the hearing that neither the plaintiff nor Ms Clarke (the first defendant, to whom I shall refer for convenience as the "defendant") are of the view that any orders sought before me could affect the interests of the second defendant. For abundant caution, my Associate contacted him by email shortly before the hearing and, although he responded electronically, he did not appear before me. In all the circumstances, I was content to conduct the hearing of this motion in his absence. 3. The defendant resisted all four of the orders sought in the notice of motion of the plaintiff. Background 1. The background of the matter may be shortly stated. 2. On 16 February 2009, the defendant entered into a contract with the plaintiff to purchase real property located at Rutherford, NSW. The contract was unusual, in that settlement was delayed for 30 years, during which time the defendant would pay instalments, perhaps with a view to refinancing after developing further equity in the property. During that time, by way of a licence, the defendant would be permitted to have possession of the home. Counsel for the plaintiff submitted that I should understand the contract as being an unusual, but not exceptional or exceptionable, "rent to buy" contract. 3. For a time the defendant had possession of the property, and made payments to the plaintiff pursuant to the contract. It is alleged that some time ago she fell into arrears. By way of a letter of 3 July 2015, the solicitors for the plaintiff indicated that the contract would be terminated on 13 July 2015. 4. On 20 August 2015, the plaintiff filed a statement of claim in this Court seeking (from the two defendants) possession, a monetary sum to compensate for arrears of payments, and a weekly occupation fee of $637.09 until the property was vacated. 5. On 7 October 2015, a default judgment was entered against both the first and second defendants for $27,189.65. 6. Thereafter, the plaintiff sought to enforce that judgment by way of a writ of possession. 7. The matter came before Rothman J on 11 December 2015. I was informed from the Bar table that on that day, his Honour, by consent, set aside the default judgment against the defendant; stayed the enforcement of any writ of possession; provided directions and timetabling; relisted the matter before the Registrar; and transferred the matter to the expedition list. 8. Apparently after a disputed hearing, his Honour also ordered that, until the matter is resolved, the defendant must pay to the plaintiff an occupation fee of $150 per week. The position is unclear as to precisely what evidence was tendered and submissions were made before his Honour, because neither party placed before me a transcript of those proceedings, including any reasons given for the order. Nor did the court file contain such a transcript. 9. On 12 January 2016, the defendant filed a defence to the statement of claim of the plaintiff. In that document, she asserts in a nutshell that the notice of default provided by the plaintiff on 28 May 2015 was not in conformity with s 88 of the National Credit Code (which is found in Sch 1 of the National Consumer Credit Protection Act 2009 (Cth)); that the purported termination letter was ineffective; that the plaintiff is not entitled to arrears of instalments unless a shortfall is demonstrated subsequent to completing an accounting process mandated by the contract; and, in the alternative, that the terms of the contract about arrears are a penalty and therefore void. 10. On the same date, she filed a cross-claim. In a nutshell, she asserts that the contract was unjust within the meaning of s 76 of the National Credit Code; that the contract was unjust within the meaning of the Contracts Review Act 1980 (NSW); that the contract should be set aside; and that the plaintiff should pay the defendant the difference between the amounts paid and the market rental value of the property. She also asserts that the defendant had paid a significantly higher amount for the property than if she had been renting it; that she had paid a significant amount for repairs and improvements to the property; and, in the alternative, that the deposit paid should be returned to her. 11. I was told at the hearing of the motion that the matter has a hearing date of 1 August 2016; that is, less than 8 weeks from the date of the hearing of the motion before me. 12. At the hearing, voluminous evidence was placed before me by way of affidavits, and exhibits and annexures thereto. I shall discuss the salient features of the evidence in my summary of the submissions of the plaintiff, and in my determination. Submissions of the plaintiff 1. In support of proposed orders 1 and 2, the plaintiff submitted that, despite the pendency of the hearing, I should enter summary judgment for possession forthwith against the defendant. That was said to be because, on a proper analysis of the defence and cross-claim, the defendant does not and cannot assert that she has a right to possession against the plaintiff, which remains, in light of the delayed settlement of three decades, the registered proprietor of the property. 2. It was submitted that, whatever other criticisms are to be made at the hearing by the defendant about the contract into which she entered, it cannot be denied that, pursuant to cl 9.3 of the contract, the plaintiff was entitled to terminate it once default occurred with regard to the payments. 3. In the alternative, it was submitted that there can be no question that there has been a repudiation of the contract by the defendant by way of the failure to make repayments pursuant to it. 4. In short it was submitted that, even accepting the very high hurdle that must be overcome by a moving party seeking summary judgment with regard to some portion of a dispute that is pending before a court (see generally O'Brien v Bank of Western Australia Limited [2013] NSWCA 71), nevertheless the test had been made out. That is because, it was said, if it be the case that it is inevitable that there will ultimately be a judgment for possession in favour of the plaintiff, there is no reason why that should not be ordered now. 5. As can be seen from the notice of motion, order 3 was pressed in the alternative. It was accepted that there had been a disputed hearing before Rothman J with regard to the question of the quantum of an occupation fee. It was also accepted that there had been no appeal from that decision of his Honour by the plaintiff. But it was said that circumstances had changed, in that I was told from the Bar table that his Honour proceeded on the understanding that the occupation fee would be paid by the defendant herself. And yet the evidence placed before me shows, it was submitted, that the occupation fee has been paid on more than one occasion by the second defendant. And it was also said that other evidence, notably tendered on behalf of the defendant, shows that the occupation fee is well below market rent for the property. Determination 1. I do not accept that I should enter summary judgment for possession at this stage, even on the basis of the postponing undertaking proffered by the plaintiff. That is so for the following reasons. 2. First, it is true that the plaintiff is the registered proprietor and the defendant is the occupier merely by licence. But that situation has only arisen because of a contract with regard to real property that is, at the very least, unusual. 3. Secondly, by way of para 3 of the cross-claim, the defendant claims that the contract in its entirety should be set aside. The Contracts Review Act is well known for its flexibility and breadth, in terms of the ways in which contracts found to be unjust can be adjusted. I accept that it would be surprising indeed if the defendant were ultimately granted a longstanding or permanent right of possession of the real property. Nevertheless, on the material placed before me with regard to the contract, its surrounding circumstances, and events over the years since 2009, I do not rule out such a result as being completely inconceivable. 4. Thirdly, to my mind it is by no means inconceivable that, if the defendant were to make good her contentions at the substantive hearing, and she were found to be entitled to damages or other payment from the plaintiff, some sort of order could be crafted by a judge of this Court whereby the defendant would be entitled to possession of the property until those sums were paid by the plaintiff. 5. Fourthly, to the extent that the entirety of the contract is impugned by the defence and cross-claim, I am not prepared to approach the matter on the basis that the clauses of that impugned contract, by their terms, permit the plaintiff to terminate the contract in certain circumstances will inevitably be held to be efficacious at the trial. 6. Fifthly, the same may be said of the analysis of counsel for the plaintiff of the question of repudiation. 7. Sixthly, it is not irrelevant that the hearing of this matter is less than two months away. I think it could be precipitous of me, perhaps even discourteous to the trial judge, if I were to attempt to "hive off" issues at this late stage with regard to a matter that has already been granted expedition. 8. For those reasons, I decline to make order 1. And, in light of the foregoing analysis, there is no need for me to discuss the undertaking proposed by the plaintiff with regard to delayed enforcement of possession. 9. As for the alternative proposition that the occupation fee should be increased markedly, I do not accept that submission either. That is for the following reasons. 10. First, as I have said, the picture as to what evidence and submissions were placed before Rothman J six months or so ago is by no means clear to me. And nor is the true picture as to who, in truth, is paying the occupation fee; and, if it be the second defendant, whether that will or may extend into the future. 11. Similarly indeterminable are the relative merits of the competing asserted hardships currently being experienced by the defendant (with regard to whom there is evidence of her impecuniosity) and the plaintiff (which, it is said, is repaying a loan secured by a mortgage over the property, and that loan is not being serviced by the occupation fee being received). 12. Secondly, the fact is that all of these questions – bound up as they are with a claim under the Contracts Review Act and the other claims – will surely be revisited in less than two months. 13. Thirdly, in the circumstances, I consider that I should neither ill-informedly interfere with the decision of Rothman J, nor precipitously interfere with the determinations about impecuniosity, hardship, and injustice that can far more readily be made by the trial judge. As for the latter, if in truth the plaintiff has been unfairly disadvantaged by the paucity of the occupation fee, and the defendant conversely unfairly advantaged, that can be taken into account by the trial judge, including with regard to whether and (if so) to what degree the contract should be adjusted. 14. For the preceding reasons, I do not propose to make alternative order 3. Conclusion 1. In short, I consider that the entirety of the notice of motion of the plaintiff should be dismissed. Costs 1. As for costs, each counsel expressly accepted that the unsuccessful party on the motion should pay the costs of the hearing before me of the successful party on the ordinary basis. Orders 1. I make the following orders: 1. The notice of motion of the plaintiff of 18 May 2016 is dismissed. 2. The plaintiff must pay the costs of the first defendant of the proceedings before me.