Broomhall v Elghalemi [2019] QDC 96

DISTRICT COURT OF QUEENSLAND CITATION: Broomhall v Elghalemi [2019] QDC 96 PARTIES: STEPHEN BROOMHALL (plaintiff/respondent) v NABILLA ELGHALEMI (defendant/applicant) FILE NO: 4720 of 2017 DIVISION: Civil PROCEEDING: Application ORIGINATING COURT: District Court DELIVERED ON: 12 June 2019 DELIVERED AT: Brisbane HEARING DATE: 10 June 2019 JUDGE: Porter QC DCJ ORDER: Application dismissed. CATCHWORDS: PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – JUDGMENTS AND ORDERS – where summary judgment was previously entered against the defendant – where the defendant alleges that a newly discovered fact – whether the newly discovered fact is a “fact’ or a legal conclusion – whether the newly discovered matter entitles the application to a different order – whether summary judgment should be stayed pending investigation COUNSEL: CJ Ryall for the plaintiff/respondent R Clutterbuck for the defendant/applicant SOLICITORS: Robert Palethorpe Solicitors for the plaintiff/respondent Milburns Law for the defendant/applicant [1] The defendant applies to stay a summary judgment for possession of her house given by Judge McGill SC on 13 June 2018 in favour of the plaintiff under r. 668(2) Uniform Civil Procedure Rules 1999 (Qld) (UCPR) pending directions for the trial of the issues raised in relation to the judgment. [2] For the reasons which follow I dismiss the application. -- 1 of 10 -- 2 Background [3] The defendant is the registered proprietor of the dwelling at 104 Todd Street, Torbanlea, (the property) over which an order has been made by the Court granting possession to the plaintiff. She lives there with her husband, Mr Birnie. They are both pensioners of modest means. In about late 2016, they were carrying out renovations to their house as owner builders. They needed $60,000 to complete the work. They sought bridging finance for two months so the work could be completed. They intended to refinance with a major lender once the work was done. It appears there was some urgency to getting the work completed. [4] There must have been some reason to do with timing or other factors which led them to seek finance from a non-bank lender. On 23 January 2017, they were interviewed by officers of Lightspeed Finance Pty Ltd. They completed an application form. Mr Birnie, the defendant’s husband, was to be the principal debtor. The defendant was to be guarantor. They provided financial information which the defendant submits showed that they did not have the capacity to service the loan. The Loan Application sought no servicing information, only the asset position of the applicants. It sought finance of $60,000 for three months. [5] Lightspeed requested that Mr Birnie obtain an ABN and complete a “Business Purpose Declaration”. The Finance Application in evidence shows the Business Purpose Declaration to be executed and seems to be part of the Finance Application as initially signed. However the Finance Application was followed up with a request from Lightspeed by email dated 31 January 2017 that the Business Purpose Declaration be signed. I am willing to infer for this application that it was signed subsequently in response to that request. The email also asked for the borrowers’ ABN. Mr Birnie obtained an ABN the same day. [6] On 6 February 2017, Lightspeed provided a due diligence report. It appears to be accepted that this was provided to the plaintiff as lender. It informed the plaintiff that the defendant and her husband were to use the money to complete works on their home. The due diligence report does not refer to capacity of the borrower to repay the loan except by refinance. The report suggests that refinance is likely given the low loan to value ratio (the property was worth some $200,000 and was close to completion). [7] On 7 February 2017, Lightspeed made a conditional offer of finance to Mr Birnie as borrower and the defendant as guarantor, secured by a registered mortgage over the property. It offered a loan amount of $90,000 which included interest for three months plus other costs, repayable after three months at two per cent interest per month unless there was default (when the rate increased to six per cent). The offer included confirmation on acceptance that the loan was entirely for business purposes. The defendant and her husband signed the declaration. [8] On 17 February 2017, loan and security documentation was sent to the defendant and her husband. The documentation identified the plaintiff as the lender. The defendant and her husband obtained legal advice on the documents. The defendant swears that it was not explained to her that she could lose the house as guarantor if the debt was not paid. -- 2 of 10 -- 3 [9] The defendant also swears that she understood from Lightspeed that the amounts due for interest and so on would accumulate and be paid out at the end by a lender to be found by Lightspeed. [10] On 1 March 2017, the loan settled. The letter to Mr Birnie included a disbursement schedule. It showed that the $90,000 had been advanced. It showed some $18,000 of the total were applied to lender’s interest (two per cent per month), “Lightspeed interest” (1.5 per cent per month) and other disbursements. $36,822 was reported as paid to existing creditors directly and the balance was paid to the principal debtor and the defendant (some $35,378). [11] On 4 September 2017, the lender’s solicitor served a notice of default in respect of the loan and notice prior to exercise of power of sale under s. 84 Property Law Act 1974 (Qld) along with a demand for possession under s. 78 Land Title Act 1994 (Qld). [12] The defendant alleges that at no time had Lightspeed sought to obtain alternative finance as alleged. The Proceedings [13] The plaintiff commenced proceedings in this Court on 17 December 2017. The plaintiff sought possession of the premises from the defendant. It did not seek judgment for any sum due under the loan agreement or the mortgage. The defendant’s defence was prepared without legal advice and referred only to attempts to refinance by way of grounds of defence. [14] On 24 April 2018, the plaintiff sought summary judgment. The application came before Judge Farr SC on 28 May 2017. It was adjourned to 12 June 2017, seemingly to allow the plaintiff to obtain legal advice. On that day, Judge McGill SC part heard the matter and adjourned it to 13 June 2017. The defendant appeared on 12 June 2017 but not 13 June 2017. On 13 June 2017 an amended statement of claim was filed, amended to address jurisdictional issues. His Honour ordered summary judgment for possession. [15] His Honour’s reasons were not published, nor were they put before me by either party. The issues at play in the summary judgment application however are probably identified by the pleadings and the submissions filed by the plaintiff. The plaintiff addressed only the formal requirements to establish entitlement to possession and the inadequate defence. No material was seemingly filed on the summary judgment application by the defendant. Only formal documents were filed in support of the application. None of the matters now raised appear to have been raised on the hearing. [16] The complaint to the Financial Ombudsman Service (FOS), which would later be dealt with by the Australian Financial Complaints Authority (AFCA), lodged by Mr Birnie against Lightspeed on 10 January 2018 was drawn to his Honour’s attention. However it is evident that that complaint related to Lightspeed and Mr Birnie, not the plaintiff and defendant in the proceedings. Accordingly the contractual undertaking by a FOS service provider not to take recovery action pending determination of a complaint did not apply. [17] No appeal was brought against his Honour’s judgment. -- 3 of 10 -- 4 [18] Rather, on 26 November 2018, over five months later, this application was filed. The Law [19] Rule 668 UCPR provides: 668 Matters arising after order (1) This rule applies if— (a) facts arise after an order is made entitling the person against whom the order is made to be relieved from it; or (b) facts are discovered after an order is made that, if discovered in time, would have entitled the person against whom the order is made to an order or decision in the person’s favour or to a different order. (2) On application by the person mentioned in subrule (1), the court may stay enforcement of the order against the person or give other appropriate relief. (3) Without limiting subrule (2), the court may do one or more of the following— (a) direct the proceedings to be taken, and the questions or issue of fact to be tried or decided, and the inquiries to be made, as the court considers just; (b) set aside or vary the order; (c) make an order directing entry of satisfaction of the judgment to be made. [20] The nature of an application under r. 668 and the genesis of the concepts behind it were considered by the Court of Appeal in IVI Pty Ltd v Baycrown Pty Ltd [2007] 1 Qd R 428, where Wilson J ,with whom Jerrard JA and Mackenzie J agreed, at [71] to [77] said as follows: [71] Before the commencement of the Judicature Act 1876, there were separate procedures at common law and in chancery for obtaining a rehearing or a new trial where further facts arose after judgment had been handed down – the writ of audita querela at common law and the bill of review in chancery. The bill of review procedure was abolished when the new procedure came into operation. [72] While proceedings by audita querela were abolished by O. 41 r. 22 of the Rules of Court made under the Judicature Act, the rule provided that similar relief might be obtained after judgment “upon the ground of facts which have arisen or been discovered too late to be pleaded”. Order 41 r. 22 of those rules was the precursor of O. 45 r. 1 of the Rules of the Supreme Court which came into effect on 1 January 1901. That provision, which was in turn the precursor of r. 668 of the UCPR, was in the following terms: “ORDER 45 — RELIEF AGAINST JUDGMENTS AND ORDERS -- 4 of 10 -- 5 Matters arising after judgment or order 1. When facts arise after the giving of a judgment or making of an order which entitle the person against whom the judgment or order is given or made to be relieved from it, or when facts are discovered after the giving of a judgment or making of an order which, if discovered in time, would have entitled the party against whom the judgment or order is given or made to a judgment or decision in the party's favour, or to a different judgment or order, the party may apply to the Court or a Judge for a stay of execution or other appropriate relief; and the Court or a Judge may grant such relief, and for that purpose may direct such proceedings to be taken, and such questions or issue of fact to be tried or determined, and such inquiries to be made, as may be just.” It is clear that O. 45 r. 1 was not intended as a substitute for an appeal or as a mechanism for rehearing an appeal which had already been heard and disposed of by an earlier order of the court. The same is true of r. 668. [73] In Stubberfield v. Brisbane City Council McPherson J.A. said at 15–17: “As appears from the terms of the old rule O. 41, r. 22, and from what was said about it by Griffith C.J. in Woods v. Sheriff of Queensland, proceedings by audita querela were abolished by that rule; but said the Chief Justice, under the old rule ‘similar relief may be obtained after judgment upon the ground of facts which have arisen or have been discovered too late to be pleaded’. The question, then, is what relief was available in proceedings by audita querela. Not much is to be found on the subject in modern works on procedure, and for enlightenment it is necessary to go back to the old texts and judgments. Blackstone says that audita querela was ‘in the nature of a bill in equity’, but one which in the common law courts was ordinarily commenced by writ complaining that the plaintiff was the victim of ‘oppression’. By plaintiff in this context was meant the plaintiff in the new proceedings commenced by writ, because the essence of the procedure was that the defendant's own claim or complaint as plaintiff in earlier proceedings had already been heard (audita querela defendentis), and that the judgment obtained by that party was now being enforced in a manner that was said to make it oppressive. The procedure was most often resorted to where, after judgment had been obtained against the new plaintiff and he had satisfied or agreed to satisfy it, the new defendant nevertheless proceeded to levy execution against him. See, for example, Williams v. Roberts. This is no doubt why, in the old Rules, O. 41, r. 22 appeared in an Order headed ‘Execution’; but the old procedure at common law was also available in cases where judgment had been obtained by fraud or surprise. See Lush's Common Law Practice and the authorities cited there and in Fisher's Common Law Digest. … In the context of modern court procedures, there is now much less scope for ‘surprise’, and it may perhaps be doubted how far it -- 5 of 10 -- 6 survives as a distinct category or ground for relieving against a judgment: Isaacs v. Hobhouse; Wilson v. Wilson.” [74] In Breen v. Lambert Thomas J. dealt with an application to stay a judgment pursuant to O. 45 r. 1 based on the discovery of further facts ante-dating the trial. His Honour reviewed the old procedures in chancery and at common law. Speaking of the chancery practice and then of the common law he said at pp. 22 – 23: “Clearly then the principles protecting the finality of judgments and the refusal by courts to interfere by reason of evidence available but undiscovered before action unless such evidence could not by reasonable diligence have been discovered in time, and other related principles, are of long-standing. They are based upon the requirements of public policy which include the desirability of there being an end to litigation. Jessel M.R.'s remarks show that these principles were not swept away by the Judicature Act. Nor have they have been undermined by the rules introduced by the Judicature Act (see the schedule to the Judicature Act 1876, including O. XLII r. 22). The same may be said with respect to the abolition of the common law writs of audita querela. The abolition of the writs by O. LVII r. 11 in 1876 was accompanied by recognition of the court's power to relieve against judgments on the ground of discovery of further facts, as Griffith C.J. observed in Woods v. Sheriff of Queensland. The similarity between those rules and O. 45 r. 1 as introduced in the Rules of the Supreme Court 1900 (at least in the operative part that deals with the discovery of facts after judgment) and the general discretion entrusted to the court in such a situation is significant.” Later he said at p. 24: “The power is however one that is not likely to be exercised, or to be used without regard to factors which have traditionally concerned the minds of judges. I acknowledge the breadth of the power, but consider that an appropriate exercise of discretion requires account to be taken of factors of the kind that influence courts of appeal in deciding whether or not to interfere with a judgment when it is alleged that relevant evidence exists which was available but not discovered before trial. The principles applied in such cases are expressed in Fredericks v. May; Clarke v. Japan Machines Australia Pty. Ltd.; Hawkins v. Pender Bros. Pty. Ltd. Although the application is couched in terms of an application for stay, or for ‘other relief’ it is in substance the invalidation of a judgment and such applications always require careful scrutiny. I agree with the following general observation made in A.M.I.E.U. v. Mudginberri. ‘The principle that there must be an end to litigation is a powerful one. Courts should not be ready to permit unsuccessful parties to attempt to overturn judgments by raising new considerations. For that reason, it is essential that a party seeking to overturn a judgment demonstrates that he or she does so only upon the footing of matters discovered since the judgment was entered. Plainly, such evidence must be weighty …’” -- 6 of 10 -- 7 [75] In cases under O. 45 r. 1 it was established that relief was not restricted to cases of absolute entitlement to an outcome, but also was available in cases dependent upon the favourable exercise of a discretion. [76] The primary judge said, correctly in my view: “While it is appropriate to apply an expansive notion of ‘entitlement’ for the purposes of r 668, I nevertheless accept the submissions made on behalf of IVI that the principles which have been developed over the centuries to cater for the different categories of cases in which a final order may be set aside remain relevant for the purposes of the discretion under r 668 and that the distinction recognised in the authorities between what is needed to be shown in an ‘ordinary case of fresh evidence’ as opposed to one based on malpractice or fraud also remains pertinent.” [77] On the hearing of the appeals counsel for the appellant relied on both limbs of r. 668(1). Two of the facts on which they relied, the failure to reveal that Norfolk was the undisclosed principal of the respondent and collusion between witnesses, were matters arising before the trial judge's order, and in my view may only fall within the second limb. The other fact, the bringing of the proceeding for specific performance, is really a permutation of the non-disclosure of the agency relationship, and I do not regard it as a separate fact within the first limb. [21] Those comments emphasise, relevantly: (a) The procedure is not a substitute for appeal. It assumes the correctness of the judgment on the evidence before the Court and rather seeks a review of that judgment because of new or newly discovered facts; (b) The importance of finality in litigation and for that reason, the need to subject applications to careful scrutiny, even at the stage where only the stay is sought; and (c) The rule did arise where the entitlement might only be to a different exercise of a discretion. Analysis [22] The defendant must first identify a new or newly discovered fact. The defendant’s evidence is replete with facts which might have been relevant in resisting summary judgment but which were not new or newly discovered. [23] Pressed by me, Mr Clutterbuck identified the relevant fact as being the discovery, made when the defendant received access to the preliminary views of Mr Patterson of the FOS, which revealed that the plaintiff had received the due diligence document and therefore knew or should have known that the principal debtor was not seeking the loan for business purposes. [24] It can be accepted that that fact (if it be a fact) was newly discovered. Nothing appears in any affidavit filed in the summary judgment to suggest it was disclosed to the defendant by the plaintiff nor does it appear that disclosure occurred prior to hearing the summary judgment application. -- 7 of 10 -- 8 [25] However, even accepting this as a newly discovered fact, I cannot see any reasonable basis to conclude that it was or might be one which entitled the defendant to a different order. [26] To understand why this is so it is necessary to appreciate the legal significance of the newly discovered fact. The defendant contends that the Business Purpose Declaration was erroneous because she and her husband were not obtaining the loan for business purposes, they were obtaining it to finish renovation of their own home. [27] This is relevant because loans for personal, domestic or household purposes are credit contracts under the National Consumer Credit Protection Act 2009 (Cth) (the NCCPA) and are therefore regulated by that Act. It was not in dispute that the plaintiff did not have a license to enter into credit contracts under that Act. The consequences relevantly include that: (a) Various obligatory notices were not given to the principal debtor; (b) The obligations imposed on the lender to assess suitability of the loan under ss. 128 to 131 did not bind the lender; (c) The plaintiff was prohibited from entering into the credit contract; and (d) The Court had power under s. 180 to order compensation and/or to vary the credit contract to prevent or address loss arising from the unlicensed lending. [28] The defendant did not fully explain exactly how she would benefit from raising such matters by way of defence to the plaintiff’s claim against her as guarantor. However, I am willing to assume for the purposes of this application that she could. Her liability is secondary to the liability of the principal debtor. As a general rule, she may challenge the liability of the principal debtor to the creditor on any ground open to the principal debtor. [29] Even making that assumption, however, I do not think it arguable that the identified newly discovered fact entitled her to raise defences arising out of the NCCPA because whether the plaintiff knew that the Business Purposes Declaration was correct or not is irrelevant to any claim for relief under the NCCPA. [30] As Mr Ryall submitted, knowledge by a lender that it is in breach of the NCCPA is not a material fact in determining whether there has been a breach of the NCCPA giving rise to a remedy under s. 180. The prohibition on unlicensed lending in s. 29 is absolute and it is to be doubted that ignorance or mistake would provide a defence to a civil claim under s. 180. [31] Rather, the key fact (if it be a fact) was that the defendant and her husband were not borrowing for a business purpose, and the Business Purpose Declaration was incorrect. The defendant and her husband knew that fact at all times prior to entry into the credit contract. That was the fact that entitled the defendant to raise defences under the NCCPA. The discovery that the lender knew that as well was not material to that entitlement. [32] I have so far assumed that the discovery that the lender knew that the lending was not for a business purpose is a fact. However, that might be doubted. Whether the loan was for a business purpose is a short hand for articulating this proposition: the loan -- 8 of 10 -- 9 was a credit contract as defined in the NCCPA. That is arguably a question of law. It is also one which might involve subtle issues relating to the purpose and intention of Mr Birnie in carrying out the renovation of the dwelling. If he and the defendant had carried out a systematic program over time of renovating and selling their dwelling, it might be arguable that there was a business purpose. That is not to say that that is true in this case. In fact I very much doubt it. It is simply to point out that the question of whether the contract is a credit contract under the Act might ultimately be a question of law. [33] I do not rest this decision on that basis. I merely point out that there are additional difficulties in the way of the proposition that the knowledge by the plaintiff that the loan was for completion of a renovation to the residence of the borrower and his partner of itself does not automatically lead to the conclusion that the loan was a credit contract under the NCCPA. The AFCA decision and agency [34] In his written outline, Mr Clutterbuck also relied upon the findings of the AFCA investigation to the effect that Lightspeed had breached the NCCPA. His written submissions relied on that in two ways. [35] First he suggested that if Judge McGill SC had been aware of the matters identified in the AFCA investigation, he might have taken a different course on the summary judgment. Mr Clutterbuck did not press this as sustaining either condition in R. 668(1), correctly in my view. Reasons and findings by a Court are not of themselves facts: See Rockett v Proprietors ‘The Sands’ BUP 82 [2002] 1 Qd R 307 at 310. [36] Second, he suggested that the AFCA report, taken with some correspondence in May 2019, suggested that Lightspeed was agent for the plaintiff in its dealings with the defendant and her husband such as to make the plaintiff liable as principal for the acts of Lightspeed. However, agency is a legal conclusion. The question to be addressed is the newly discovered facts which support that conclusion. The matters pointed to are very thin, indeed they comprise merely the inference that Summer Lawyers acted for both Lightspeed and the lender in the transaction. Even that matter seems to be disputed by the plaintiff. I am unpersuaded that there is any sufficiently arguable newly discovered fact which sustains the legal conclusion that Lightspeed was agent for the plaintiff in its dealings with the defendant and her husband. [37] Further, there was in my view ample basis arising out of evidence already in the possession of the defendant that the plaintiff was arguably bound by the conduct of Lightspeed at the time of the summary judgment application. This arises in circumstances where Lightspeed was acting as financier not as broker for the defendant and her husband and where as a matter of law, the plaintiff became lender as Lightspeed’s nominee. Approach to this application [38] I am conscious that by this application, the defendant only seeks a stay pending investigation and determination of the issues raised as justifying setting aside or varying the summary judgment order. No submissions were made to me as to the approach to be taken to the exercise of this discretion from the perspective of how persuasive the applicant’s case must be. -- 9 of 10 -- 10 [39] The starting point is to recognise the following considerations: (a) First, that the applicant does not seek final orders, just an opportunity to be further heard on whether orders might be made, including with the benefit perhaps of interlocutory steps such as limited disclosure. That circumstance suggests a lower threshold of satisfaction than would be required if called upon to make orders setting aside or varying the judgment; (b) Second, the order that is sought to be set aside or varied is a summary judgment order. There is a significant public interest in finality of litigation which must be considered when deciding whether to exercise the discretion to authorise further litigation about a matter already determined. I agree with Justice Atkinson’s observation in 180 Capital Finance Pty Ltd v Coomer [2010] QSC 116 at [11] that that consideration applies with somewhat less force in the context of a summary judgment, where there has not been a trial of the matter. However, against that is the fact that the judgment has stood undisturbed and without appeal for a year. [40] Bearing those matters in mind, the question is whether the applicant’s case is of sufficient weight to justify permitting further litigation of the issues resolved by the final judgment. For the reasons already given, I consider the applicant’s case that r. 668(1) is engaged is very weak and insufficient to justify making the order sought by the applicant. [41] I therefore dismiss the application. [42] I make the following additional observations. While there were no sufficiently arguable new or newly discovered facts to engage r. 668, that is not to say that the issues raised on this application are without substance. The NCCPA issue and indeed some of the other issues in the material, including the material relating to alleged promises to source a takeout long term funder, might have been relevant to a defence of the summary judgment and might have been raised on an appeal of that judgment if leave could be obtained to lead further evidence. Of course at this stage, leave to appeal out of time would also have to be sought and there is no guarantee that leave would be granted. However, it is important that the r. 668 application is not used as a way to raise matters which are properly matters relevant to an appeal. The Courts have emphasised the importance of the integrity of the appeal process and of the distinctly different issues which arise under r. 668. [43] The unrepresented status of the defendant at the summary judgment hearing probably contributed to the failure to articulate the points which seem to come up, though I by no means can be certain of that fact. However, that is also an irrelevant matter in considering whether there is a sufficiently arguable case that r. 668(1) is engaged to justify this Court staying the judgment and authorising further litigation in a matter disposed of by summary judgment a full year ago. -- 10 of 10 --