Browning & Anor v Australia and New Zealand Banking Group Limited [2014] QCA 43

SUPREME COURT OF QUEENSLAND CITATION: Browning & Anor v Australia and New Zealand Banking Group Limited [2014] QCA 43 PARTIES: DAVID ALEXANDER BROWNING (first appellant) ELIZABETH ELEANOR BROWNING (second appellant) v AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED (respondent) FILE NO/S: Appeal No 3656 of 2013 SC No 7475 of 2012 DIVISION: Court of Appeal PROCEEDING: General Civil Appeal ORIGINATING COURT: Supreme Court at Brisbane DELIVERED ON: 11 March 2014 DELIVERED AT: Brisbane HEARING DATE: 24 February 2014 JUDGES: Margaret McMurdo P and Muir JA and Daubney J Separate reasons for judgment of each member of the Court, each concurring as to the orders made ORDER: 1. The parties are refused leave to adduce further evidence. 2. The appeal be allowed. 3. The orders made on 25 March 2013 be set aside. 4. The default judgment entered on 16 November 2012 be set aside. 5. The respondent pay the appellants’ costs of the appeal. CATCHWORDS: APPEAL AND NEW TRIAL – APPEAL – GENERAL PRINCIPLES – INTERFERENCE WITH DISCRETION OF COURT BELOW – IN GENERAL – FAILURE TO EXERCISE DISCRETION – where the appellants entered into two loan agreements with the respondent – where the respondent alleged in a statement of claim that a “Default Event” occurred in that the term of both loan facilities expired and the appellants failed to make repayments – where the respondent claimed $6,879,097.40 in payment of a debt -- 1 of 10 -- 2 alleged to be owing by the appellants to the respondents, recovery of possession of two parcels of land, recovery of possession of livestock, interest and costs – where the respondent filed a request for default judgment – where default judgment given by a deputy registrar ordered that the respondent recover possession of the subject land and livestock and that the appellants pay the respondent $7,036,157.66, including interest and costs – where the appellants‟ application to have the default judgment set aside was refused – where the appellants‟ application for an order staying proceedings on an enforcement order pending appeal was refused – where the default judgment bore the notation “Form 26 Rule 283” – where the primary judge concluded that the judgment should have been made under r 287 of the Uniform Civil Procedure Rules 1999 (Qld) (the UCPR) – where the appellants submit that the default judgment was irregular – whether the exercise by the primary judge of his discretion miscarried as he failed to have regard to the non- compliance with r 283 to r 288 of the UCPR – whether the primary judge should have set aside the default judgement Supreme Court Act 1995 (Qld), s 47 Uniform Civil Procedure Rules 1999 (Qld), r 144, r 281, r 282, r 283, r 284, r 285, r 286, r 287, r 288, r 290, r 371 Anlaby v Praetorius (1888) 20 QBD 764, considered Cusack v De Angelis [2008] 1 Qd R 344; [2007] QCA 313, considered International Alpaca Management Pty Ltd v Ensor (1995) 133 ALR 561; [1995] FCA 1686, considered Richmond Hill Steamship Company v Corporation of Trinity House [1896] 2 QB 134, considered Stephenson v Thompson [1924] 2 KB 240, considered The Noordam (No 2) [1920] AC 904, considered VAW (Kurri Kurri) Pty Ltd v Scientific Committee (established under s 127 of the Threatened Species Act 1995) (2003) 58 NSWLR 631; [2003] NSWCA 297, followed Vosmaer v Spinks [1964] QWN 36, considered COUNSEL: P E King for the appellants J Peden for the respondent SOLICITORS: Reardon & Associates for the appellants HWL Ebsworth Lawyers for the respondent [1] MARGARET McMURDO P: I agree with Muir JA's reasons for allowing this appeal. [2] The appellants sought to set aside a default judgment entered by a deputy registrar on 16 November 2012 ordering that the respondent recover possession of specified land and livestock and that the appellants pay the respondent $7,036,157.66, together with interest and costs. -- 2 of 10 -- 3 [3] It is common ground that in giving that judgment the deputy registrar acted under Uniform Civil Procedure Rules 1999 (Qld), Ch 9 which deals with ending proceedings early. It provides for default judgment to be given in cases where, as here, a party commences a proceeding by claim and a defendant does not file a defence as required under the UCPR.1 Upon proof of service,2 "the court, as constituted by a registrar",3 may give judgment in default on a claim for a debt or liquidated demand only (r 283); on a claim for unliquidated damages only (r 284); on a claim for detention of goods only (r 285); and on a claim for recovery of possession of land only (r 286). Under r 287, default judgment may be given for claims including two or more of the claims specified in rr 283-286 inclusive but no other claim, inferentially, as the primary judge found, by the court as constituted by a registrar. [4] By contrast, r 288 provides: "Judgment by default – other claims (1) This rule applies if a defendant is in default and the plaintiff is not entitled to apply for judgment under rule 283, 284, 285 or 286. (2) The plaintiff may apply to the court for a judgment. (3) On the application, the court may give the judgment it considers is justified on the pleadings even if the judgment was not claimed." [5] Unlike rr 283-286 inclusive which allow for default judgment to be given by "the court, as constituted by a registrar", the terms of r 288 refer only to the court giving default judgment, that is, the court as constituted by a judge or magistrate.4 [6] The term "goods" as used in r 285 is broad and all-encompassing and takes its meaning from the context in which it is used.5 It is not defined in the UCPR. Its ordinary meaning is "possessions, especially moveable effects or personal chattels".6 But the respondent's claim against the appellants was not one for the detention of the specified livestock so that r 285 has no application. The respondent's claim was to recover possession of both specified land and specified livestock. It was therefore not a claim to which rr 283-287 applied, where the registrar could make orders for default judgment. The applicable rule allowing the respondent to obtain judgment by default was r 288 under which default judgment could be entered, not by a registrar but by the court. It follows that the registrar had no jurisdiction to give default judgment in this case. The default judgment entered on 16 November 2012 was irregular and the primary judge erred in not setting it aside. This argument was not raised before the primary judge and was not articulated clearly even in the appeal. For those reasons, I agree with Muir JA that the appellants should not have the costs of their application at first instance. [7] I agree with the orders proposed by Muir JA. 1 UCPR, r 281. 2 UCPR, r 282. 3 See UCPR, r 283, r 284, r 285 and r 286. 4 UCPR, r 3. 5 The Noordam [1920] AC 904, 908. 6 Macquarie Dictionary, Federation ed. -- 3 of 10 -- 4 [8] MUIR JA: Introduction In a proceeding commenced by a claim filed on 20 August 2012, the respondent claimed: 1. $6,879,097.40, in payment of a debt alleged to be owing by the appellants to the respondents; 2. recovery of possession of the parcels of land comprising Burslem Station and Casterton Station near Hughenden; 3. recovery of possession of specified livestock; 4. interest pursuant to s 47 of the Supreme Court Act 1995 (Qld)7 from the date of claim until judgment; and 5. costs. [9] The respondent experienced difficulty in effecting service of the claim and statement of claim. The male appellant was eventually served and an order for substituted service of the female appellant was made on 17 October 2012. [10] A conditional notice of intention to defend under r 144 of the Uniform Civil Procedure Rules 1999 (Qld) (the UCPR) was filed on 12 October 2012. The document alleged that the proceeding had not been commenced in the correct Supreme Court district and that service of the claim and statement of claim had not been effected on the male appellant in accordance with the UCPR “or the law”. The document also contained a “without prejudice” offer by the appellants to “tender an offer of full payment of the amount of the claim” within 30 days of the date of filing of the conditional notice of intention to defend. [11] The appellants‟ offer was given effect to when, on 22 October 2012, the appellants or someone on their behalf delivered to a branch of the respondent at Hamilton a document purporting to be an “International Promissory Note (UNICITRAL (sic) Convention)”. The so-called promissory note purported to have been issued on 18 October 2012. It provided for payment to “Shayne Elliot trading as SHAYNE ELLIOT, Chief Financial Officer, Australia and New Zealand Banking Group Limited” of $7,279,097.40 upon certain terms which included the release by the respondent of all the securities held by it over the appellants‟ properties. [12] Acceptance by the promisee of the promisor‟s offer was stated to be effected by events including, “The failure of the promisee to fully release and discharge the securities within sixty (60) days of the date of this offer” and “The failure of the promisee to … return the original offer to the promisor within twenty-four (24) hours from the date of making the offer to the promisee”. [13] The UNCITRAL Convention on International Bills of Exchange and International Promissory Notes 1988 has not come into force. It requires ratification by 10 countries for it to commence operation and only five, not including Australia, have ratified it to date.8 7 Repealed on 1 September 2012 by s 211 of the Civil Proceedings Act 2011 (Qld). 8 United Nations Convention on International Bills of Exchange and International Promissory Notes (New York, 1988). -- 4 of 10 -- 5 [14] A solicitor in the employ of the respondent‟s solicitors received an email from one Douglas Macleod Beames, who described himself as a “Commonwealth Public Official”. Attached to the email were a letter from Mr Beames addressed to “The Registrar, Personal Property Securities Register, GPO Box 1944, Adelaide City, South Australia 5000” and a copy of the promissory note. The letter alleged that “civil war has been declared by [the respondent] and has or is about to erupt”. There was an implicit suggestion that the Minister for Defence should impose martial law immediately to restore the rule of law and to enable appropriate investigations to take place. Under the heading “The primary causes of the break- down in the Rule of Law”, the author cited:  “misuse and abuse of the Verification Statement (under the Personal Property Security Act 2009 (Commonwealth) to aid in the facilitation of criminal offenses”;  the use of documents by a lawyer in an attempt to obtain property by deception;  that the Supreme Court of Queensland was a legal fiction and is in fact established and registered on foreign stock exchanges; and  that the respondent had obtained a default judgment knowing that the respondent had accepted a tradable security (the promissory note attached to the email). [15] In reliance on rr 144 and 281 of the UCPR, the respondent filed a request for default judgment in Form 25 on 12 November 2012. It claimed: $6,879,097.40 plus interest and costs; recovery of possession of the leasehold land comprising Burslem and Casterton Stations; and recovery of possession of bulls, calves and cows the numbers and breeds of which were described. [16] The default judgment given by a deputy registrar on 16 November 2012 ordered that:  the respondent recover possession of the subject land;  the respondent recover possession of the livestock described in the claim; and  the appellants pay the respondent $7,036,157.66 including $154,543.76 interest and $2,516.50 costs. The application to set aside the default judgment [17] The appellants applied on 20 March 2013 to have the default judgment set aside. The application was heard on 25 March 2013 by the primary judge who ordered that the application be refused. An application for an order staying proceedings on an enforcement order pending appeal was also refused. The primary judge’s reasons [18] The primary judge noted that the default judgment bore the notation “Form 26 Rule 283”. His Honour concluded that the judgment should have been made under r 287. He observed, “I would regard the reference on the judgment itself to rule 283 to be a mere irregularity which should not, having regard to rule 371, be regarded as invalidating the judgment which was entered”. -- 5 of 10 -- 6 [19] It is unnecessary to recite the arguments advanced by the counsel who appeared for the appellants at first instance and the primary judge‟s reasons for disposing of them. On appeal the more foolish of the arguments advanced at first instance were abandoned. They included an assertion that any indebtedness of the appellants to the respondent was discharged by delivery to and acceptance by the respondent of the promissory note and the fact that the deputy registrar entered the default judgment in the absence of the appellants. Such specious arguments served to distract attention from the arguments the appellants were struggling to articulate in respect of rr 282 to 286. The appellants’ contentions on appeal [20] Leave was given on the hearing of the appeal to amend the notice of appeal to: delete grounds 1, 2 and 4 of the five original grounds; amend ground 3; and insert two further grounds. [21] For the most part, the arguments advanced by the appellants on appeal are difficult, if not impossible, to discern from the grounds of appeal as amended. Some illumination of the points argued orally may be gleaned from the further outline of submissions filed by the appellants on 20 February 2014. Much of that document, however, was taken up with the elucidation of a draft defence. Neither it, nor most of the allegations in it, were before the primary judge. [22] In oral argument, rr 283 to 288 inclusive of the UCPR were subjected to detailed analysis and various arguments were advanced. Most, with respect, lacked substance. For example, it was argued that the respondent‟s claim was not for “recovery of possession” of land but was for delivery of “possession under a mortgage” with the result that r 286(4) expressly excluded any right on the part of a registrar to give judgment. The claim, however, expressly sought “recovery of possession” and, if it is relevant, the request for default judgment expressly stated that the claim was not for “delivery of possession under a mortgage”. Non-compliance with the UCPR [23] Another proposition which was pursued was that default judgment was necessarily irregular if the deputy registrar purported to apply a particular rule which did not confer the relevant power even if he had the relevant power under another rule or rules. The following discussion of authority by Spigelman CJ in VAW (Kurri Kurri) Pty Ltd v Scientific Committee (established under s 127 of the Threatened Species Act 1995),9 exposes the flaw in this contention: “22 In Lockwood v The Commonwealth (1954) 90 CLR 177 at 184, to which Bowen CJ referred without explaining its inapplicability, Fullagar J said: „… It is, I think, a settled principle that an act purporting to be done under one statutory power may be supported under another statutory power …‟. 23 To similar effect is the statement in a five judge joint judgment of the High Court in Brown v West (1990) 169 CLR 195 at 203, delivered after Australian Broadcasting Tribunal v Saatchi & Saatchi: „… However, the validity of the Tribunal‟s 9 (2003) 58 NSWLR 631 at 637. -- 6 of 10 -- 7 determinations is unaffected by mistaking the source of the power to make them …‟. Their Honours relied as authority for this proposition on Moore v Attorney-General (Irish Free State) [1935] AC 484 at 498 and R v Bevan; Ex parte Elias and Gordon (1942) 66 CLR 452 at 487. 24 Brennan J relied on the same authorities in Johns v Australian Securities Commission (1993) 178 CLR 408 at 426 for the following proposition: „… When a power is exercised, a mistake in the source of the power works no invalidity. Validity depends simply on whether a relevant power existed‟. McHugh J came to a similar conclusion (at 469) adapting a proposition from an analogous context: „The question is not one of intention but of power, from whatever source derived‟.” [24] Of course, an error of law would be shown if the correct rule not adverted to by the registrar required certain matters to be taken into account and they were not taken into account. [25] There was, however, at least one respect in which the default judgment was irregularly entered. The scheme of Division 2 of Part 1 of Chapter 9 of the UCPR is to make provision in separate rules for default judgment in respect of particular claims: r 283 – debt or liquidated demand; r 284 – unliquidated damages; r 285 – detention of goods; r 286 – recovery of possession of land. Rule 287 provides: “287 Judgment by default—mixed claims (1) This rule applies if the plaintiff‟s claims for relief against a defendant in default include 2 or more of the claims for relief mentioned in rules 283 to 286, and no other claim. (2) The plaintiff is entitled to a judgment against the defendant on all or any of the claims for relief the plaintiff could request under those rules if that were the plaintiff‟s only claim for relief against the defendant.” (emphasis added) [26] The respondent sought to rely on r 287, arguing that the respondent‟s claims for relief included two or more of the claims for relief mentioned in rr 283 to 286. The respondent‟s difficulty is that its claim for relief contains an additional claim, the claim for recovery of possession of the livestock. It was conceded on behalf of the respondent that this claim was not a claim “for detention of goods only” within the meaning of r 285. In any event, sub-rule (5) requires that the application must be made to the Court where the order sought is for the return of specified goods. If, as I consider was the case, livestock are “goods” within the ordinary meaning of that word,10 they were “specified goods”. Their identification by number and breed was agreed upon in the respondent‟s stock mortgage.11 If the livestock are not “goods”, r 287 still did not authorise the deputy registrar to enter judgment; the claim in respect of the livestock was a claim not mentioned in rr 283 to 286. 10 See e.g. Stephenson v Thompson [1924] 2 KB 240 at 249 per Atkin LJ; The Noordam (No 2) [1920] AC 904 at 908–910; Richmond Hill Steamship Company v Corporation of Trinity House [1896] 2 QB 134 at 137–138; and International Alpaca Management Pty Ltd v Ensor (1995) 133 ALR 561 at 588–589. 11 C.f. Benjamin’s Sale of Goods, 5th ed, Sweet & Maxwell, London, 1997, para 1-112, 113. -- 7 of 10 -- 8 Application of r 290 [27] Under r 290 of the UCPR, a “court may set aside or amend a judgment by default” on such terms as it considers appropriate. [28] The entering of judgments pursuant to rules such as those in Division 2 of Part 1 of Chapter 9 of the UCPR is a very serious matter that has obvious impact on the rights of a defendant. Normally, an irregularly obtained judgment will be set aside on the application of a defendant. In Anlaby v Praetorius,12 Fry LJ, referring to a default judgment entered prematurely and irregularly, said: “In such a case the right of the defendant to have the judgment set aside is plain and clear. The Court acts upon an obligation; the order to set aside the judgment is made ex debito justitiae, and there are good grounds why that should be so, because the entry of judgment is a serious matter, leading to the issue of execution, and possibly to an action of trespass.” [29] The accepted position prior to the UCPR coming into operation was that, generally, regularly entered judgments would be set aside if it was demonstrated that the defendant had an arguable case but that irregularly entered judgments must be set aside ex debito justitiae.13 The appellants relied on Cusack v De Angelis,14 citing the following observation:15 “It has been long accepted that a defendant is entitled to have an irregularly entered judgment set aside as of right, subject to the exercise of a power of amendment and the futility of interfering with the judgment. Such judgments are the product of the exercise of administrative acts performed without legal authority. Irregularity, as that term is used in relation to default judgments, normally results from a failure to comply with the rules of court relating to the entering of default judgments.” (citations omitted) [30] Here the interests of justice favour the setting aside of the irregularly entered judgment. The statement of claim served on the appellants is a sketchy and rather unsatisfactory document. It alleges two loan agreements between the respondent and the appellants entered into on or about 21 October 2010. It is alleged that under one, defined as the “Agri Finance Loan”, the respondent agreed to advance to the appellants $5,970,000. An agreement to advance $51,000 is alleged to exist under the other loan agreement, defined as the “Revolving Agri Line Loan”. [31] A copy of a letter of offer from the respondent to the appellants dated 21 October 2010 was in evidence before the primary judge. The letter, which had the appellants‟ acceptance endorsed on it, referred to an ANZ Revolving Agri Loan facility with a limit of $51,000 and an ANZ Agri Finance (Variable Rate) facility for an amount of $5,970,000. The purpose of the ANZ Agri Finance (Variable Rate) facility was said to be “Restructure existing Landmark Facilities”. The term of both facilities was said to expire on 31 December 2010. The part of the 12 (1888) 20 QBD 764 at 768. 13 Vosmaer v Spinks [1964] QWN 36. 14 [2008] 1 Qd R 344. 15 Cusack v De Angelis [2008] 1 Qd R 344 at 351 [36] per Muir JA. -- 8 of 10 -- 9 document dealing with the ANZ Agri Finance (Variable Rate) facility provided for “monthly interest only repayments and full clearance of debt upon expiry of the term”. Under the heading “Other Conditions” it was provided: “Scheduled [principle] reductions are due as follows: 31 December 2010 – $2,600,000 reduction; Remaining balance of $3,421,000 to be re-negotiated (subject to ANZ‟s normal credit approval criteria) prior to termination date. Failure to meet any of the above scheduled limit/[principle] reductions will constitute an Event of Default.” [32] There is no direct allegation in the statement of claim that either of the sums of $51,000 and $5,970,000 was actually advanced. It is alleged in paragraph 13 of the statement of claim that a “Default Event” occurred in that the term of both loan facilities expired on 31 December 2010 and the appellants “failed to repay the Loan Facilities”. Otherwise, none of the material terms of either loan agreement is pleaded or identified except insofar as it is alleged in paragraphs 10, 11 and 12 that:  pursuant to cl 7.1(b) of “the memorandum of common provisions for the Burslem Station Mortgage and the Casterton Station Mortgage, it was agreed that” failure to pay the secured money on time would constitute default under both such mortgages;  pursuant to cl 7.2(b) of such memorandum, it was agreed that if a default event occurred all monies owing by the appellants to the respondent pursuant to the loan facilities would be due and payable on demand by the respondent;  pursuant to cl 7.3 of such memorandum, it was agreed that if a default event occurred the respondent could exercise all its rights under such mortgages. [33] It is not directly alleged that it was a term of each loan agreement that it expire on 31 December 2010. Paragraph 13 of the statement of claim makes the assumption that there is such a term and the substance of material terms is not generally identified. The pleading baldly asserts, “The full terms of the Loan Facilities will be referred to at the trial of this proceeding”. [34] Paragraph 16 alleges that a notice of demand was sent to the appellants by the respondent‟s solicitors requiring “immediate repayment of the monies then due and owing to the [respondent] in respect of the Loans totalling $6,747,711.31”. That a demand for payment was made is a properly pleaded allegation of material fact but other even more fundamental material facts are that monies were advanced and were due and owing. [35] As for the livestock, no terms of the stock mortgage referred to in paragraph 7 of the statement of claim are pleaded except insofar as it is alleged in paragraph 8 that the appellants “are liable for enforcement expenses incurred by the [respondent] on a full indemnity basis” and it is alleged that the Burslem Station mortgage, the Casterton Station mortgage and the stock mortgage secured “the Loan Facilities”. [36] There are matters in the statement of claim that are likely to give rise to confusion. Paragraphs 14 and 15 allege that the respondent wrote to the appellants seeking to -- 9 of 10 -- 10 mediate “the debt owed to the [respondent] in accordance with the Queensland Farm Debt Mediation Scheme” and that the appellants refused to mediate in accordance with such scheme. How these matters are relevant to the respondent‟s causes of action does not emerge from the pleading. [37] It may be seen from the foregoing that the transactions the subject of the litigation have a degree of complexity. Having regard to the pleading and the material placed before the deputy registrar, the deputy registrar would not have been in a position to determine precisely what judgment should have been given even if the deputy registrar had power to embark on such a determination. [38] For the above reasons, the appeal must succeed. The exercise by the primary judge of his discretion miscarried as he failed to have regard to the non-compliance with the rules addressed above. The non-compliance on which the appellants succeeded was not brought to the primary judge‟s attention but the appellants‟ argument before him did concern, in part, the application of rr 283 to 288 inclusive even if it was more apt to conceal than reveal the merits of the appellants‟ case. [39] I would make no order as to the costs at first instance. The appellants failed to properly expose the contention on which they succeeded on appeal and instead relied on other grounds, some of which were obviously misconceived. The appellants and the respondent both sought leave to file and read further affidavits in order to adduce further evidence which was either irrelevant or which, with reasonable diligence, could have been led at first instance. None of the evidence was likely to affect the outcome of the appeal and I would, therefore, refuse leave. [40] The respondent argued that the appeal in relation to the livestock and the grazing properties lacked utility as the evidence sought to be adduced showed that the grazing properties and livestock had been sold by receivers. It does not follow from that, however, that the appellants should be left to bear the consequence of having an irregularly entered judgement against them on the public record. Nor should they face the possibility of arguments that claims or counterclaims they may wish to make are foreclosed by the doctrine of res judicata. [41] For the above reasons, I would order that: 1. The parties be refused leave to adduce further evidence. 2. The appeal be allowed. 3. The orders made on 25 March 2013 be set aside. 4. The default judgment entered on 16 November 2012 be set aside. 5. The respondent pay the appellants‟ costs of the appeal. [42] DAUBNEY J: I agree with Muir JA. -- 10 of 10 --