Commonwealth Bank of Australia v Seagrott & Ors [2013] QDC 162

DISTRICT COURT OF QUEENSLAND CITATION: Commonwealth Bank of Australia v Seagrott & Ors [2013] QDC 162 PARTIES: Plaintiff: COMMONWEALTH BANK OF AUSTRALIA (ABN 48 123 123 124) AND First Defendant: STEVEN JOHN SEAGROTT AND Second Defendant: CARMEL PATRICIA SEAGROTT AND Plaintiff by Counterclaim: CARMEL PATRICIA SEAGROTT AND First Defendant by Counterclaim: COMMONWEALTH BANK OF AUSTRALIA (ABN 48 123 123 124) AND Second Defendant by Counterclaim: THE COLONIAL MUTUAL LIFE INSURANCE SOCIETY LIMITED TRADING AS COMMINSURE (ABN 12 004 021 809) FILE NO/S: 3814/10 DIVISION: Civil PROCEEDING: Application ORIGINATING COURT: District Court of Queensland DELIVERED ON: 18 July 2013 DELIVERED AT: Brisbane HEARING DATE: 1 July 2013 JUDGE: Kingham DCJ ORDER: 1. That pursuant to rule 375(3) of the Uniform Civil Procedure Rules 1999 (Qld), the Court directs that the second defendant by counterclaim be properly named in these proceedings as “The Colonial Mutual Life Assurance Society Limited ABN 12 004 021 809 trading as -- 1 of 5 -- 1 CommInsure”. 2. That pursuant to rule 67 of the Uniform Civil Procedure Rules 1999 (Qld), the Court directs that Steven John Seagrott be included as a second plaintiff to the counterclaim. 3. That the counterclaim be struck out pursuant to rule 171 of the Uniform Civil Procedure Rules 1999 (Qld). 4. That the plaintiff recover possession of the property described as Lot 7 on Registered Plan 191232 in the County of Stanley, Parish of Burpengary, Title Reference 16614065 being the land situated at 77 Park Road, Deception Bay in the State of Queensland. 5. That the first defendant and second defendant pay to the plaintiff the sum of $202,277.14, inclusive of interest in the amount of $37,170.42 calculated to 18 July 2013. 6. The first defendant and the second defendant pay the plaintiff’s costs of and incidental to the proceeding, including this application, on a standard basis. CATCHWORDS: CIVIL – PROCEDURE – SUMMARY JUDGMENT – where the defendants argued a mortgage protection policy should have paid their loan repayments – where the second defendant argued the bank should have paid out the loan if she was uninsurable – whether there is any real prospect of defending the claim – whether there is a need for a trial of the claim. CIVIL – PROCEDURE – SUMMARY JUDGMENT – where the defendants brought a counterclaim against the bank and the insurer – where the defendants argued a mortgage protection policy should have paid their loan repayments - whether the counterclaim discloses a cause of action. Uniform Civil Procedure Rules 1999 (Qld) r 171, 292, 375(5). Commissioner of Taxation v Salcedo [2005] 2 Qd R 232, applied. COUNSEL: Ms S.D. Anderson for the Plaintiff. The Second Defendant appeared on behalf of both Defendants. SOLICITORS: Gadens Lawyers for the Plaintiff. The Second Defendant appeared on behalf of both Defendants. Background [1] Since 1995, the Bank and Mr and Mrs Seagrott have had a financial relationship, the Bank having advanced funds under various loan agreements secured by mortgages over a property owned by Mr and Mrs Seagrott at Deception Bay. The Bank claims Mr and Mrs Seagrott are in default under the most recent loan agreement entered into in April 2005. It claims possession of the property and recovery of the debt. -- 2 of 5 -- 2 [2] Mr and Mrs Seagrott admit they have not met their obligations under the loan agreement, but have defended the claim and mounted a counterclaim on arguments about their mortgage protection insurance policy, offered by a subsidiary of the Bank. [3] Before turning to the substantive applications, I must note a number of orders I made without objection at the commencement of the hearing. Firstly, I granted leave to the Bank to amend its application from seeking summary judgment on the counterclaim to seeking an order to strike it out.1 The pleadings on the counterclaim have not closed, so summary judgment is not available. If granted, the effect of the application is the same as a summary judgment application - to bring the counterclaim to an end. [4] Secondly, I amended the name of the second defendant by counter-claim to the Colonial Mutual Life Insurance Society Limited which trades under CommInsure (a registered business name).2 However, I will refer to the second defendant by counter-claim using the business name CommInsure as this is how the parties have referred to it. [5] Finally, I granted to leave to add Mr Seagrott as the second plaintiff by counterclaim. Legal Principles [6] Returning to the application for judgment on the claim and to strike out the counterclaim, the principles that apply are not controversial. [7] On the summary judgment application, the question for the court is whether the defendants have any real prospect of successfully defending all or part of the plaintiff’s claim; and whether there is a need for a trial of the claim or part of the claim.3 Summary judgment will only be granted in the clearest of cases.4 There is “no real prospect of succeeding” if there is there is no realistic, as opposed to a fanciful, prospect of success.5 [8] A counterclaim is liable to be struck out if it discloses no reasonable cause of action.6 [9] The Bank submitted that Mr and Mrs Seagrott do not dispute they are in arrears and their defence and counterclaim discloses no reasonable cause of action and there is no reason for a trial. The Claim [10] The Bank issued a demand to Mr and Mrs Seagrott, dated 4 October 2010 because, at that point, they were in arrears in their repayments in the sum of $18,173.00.7 Although Mr and Mrs Seagrott denied they received the demand,8 I am satisfied it was sent by prepaid ordinary post to Mr and Mrs Seagrott at the address of the mortgaged property, where they continue to reside.9 1 Uniform Civil Procedure Rules 1999 (Qld) r 171. 2 Uniform Civil Procedure Rules 1999 (Qld) r 375(5). 3 Uniform Civil Procedure Rules 1999 (Qld) r 292. 4 Deputy Commissioner of Taxation v Salcedo [2005] 2 Qd R 232, 233 [3] (Mc Murdo P). 5 Deputy Commissioner of Taxation v Salcedo [2005] 2 Qd R 232, 235 (McMurdo P). 6 Uniform Civil Procedure Rules 1999 (Qld) r 171. 7 Affidavit of Janel Bonnie Pearce, affirmed 26 April 2013: Exhibit JBP-3 – Letter of Demand, 4/10/2010. 8 Defence and Counterclaim, paragrraph [3]. 9 Affidavit of Janel Bonnie Pearce, affirmed 26 April 2013, paragraph [6]. -- 3 of 5 -- 3 [11] Mr and Mrs Seagrott appear to admit that they did not make the required monthly payments. They pleaded they were unable to negotiate with the Bank to accept weekly instalment amounts instead of the full monthly amount.10 [12] The payment history on the loan transaction shows the direct debit was cancelled on 29 July 2009. Thereafter, no payments were made until 6 January 2010 when weekly payments of $100 were made by Netbank until 10 March 2010.11 [13] The amount outstanding under the loan agreement as at the date of hearing was $201,588.53 including interest of $36,481.81.12 The Insurance Policy [14] Mr and Mrs Seagrott allege the loan agreement was accompanied by a mortgage protection insurance policy signed by them. 13 I take this to be a reference to an application for such insurance. They plead that, until mid December 2010, they were under the mistaken impression that CommInsure (the trading name under which the second defendant by counterclaim operated) was “in effect” and “paying premiums”. [15] That is not supported by the evidence before the Court. [16] There is evidence of three mortgage protection policies issued in Mr Seagrott’s name. The first two (20896395 & 208964840) were applied for in 1995. While both Mr and Mrs Seagrott signed the application, Mr Seagrott was nominated as the policy holder. The policies commenced on 15 August 1995 and terminated on 6 January 2003 when the home loan to which they related was closed off.14 [17] On 27 December 2002, Mr and Mrs Seagrott applied for a mortgage protection policy in both names. The third mortgage protection policy (24962104) was issued in Mr Seagrott’s name only. 15 [18] By 17 January 2003 Mrs Seagrott was aware that her application for mortgage protection insurance had been refused. On that day she wrote to CommInsure disputing the decision. 16 Mrs Seagrott, herself, exhibited a letter from Commonwealth Financial Services dated 5 February 2003 to her affidavit which discusses their reasons for refusing her application for cover.17 [19] Mrs Seagrott has exhibited unsigned copies of facsimile correspondence with CommInsure. Accepting, for the sake of considering their argument, that those facsimiles were sent by Mrs Seagrott and received by CommInsure, they do not take the matter any further. Rather, they confirm that Mrs Seagrott knew she was not named on the policy. 10 Defence and Counterclaim [2]. 11 Affidavit of Mark Deligiorgakis, sworn 9 April 2013: Exhibit MD-6 – Statements of Account. 12 Affidavit of Shannon Jean Martin, sworn 1 July 2013, filed by leave on 1 July 2013: paragraph [3]. 13 Defence and Counterclaim [1]. 14 Affidavit of Kate Zaia, sworn 24 April 2013: Exhibit KZ-10 – Letter from CommInsure to the second defendant with enclosures. 15 Affidavit of Kate Zaia, sworn 24 April 2013: Exhibit KZ-3 – Copy of policy documents regarding policy 24962104. 16 Affidavit of Kate Zaia, sworn 24 April 2013: Exhibit KZ-7 – Letter from CLL to the second defendant. 17 Affidavit of Carmel Patricia Seagrott, sworn 1/07/13: Exhibit SEA-03 –Letter from Commonwealth Life, 5/02/03. -- 4 of 5 -- 4 [20] Mr Seagrott gave his wife authority to speak on his behalf about the loan and insurance matters.18 Mrs Seagrott’s facsimiles do contain statements calling on CommInsure to cancel the policy if it is not willing to insure her. Mr and Mrs Seagrott argue CommInsure continued to debit the premium for the mortgage protection policy after she says she demanded they cancel the policy.19 [21] How this affects their liability to the Bank under the loan agreement escapes me. It is evident that Mr and Mrs Seagrott equate the Bank with CommInsure and see them as one in the same entity. That is not the position in law. No basis has been pleaded for visiting any conduct on CommInsure’s part to the Bank. Even if CommInsure should have cancelled the policy, there is no basis for arguing that the bank should have paid out the loan or discharged their liability under the loan agreement. [22] Alternatively, had the policy Mrs Seagrott applied for been issued to her, it would not have covered their loan repayments. When they made their joint application in December 2002, Mr and Mrs Seagrott marked the box “No” to indicate that neither wished to apply for optional disablement and unemployment cover. Their application, then, was for death cover only.20 Regardless of whether the policy was or should have been issued in both names, Mr and Mrs Seagrott did not apply for anything other than cover in the event of death. The circumstances under which the policy might have covered the loan repayments, whether in their joint names or not, have not arisen, as both Mr and Mrs Seagrott are alive. [23] Given those matters, I see no basis for Mr and Mrs Seagrott to resist the Bank’s claim and no basis for bringing a counterclaim against the Bank in relation to the insurance policy. While there might be some action they can take in relation to CommInsure taking no step to cancel the policy as Mrs Seagrott requested, the current counterclaim does not plead any identifiable cause of action and should be struck out. [24] I am satisfied that Mr and Mrs Seagrott have no real prospects of defending the Bank’s claim. Given the liability is not disputed and I see no basis for defending the Bank’s claim based on the mortgage protection insurance policy, I see no need for a trial of the claim. Judgment will be entered for the Bank on its claim. The counterclaim does not reveal a cause of action against either the Bank or CommInsure and should be struck out. Conclusion [25] At the hearing, the Bank produced a calculation of the sum then owing, including interest. On my calculations, the sum now stands at $202,277.14, including interest of $37,170.42. Judgment will be entered for that sum, unless otherwise ordered after hearing from the parties. Mr and Mrs Seagrott must pay the Bank’s costs of and incidental to these proceedings, including this application, assessed on the standard basis, if not agreed. 18 Affidavit of Kate Zaia, sworn 24 April 2013: Exhibit KZ-8 – Fax from both defendants to CommInsure. 19 Defence and Counterclaim [6]. 20Affidavit of Kate Zaia, sworn 24 April 2013: Exhibit KZ-1 – Mortgage protection application. -- 5 of 5 --