Bank Polska Kasa Opieki Spolka Akcyjna v Richard Zbigniew Opara & Anor [2010] QSC 93

SUPREME COURT OF QUEENSLAND CITATION: Bank Polska Kasa Opieki Spolka Akcyjna v Richard Zbigniew Opara & Anor [2010] QSC 93 PARTIES: BANK POLSKA KASA OPIEKI SPOLKA AKCYJNA Applicant v RICHARD ZBIGNIEW OPARA First Respondent EVA DOROTA OPARA Second Respondent FILE NO/S: BS 5198 of 2006 BS 5199 of 2006 BS 5200 of 2006 DIVISION: Trial Division PROCEEDING: Application ORIGINATING COURT: Supreme Court at Brisbane DELIVERED ON: 31 March 2010 DELIVERED AT: Brisbane HEARING DATE: 23-25 November 2009 JUDGES: McMurdo J ORDER: In each proceeding it is ordered that registration of the foreign judgment be set aside. CATCHWORDS: PRIVATE INTERNATIONAL LAW – FOREIGN JUDGMENTS – EFFECT AND ENFORCEMENT – where the applicant obtained three judgments against the respondents in Poland and had those judgments registered in this court – where the respondents sought to have the registration of those judgments set aside on several grounds – whether the respondents received notice of the original proceedings in sufficient time to defend them – whether the original judgments were “enforceable money judgments” to which the Act applies – whether the judgments were final and conclusive – whether it would be contrary to public policy to enforce the judgments in this court -- 1 of 22 -- 2 Reciprocal Enforcement of Judgments Act 1959 (Qld) Foreign Judgments Act 1991 (Cth), s 5(4)(a), s 6, s 7, s 7(2)(a)(i), s 7(2)(a)(v), s 7(3) Ainslie v Ainslie (1927) 39 CLR 381 Barclays Bank Limited v Piacun [1984] 2 Qd R 476 Garcia v National Australia Bank Ltd (1998) 194 CLR 395 Kuligowski v Metrobus (2004) 220 CLR 363 Nouvion v Freeman (1890) LR 15 App Cas 1 Re Dooney [1993] 2 Qd R 362 COUNSEL: KA Barlow with DEF Chesterman for the applicant NH Ferrett for the respondents SOLICITORS: Hopgood Ganim as town agents for Baker & McKenzie for the applicant Cooper Grace Ward for the respondents [1] In each of these three proceedings, a judgment given in Poland has been registered in favour of Bank Polska against Dr and Mrs Opara under s 6 of the Foreign Judgments Act 1991 (Cth). They now apply to set aside the registration of those judgments under s 7 of the Act. [2] There is no substantial difference between the relevant evidence and the arguments from one proceeding to the others. In each case the grounds for the Oparas’ application are that: (a) the judgment which was registered was not a judgment to which Part 2 of the Act applies 1 either because it was not an “enforceable money judgment” or because it was not “final and conclusive”2 ; (b) the Oparas did not receive notice of the proceedings in which the judgment was granted in sufficient time to enable them to defend those proceedings and they did not appear3 ; (c) the enforcement of the judgment would be contrary to public policy either because the Oparas did not have notice of the foreign proceedings and an opportunity to participate in a hearing preceding the judgment or because, in Mrs Opara’s case, there were circumstances surrounding the Bank’s claim which would provide her with a defence according to the principles in Garcia v National Australia Bank Ltd4 if the Bank’s claim had been considered under Australian law. 1 s 7(2)(a)(i). 2 s 5(4)(a). 3 s 7(2)(a)(v). 4 (1998) 194 CLR 395. -- 2 of 22 -- 3 [3] Before going to those questions it is necessary to detail the history of the litigation between these parties which preceded the registration of the judgments in this court on 7 July 2007 and to discuss the nature and effect of the foreign proceedings and the judgments which the Bank obtained. [4] The Bank carries on business in several countries but is based in Poland. The Oparas were Polish citizens who have lived and worked in Poland for most of their lives, although they lived in Australia for some years during the 1980s and have lived here since 2003. At one stage Dr Opara was a prominent businessman in Poland but only after, it would appear, he built a fortune by investing in private hospitals in Australia. That was done through a company Alpha Healthcare Limited, which was for a time listed on the Australian Stock Exchange. Dr Opara and, for about 18 months, Mrs Opara were directors of that company. Mrs Opara has worked as a journalist and author. She was editor-in-chief of an interior design magazine from about 1999 to 2003. She has written 10 books, mostly novels but also a work of non-fiction which she wrote for a Master’s thesis. [5] This litigation results from three agreements between the parties. There were two loan agreements, respectively described in the evidence as Mortgage 85 and Mortgage 86, which were entered into on 19 June 2001. Under Mortgage 85, the Oparas borrowed PLN 7,100,000 (approximately AUD 2,750,000), repayable in monthly instalments. That loan was secured against certain real property which they owned in Poland. Under Mortgage 86 they borrowed PLN 4,900,000 (approximately AUD 1,900,000) again repayable in monthly instalments. That was secured against certain other real property which they owned in Poland. The third transaction was one between the Bank and Dr Opara as the principal debtor and Mrs Opara as a guarantor. By that agreement, made on 16 October 2001 and which is described as the Securities Loan agreement, the Bank agreed to provide to Dr Opara a credit facility of up to PLN 30,000,000 (approximately AUD 11,750,000) for a period of one year. That limit was increased to an amount of PLN 50,000,000 (approximately AUD 19,500,000) by a variation agreed on 2 January 2002. [6] By March 2002, the Oparas had defaulted under each agreement. In July 2002, the Bank gave a written notice to the Oparas by which it terminated the agreements for Mortgage 85 and Mortgage 86. The notice was in these terms:5 “Bank Polska Kasa Opieki S.A. …, acting pursuant to: (1) [Mortgage 85] (2) [Mortgage 86] terminates the aforementioned agreements due to your default, in particular your failure to repay principal instalments by the deadlines fixed in the loan repayment schedules attached to the agreements in question. Pursuant to … the terminated agreements … you are obliged to repay – on the day following the end of the 30–day termination period 5 An agreed translation from the original Polish, as are the other documents extracted in this judgment, including relevant statutes and court rules. -- 3 of 22 -- 4 starting from the date of service of this termination notice – the disbursed loans with the interest due to the Bank as at repayment date. As at 24 July 2002, your indebtedness is as follows: - under [Mortgage 85] for mortgage loan adjusted with CHF exchange rate repaid … it totals CHF 2,997,758.91; - under [Mortgage 86] for mortgage loan adjusted with CHF exchange rate repaid … it totals CHF 2,071,575.26. Should you fail to repay the debt under the aforementioned loans on the day following the end of the termination period steps will be taken against you in order for the Bank to recover the amounts receivable by means of coercive procedure. At the same time, increased interest will accrue on overdue receivables at the rate specified in … the aforementioned mortgage loan agreements.” [7] In November 2002, the Bank terminated the Securities Loan agreement by notice to Dr Opara in these terms (translated from the Polish original): “In view of your failure to repay the amount due under [that agreement] by the deadline provided for in … the aforementioned Agreement, i.e. on 31 October 2002, [the Bank] informs that … from 1 November 2002 until the day of final pay-off of the amount due interest will accrue on the full amount of disbursed loan at the rate for overdue debt, i.e. 1.5 times the default interest on PLN receivables. At the same time, [the Bank] calls you to repay the whole debt under the aforementioned Agreement, which as of 14 November 2002 totals PLN 21,239,606.67, including: - principal of PLN 20,561,981.46; - interest of 677,625.21 accrued until 13 November 2002 within 7 days of the date of receipt of this notice, otherwise the Bank will commence debt collection procedure in order to recover its receivables.” The proceedings in Poland [8] The steps which the Bank took to obtain its judgments were as follows. [9] For each of Mortgage 85 and Mortgage 86, on 18 September 2002 the Bank applied its seal to a document described as “Bank Writ of Execution”. 6 The purpose of such a document, under Polish law, is to facilitate the collection by a bank of an overdue 6 Again, translating from the original. -- 4 of 22 -- 5 debt by court officers taking steps to realise the debtor’s assets. As I will discuss, a bank begins this process by issuing such a document although at that stage it has not commenced any legal proceedings, let alone obtained a judgment. This document is commonly called (in English) a “Banking Execution Title” or “BET”. The bank then applies to a court for what is described as an “Enforcement Clause”, by which the court orders that the BET may be enforced, in the same way as a money judgment is enforced, and directs its officers to “implement” it. Under the laws and court procedures of Poland, such an order is made ex parte. It is such an order which was issued in relation to each of these three agreements and which became the foreign judgment registered in this court. [10] Again on 18 September 2002, the Bank filed a motion in the District Court of Warsaw seeking to enforce these BETs. The motion sought orders for a declaration that the BETs were enforceable and for their service with such “declaration of enforceability” upon Dr and Mrs Opara. It also sought an order “adjudicating the Debtors to pay to the Creditor the costs of proceedings for declaration of enforceability …” Each motion was in terms which alleged that the Oparas were debtors who had defaulted under the relevant agreement, that the Bank had terminated that agreement and it had served the termination notice upon them. It alleged that upon that termination, the whole debt had become due and payable and that because the Oparas failed to repay the Bank, it had issued on that day the BET. It further alleged, as was the case, that when entering into the loan agreement the Oparas had agreed to enforcement of their obligations by this procedure of a BET. [11] The BET in respect of Mortgage 85 had to be amended by the Bank and an amended BET was executed by the Bank on 29 November 2002. In the meantime, the Bank obtained the judgment which it had sought in relation to the BET for Mortgage 86. This was given on 21 November 2002. [12] The judgment, as translated, was in these terms: “ DECISION District Court for Warsaw Mokotów in II Civil Division Presiding judge: District Court Judge A. Karnicka Kawczyńska having examined on 21 November 2002 at closed session the case instituted by motion of Polska Kasa Opieki S.A. against debtors Dorota Gorecka-para and Ryszard Opara for declaration of enforceability decides: to declare enforceable bank writ of execution No. 32/2002/II of 18 September 2002 issued by Polska Kasa Opieki S.A. against Dorota Gorecka-Opara and Ryszard Opara up to 5,829,617.99 with contractual interest accrued on PLN 5,626,667.69 from 18 September 2002 up to the maximum amount of PLN 9,800,000.00; 3) moreover adjudicates that Dorota Gorecka-Opara and Ryszard Opara pay to Polska Kasa Opieki S.A. PLN 10,000.00 by way of refund of the costs of proceedings. … -- 5 of 22 -- 6 REASONS The creditor filed a motion for declaration of enforceability of the bank writ of execution issued on 18 September 2002 against Dorota Gorecka-Opara and Ryszard Opara. The bank writ of execution enclosed with the motion meets the requirements provided for in Art. 96 and Art. 97 of the Act of 29 August 1997 Banking Law [Journal of Laws No. 140, item 939]. With case file, the creditor enclosed the debtor’s statement on voluntary submission to execution up to PLN 9,800,000. In view of the above, the Court adjudicated as in the introduction on the basis of Art.781 of the Code of Civil Procedure and Art. 97 of the Banking Law.” [13] On 16 December 2002 that document, containing the court’s judgment, was endorsed by a judge of the District Court of Warsaw as follows: “DISTRICT COURT FOR WARSAW-MOKOTÓW hereby orders and directs all offices and persons whom it may concern to implement the present writ and to be of assistance whenever legally requested Issued to BPKO SA II Branch Warsaw upon collection of PLN 12 of office fee. This writ is executable pursuant to Art. 777(3) of the Code of Civil Procedure.” [14] When that judgment was ordered to be registered in this Court7 it was described in this Court’s order as the judgment of the District Court of Warsaw dated 21 November 2002 “whereby it was ordered that the first respondent [Dr Opara] … and the second respondent [Mrs Opara] … pay the sum of PLN 5,626,667.69 … together with interest of PLN 101,475.15 … and costs of PLN 10,000 … to the [Bank].” Two things should be noted about the order made by this Court. The first is that its description of the effect of the foreign judgment does not correspond with the language of that judgment. There was no order that the Oparas pay any amount other than for costs. Rather, there was a declaration that the BET was enforceable. That is relevant to the question, which is considered below, of whether this was an “enforceable money judgment”. Secondly, that which was registered was the judgment of 21 November 2002, rather than any subsequent judgment in Poland in respect of Mortgage 86. That is relevant because the Bank argues that the Oparas had notice of the proceedings in which the judgment was granted in sufficient time to enable them to defend those proceedings and that they did appear in those proceedings, even if those things occurred after 21 November 2002. The Oparas unsuccessfully challenged that judgment by something analogous to an appeal. But it is clear that, in fact, they were unaware of the existence of the proceedings in which the judgment was granted, before it was granted on 21 November 2002. And if it matters, they were unaware during that period of the existence of the BET. 7 In 5199/06. -- 6 of 22 -- 7 [15] The amended BET for Mortgage 85 was in substantially the same terms as that for Mortgage 86. On 2 December 2002, the District Court of Warsaw declared it to be enforceable and “adjudicate[d] that [the Oparas] jointly and severally pay to” the Bank PLN 10,065 “by way of refund of the costs of proceedings in the case”. The court’s judgment contained these written reasons: 8 “The creditor … filed on 18 September 2002 a motion for declaration of enforceability of the bank writ of execution issued by the bank on that date and subsequently amended on 29 November 2002 against joint and several debtors [Mrs Opara and Dr Opara]. The bank writ of execution presented by the creditor meets, in the Court’s opinion, all conditions required under Art. 96 of the Act of 29 August 1997 Banking Law … The enclosed statement of the debtors meets the requirements set out in Art. 97 of the Banking Law. Therein, the debtors submitted to execution up to PLN 14,200,000 with the final deadline by which the creditor may issue a bank writ of execution fixed on 19 June 2018. In the motion, the creditor claimed to have a claim against the debtors under [Mortgage 85] equal to the amount whose payment is pursued. Therefore, on the basis of the above statements for the creditor (in these cases the court does not examine whether they are true), the Court declared the presented bank writ of execution enforceable against the debtors. The above decision of the Court was based on Art 96 of the Banking Law in conjunction with Art. 781 of the Code of Civil Procedure …” I have highlighted those words because they are relevant to the question of whether this was a final and conclusive judgment. That judgment was subsequently endorsed, on 14 February 2003, with a similar order and direction to “all offices and persons whom it may concern to implement the present writ and to be of assistance whenever legally requested”. [16] In this Court, when it was ordered that the judgment of the District Court of Warsaw dated 2 December 2002 be registered,9 the judgment was described as a judgment whereby it was ordered that Dr and Mrs Opara pay to the Bank certain sums for principal and interest, as well as for costs. Again that did not correspond with the terms of the judgment, which had ordered that only costs be paid and which otherwise was in the form of a declaration that the BET was enforceable. At no time prior to 2 December 2002 did the Oparas know of the existence of the proceedings in which that judgment was granted. [17] On 14 November 2002, the Bank issued a written demand to Dr Opara that he pay PLN 21,239,606.67 said to be owing under the Securities Loan agreement. On 5 December 2002, the Bank made a written demand on Mrs Opara under 8 Again as translated from Polish. 9 Again, on 7 July 2006 in 5198/06. -- 7 of 22 -- 8 her guarantee of that facility, in the amount of PLN 21,401,849.16.10 On 29 January 2003, the Bank executed a BET in relation to that facility and on the same day, it filed a motion in the District Court of Warsaw for a declaration that the BET was enforceable. Judgment was given upon that motion on 21 October 2003. It was in relevantly the same terms as the other judgments: a declaration that the BET was enforceable to certain amounts for principal and interest and an “adjudication” that Dr and Mrs Opara pay to the Bank a certain sum for costs of the proceedings. The written reasons were substantially identical to those in the judgment concerning Mortgage 85. In particular, there was the statement that the court did not examine whether the allegations by the bank were true. [18] Again when that judgment was registered in this Court, 11 it was described as a judgment whereby it was ordered that Dr Opara and Mrs Opara pay those sums for principal and interest as well as for costs. [19] At this stage it is convenient to discuss the laws and rules of court under which the BETs were executed and the judgments were given. This was the subject of evidence by two Polish lawyers, Dr Czarny who was called by the Oparas and Ms Postepska who was called by the Bank. Unless indicated otherwise, what follows is common ground between them as to the relevant law and procedures. [20] A BET is issued under Article 96 of the Banking Act, which is as follows: “Art. 96. §1. Banks may issue banking execution titles on the basis of bank’s books or other documents pertaining to banking operations. §2. A banking execution title must contain the name of the bank which had issued it and in favour of which the execution is to be effected, the debtor liable to pay, the amount of the debtor’s liability including interest and dates of payment, date of the banking execution title, as well as the description of the banking activity which has resulted in the vindicated claim and a statement of enforceability of the claim. The banking execution title must be provided with a seal of the bank which has issued the title and with signatures of the persons entitled to act on behalf of the bank. §3. In case of execution against several persons or with respect to several component assets of the debtor’s property, further execution title may be issued.” Only certain accredited banks, of which this Bank is one, may issue a BET. Ms Postepska describes the BET as “an instrument which can be used exclusively by legitimate entities in order to expedite enforceable proceedings against their debtors”. She agreed with Dr Czarny’s description of the BET as “a special privilege afforded to banks”. Its benefit to a bank is that it allows the bank, by its own document, to confer upon itself a status equivalent to that of a judgment creditor. This is because Article 777 of the Civil Procedure Code defines what are described as “execution titles” to include a BET. Article 777 of the Civil Procedure Code states as follows: “§1. Execution titles shall include: 10 The difference being due to the interest accrued between the two notices. 11 On 7 July 2006 in 5200/06. -- 8 of 22 -- 9 1) a final and absolute court judgment, an immediately enforceable court judgment and a court settlement; 11 ) a final and absolute judgment or an immediately enforceable judgment passed by a court officer, 2) an arbitration court’s award or a settlement reached before an arbitration court; 21 ) a settlement reached before a mediator, 3) other judgments, settlements and acts which by virtue of parliamentary acts are subject to enforcement by means of court enforcement proceedings …” A BET is within Article 777(3), by the operation of Article 96 of the Banking Act. Accordingly, it is treated as equivalent to an immediately enforceable court judgment, obtained after a full hearing of the merits, for the purpose of enforcement of the bank’s rights. [21] Article 776 of the Civil Procedure Code is as follows: “Unless a parliamentary act provides otherwise, an enforcement title shall be the basis for commencement of enforcement proceedings. An enforcement title is defined as an execution title with an enforcement clause appended thereto.” An “enforcement clause” is something granted by a court under Article 782 of the Civil Procedure Code, which is as follows: “§1. An enforcement clause shall be granted by the single judge of the court on the creditor’s motion. For the title issued in the proceedings which have been or could have been started in a mandatory way, the court shall grant the enforcement clause in a mandatory way.” Each of the judgments registered in this Court was granted by the District Court of Warsaw under Article 782. [22] Article 783 of the Civil Procedure Code is as follows: “§1. An enforcement clause should contain a statement that the title authorizes the holder to conduct enforcement and, if necessary, should define its scope. Unless special regulations provide otherwise, execution titles awarding performance in foreign currencies shall be appended with an enforcement clause obligating a court bailiff to convert the awarded amount into the Polish currency at the average foreign exchange rate of Polish zloty to foreign currencies published by the National Bank of Poland on the day immediately preceding the transfer of the amount due to the creditor. -- 9 of 22 -- 10 §2. The Minister of Justice shall define the wording of an enforcement clause in a relevant ordinance. §3. In case of an execution title in the form of a court judgment, the clause shall be placed on a copy of the judgment, and the fact of such clause being issued shall be disclosed on the original of the judgment. In other cases, the clause shall be placed on the execution title presented by the parties.” [23] Ms Postepska said that the court’s decision to grant an enforcement clause involves a “ruling”, which she distinguished from a “sentence” or an “order for payment”. She referred to Article 354 of the Civil Procedure Code which states: “Unless the Code provides for passing a sentence or issuing an order for payment, the court shall pass a ruling.” [24] She explained that sentences, orders for payment and rulings are types of judgments. A “sentence” would follow from a contested hearing of the Bank’s case. An “order for payment” would follow from another procedure (under Article 405 of the Civil Procedure Code) by which a creditor must prove its case. The Bank relies upon this evidence from Ms Postekska as demonstrating that what was registered in each case was indeed a judgment. That must be accepted; but Ms Postepska’s distinction between this judgment as a “ruling” on the one hand, and a “sentence” or an “order for payment” on the other is relevant to the question of whether these were “money judgments”. [25] Article 97 of the Banking Act states as follows: “§1. The banking execution title may constitute grounds for the enforcement effected under the provisions of the Civil Procedure Code, after having been provided with an enforcement clause to such title by the court exclusively against the person who performed the banking operation with the bank directly or is a debtor of the bank due to security for a bank’s receivables resulting from a banking operation and filed a statement on submission to execution, and when a claim covered by a banking execution title results directly from the said banking operation or from the security thereof. §2. The statement referred to in paragraph 1 shall mention the maximum amount of indebtedness up to which a bank may issue a banking execution title, as well as the time limit within which a bank may apply for appending the said title with an enforcement clause. The debtor may also submit itself to execution in order to release movables where a registered pledge has been established or a transfer of ownership has been made in order to secure the claim. §3. The bank’s motion for granting an enforcement clause, referred to in paragraph 1, shall be examined by the court forthwith, however, no later than within 3 days from the date of submitting thereof.” -- 10 of 22 -- 11 Thus there is provision for a written statement by the bank’s customer submitting to execution in accordance with this process of a BET and an Enforcement Clause. In practice such a statement is provided by the customer at the time the loan agreement is made, as in each case occurred here. It constitutes an acknowledgment by the bank’s customer that the bank might issue this particular remedy; it does not preclude the customer from later challenging the BET or the declaration of its enforceability on the basis of the circumstances by then arising. [26] Ordinarily, as occurred here, the Bank terminates the underlying loan agreement before proceeding to seek to recover the debt by this process of a BET. In that way, the debtor is able to anticipate that the remedy will be pursued, just as that could be anticipated from the debtor’s default itself. However, there is no requirement on a bank to give any notice to the debtor that the remedy will be or is being pursued. In particular, there is no requirement for notice to be given that the bank has executed or “issued” the BET or that it has brought proceedings for an Enforcement Clause to be granted. Nor is it the practice of banks to do so. [27] Article 786 of the Civil Procedure Code defines the court’s task in deciding whether to grant an Enforcement Clause. In its present terms, it now expressly requires the court to examine the BET and other documents presented to the court by the bank to check whether the debtor has submitted to this process of execution and whether the bank’s claims set out in the BET results from what Ms Postepska describes as “banking activity”. At the time of these judgments, the Civil Procedure Rules did not contain such an express requirement for the court’s examination of those matters. However, I accept, as Ms Postepska said, that in practice the courts then did so in the manner which is now prescribed under Article 786 as follows: “§1. In proceedings for appending an enforcement clause to the banking execution title, the court shall investigate whether the debtor submitted to enforcement and whether the claim covered by the title results from a banking transaction performed directly with the bank or from security for the bank’s receivables arising from that transaction. §2. If enforcement of the execution title depends on an occurrence which should be proven by the creditor, the court shall append the enforcement clause upon delivery of a documentary proof of that occurrence.” [28] I go then to the means available to vary or set aside a judgment granting an enforcement clause for a BET. Once the enforcement clause is granted, the creditor has the right to commence what Ms Postepska describes as “the enforcement proceedings” by filing an application with the court bailiff or “the appropriate court”. The bailiff is then obliged to seek to enforce the bank’s claim by recourse to the debtor’s assets. Article 805 of the Civil Procedure Code provides: “§1. When the first steps of the execution are carried out, the debtor should be notified that the enforcement proceedings have started and should be informed of the contents of the enforcement title and the manner in which the execution is to be performed. §2. On the debtor’s demand, the court bailiff should show the original of the enforcement title to the debtor.” -- 11 of 22 -- 12 There are two ways in which a debtor might seek to affect the operation of the judgment granting the enforcement clause. The first is by filing what is described as an anti-enforcement action. The second is by filing what is called a “complaint for granting the enforcement clause”, which I will call the complaint procedure. [29] The anti-enforcement action has its source in Article 840 of the Civil Procedure Code which provides, in part, as follows: “§1. The debtor has the right to demand by a writ that the enforcement title shall be deprived of the enforceability in whole or in part or to be restricted, if: 1) he denies the facts on which the issuing of the enforcement clause was based, in particular when [he] challenges the existence of the obligation ascertained by the execution title which is not the court judgment or when he denies that the obligation was transferred, despite the fact that the transfer of such obligation was confirmed by the official document; 2) after issuance of the execution title, an event occurred as a result of which the obligation expired or it cannot be enforced; when the title is in the court’s judgment, the debtor has the right to base the claim on the facts which occurred after closing of the hearing and also on the objection that the debt has been satisfied, provided that such objection was not a subject of examination in that case; 3) the spouse, against whom the court granted the enforcement clause pursuant to Art. 878 shall prove that the debt enforced was not due to the creditor, at the same time this spouse may raise an objection resulting not only from his/her own rights but also the objection that his/her spouse was not able to raise before.” [30] The complaint procedure is based upon Article 795 of the Civil Procedure Code which is as follows: “§1. A complaint may be lodged against the court ruling granting the enforcement clause. §2. The time limit for the creditor to file a complaint begins at the date of obtaining the enforcement clause by the creditor or refusing to grant it by the court; and for the debtor – from the date of service of the notice on commencement of the execution.” Not only the debtor but also the bank may file such a complaint. The bank has one week from the grant or refusal of the Enforcement Clause in which to file such a complaint; the debtor has one week from the date of delivery by the court bailiff of notice of commencement of the enforcement proceedings. Such a complaint is brought within the same proceedings which have resulted in the judgment granting the Enforcement Clause. -- 12 of 22 -- 13 [31] An anti-enforcement action is sought in separate proceedings and the debtor is entitled to be heard. Under the complaint procedure, there is no requirement to hear the debtor although the court, of its own motion or at the request of the debtor, may order a hearing. [32] There is also Article 189 of the Civil Procedure Code by which proceedings may be brought by the debtor to establish that it is not liable on the basis, for example, that the debtor has been discharged or that the alleged debt is yet to become due and payable. However, such proceedings are available to the debtor only prior to the granting of the Enforcement Clause. [33] I return to the facts of these cases. On 17 January 2003, the Oparas were notified of the judgment of 21 November 2002 in respect of Mortgage 86. On 23 January 2003, Dr Opara applied under the complaint procedure. His grounds were that the Oparas had not intended to agree to execution by the process of a BET or that they had agreed to it in consequence of some undue pressure by the Bank which was in a more powerful bargaining position. There were also other allegations which need not be set out here. That complaint was dismissed by the District Court of Warsaw on 19 November 2003, apparently for his failure to remedy certain formal defects in his application. [34] On 12 March 2003, the Oparas were notified of the judgment granted on 2 December 2002 in respect of Mortgage 85. On 10 March 2004, the Oparas were notified, through their representative Ms Grabowska, that enforcement proceedings were on foot relating to the Securities Loan agreement, that is the third judgment. [35] There were also several complaints filed by the Oparas in the District Court of Warsaw as to aspects of the particular conduct of the enforcement proceedings by the bailiff, each of which was dismissed. The Oparas filed an appeal against those decisions by proceedings brought in the Regional Court in Warsaw on 22 May 2006. That court dismissed those appeals on 27 July 2006. By then the three judgments, granting an enforcement clause for the BET in each case, had been registered as foreign judgments in this Court. Did the Oparas receive notice of the proceedings in Poland? [36] Section 7(2)(a) of the Foreign Judgments Act 1991 (Cth) provides: “(2) Where a judgment debtor duly applies to have the registration of the judgment set aside, the court: (a) must set the registration of that judgment aside if it is satisfied: … (v) that the judgment debtor, being the defendant in the proceedings in the original court, did not (whether or not process had been duly served on the judgment debtor in accordance with the law of the country of the original court) receive notice of those proceedings in sufficient time to enable the judgment debtor -- 13 of 22 -- 14 to defend the proceedings and did not appear; …” [37] The case for the Oparas is that they received no notice of those proceedings prior to the judgment and nor did they appear in those proceedings prior to the judgment. The facts are not in contest in this respect: in none of these three cases were they notified that the Bank had filed its motion seeking the granting of an Enforcement Clause until well after the court’s decision to grant it, which is the decision registered as a foreign judgment. In Barclays Bank Limited v Piacun12 the Full Court of this Court held, in relation to the equivalent ground for setting aside registration of a judgment under the then Reciprocal Enforcement of Judgments Act 1959 (Qld), that what was required was actual notice of the proceedings in the original court in which the judgment was granted. The Bank’s case accepts that to be the proper interpretation of s 7(2)(a)(v). But the Bank attempts to explain that in some way the requirement of notice was satisfied here. [38] First the Bank argues, in effect, that the Oparas had notice of “the proceedings in the original court” before those proceedings were commenced. It is said that the Oparas must have expected such proceedings to be brought by the Bank. They knew that they had not paid the Bank what the Bank claimed to be due in each case; and they knew or must be taken to have known that by the loan agreements and other documents which they had signed, they had agreed to the Bank pursuing their property by this process of a BET and an Enforcement Clause granted by a relevant court. In particular, in each case they had received notice of termination of the original loan agreement or facility. The facts in these respects are uncontroversial, save that Mrs Opara says that she did not read what she signed. But I would accept that the Oparas must have anticipated that the Bank would, or at least might, pursue them by this particular process. [39] However, I do not accept that they were thereby notified of those proceedings. Rather, they were aware of the facts and circumstances which made the commencement of those proceedings a likely event. The relevant ground refers to “notice of those proceedings” in the sense of actual rather than anticipated or likely proceedings. No authority was cited for the proposition that under this provision, in some way a debtor might be said to receive notice of proceedings which were then non existent. [40] The Bank’s argument refers to the procedures available to a debtor to bring his or her own proceedings to prevent a bank from proceeding by a BET: the anti-enforcement action or proceedings under Article 189 of the Civil Procedure Code, as I have discussed. It argues that in some way, the availability of those remedies overcomes the requirement for notice of the actual commencement of proceedings. But the existence of those remedies does not affect what I see as the plain meaning of s 7(2)(a)(v). To survive an application to set aside its registration under that provision, a judgment must have been given in proceedings of which the debtor, as a defendant in those proceedings, received notice and in sufficient time to enable him or her to defend those proceedings. Much of the Bank’s argument was put in terms that the Oparas were able to defend “themselves”. But the question here is whether they were notified of the proceedings so that they could defend “the proceedings”. 12 [1984] 2 Qd R 476. -- 14 of 22 -- 15 [41] A further submission for the Bank was that the relevant proceedings must be regarded as more extensive than those which resulted in the grant of the Enforcement Clause. It is said that those proceedings included what occurred, or might have occurred, had the Oparas made and prosecuted applications, under what I have called the complaint procedure. Further, it was said that the Oparas had sufficient time to defend the proceedings because they had time to make application under the complaint procedure or alternatively by an anti-enforcement action. [42] This is effectively the argument which was rejected in Barclays Bank Limited v Piacun. In that case the bank had obtained a judgment for a debt in default of appearance by the defendant. The judgment was duly obtained after the defendant was served according to an order for substituted service. The defendant had actual notice of those proceedings only after the judgment was given and when he was served with the application for registration of the judgment in Queensland. It was unsuccessfully argued that that defendant had sufficient time to “defend” the action by applying to set aside the judgment so as to be able to defend. Connolly J held that what was required by the equivalent provision to s 7(2)(a)(v) was that: “the defendant must receive notice of the proceedings in sufficient time to enable him to have resisted the making of the judgment which it is sought to register.”13 [43] Macrossan J said: 14 “The chamber judge held that at the stage when he had the matter for consideration it was correct to take into account the passage of time, some four months as it happened, since the appellant had first received notice of the application to register. For this period the appellant had in fact notice that English proceedings had led to judgment in that country. His Honour decided that in this situation the appellant had had ample time to apply in England to set aside the judgment so that the correct conclusion was that, within the words of s. 7(1)(c), the appellant did “receive notice of (the) proceedings in sufficient time to enable him to defend the proceedings”. He determined then that the appellant’s ground of opposition to registration advanced under the subsection quoted could not succeed and dealing as he did with the other points raised in argument, he ordered that the judgment be registered. The question on this appeal is whether this particular conclusion is correct. It might be thought that the ordinary meaning of the words “the defendant in the proceedings in the original Court did not … receive notice of those proceedings in sufficient time to enable him to defend the proceedings and did not appear” would not cover the case of a defendant who received notice of those proceedings only after final judgment had been entered but who arguably had sufficient time to enable him to move in the original Court to set aside the judgment there obtained in default of his appearance. One may wonder whether anything compels the ordinary meaning to be departed from. … 13 [1984] 2 Qd R 476 at 479. 14 [1984] 2 Qd R 476 at 481-483. -- 15 of 22 -- 16 The reference in [this] subsection appears to be to cases where during the course of an original suit but prior to entry of judgment a debtor did not receive notice in time to enable him to defend and he did not appear. In these cases the legislative design appears to be to give the debtor a right ex debito justiciae to set aside registration without more ado. Neither the language used nor my view of the policy behind the words of the subsection would permit it to be stretched to cover the case where the debtor had notice only of the fact of a foreign final judgment having been entered against him and so had no more than a subsequent opportunity to move in some fashion to set it aside.” [44] The Bank’s argument relies upon Ms Postepska’s evidence that proceedings in which an Enforcement Clause is granted can be described as “two-instance proceedings” in which “the Court of second instance can consider and overturn the underlying judgment issued by the Court of first instance”. 15 However, the judgment which became registered here was that granted by, in her terminology, the court of first instance. Section 7(2)(a)(v) requires notice of the proceedings which resulted in the judgment so as to provide sufficient time to enable the debtor to defend those proceedings. It is based upon the notion that any defence of legal proceedings necessarily precedes the final and conclusive judgment within them. To hold otherwise would be inconsistent with the plain language and the judgment in Barclays Bank Limited v Piacun. [45] Of course the reason why no notice was given of the proceedings, being the Bank’s motion for the grant of an Enforcement Clause, was that no notice was required by Polish law or the relevant procedural rules. A requirement for such a notice would affect the value of this particular remedy which the law of Poland has granted to accredited banks. To reject the Bank’s argument is not to criticise that law; it is simply to recognise that the registration of these judgments in this country must be according to the language and policy of the Australian statute. [46] For the Bank it was argued that, in fact, the Oparas did “appear” in those proceedings. But this is a variant of their argument that the proceedings extended to what occurred after the judgments were given. It is clear that the reference to an appearance in s 7(2)(a)(v) is to an appearance in the proceedings culminating in the judgment. [47] Accordingly, the ground under s 7(2)(a)(v) is established. Dr and Mrs Opara received no notice of the proceedings in the original court, those proceedings being constituted by the motion for the grant of the Enforcement Clause and relevantly terminating on the grant of that clause which constituted the judgment in question. And that is the case even if the remedies of an anti-enforcement action or an application by the debtor under Article 189 of the Civil Procedure Code of Poland could be regarded as a “defence to the proceedings commenced by the Bank”. Any knowledge of circumstances indicating the likelihood of proceedings, or notice of the proceedings but only after the judgment, is irrelevant for the purpose of this provision. 15 Her report page 19. -- 16 of 22 -- 17 [48] For the Bank it is argued that if a ground is established under s 7(2)(a), nevertheless there is a discretion to decline to set aside the registration of the judgments. No authority is cited for that proposition. It is inconsistent with the plain terms of s 7. Where there are circumstances engaging s 7(2)(a), the court must set aside the registration of the judgment. By contrast, s 7(2)(b) provides that the court, upon an application such as this: “(b) may set the registration of the judgment aside if it is satisfied that the matter in dispute in the proceedings in the original court had before the date of the judgment in the original court been the subject of a final and conclusive judgment by a court having jurisdiction in the matter.” [emphasis added] [49] As Macrossan J said in Barclays Bank Limited v Piacun in the passage as set out above, in the circumstances of the present case, “the legislative design appears to be to give the debtor a right ex debito justiciae to set aside registration without more ado”. [50] It was argued that to set aside registration of these judgments upon this ground would offend the purpose of the scheme for registration of foreign judgments under this Act. In particular, it was said that this would unduly compromise the effect to be given to foreign judgments where there was no evidence to support a conclusion that the foreign judgment was wrongly granted. But such a qualification to the effect of s 7(2)(a) is not at all indicated within the Act. On the contrary, it is clear that it was intended that not every judgment duly given according to the laws of the place where it was given should be registrable, or at least should remain registered once an application is made to set that registration aside. Were these money judgments? [51] Part 2 of the Act applies only to an “enforceable money judgment” which is defined by s 3 to mean: “… a money judgment under which is payable: (a) an amount of money, other than (except as mentioned in paragraphs (b) and (c )) an amount payable in respect of: (i) taxes or other charges of a similar nature; or (ii) a fine or other penalty; or (b) an amount of money payable in respect of New Zealand tax; or (c) an amount of money payable in respect of recoverable Papua New Guinea income tax.” [52] The case for the Oparas is that these are not judgments under which an amount of money is payable (other than for costs). Rather, they are orders by which the court bailiff may seize and deal with the assets of the debtor in order to satisfy a debt which exists independently of the judgment. In other words the source of the debtor’s obligation remains that which existed prior to the judgment and the outstanding principal and interest is not payable by force of the judgment. -- 17 of 22 -- 18 [53] By the grant of an Enforcement Clause, the Polish court allows a bank to enforce its own instrument, the BET, as if it were a money judgment. Article 96 of the Banking Act provides banks with this privilege of issuing execution titles, which then provide the bank with the remedies enjoyed by a judgment creditor or the successful party under an award in an arbitration. The grant of an Enforcement Clause is not a determination of a dispute (if any) as to the bank’s entitlement to the debt. It appears not to be a requirement of the grant of an Enforcement Clause that the court investigate the existence or amount of a debt. Rather, the practice then was according to the present Article 786 of the Civil Procedure Code, under which the court is to investigate whether the debtor submitted to enforcement by this process and whether the claim results from the type of transaction for which Article 96 of the Banking Act provides this remedy. That is confirmed by the terms of the Enforcement Clause which was sought and granted, which is a declaration that the bank’s BET is enforceable. In each of these three judgments, there is a marked distinction between the order making such a declaration and the order for the payment of costs. And in at least two of these cases, the court’s written reasons clearly stated that the court had not investigated the merits of the Bank’s claim that it was owed a certain sum. [54] Another kind of execution title which could be the subject of the grant of an Enforcement Clause is what Ms Postepska described as a court sentence, or put another way, a judgment in favour of a creditor after a contested trial. Just as the grant of the Enforcement Clause would not be the source of the judgment debtor’s obligation to pay in that context, nor was it the source of the Oparas’ obligations to pay the Bank in these circumstances. [55] It was said that Dr Czarny agreed in cross-examination that in coming to its conclusion that a BET is validly issued, the court makes a judgment that the money sum claimed within that instrument is due and payable by the debtor. 16 But that was not the effect of his evidence. Dr Czarny said no more than that it was a decision by the court that the BET was “validly issued” which, in the context of the provisions and rules of procedure which I have discussed, cannot be understood as some adjudication that the debt as set out by the Bank in the BET was due and owing. Rather, the purpose of the provision of this remedy to accredited banks is apparently to provide them with the remedies of execution against a customer’s property without having to establish the merits of their case. [56] The Bank also relied upon Article 923 of the Civil Procedure Code, which was not the subject of evidence from Dr Czarny or Ms Postepska. Counsel for the Bank referred to the (agreed) English translation of the document described as a “summons for payment”, issued by the bailiff or “Court Debt Collector”. That document records: “Pursuant to the provisions of Article 923 of Polish Civil Proceedings Code the aforementioned Collector summons the debtor [Dr Opara] to satisfy the receivables within 14 days under pain of commencing actions of the real property description and valuation [sic].” It was submitted that this makes it appear that a demand for payment must be made, and that this is in some way relevant to the present question. This provides no basis, 16 Referring to his evidence at Transcript 1-64. -- 18 of 22 -- 19 if one does not otherwise appear, for suggesting that these are judgments under which the principal and interest was payable. [57] The distinction between these judgments and money judgments is illustrated by the difference between the terms of the judgments as they were made in the original court and as they were described in the orders made in this Court for their registration. On the face of the orders made in this Court, whilst they remain registered they have effect as judgments under which the principal and interest is payable. Perhaps not surprisingly, the Bank did not seek to have them registered in the terms in which they were granted, according to what is now agreed to be the proper English translation of those judgments. [58] The result is that this ground under s 7(2)(a)(i) is also established and upon that ground also, the registration of the judgments must be set aside. Final and conclusive [59] The Oparas’ case here strongly relies upon Nouvion v Freeman.17 It was there held than an action could not be brought in England upon a foreign judgment for the recovery of a debt if that judgment had not finally and conclusively (subject to an appeal to a higher court) settled the existence of the debt so as to become res judicata between the parties. The foreign judgment there was what under Spanish law was described as a “remate” judgment for the recovery of a sum of money. In such proceedings a defendant could plead only certain limited defences but could not set up any defence affecting the validity of the contract. Either side, if unsuccessful in these proceedings, was able to bring proceedings in the same court in which all of the merits could be investigated and in which the remate judgment could not be set up as res judicata or otherwise. It was held that this was not a final and conclusive judgment in the required sense. Lord Herschell said:18 “My Lords, I think that in order to establish that such a judgment has been pronounced it must be shewn that in the Court by which it was pronounced it conclusively, finally, and for ever established the existence of the debt of which it is sought to be made conclusive evidence in this country, so as to make it res judicata between the parties. If it is not conclusive in the same Court which pronounced it, so that notwithstanding such a judgment the existence of the debt may between the same parties be afterwards contested in that Court, and upon proper proceedings being taken and such contest being adjudicated upon, it may be declared that there existed no obligation to pay the debt at all, then I do not think that a judgment which is of that character can be regarded as finally and conclusively evidencing the debt, and so entitling the person who has obtained the judgment to claim a decree from our Courts for the payment of that debt.” He noted that such a judgment would not deprive the plaintiff from suing upon the original course of action, and in those subsequent proceedings all of the merits might be investigated notwithstanding the earlier judgment. 19 Lord Bramwell and Lord Ashbourne20 noted that were the plaintiff to be given judgment in England on 17 (1890) LR 15 App Cas 1. 18 (1890) LR 15 App Cas 1 at 9. 19 (1890) LR 15 App Cas 1 at 11. 20 (1890) LR 15 App Cas 1 at 16, 18. -- 19 of 22 -- 20 the basis of this remate judgment, he would be in a stronger position as the English judgment would have the consequence of precluding further litigation between the parties, which was not the result of the Spanish judgment. [60] In Ainslie v Ainslie, 21 Isaacs J, in discussing whether an order in matrimonial proceedings was final and conclusive where it was able to be subsequently altered, said:22 “The true rule is to see whether or not the Legislature has by its enactment left the order entirely floating, so to speak, as a determination enforceable only as expressly provided and in the course of that enforcement subject to revision, or whether the order has been given the effect of finality unless subsequently altered.” That passage was cited in the joint judgment in Kuligowski v Metrobus23 before this was said: “A ‘final’ decision, then, is one which is not of an interlocutory character, but is completely effective unless and until rescinded, altered or amended. The fact that an appeal lies from a decision does not make it any less final. It must be ‘final and conclusive on the merits’; ‘the cause of action must be extinguished by the decision which is said to create the estoppel’. [footnotes omitted] [61] The effect of the judgments in this case was susceptible to extinguishment or alteration either by use of the complaint procedure within the same proceedings or by anti-enforcement proceedings. But that susceptibility need not deprive the judgments of their nature as final and conclusive, unless and until they were so affected. Whilst they stood, they had finally and conclusively determined that the Bank should have the remedies of execution to meet the claim set out in its BETs. As far as they went, it seems to me that the judgments were final and conclusive. But as I have discussed, they were not determinations of the indebtedness of the Oparas to the Bank. To say then that the judgments gave rise to a res judicata is to put the matter incompletely because res judicata would operate only in respect of what was necessarily determined within the judgments. [62] When cross-examined, Ms Postepska said that a bank could not bring separate proceedings for the recovery of its debt once it had obtained a grant of an Enforcement Clause for a BET. It was submitted for the bank that this meant that there was a res judicata from the grant of the Enforcement Clause, with the result that the judgment was final and conclusive. Although the basis for this opinion of Ms Postepska does not appear from the materials which have been tendered, i.e. from the Banking Law or the Civil Procedure Code, I am not persuaded to reject her evidence in that respect. But the reasons for precluding a bank from pursuing the debtor by those further proceedings may not correspond with the principles underlying the doctrine of res judicata under our law. Because the grant of an Enforcement Clause does not appear to involve a full adjudication of the merits of the Bank’s claim to be a creditor in a certain sum, it may not be the case that impediment upon further proceedings by the Bank stems from a need to prevent the re-agitation of a matter already the subject of a court’s adjudication. 21 (1927) 39 CLR 381. 22 (1927) 39 CLR 381 at 390. 23 (2004) 220 CLR 363 at 375. -- 20 of 22 -- 21 [63] The judgments were susceptible to being set aside by successful anti-enforcement proceedings. As discussed already, an anti-enforcement action is brought in different proceedings. It does not involve a reconsideration simply of what had been the questions for the court in granting the Enforcement Clause. This is distinguishable from an application to set aside a default judgment for a debt which, for example, was held to be final and conclusive in the relevant sense in Re Dooney.24 In that type of case, the defendant has had an opportunity to defend and to set up any defence which the law provides. In the present cases, there was no opportunity to defend provided by the law or the Civil Procedure Code of Poland. And the court was not required and did not consider the truth of the Bank’s claim to be a creditor in a certain sum. It was only within an anti-enforcement claim, brought by separate proceedings, that the whole of the merits were able to be explored. In my opinion the case is analogous to that in Nouvion v Freeman. Thus if these were judgments under which money was payable, they were not final and conclusive. Public policy [64] The first of the arguments under this ground was that it would be against public policy to allow such judgments to remain registered if they were final and conclusive money judgments but made ex parte. But the absence of notice of the proceedings in which the judgments were given and the absence of an appearance in those proceedings by the Oparas together require the registration of the judgments to be set aside, without regard to such a consideration of public policy. On the other hand, had I accepted that this was a judgment to which Part 2 of the Act applied, and had I accepted the Bank’s arguments that the Oparas had received notice of the proceedings in Poland, I would not have upheld the public policy argument in this respect. The Oparas had the opportunity, which they did not pursue, of having a Polish court set aside these judgments. [65] The other matter argued was that Mrs Opara is said to have been in a position which would have provided her with a Garcia defence under Australian law. I would not have accepted that argument. Firstly, it could apply only to the third of the judgments, under which Mrs Opara was a party by being a guarantor. The other judgments, in respect of Mortgage 85 and Mortgage 86, involved claims arising from loans to both Dr and Mrs Opara jointly. Accordingly, these transactions were not voluntary in the relevant sense. [66] Secondly, I was not persuaded by Mrs Opara’s evidence or otherwise that she did not understand the purport and effect of any of these transactions. Even assuming that she did not read the document which she signed as a guarantor, it is more likely than not, from the evidence in this case, that she understood the effect of the document. She impressed me as an intelligent and confident person. She is well educated and has had considerable business experience. It is very likely that she knew that her husband was borrowing large sums for his business activities from which she would at least indirectly be a beneficiary. They held much property together and she must have understood that the Bank would wish her to be responsible in the event that Dr Opara was unable to repay his debt in full. For the Bank it is argued that she admitted in cross-examination that she understood her 24 [1993] 2 Qd R 362. -- 21 of 22 -- 22 obligations to pay under each of these documents. 25 I do not see her evidence as going that far. But I am unpersuaded to accept all of the claims in her affidavit. She there swore that she was not permitted to read any of the documents before signing, which I would reject having regard to evidence given by employees of the Bank, which is more persuasive. She swore that she was not given a copy of all loan documents either at the time of signing or after signing the loan documents. I would prefer the evidence for the Bank that it was standard procedure for the Bank to provide such copies. I do not accept her evidence that she was not given the opportunity of obtaining legal or financial advice before signing the documents. I do accept that the effect of the documents was not explained to her by the Bank, with which the Bank’s witnesses agreed. But I do not accept that the effect of them was not explained by any other person or that she did not understand the effect of these transactions. Conclusion [67] The Bank has now spent some years in this jurisdiction pursuing the Oparas by attempting to enforce as money judgments what were instead more limited orders, obtained ex parte, directed to officials of the District Court of Warsaw. That was the course which the Bank took, rather than seeking to prove the state of the account between it and the Oparas, a matter upon which it seems that the Polish courts have not been asked to adjudicate. [68] In each proceeding it must be ordered that registration of the foreign judgments be set aside. I will hear the parties as to costs. 25 Transcript 1-15. -- 22 of 22 --