Can I obtain leave to defend an application for summary judgment for possession (part 1)?

  • Author : Bill Stark - 29-08-2014

In an proceeding for possession of a security property by a mortgagee, it can be very difficult to mount an arguable defence.

In the vast majority of claims for possession by mortgagees, either no appearance or no defence is filed, and the mortgagee obtains an order for possession in default.

The second-most common outcome is for a 'holding defence' to be filed, with the borrower really only seeking more time to pay out the mortgagee.

There are some cases where a real defence is filed, where the borrower does not seek more time to pay out the loan. In those cases, mortgagees will often seek summary judgment on the basis that the borrower has no defence to the claim for possession.

There are some recent cases which shed light on the circumstances in which a defendant borrower will be granted leave to defend an application for summary judgment. 

 

Pagone J in Portbury Development Co Pty Ltd v Ottedin Investments Pty Ltd and ors [2012] VSC 490 had to decide whether a defendant had done enough to be granted leave to defend the claim on the hearing of an application for summary judgment.

In paragraph 9, Pagone J noted:

The defendants rely upon the facts in the particulars to para 44 in resisting the application for summary judgment.  They maintained before Gardiner AsJ, and before me, that on an application for summary judgment it was not necessary for a defendant to verify by non hearsay evidence the facts alleged in a pleading.  The defendants submitted that it was sufficient in response to a plaintiff’s application for summary judgment for a solicitor, ... to make an affidavit which referred to the particulars in para 44 of the defendants’ Amended Defence and Counterclaim and depose that he was “informed by [the client] and believe[d] that the facts pleaded [in para 44] are true and correct”.  Portbury contended before Gardiner AsJ, and before me, that this was insufficient to satisfy a defendant’s obligation to show cause under r 22.04 of the Rules or the Civil Procedure Act 2010 (Vic), but did not otherwise controvert the facts in the particulars.  It did, however, through the evidence it filed, give evidence ... from which it maintained an entitlement to summary judgment.

Pagone J then summarised the relevant principles as follows (paragraph 24):

The plaintiff has the burden of satisfying a court that it is appropriate to give summary judgment whether that is sought under s 63 of the Civil Procedure Act 2010 (Vic) or under Order 22 of the Rules.  The relevant principles were considered by Dixon J in Ottedin Investments Pty Ltd v Portbury Development Co Pty Ltd[6] in which his Honour said:

[6]          [2011] VSC 222; see also JBS Southern Aust Pty Ltd v Westcity Group Holdings Pty Ltd [2011] VSC 476, [36]-[50] (Croft J).

Summary Dismissal

7           In moving for summary dismissal, a party may rely on r 23.01 of the Rules, s 63 of the Civil Procedure Act 2010, and/or the court's inherent jurisdiction.
8             By civil procedure reform introduced by the Act, the operative effect of the principles governing applications for summary dismissal is now less stringent...
9             The new test is evident in the plain language of Part 4.4 of theCivil Procedure Act 2010.  Section 62 permits a defendant in a civil proceeding to apply to the court for summary judgment on the ground that a plaintiff's claim or part of that claim has no real prospect of success.

Section 63 provides:
63       Summary judgment if no real prospect of success

(1)          Subject to section 64, a court may give summary judgment in any civil proceeding if satisfied that a claim, a defence or a counterclaim or part of the claim, defence or counterclaim, as the case requires, has no real prospect of success.
(2)          A court may give summary judgment in any civil proceeding under subsection (1)—
(a)          on the application of a plaintiff in a civil proceeding;
(b)          on the application of a defendant in a civil proceeding;
(c)          on the court's own motion, if satisfied that it is desirable to summarily dispose of the civil proceeding.
It will be recalled that in explaining the test used prior to the Act, a variety of expressions describing that test could be found in the cases.  The expression now identified by Parliament is in plain language: "no real prospect of success".
10           ...  The critical qualifying word "real" directs the court to "the need to see whether there is a realistic, as opposed to a fanciful, prospect of success".
11           In two other respects, the provisions of the Act ought be borne in mind when exercising the discretion to summarily dismiss.  First, the court must seek to give effect to the overarching purpose of the Act and the Rules in exercising, or interpreting, the statutory power to summarily dismiss.  This overarching purpose is "to facilitate the just, efficient, timely and cost effective resolution of the real issues in dispute". The court is directed to further the overarching purpose by having regard to the objects and matters articulated in s 9of the Act.  The manner in which the court will consider these objects and matters will depend on the nature and circumstances of the application before it.  On this application, I bear in mind the following objects (s 9(1)):
(a)       the just determination of the civil proceeding;
(c)       the efficient conduct of the business of the court;
(d)          the efficient use of judicial and administrative resources;
(f)       the timely determination of the civil proceeding; and
(g)          dealing with a civil proceeding in a manner proportionate to—
(i)          the complexity or importance of the issues in dispute; and
(ii)       the amount in dispute:
and I have regard to the following matters (s 9(2)):
(f)          any prejudice that may be suffered by a party as a consequence of any order proposed to be made or direction proposed to be given by the court;
(g)          the public importance of the issues in dispute, and the desirability of a judicial determination of those issues; and
(h)          the extent to which the parties have had the benefit of legal advice and representation.
12           Second, the discretionary nature of the power to summarily dismiss is exercisable having regard to s 64 of the Act.  That section provides:
64       Court may allow a matter to proceed to trial
Despite anything to the contrary in this Part or any rules of court, a court may order that a civil proceeding proceed to trial if the court is satisfied that, despite there being no real prospect of success the civil proceeding should not be disposed of summarily because—
(a)       it is not in the interests of justice to do so; or
(b)          the dispute is of such a nature that only a full hearing on the merits is appropriate.
The section affirms the court's broad discretion, exercised judicially, whether to summarily dismiss a proceeding or a claim, which was the basis upon which the previous test was applied.  The circumstances in which the court might consider the dispute to be of such a nature that only a full hearing on the merits is appropriate is equally wide in its compass and plainly to be considered in the circumstances of each case.[7]

[7]          [2011] VSC 222 [7]-[12](citations omitted).

His Honour went on to note the observations of French CJ and Gummow J in Spencer v Commonwealth of Australia[8]that the exercise of powers to terminate proceedings summarily must always be attended with caution.[9] In Karam v Palmone Shoes Pty Ltd[10], decided since the coming into force of s 63 of the Civil Procedure Act 2010(Vic), it was observed that “the power to order summary judgment is [still] to be exercised sparingly and not ‘unless it is clear that there is no real question to be tried’ ”.[11]

[8]          (2010) 241 CLR 118.
[9]          Ottedin Investments Pty Ltd v Portbury Developments Co Pty Ltd [2011] VSC 222, [15] (Dixon J).
[10]         [2012] VSCA 97; see also Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87, 99 (Mason, Murphy, Wilson, Deane and Dawson JJ).
[11]         Karam v Palmone Shoes Pty Ltd [2012] VSCA 97,[28] (Nettle and Osborn JJA); see also Ticco Pty Ltd v Complete Family Healthcare Services Pty Ltd [2005] VSCA 221, [20]–[21] (Hollingworth AJA), [36]–[37] (Charles JA).

The result of the Portbury decisions (by Pagone J and Dixon J) is thatthe principles governing applications for summary dismissal are now less stringent, and the court will grant a mortgagee summary judgment where there is no real prospect of any defence succeeding.

In a claim for possession by a morgagee of land registered under the Transfer of Land Act, 1958, the proof of the claim are relatively simple.

The usual pleading includes:
(a) ownership of the land by the borrower,
(b) the loan of money by the lender to the borrower,
(c) registration of the lender's mortgage on title,
(d) an obligation to pay interest, or repay principal by the borrower,
(e) breach of that obligation,
(f) notice to remedy that breach,
(g) a failure to remedy the breach despite notice, and
(h) continued possession of the land by the borrower.

Proof of those elements would ordinarily result in an order for possession of the property in favour of the mortgagee. 

The cases confirm that the court is unlikely to refuse an application for summary judgment by a mortgagee without good cause.

However, in the particular circumstances of the case, Pagone J decided at paragraph 36:

In my view the defendants have shown cause against the application for summary judgment, and the plaintiff has not discharged the onus upon them under either r 22.02 of the Rules or s 63 of the Civil Procedure Act 2010.

About the Author

Bill Stark

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