National Australia Bank Ltd v Charlton; Charlton v The General Manager, NSW Rural Assistance Authority (No 5)

1. [1]

   HIS HONOUR: By a statement of claim brought on 16 January 2015, the National Australia Bank Ltd (“NAB”) brought debt and possession proceedings against Josephine Joan Charlton in her own capacity and as trustee for the Phoenix Trust (“Ms Charlton”; further, the Phoenix Trust shall hereinafter be referred to as “the Trust”) (case number 2015/27843: “the debt and possession proceedings”). NAB claimed a debt owed by Ms Charlton which was made up of an Overdraft, a First Business Options Loan and a Second Business Options Loan and NAB sought an order for possession under a mortgage.

2. [2]

   A reply to the statement of claim was filed 4 May 2016. A reply to that reply was filed 5 May 2016. An amended statement of claim was filed on 4 May 2016. An amended defence was filed on 20 May 2016.

3. [3]

   By a statement of cross-claim filed 9 July 2015 (and later amended on 6 August 2015), Ms Charlton, then as the first cross-claimant, and Kevin Michael O’Brien, as the second cross-claimant, brought a cross-claim in the debt and possession proceedings (“the cross-claim proceedings”). A defence to the first cross-claim was filed 2 September 2015. An amended defence was filed to the cross-claim proceedings on 4 May 2016.

4. [4]

   Further proceedings were commenced by summons by “[Ms] Charlton in her own capacity” and “Mr O’Brien as Trustee of Phoenix Trust” on 21 April 2016 against the General Manager of the NSW Rural Assistance Authority (“the RAA”) and NAB. These were judicial review proceedings and bore the case number 2016/122304 (“the judicial review proceedings”).

5. [5]

   On 2 June 2016, Schmidt J made orders that the debt and possession and judicial review proceedings would be heard together whereby the evidence in the one matter would be evidence in the other. (Collectively the debt and possession, cross-claim and judicial review proceedings shall be referred to as “the proceedings”).

6. [6]

   The proceedings have a lengthy case management history which was, in part, described in a judgment of the Court in National Australia Bank Ltd v Charlton; Charlton v The General Manager, NSW Rural Assistance Authority [2018] NSWSC 157 (“Charlton No 1”) at [21]-[50].

7. [7]

   Ms Charlton filed a notice of motion dated 5 September 2017 seeking summary dismissal of the debt and possession proceedings, or alternatively that the judicial review proceedings be heard separately (and before) the debt and possession proceedings (the first notice of motion was formally filed on 27 September 2017). The first notice of motion was dismissed in Charlton No 1.

8. [8]

   By notice of motion filed on 28 February 2018, Ms Charlton sought a stay of debt and possession proceedings, pursuant to s 67 of the Civil Procedure Act 2005 (NSW), and a vacation of the hearing dates set for the proceedings upon the basis that Ms Charlton intended to appeal the decision in Charlton No 1 (“the stay application”). No stay application was brought in relation to the related cross-claim proceedings and judicial review proceedings. The second notice of motion was dismissed on 14 March 2018 (the first day of the trial) in National Australia Bank Ltd v Charlton; Charlton v The General Manager, NSW Rural Assistance Authority (No 2) [2018] NSWSC 969 (“Charlton No 2”).

9. [9]

   By a notice a motion filed 8 March 2018 (“the third notice of motion”), Mr O’Brien sought to be added as a defendant in the debt and possession proceedings. This motion was heard on the latter half of the first day of the trial after the Court had delivered judgment on the stay application. The third notice of motion was dismissed on 15 March 2018 with reasons delivered on 26 June 2018: National Australia Bank Ltd v Charlton; Charlton v The General Manager, NSW Rural Assistance Authority (No 3) [2018] NSWSC 970 (“Charlton No 3”).

10. [10]

    The trial then proceeded over 6 more days, albeit spread out over a considerable period of time for a variety of reasons. As mentioned, the course of the proceedings up to Charlton No 1 appears in Charlton No 1, including settlement discussions, a further court ordered mediation, an intention to appeal from the same and a withdrawal of an application for mediation. The reasons for further delays are reflected in the transcript of proceedings but, in part, concerned Ms Charlton, a self-represented litigant, being afforded latitude in bringing her case.

11. [11]

    The proceedings were resolved wholly in favour of NAB by a judgment of this Court delivered 29 October 2019: National Australia Bank Ltd v Charlton; Charlton v The General Manager, NSW Rural Assistance Authority (No 4) [2019] NSWSC 1477 (“Charlton No 4”).

12. [12]

    As to debt and possession, the Court found (at [539]) as follows:

13. [13]

    The Court dismissed the cross-claim (at [540]) and made the following finding as to the judicial review proceedings at [541]:

14. [14]

    It was observed the Court had not heard the parties on costs which were thereby reserved.

15. [15]

    The Court made observations as to the filing of short minutes of order at [543] as follows:

16. [16]

    The Court made the following directions in Charlton No 4 at [544]:

Course of Proceedings

1. [17]

   On 12 November 2019, NAB sent the following communication to the Court:

2. [18]

   On 12 November 2019, the Court granted NAB an extension of time to file and serve the draft short minutes of order by 5pm on Tuesday, 19 November 2019.

3. [19]

   On 19 November 2019, NAB provided the following documents via email to the Court:

   1. (1)

      NAB’s Submissions in Support of Final Orders, dated 19 November 2019;

   2. (2)

      Annexure A – Short Minutes of Order in proceedings 2015/27843; and

   3. (3)

      Annexure B – Short Minutes of Order in proceedings 2016/122304.

4. [20]

   The orders proposed in the debt and possession proceedings were as follows:

5. [21]

   The orders proposed in the judicial review proceedings were as follows:

6. [22]

   On 29 November 2019, Ms Charlton wrote to the Court seeking an extension of time with respect to the debt and possession proceedings. That communication is extracted below:

7. [23]

   On 10 December 2019, Ms Charlton provided the Court with submissions made in objection to the orders sought by NAB. That communication is extracted below:

8. [24]

   The following attachments were provided by Ms Charlton over a series of four emails:

   1. (1)

      Ms Charlton’s Submissions in Objection to Final Orders sought by NAB, dated 3 December 2019 (6 pages);

   2. (2)

      Mr O’Brien’s Submissions in Objection to Final Orders sought by NAB, dated 5 December 2019 (4 pages); and

   3. (3)

      Annexures (15 pages).

9. [25]

   On 10 December 2019, the Court sent the following communication to the parties:

10. [26]

    On 16 December 2019, NAB sent the following email to the Court:

11. [27]

    That email attached sealed copy of NAB’s Submissions in Support of Final Orders, dated 19 November 2019, which indicated the submissions were filed on 11 December 2019.

12. [28]

    On 16 December 2019, the Court sent the below communication to NAB:

13. [29]

    On 19 December 2019, NAB sent the following communication to the Court:

14. [30]

    That email attached the affidavit of Ms Beth Stacker sworn 19 December 2019.

15. [31]

    On 20 December 2019, Ms Charlton sent the following communication to the Court (in reply to the above communication of NAB):

16. [32]

    On 20 December 2019, the Court sent the following communication to Ms Charlton:

17. [33]

    That same day, Ms Charlton sent the following email to the Court:

18. [34]

    That email attached and affidavit of Ms Charlton dated 20 December 2019, it was unsealed.

19. [35]

    On 8 January 2020, the Court received the following communication from NAB:

20. [36]

    The Court granted the extension.

21. [37]

    On 29 January 2020, NAB sent the following communication to the Court:

22. [38]

    That email attached Short Minutes of Order, with respect to the debt and possession proceedings, which proposed the following orders (with the amount in proposed order 3 amended to reflect the reduction described above):

23. [39]

    On 9 February 2020, Ms Charlton sent the following email to the Court:

24. [40]

    On 17 February 2020, Ms Charlton sent the following communication to the Court:

25. [41]

    That email attached the affidavit of Ms Charlton dated 16 February 2020. It was said to concern “FURTHER TO CALCULATION OF DEBT – CORRESPONDENCE FROM NAB ATTACHED”. The attachment was not sealed and did not appear to have been filed.

26. [42]

    In the result, the orders sought by NAB, in the debt and possession proceedings and the cross-claim proceedings, were the following orders:

    1. (1)

       Judgment for NAB against Ms Charlton for the whole of the land comprised in the Certificate of Title, Folio Identifier 22/724651 and known as ‘Oriel’ Shannonvale Road, Five Ways (also known as ‘Oriel’ Tottenham) in the State of New South Wales.

    2. (2)

       Leave to NAB to issue a writ of possession to enforce the judgment in 1 above.

    3. (3)

       Judgment for NAB against Ms Charlton in the sum of $1,838,388.

    4. (4)

       Ms Charlton to pay NAB’s costs of the statement of claim.

    5. (5)

       The cross-claim be dismissed.

    6. (6)

       Ms Charlton and Mr O’Brien to pay NAB’s costs of the cross-claim.

27. [43]

    As earlier mentioned, in the judicial review proceedings, NAB sought the following orders:

    1. (1)

       The summons be dismissed.

    2. (2)

       Ms Charlton and Mr O’Brien to pay NAB’s costs of the proceedings.

28. [44]

    No orders were sought with respect to RAA. As mentioned, RAA entered a submitting appearance.

29. [45]

    As those orders were disputed by Ms Charlton and Mr O’Brien, submissions were filed by the respective interests.

SUBMISSION BY NAB

1. [46]

   Noting adjustments in the NAB position as recorded under the heading, the Course of Proceedings, as to the debt and possession proceedings (and the cross-claim), NAB submitted:

2. [47]

   As to the incorrect reference to 30 September 2019, NAB submitted that the correct dates from which the debt was to be calculated were as follows (supported by the affidavit of Ms Stacker):

   1. (1)

      Overdraft – 4 November 2019;

   2. (2)

      First Business Options Loan – 1 November 2019; and

   3. (3)

      Second Business Options Loan – 1 November 2019.

3. [48]

   As to proposed order 3, NAB only sought the amount owed at the dates above, and did not seek an amount including interest accrued in the period following those dates.

4. [49]

   The affidavit of Ms Stacker identified the amount owing on each of those facilities as at the respective dates identified above, as follows:

   1. (1)

      For the Overdraft, $817,869.17;

   2. (2)

      For the First Business Options Loan, $313,288.42;

   3. (3)

      For the Second Business Options Loan, $708,157.72.

5. [50]

   The sum of those amounts is $1,839,315.31. As will be discussed below, Ms Charlton contended that this figure impermissible included enforcement fees arising from notices that were withdrawn. As was discussed above, NAB conceded (without admission) that it would not pursue charges which it assessed in the sum of $927.31.

6. [51]

   As to the judicial review proceedings, NAB submitted:

Submissions for Ms Charlton

1. [52]

   Ms Charlton filed a submission dated 3 December 2019 and Mr O’Brien filed submissions dated 5 December 2019.

2. [53]

   The directions made by the Court made abundantly clear that the scope for further submissions was confined to any dispute as to whether the proposed orders reflected the judgment of the Court.

3. [54]

   It follows that the liberty given to the parties did not extend to, as featured in some parts of Ms Charlton’s and Mr O’Brien’s submissions, the re-canvassing of issues resolved in the judgment, challenges to findings or conclusions reached in the judgment or entirely fresh issues such as the issue raised by Mr O’Brien concerning Mr Justin O’Brien and his family’s legal status under cl 18 of the Deed and various other submissions regarding possession. It might be noted, in that respect, that, whilst Ms Charlton and Mr O’Brien are self-represented litigants, they are not unworldly of Court processes.

4. [55]

   The balance of this judgment will deal with submissions advanced by Ms Charlton and Mr O’Brien which conform to the directions of the Court.

Debt and Possession Proceedings

1. [56]

   As to the orders proposed by NAB in relation to those proceedings, Ms Charlton seemed to make three complaints.

2. [57]

   First, Ms Charlton submitted:

3. [58]

   Secondly, Ms Charlton submitted:

4. [59]

   Thirdly, Ms Charlton submitted:

5. [60]

   Whilst not entirely clear, I understand Ms Charlton raised the following issues as to the orders:

   1. (1)

      There was no adjustment made to the default interest rate charged by NAB despite notices being withdrawn (“Issue 1”).

   2. (2)

      There was no removal of the enforcement fees charged on the 16 November 2011 notice or other notices (“Issue 2”).

   3. (3)

      Costs should not be made in respect of Charlton No 4 whilst costs in relation to Charlton No 1, Charlton No 2 and Charlton No 3 (“Issue 3”) remain reserved.

Judicial Review Proceedings

1. [61]

   As to the order 2 proposed by NAB in relation to the judicial review proceedings, Ms Charlton submitted:

Debt and Possession Proceedings

1. [62]

   I shall deal with the issues raised by Ms Charlton (and Mr O’Brien who joined in those submissions) seriatim.

2. [63]

   As to Issue 1, the default interest rate charged by NAB in relation to the Overdraft did not need to be adjusted as the 26 October 2011 cancellation notice did not constitute an enforcement action for the reasons expressed at [412] of Charlton No 4. In other words, the bank was entitled to take this action without the need for a s 11 certificate.

3. [64]

   More generally, the charging of a default interest rate alone does not constitute enforcement action for the purposes of the Farm Debt Mediation Act 1994 (NSW). At [409] of Charlton No 4, it was stated:

4. [65]

   Finally, it was accepted that NAB withdrew reliance on the first and second default notices (at [422] of Charlton No 4). At [445] of Charlton No 4, it was found that Ms Charlton was aware that NAB had withdrawn reliance on the first default notice.

5. [66]

   The method by which NAB calculated the proposed judgment debt has been discussed above. However, it remained unclear whether the calculation had adjusted for enforcement fees arising from notices of which reliance had been withdrawn by NAB.

6. [67]

   In its communication of 29 December 2019, NAB provided further information as to enforcement fees:

7. [68]

   It would seem that the $200 enforcement cost arose from the first default notice issued 16 November 2011 given the proximity of dates.

8. [69]

   Whilst not mentioned in NAB’s submissions, from a review of the evidence, it also seems that an enforcement fee of $120 was charged to the overdraft on 27 January 2012 which presumably arose from the second default notice issued 24 January 2012; a notice that was also withdrawn by NAB. Ultimately, NAB accepted the amount of charges amounted to $927.31 and, as earlier mentioned, NAB accepted that a reduction in the debt may be made by the Court with respect to that amount.

9. [70]

   As to the Financial Ombudsman proceedings, the determination made was that NAB should pay “the total sum of $4,000 for non-financial loss, which sum is to be paid by way of a reduction in the debt owing to the FSP”. The following conclusions can be drawn from that determination:

   1. (1)

      The sum payable was for non-financial loss, which necessarily excludes the enforcement fees arising from the first and second default notices, which constituted financial loss;

   2. (2)

      The Financial Ombudsman Service considered that the portion of the $4,000 ($2,000) relating to the first default notice was payable due to that notice being void, whereas Ms Charlton’s argument in respect of the proposed judgment debt (which was correctly aligned to the terms of the judgment in Charlton No 4) was that enforcement fees should not be payable on the basis of non-reliance by NAB. Those were distinct considerations, therefore, it cannot be said that the $2,000 encompassed the enforcement fees at issue here.

   3. (3)

      The $4,000 was payable by reducing the debt owed by the defendant to NAB. Under the determination, that course was to be actioned “within 60 days” from the date of acceptance of the determination.

10. [71]

    Points 1 and 2 lead to the conclusion that the enforcement fees charged on the first and second default notices are distinct from the $4,000 FOS determination.

11. [72]

    Point 3 is relevant to the Court’s determination of the date at which interest should accrue if the $4,000 adjustment was not made to the debt by NAB following the FOS determination.

12. [73]

    Based on the above considerations, the judgment debt should be reduced by $927.31. This is reflected in the orders proposed by NAB.

13. [74]

    As to the $4,000 sum referred to by Ms Charlton, NAB accepted it had not made payment of that amount to Ms Charlton and Mr O’Brien. However, “[t]he FOS determination provided Ms Charlton and Mr O’Brien with an opportunity to receive a payment in the sum of $4,000 but, as is made clear on page 1 of the FOS determination, NAB’s obligation to comply with the terms of the determination was conditional on Ms Charlton and Mr O’Brien accepting the determination, which they did not. Accordingly, NAB was never obliged to pay $4,000 to Ms Charlton and Mr O’Brien”. Nothing in these proceedings altered that position.

14. [75]

    The Court is not limited in its power to make an order as to costs in a matter by virtue of having reserved its decision as to costs in interlocutory proceedings. Orders as to costs may be made at “any stage of the proceedings or after the conclusion of the proceedings”: s 98(3) Civil Procedure Act 2005 (NSW) (“CPA”).

15. [76]

    Section 98(4) of the CPA further sets out the particular circumstances in which the Court may make an order as to costs, as follows:

16. [77]

    The Court provided an opportunity to the parties make submissions as to the costs of the proceedings, which included the interlocutory issues resolved by the Court in Charlton No 1, Charlton No 2 and Charlton No 3, and as to the principal judgment in Charlton No 4. Ms Charlton and Mr O’Brien were wholly unsuccessful in all of those judgments in the debt and possession proceedings and in the cross-claim. The proposed orders by NAB appropriately reflect the general rule that costs follow the event: r 42.1 Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”) and an order for costs should be made in its favour.

17. [78]

    It is apparent that the timing of the Court’s making of orders as to costs in relation to Charlton No 4 is not inappropriate. In that respect, Ms Charlton’s submissions are defective in that they seem to conflate the making of an order as to costs with the assessment of costs.

Judicial Review Proceedings

1. [79]

   In my view, there is no proper basis raised by Ms Charlton or Mr O’Brien to support an order other than that costs should follow the event: UCPR r 42.1. Their contentions were essentially rejected and the summons dismissed.

2. [80]

   No order for costs should be made against the RAA which entered a submitting appearance. There would seem to be no aspect of the proceedings which would excite an application for the RAA for costs and accordingly no orders or provision for hearing is made in that respect. If, however, the RAA does contemplate taking such a step, it would need to do so promptly upon the receipt of this judgment.

The Submissions of Mr O’Brien

1. [81]

   Mr O’Brien adopted the submissions of Ms Charlton and provided additional submissions. Whilst somewhat difficult to understand, the additional submissions raised the following additional issue:

   1. (1)

      A writ of possession is incompatible with a caveat on the title of the property which was lodged prior to the filing of the statement of claim for debt and possession. Mr O’Brien submitted:

2. [82]

   This submission was already ventilated, to an extent, in the proceedings giving rise to Charlton No 4, as “additional issue 2” which was summarised at [211(2)] of that judgment. It should be noted that at [211(5)] of Charlton No 4, the Court found:

3. [83]

   As to the submission now made, there are two difficulties. First, the argument raised by Mr O’Brien is pre-emptive. The order sought by NAB is for leave to issue a writ of possession, not an application for a writ of possession, which, as NAB correctly submitted, would need to be made separately by way of a notice of motion, together with an affidavit in support: UCPR rr 39.2(1), 39.3(1) and (2).

4. [84]

   Secondly, a caveat on the title of a property is no bar to the making of an order granting leave to issue a writ of possession. Leave to issue a writ of possession, as with an application for a writ of possession, operates in accordance with the general law.

5. [85]

   I reject Mr O’Brien’s submissions in this respect.

Orders

1. [86]

   In the result, with respect the debt and possession and the cross-claim proceedings, the Court makes the following orders:

   1. (1)

      Judgment for NAB against Ms Charlton for the whole of the land comprised in the Certificate of Title, Folio Identifier 22/724651 and known as ‘Oriel’ Shannonvale Road, Five Ways (also known as ‘Oriel’ Tottenham) in the State of New South Wales.

   2. (2)

      Leave to NAB to issue a writ of possession to enforce the judgment in 1 above.

   3. (3)

      Judgment for NAB against Ms Charlton in the sum of $1,838,388.

   4. (4)

      Ms Charlton to pay NAB’s costs of the statement of claim.

   5. (5)

      The cross-claim be dismissed.

   6. (6)

      Ms Charlton and Mr O’Brien to pay NAB’s costs of the cross-claim.

2. [87]

   As to the judicial review proceedings, the Court makes the following orders:

   1. (1)

      The summons be dismissed.

   2. (2)

      Ms Charlton and Mr O’Brien to pay NAB’s costs of the proceedings.