Court of Appeal Supreme Court New South Wales

• Medium Neutral Citation: Hammond v JP Morgan Trust Australia Ltd [2012] NSWCA 295
• Hearing dates: 4 September 2012
• Decision date: 18 September 2012
• Before: Basten JA at [1]; Meagher JA at [2]; Bergin CJ in Eq at [76]

Decision

(1) Appeal be dismissed.

(2) Appellant to pay the respondent's costs of the appeal.

(3) The stay of execution of the writ of possession issued on 12 April 2012 be dissolved.

(4) Mr Hammond's motion for review of the decision of Beazley JA of 13 August 2012 and other relief be dismissed.

(5) Mr Hammond to pay the respondent's costs of that application.

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

• Catchwords: ESTOPPEL - promissory - whether mortgagee prevented from relying on non-compliance with a default notice and prosecuting proceedings for possession; REAL PROPERTY - mortgagee's claim for possession - whether mortgagor has benefit of promissory estoppel preventing reliance on default notice; PROCEDURE - joinder of parties - whether a person, who claims that a registered proprietor and mortgagor holds property subject to a resulting trust, is a necessary party to proceedings brought by the mortgagee for possession of the property
• Legislation Cited: Consumer Credit (New South Wales) Act 1995; Consumer Credit Code; National Credit Code (Cth); Real Property Act 1900; Supreme Court Act 1970
• Cases Cited: Accurate Financial Consultants Pty Ltd v Koko Black Pty Ltd [2008] VSCA 86; 66 ACSR 325; Agricultural and Rural Finance Pty Ltd v Gardiner [2008] HCA 57; 238 CLR 570; Akins v National Australia Bank (1994) 34 NSWLR 155; Australian Crime Commission v Gray [2003] NSWCA 318; Delehunt v Carmody [1986] HCA 67; 161 CLR 484; Foran v Wight [1989] HCA 51; 168 CLR 385; Galaxidis v Galaxidis [2004] NSWCA 111; Grundt v Great Boulder Pty Gold Mines Ltd [1937] HCA 58; 59 CLR 641; Hammond v JP Morgan Trust Australia Ltd [2011] NSWCA 57; Hammond v JP Morgan Trust Australia Ltd [2012] NSWCA 156; Hammond v JP Morgan Trust Australia Ltd [2012] NSWCA 188; Hammond v JP Morgan Trust Australia Ltd [2012] NSWCA 261; Hughes v Metropolitan Railway Company (1877) 2 App Cas 439; John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd [2010] HCA 19; 241 CLR 1; JP Morgan Trust Australia Ltd v Hammond [2012] NSWSC 213; JP Morgan Trust Australia Ltd v Hammond [2012] NSWSC 317; Legione v Hateley [1983] HCA 11; 152 CLR 406; MCI World Com International Inc v Primus Telecommunications Inc [2004] 2 All ER (Comm) 833; News Ltd v Australian Rugby Football League Ltd (1996) 64 FCR 410; Nowlan v Marson Transport Pty Ltd [2001] NSWCA 346; 53 NSWLR 116; Penrith Whitewater Stadium Ltd v Lesvos Enterprises Pty Ltd [2007] NSWCA 131; Phoenix Commercial Enterprises Pty Ltd v City of Canada Bay Council [2010] NSWCA 64; Rinehart v Welker [2012] NSWCA 1; 285 ALR 191; Saleh v Romanous [2010] NSWCA 274; 79 NSWLR 453; Sullivan v Sullivan [2006] NSWCA 312; 13 BPR 24,755; The Commonwealth v Verwayen [1990] HCA 39; 170 CLR 394; The Western Australian Insurance Company Ltd v Dayton [1924] HCA 58; 35 CLR 355; Thorner v Major [2009] UKHL 18; [2009] 1 WLR 776; Tjiong v Tjiong [2012] NSWCA 201; Westpac Banking Corporation v The Bell Group Ltd (In Liq) (No 3) [2012] WASCA 157
• Category: Principal judgment
• Parties: Tracie Hammond (Appellant); JP Morgan Trust Australia Ltd (Respondent); Patrick Hammond (Applicant in the Motion)
• Representation: Counsel: T Hammond (In person) (Appellant); J Stoljar SC; P T Newton (Respondent); C A Moore SC; Ms F T Roughley (Amicus Curiae); P Hammond (self-represented); Solicitors: Kemp Strang (Respondent)
• File Number(s): 2012/124059

Decision under appeal

• Citation: JP Morgan Trust Australia Ltd v Hammond [2012] NSWSC 317
• Date of Decision: 2012-04-03 00:00:00
• Before: Johnson J
• File Number(s): 2008/284105

Judgment

1 BASTEN JA: I agree with the orders proposed by Meagher JA. I gratefully adopt his reasons with respect to the admission of evidence at the hearing of the appeal and for the orders proposed.

2 MEAGHER JA: The appellant appeals against a judgment of Johnson J that the respondent as mortgagee have possession of a property at Faulconbridge owned by her: JP Morgan Trust Australia Ltd v Hammond [2012] NSWSC 317. The applicant (Mr Hammond) is the appellant's husband. He seeks a review of a decision of Beazley JA dismissing his application to be joined as a party to the appeal: Hammond v JP Morgan Trust Australia Ltd [2012] NSWCA 261.

3 The primary issue in the appeal is whether, taking into account further evidence which the appellant seeks to adduce under s 75A of the Supreme Court Act 1970, the respondent's claim to possession should have been dismissed because the respondent was estopped from bringing or maintaining possession proceedings in reliance upon any failure of the appellant to comply with a Default Notice dated 19 February 2008. If this issue is resolved in favour of the appellant, there is a further question as to whether the respondent is able to rely upon the appellant's failure to comply with a later Default Notice dated 4 April 2011 to support the judgment for possession. This question is raised by the respondent's notice of contention.

4 The issue in Mr Hammond's application is whether Beazley JA erred in concluding that he was not a necessary party to the possession proceedings, assuming for the purpose of that application that (as Mr Hammond contends) the appellant holds the Faulconbridge property on trust for herself and her husband as joint beneficial owners.

5 At the commencement of oral argument, the respondent conceded that there were "special grounds" for the purposes of s 75A(8) of the Supreme Court Act, justifying the receipt of further evidence on the appeal. Nevertheless, it remains necessary to record the history of the underlying proceedings. That history is relevant to whether the Court should accept that concession as to there being "special grounds", and also to a consideration of the respondent's notice of contention

Proceedings at first instance

6 On 8 April 2005 the respondent advanced $486,000 to the appellant to enable her to purchase the Faulconbridge property for $540,000. That advance was secured by registered mortgage AB413944K. Under the terms of the loan secured by that mortgage, the appellant was required, during the first five years, to pay monthly instalments of interest only. Those instalments were due in the middle of each month.

7 The application for the loan was submitted on behalf of the appellant by Crown Mortgages Pty Ltd (Crown Mortgages). Mr Hammond was originally the sole director of and shareholder in Crown Mortgages which carried on a business of producing residential and commercial mortgages to brokers and consumers. By early 2005, 70 per cent of the shares in Crown Mortgages were held by the Hammond Family Trust. Mr Hammond says that the balance of the funds required for the purchase of the property and the monthly interest payments made between 2005 and late 2007 were sourced from Crown Mortgages, either directly or via a joint account of himself and the appellant operated with the Commonwealth Bank. On the basis that he provided those funds and that it was intended that the property be jointly owned by him and his wife, Mr Hammond says that it is held by his wife for them beneficially, as joint tenants: cf Delehunt v Carmody [1986] HCA 67; 161 CLR 484.

8 The purchase of the property was settled and the loan advanced on 8 April 2005. In late 2007 the appellant defaulted in the payment of interest instalments. In February 2008 the respondents served a Default Notice on the appellant. On 22 April 2008 the respondent commenced proceedings for possession in the Common Law Division. It alleged that the appellant had not complied with the Default Notice by reason of her failure to pay outstanding instalments totalling $14,725.30.

9 The appellant has, since at least 2002, suffered from a number of physical and psychological illnesses. Those illnesses have, for some time, left her unable to represent herself at hearings or to participate significantly in the defence of the proceedings. For that reason, Mr Hammond conducted the defence of the proceedings on her behalf in the initial stages and also appeared for her when the proceedings were before the Court. By her defence, filed in August 2008, the appellant denied any failure to comply with the Default Notice and alleged that an arrangement had been entered into with the respondent for payment "in respect of the default".

10 On 12 December 2008, Latham J, on the respondent's application, made an order for summary judgment for possession of the property. Mr Hammond appeared on behalf of the appellant at the hearing of that application. One argument put was that, because of an arrangement between the parties, the original Default Notice had been remedied. That argument was rejected. The appellant successfully appealed from that decision: Hammond v JP Morgan Trust Australia Pty Ltd [2011] NSWCA 57. Mr Hammond represented the appellant on the hearing of that appeal. In a judgment delivered on 11 March 2011, the Court (Tobias JA with whom Campbell and Macfarlan JJA agreed) held that there was an arguable defence based on an arrangement that the respondent would not take any further action in reliance on the first Default Notice if, as happened, the appellant paid it $23,034.84: esp at [15], [27].

11 Following the decision of this Court, further pleadings were filed. The respondent also served the second Default Notice in April 2011. That notice claimed arrears of $190,691.84. That amount was not paid.

12 The further pleadings filed included an Amended Defence and an Amended Cross-Claim. The Amended Defence alleged that the respondent had represented that the appellant would have until 30 April 2008 to rectify the first Default Notice and that this had been done by payment of $23,034.84 on 22 April 2008 (see esp paras 13 to 18). The Amended Cross-Claim included an allegation that, in assessing her loan application and making the loan, the respondent had breached a duty of care owed to the appellant, entitling her to damages.

13 In its defence to that Amended Cross-Claim, the respondent pleaded the circumstances in which the loan had been made, the service of the two Default Notices and the appellant's failure to pay the amounts claimed under each notice. That defence concluded by alleging that the respondent was entitled to possession of the property.

14 In August 2011, the respondent indicated that it opposed Mr Hammond representing the appellant at the final hearing of the proceedings. When the proceedings were fixed for hearing before Johnson J, his Honour listed that question for determination on 9 March 2012 and before the commencement of the final hearing. The primary judge refused Mr Hammond's application for leave to continue to represent the appellant: JP Morgan Trust Australia Ltd v Hammond [2012] NSWSC 213.

15 The possession proceedings were heard on 3 April 2012. Outlines of submissions were exchanged before that hearing. The appellant's outline dated 26 March 2012 included an argument that in accordance with an arrangement between the parties, the first Default Notice was satisfied by payment of $23,034.84 on 22 April 2008. That argument was addressed in the respondent's outline.

16 The appellant was not present in Court on 3 April 2012. Mr Hammond was and made a further application for leave to represent his wife. That application was also refused: JP Morgan Trust Australia Ltd v Hammond [2012] NSWSC 317 at [4]-[7]. The primary judge then proceeded to hear the respondent's claim in the absence of the appellant. The material tendered by the respondent and admitted into evidence did not include any affidavit evidence or documents dealing with the second Default Notice. It did include parts of the appellant's affidavit of 25 August 2010 which contained admissions as to the signing of loan documentation. There was also not tendered by the respondent or otherwise admitted into evidence any part of the affidavit of Mr Hammond sworn 12 September 2011 or the documents exhibited to that affidavit. Those documents included the communications dated between 20 March and 30 April 2008 which were relied upon by the appellant to support the argument pleaded and addressed in her outline of submissions.

17 In his reasons for judgment, the primary judge records that he had regard to those submissions: [14]. At [34], his Honour concludes that the appellant had not complied with the Default Notice. However, there is no consideration of the argument in the appellant's outline: cf [40] and [41].

18 The primary judge did address a number of the other issues raised by the appellant in the Amended Defence and Amended Cross-Claim. His Honour concluded that the loan was made by the respondent: [40]; that the appellant had the assistance of her husband, an experienced person in the mortgage industry, when completing the loan agreement as well as access to a lawyer who had assisted her: [43], [44]; that there was no evidence that the respondent departed from its normal or appropriate lending practices: [53]; that there was no evidence of the respondent having engaged in any unfair pressure or tactics towards the appellant: [65]; and that in the circumstances there was no duty of care owed by the respondent to the appellant, let alone any breach of duty: [48].

19 The following matters emerge from this consideration of the history of the underlying proceedings. First, the appellant's argument that the first Default Notice was satisfied in accordance with an arrangement made between the parties was not addressed by the primary judge. That argument had been pleaded by way of defence and was the subject of written submissions of the appellant and the existence of the argument had provided the reason for this Court's decision to set aside the earlier summary judgment. Secondly, the evidence upon which that argument was based consisted of contemporaneous documents whose authenticity was not in issue. Thirdly, that evidence was not tendered before the primary judge because the hearing proceeded in the absence of the appellant, Mr Hammond having been refused leave to represent her. This was so although he had acted on her behalf in the defence of the proceedings since they had been commenced nearly four years earlier. Fourthly, in the absence of the appellant leading any evidence in support of the Amended Cross-Claim, the respondent led no evidence as to and did not rely upon any failure to comply with the second Default Notice. Accordingly, reliance on that notice was not pleaded in the statement of claim in support of the relief sought by it, no evidence or argument was addressed to that notice at the final hearing, and the primary judge was not required to and did not give any consideration to the efficacy of that notice or to the application of s 80 of the Consumer Credit Code, or s 88 of the National Credit Code, in relation to that notice and enforcement proceedings commenced in April 2008.

The appeal proceedings

20 The appellant appeals from the primary judge's decisions of 9 March 2012 and 3 April 2012. The nine grounds of appeal include that the primary judge erred in concluding that the appellant was in default under the mortgage.

21 On 14 May 2012 Tobias AJA dismissed an application by the appellant for a stay of execution of a writ of possession issued on 12 April 2012: Hammond v JP Morgan Trust Australia Ltd [2012] NSWCA 156. The appellant sought a review of that decision under s 46(4) of the Supreme Court Act. On 28 May 2012 Beazley JA granted a stay of execution of the writ of possession pending the determination of that application.

22 The application for review was heard on 15 June 2012. On that occasion Mr Moore SC and Ms Roughley appeared as amicus curiae in the interests of the appellant. The Court (Basten JA, Sackville AJA and Young AJA) was satisfied that if the appellant was permitted to adduce evidence in the appeal of the written communications of March and April 2008, she had an arguable ground of appeal: Hammond v JP Morgan Trust Australia Ltd [2012] NSWCA 188. For that reason, the Court extended the stay until the determination of the appeal and made directions to permit the filing by the appellant of an application to lead further evidence in the appeal. The Court also directed that if the respondent sought to rely on the second Default Notice, it should file a notice of contention. That notice was filed on 13 July 2012. It includes a contention that in the event the Court holds that the respondent was estopped from bringing possession proceedings in reliance upon the first Default Notice, the respondent should be given leave nunc pro tunc to bring the proceedings, and support the judgment, on the basis of non-compliance with the second Default Notice.

23 Finally, on 13 August 2012, Beazley JA heard Mr Hammond's application to be joined as a party to the appeal. That argument was rejected: Hammond v JP Morgan Trust Australia Ltd [2012] NSWCA 261. Her Honour also dismissed Mr Hammond's application for declarations as to his beneficial interest in the Faulconbridge property. In his application for a review of that decision Mr Hammond seeks, in addition to the relief sought before Beazley JA, an order setting aside the judgment of Johnson J of 3 April 2012 and, in the event that he is not joined as a party to the appeal, an order staying execution of the writ of possession pending an appeal to the High Court.

The issues in the appeal and application for review

24 As has already been noted, the respondent conceded at the commencement of oral argument that there were "special grounds" justifying the receipt of further evidence on the appeal, notwithstanding that the evidence sought to be tendered was available at the time of the hearing. In my view that concession was correctly made. The circumstances described above are sufficiently out of the ordinary to answer the description "special grounds" and justify the admission of the evidence on appeal: see Phoenix Commercial Enterprises Pty Ltd v City of Canada Bay Council [2010] NSWCA 64, esp at [136]; and generally Akins v National Australia Bank (1994) 34 NSWLR 155 at 160; Nowlan v Marson Transport Pty Ltd [2001] NSWCA 346; 53 NSWLR 116 at [14]; Tjiong v Tjiong [2012] NSWCA 201 at [165]-[168]. The evidence was not led at the hearing because the appellant was not present or represented. She had filed an outline of submissions which raised the argument to which the evidence was relevant; and an affidavit was filed which sought to tender the principal documents relied upon. The appellant did not understand that the consequence of her not being present or represented at the hearing was that the evidence filed on her behalf would not be considered by the Court. That evidence was not controversial and had been the subject of an earlier decision of this Court that it provided the appellant with an arguable defence to the respondent's claim. As the appellant submitted, it is in the interests of justice that the defence based on that material be considered by the Court when hearing the appeal. The respondent does not contend otherwise.

25 For those reasons, I agreed in the order admitting into evidence on the hearing of the appeal the relevant communications dated between 20 March and 30 April 2008. Those communications are dealt with in detail below. There was also admitted into evidence the material which the respondent relies upon in support of its notice of contention. That material relates to the second Default Notice and was excluded from the evidence tendered by the respondent before the primary judge. Had the material relied upon by the appellant been tendered at the hearing it is likely that the respondent would have tendered this additional material.

26 It is argued on behalf of the appellant that she had the benefit of a promissory estoppel arising from statements made by the respondent's representative, Challenger Mortgage Management (Challenger) which induced her to pay $23,034.84 to the respondent on 22 April 2008. A promissory estoppel operates as a restraint on the enforcement of rights: Hughes v Metropolitan Railway Company (1877) 2 App Cas 439 at 448; Legione v Hateley [1983] HCA 11; 152 CLR 406 at 432-433; Saleh v Romanous [2010] NSWCA 274; 79 NSWLR 453 at [62], [74] per Handley AJA (Giles JA and Sackville AJA agreeing). Here, the appellant must establish that she so acted or abstained from acting on the basis of the represented or promised state of affairs as to the exercise of the respondent's rights, that she would suffer detriment if the respondent was later allowed to set up rights inconsistent with that state of affairs: Grundt v Great Boulder Pty Gold Mines Ltd [1937] HCA 58; 59 CLR 641 at 674-675; Legione v Hateley at 437; The Commonwealth v Verwayen [1990] HCA 39; 170 CLR 394 at 453, 500. It is argued that in the absence of the statements made by Challenger, the appellant would have paid the amount necessary to remedy the first notice and avoided the commencement of possession proceedings based upon a failure to remedy that notice. Alternatively, it is argued that the appellant would not have paid that sum at all. On either basis it is said that she would suffer detriment if the respondent was entitled to obtain judgment for possession in reliance on a failure to comply with the first Default Notice.

27 In oral argument it was accepted by Mr Moore SC, rightly in my view, that although in the written submissions the terms "election" and "waiver" had been used to describe the legal effect of the respondent's conduct, the only right in the nature of a defence to which that conduct might give rise was a promissory estoppel. The fact of non-compliance with the Default Notice did not result in the respondent having alternative and inconsistent rights so as to require it to make an election: see generally Agricultural and Rural Finance Pty Ltd v Gardiner [2008] HCA 57; 238 CLR 570 at [56], [58]-[61].

28 Although in the written submissions in support of the appellant's position, it was suggested that there may not have been any evidence before the primary judge as to the amount owing to the respondent, in oral argument Mr Moore SC indicated that this submission was not maintained. As the claim made by the respondent did not include a money claim, it was not necessary for it to prove the precise amount outstanding at the time of the hearing. The evidence of Mr Duncan established the defaults which occurred between October 2007 and April 2008 and that no payments had been made after 7 May 2008. There was also tendered in evidence a loan statement which recorded that the balance outstanding as at 24 June 2011 was $759,226.30. Although that statement described the lender as Perpetual Trustees Victoria Ltd, Mr Duncan's evidence was that it related to the appellant's loan and recorded payments made and received with respect to that loan. No other argument was put in the interests of the appellant in support of the remaining grounds of appeal.

29 It was submitted by Mr Moore SC that if the appellant had the benefit of a promissory estoppel precluding the respondent from relying on any failure to remedy the first Default Notice, the appeal should be allowed and the respondent's claim dismissed. In response to the notice of contention, it was submitted that in circumstances where the second Default Notice was not pleaded in the statement of claim or considered by the primary judge, because it was not the subject of evidence or relied upon in the argument before him, the respondent should not be entitled to rely on it by way of a notice of contention: cf Penrith Whitewater Stadium Ltd v Lesvos Enterprises Pty Ltd [2007] NSWCA 131 at [14]-[18] (per Basten JA).

30 The issue raised by Mr Hammond's application is whether Beazley JA erred in concluding that the orders sought by the respondent in the proceedings did not directly affect the rights or liabilities of Mr Hammond so as to make him a necessary party to those proceedings: see John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd [2010] HCA 19; 241 CLR 1 at [131]-[132].

31 It is convenient first to address the issues raised in the appeal. I will then address Mr Hammond's application under s 46(4). In considering the issues in this order, I am mindful that if Mr Hammond should have been joined as a necessary party to the possession proceedings, he may be entitled, for that reason, to have the judgment for possession set aside: John Alexander's Clubs Pty Ltd at [137].

The facts relevant to whether there was a promissory estoppel

32 These facts are not controversial. As at February 2008 the appellant was in default in respect of interest instalments totalling $18,880.07. That amount included an instalment of $4,154.77 due on 15 February 2008. Payment of that amount was made by a direct debit on that day but that payment was reversed on 18 February 2008 because of a lack of funds in the account from which the payment was made. In the respondent's statements of account that reversal was described as being due to the "dishonour" of the initial payment.

33 Clause 7.1 of Memorandum No 2610615, whose provisions were incorporated in the mortgage, defined an event of default to include a failure to pay amounts due under the loan agreement. That agreement required that monthly instalments of interest be paid. Clause 7.2 of the Memorandum provided:

"When an event of default occurs and you choose to exercise your rights under the Mortgage then you will give me a Default Notice requiring me to remedy the default. I must have been in default for one day or more before you may do this. The Default Notice will allow a period of at least thirty days ... to remedy the default ..."

The references to "you" are to be understood as references to the respondent and the references to "I" are to the appellant.

34 Clause 8.1 of the Memorandum provides:

"In the event that I failed [sic] to rectify the default in compliance with any Default Notice under Clause 7.2 you may then or at any later time exercise all of my powers as owner of the Property and all powers vested in mortgagees by any applicable law."

Examples are then given as to what might be done by the respondent. They include entering and taking possession of or selling the property.

35 In 2008 the mortgage was, by virtue of s 5 of the Consumer Credit (New South Wales) Act 1995, subject to the provisions of the Consumer Credit Code. Section 80 of that Code provided that a credit provider "must not begin enforcement proceedings against a debtor in relation to a credit contract" unless the debtor is in default and the credit provider has given the debtor a default notice complying with that section and allowing the debtor a period of at least 30 days from the date of notice to remedy the default. In addition, the statutory power of sale conferred on a registered mortgagee only became exercisable if a written notice was given as required by s 57(2)(b) of the Real Property Act 1900.

36 On 19 February 2008, the first Default Notice was issued. It announced itself as being a notice pursuant to or within these sections. It referred to an amount of $14,725.30 as "Arrears" not paid by the appellant when due under the loan agreement. It did not include the amount which had fallen due on 15 February 2008. It provided that to remedy the default in not paying the "Arrears", the appellant was required to pay that amount "within 31 days of receipt of this notice". That period was referred to as the "Grace Period". It was common ground that the notice was received by the appellant on 22 February 2008 and that accordingly the last day of the Grace Period was 25 March 2008.

37 The Default Notice also provided:

"3. If you do not remedy all the Default(s) within the Grace Period, or if a default of the same type as specified in this notice occurs during the Grace Period, then:

3.1 The Total Amount Outstanding plus Lender's costs and charges will automatically be due and payable and the Lender may commence proceedings for the Total Amount Outstanding; and

3.2 In respect of the Property securing that Credit Contract, the Lender proposes to:

•   commence proceedings for or otherwise take possession of the Property

•   exercise power of sale in respect of the Property"

The notice also required the payment of the costs of issuing the notice of $417.34.

 

38 Finally, the Default Notice stated that payment could be made to a post office box address or by Bpay and a Biller Code was given to enable electronic payment. That Biller Code was not the correct code to which payments in reduction of the appellant's account should have been directed.

39 On 14 March 2008 a further payment of $4,154.77 was due. As with the February payment, that payment was made by a bank direct debit and "dishonoured" by reversal of the payment on 17 March 2008.

40 On 20 March 2008 a letter from the appellant was faxed to Mr Mukesh Naiker of Challenger. It is very likely that the letter was prepared and sent by Mr Hammond:

"Further to your conversation with Patrick regarding this loan account, I would like to request a moratorium on payments and enforcement action. I have suffered a series of setbacks over the last 12 months but are now in a position to turn things around.

Negotiations have just been completed with investors to invest $100k in a development venture. I expect that it will nett a profit in excess of $100k within 6 months. On that basis, I would like a moratorium in respect of the current arrears and a stay of any enforcement action provided that no further payments are missed.

Could you please advise if this is acceptable to Challenger. If not, can you offer any alternatives. After everything else that has happened, I really don't want to lose my home as well."

The reference to "Patrick" is to Mr Hammond.

41 Mr Naiker responded by email on the same day:

"Refer to you [sic] fax dated 20/03/2008.

Your request for a moratorium has been declined. I can confirm our solicitors have instruction to proceed to issue a statement of claim which will allow you 28 days to rectify the default and or refinance the facility by the expiry of the legal notice (Approximately 30 April 2008).

Please keep me informed for of your process [sic] as after the Statement of Claim has expired challenger [sic] would be seeking to apply for default judgment and a writ for possession."

42 On 1 April Mr Hammond sent Mr Naiker a further email:

"Further to our conversation last Friday, we are seeking to have funds released from trust to pay the outstanding arrears.

Could you please provide a letter stating the arrears that need to be paid so that we can provide it to the trustee."

The reference to "last Friday" was to 28 March 2008.

43 On 8 April 2008 Challenger sent a letter addressed to the appellant which said:

"Challenger Mortgage Management have now advised you on several occasions of the payment dishonours that occurred on the abovementioned account.

On behalf of JP Morgan Trust Australia Ltd, we advise that you are in breach of your loan agreement due to payment arrears. To rectify this, we request that you Bpay the amount of $23,034.84 within seven (7) days."

This letter also gave a Biller Code to which any Bpay payment should be directed. That code was different from the one stated on the Default Notice and was the correct code to which payments in reduction of the appellant's loan were to be directed.

44 The instalment due on 15 April 2008 was also dishonoured by the reversal on 16 April 2008 of the bank direct debit. The amount of that instalment was $4,473.70.

45 On 17 April Mr Hammond emailed Mr Naiker:

"I have just received confirmation that funds can be released from trust and will be Bpayed to the account to pay arrears. I will get written confirmation from the Trustee shortly."

Mr Naiker replied on 17 April 2008 within an hour or so:

"Thank you for the update.

Please note that you have a further dishonour of $4,473.70 the total instalment arrears are currently $27,508.54."

46 On 22 April 2008 in the afternoon Mr Hammond sent the following email to Mr Naiker:

"Funds have been Bpayed from the trustees to the account and should hit Thursday morning."

The reference to Thursday was to 24 April 2008. Mr Naiker responded on the same day:

"Thank you Patrick I will note the account."

47 On 22 April 2008, the statement of claim seeking possession of the property was filed. No money claim was made. The pleading referred to the Default Notice dated 19 February 2008 and alleged that the appellant had "failed to correct the default specified in the Default Notice within 31 days of service". The default described in the particulars and specified in the Default Notice was the failure to pay $14,725.30. That statement of claim was not served on the appellant or Mr Hammond or otherwise brought to the attention of either of them until some time on 30 April 2008.

48 On 23 April 2008, two payments totalling $23,034.84, were paid on behalf of the appellant by Bpay to the incorrect Biller Code account. Mr Naiker did not become aware of those payments until 30 April 2008. By that time, the funds had been returned to the account from which they had been transmitted.

49 On 30 April 2008, in an email response to an inquiry from Mr Naiker concerning these payments, Mr Hammond said:

"There were 2 lots of $11,517.42 which totalled the amount set out in the letter from Mary McHugh.

I have just received a statement of claim. Please advise ASAP why I have been served as money has been paid into the account specified by Kemp Strang. Obviously I am extremely concerned by this turn of events.

I have spoken to Dannielle I think from Kemp Strang who advised that the biller code on the letter was not theirs and that it was yours so I don't understand why you don't have the money,

50 Later on that day, Mr Naiker sent the following email to Mr Hammond:

"Further to our conversation 30/04/2008.

I can confirm that the funds have been returned to the source account on the 28/04/2008 by our finance department.

I have spoken to our solicitors at Kemp Strang and have confirmed the incorrect Biller code ... was referenced on the notice dated 19/02/2008.

Please note the letter sent on 08/04/2008 from this office confirming the arrears had the correct details and note that payment on the 15/04/2008 for the amount of $4,473.70 was not made and the required amount now to rectify the default is $27,508.54."

That email also gave the correct Biller Code number for any further payments.

51 On 7 May 2008, the amount of $23,034.84 was paid to the correct Biller Code account. No further payments were made in reduction of the loan after that date.

Was the appellant entitled to a promissory estoppel

52 Although it has been said that a representation must be "clear" or "clear and unambiguous" before it can found a promissory estoppel (see Foran v Wight [1989] HCA 51; 168 CLR 385 at 410-411 per Mason CJ citing Legione v Hateley at 435-437), generally a representation will support an estoppel if it was reasonable for the representee to interpret the representation or promise in the way contended for and to act in reliance on that interpretation: per Hodgson JA (McColl JA agreeing) in Sullivan v Sullivan [2006] NSWCA 312; 13 BPR 24,755 at [85]. See also The Western Australian Insurance Company Ltd v Dayton [1924] HCA 58; 35 CLR 355 at 375; Australian Crime Commission v Gray [2003] NSWCA 318 per Ipp JA (Mason P and Tobias JA agreeing) at [179]-[206]; Galaxidis v Galaxidis [2004] NSWCA 111 per Tobias JA (Giles and Hodgson JJA agreeing) at [84]-[93]; Accurate Financial Consultants Pty Ltd v Koko Black Pty Ltd [2008] VSCA 86; 66 ACSR 325 at [178]; cf Westpac Banking Corporation v The Bell Group Ltd (In Liq) [No 3] [2012] WASCA 157 per Drummond AJA at [1749]-[1768]. It is not necessary in this case to consider Drummond AJA's observations concerning Australian Crime Commission v Gray because I have concluded that the conduct relied upon was not reasonably capable of giving rise to the representations said to have been acted upon by the appellant.

53 When addressing whether conduct is reasonably capable of giving rise to a particular representation or promise it is necessary to have regard to the context in which it occurred and to consider what it would have conveyed to a person in the position of the recipient: Australian Crime Commission v Gray at [183], [184]; Galaxidis at [86]; Accurate Financial Consultants at [134], [180]; MCI World Com International Inc v Primus Telecommunications Inc [2004] 2 All ER (Comm) 833 at 844 (per Mance LJ); Thorner v Major [2009] UKHL 18; [2009] 1 WLR 776 at [56] (per Lord Walker). This requires attention to Mr Hammond's position as the person acting on behalf of the appellant and to whom any representations were made. The primary judge found that Mr Hammond was experienced in the mortgage industry. As such he should be taken to have had some knowledge of the operation of default notices and of proceedings to enforce rights under mortgages, including by proceedings for possession.

54 The second paragraph of Mr Hammond's email of 30 April 2008 suggests that he had been proceeding on the basis that if he paid the amount requested by Challenger's letter of 8 April, the proceedings for possession would not be commenced or continued.

55 In their submissions, Mr Moore SC and Ms Roughley formulated the representation said to have been made in two ways. The first representation was that the appellant had 28 days after service of the foreshadowed statement of claim in which to remedy the default specified in the first Default Notice. The second, which has three parts, was that strict compliance with the first Default Notice was not essential to avoid an action for possession; that payment of $23,034.84 would rectify any defaults current as at 8 April 2008; and that the appellant would be able, up to 28 days after service of the statement of claim, to rectify any defaults and at least those current as at 8 April 2008.

56 As to reliance, it was said that the appellant, by Mr Hammond, relied on these representations either by abstaining from paying $14,725.30 or $18,880.07 (which would include the March 2008 instalment) before 25 March 2008 or by later paying $23,034.84 which otherwise would not have been paid.

57 The Default Notice by its terms required the appellant to remedy the defaults on which it was based, and any other similar defaults, within a period which ended on 25 March 2008. That meant it required payment of $14,725.30 together with the March instalment before that date. On receipt of the notice Mr Hammond should be taken to have appreciated that a further instalment would fall due on 14 or 15 March 2008. He also must be taken to have appreciated that the respondent could not commence proceedings for possession or exercise its power of sale in respect of the property until that period had expired with the default not having been remedied. That was made clear by cl 3 of the Default Notice and was also the effect of cl 7.2 of the Memorandum.

58 By the fax of 20 March 2008, Mr Hammond sought an agreement to defer payment in respect of the "current arrears" as well as a stay of enforcement action provided future payments were made. The description "current arrears" included as at 20 March 2008 the unpaid instalments due in February and March 2008. At that time Mr Hammond must have appreciated that the "current arrears" exceeded the "Arrears" amount which was the subject of the Default Notice.

59 Challenger's email of 20 March 2008 rejected that "moratorium" proposal. It also advised of three further matters. The first was that the respondent's solicitors had instructions to proceed to issue a statement of claim. Mr Hammond should be taken to have known that could not occur until the Grace Period had expired and unless the appellant had failed by that time to remedy the defaults on which the first notice was based. The second matter was that the statement of claim would allow 28 days to "rectify the default" and/or enable the refinancing of the facility before what was described as the "expiry of the legal notice". The third matter was that when that period had expired, Challenger, on behalf of the respondent, would be applying for default judgment and a writ of possession.

60 There are respects in relation to these last two matters in which this email is unclear. How it might reasonably have been understood depends in part on the knowledge and sophistication of the reader in relation to legal process. The reference to a "default" was reasonably to be understood as a reference to a failure to meet a financial obligation under the mortgage and loan agreement. The expression "rectify the default", without considering its context, is capable of referring to the default which was the subject of the Default Notice. However, it is directed to the remedying of a default in existence at a time after the issue of a statement of claim. By then, the time for remedying the default specified in the Default Notice necessarily will have passed and any relevant "default" will either be that which is current or, perhaps, whatever may be alleged in the statement of claim to constitute the default.

61 The email is to be understood as allowing or permitting the appellant 28 days from the issue or service of a statement of claim to "rectify" that default or refinance the facility. In relation to the former, it is unlikely that the respondent was to be understood as saying that after it had commenced proceedings it would not enforce its rights if the appellant paid an amount which was less than the full amount of arrears then outstanding.

62 Ultimately, it is unnecessary to resolve these difficulties in the interpretation of this email because Mr Hammond's email of 1 April 2008 indicates that he understood that the amount which the respondent required be paid at that time was the "outstanding arrears". Whilst considered alone that reference also could have been to the arrears which were the subject of the Default Notice and which remained outstanding, Mr Hammond's request for a letter "stating the arrears that need to be paid" makes clear that what he understood was required to be paid and accordingly "rectified" within the meaning of the earlier email, was the full amount of the arrears then outstanding and not simply the amount which was the subject of the earlier Default Notice.

63 That this was what was required to be paid was confirmed by Challenger's letter of 8 April 2008 which stated that to rectify the breach "due to payment arrears" the appellant was required to pay $23,034.84 within seven days. That was the full amount of the arrears then outstanding. Mr Hammond should be taken to have appreciated this. He must also have known that if the further interest instalment due on about 15 April 2008 was not paid, the amount outstanding would increase. Mr Hammond's email of 17 April 2008 indicating that funds would be released "to pay arrears" could have been referring to the arrears advised by the letter of 8 April 2008 or to those then outstanding which would have included the further amount of $4,473.70, which was the subject of a "dishonour" on 16 April 2008. Any uncertainty in that regard was removed by Mr Naiker's response on the same day. That email stated that the amount necessary to "pay arrears" included the further instalment.

64 The respondent's conduct to this point was consistent with a preparedness to withhold or discontinue action on any statement of claim if the appellant paid the current outstanding arrears on the loan facility. As at 17 April 2008 that amount was $27,508.54. By the email of 20 March, the respondent's agent had not represented that the time for complying with the Default Notice would be extended. It had represented that following the issue of a statement of claim, which depended upon the time for compliance with that Default Notice having expired without its being satisfied, the appellant would have 28 days to pay outstanding arrears. That Mr Hammond understood this email in that way is apparent from the subsequent communications on 1, 8 and 17 April 2008.

65 Mr Hammond, on behalf of the appellant, caused $23,034.84 to be paid on 23 April 2008. The evidence does not suggest that the funds which enabled that payment to be made had been available before that time. The email of 1 April 2008 suggests that there had been prior unsuccessful attempts to have funds released. The payment made on 23 April was of the amount requested in the letter of 8 April. It was not made within the stipulated seven days and by the time it was made, a further amount had fallen due. That payment was returned on about 28 April. By the time the second payment was made on 7 May 2008, Mr Hammond had received a copy of the statement of claim and been advised by Mr Naiker's email of 30 April that a payment of $27,508.54 was required "to rectify the default".

66 The foregoing analysis supports the following conclusions. First, there was no representation made by the email of 20 March 2008 that the appellant had 28 days after service of a statement of claim in which to remedy the default specified in the first Default Notice. Secondly, Mr Hammond did not proceed on the basis that such a representation was made to him. He acted on the basis that the amount required to be paid was the outstanding arrears. Thirdly, no representation was made that strict compliance with the Default Notice was not essential to avoid an action for possession. The effect of what was represented was that if the Default Notice was not complied with so as to justify the issue of a statement of claim and such a claim was issued, then the respondent would have 28 days to pay any then outstanding arrears. It was consistent with that being the position that the appellant could avoid the consequences of the commencement of an action for possession by paying the arrears outstanding at that time. Fourthly, there was no representation or promise made that the respondent would not proceed with any action for possession if the appellant did not pay the amount requested by the letter of 8 April 2008 within the seven days, but did pay that amount at a later date and at a time when the current outstanding arrears exceeded the amount requested in that letter. Fifthly, the evidence does not support a finding that Mr Hammond or the appellant could have paid $14,725.30 to the respondent before 25 March 2008. Finally, at the time the $23,034.84 was paid away on about 7 May 2008 the appellant, by Mr Hammond, knew that a statement of claim for possession had been issued and that the respondent was requiring payment of at least $27,508.54 to avoid the continuation of that legal action.

67 These conclusions require that the appellant's argument as to her having the benefit of a promissory estoppel must be rejected. No representation was made either in the terms suggested by Mr Hammond's email of 30 April 2008 or in the terms formulated by Mr Moore SC and Ms Roughley. Nor was there any relevant act of reliance on the part of the appellant either in relation to the asserted representation concerning the time for remedying the default specified in the Default Notice or in paying away the sum of $23,034.84. The appellant was not in a position to make any payment before 25 March 2008 and at the time the sum of $23,034.84 was paid away on 7 May 2008 Mr Hammond could not have been under any misunderstanding as to the respondent's position.

Disposition of the appeal

68 Subject only to considering Mr Hammond's argument as to his being a necessary party to the proceedings, there is no other ground pressed in argument or otherwise identified which provides a basis for allowing the appeal and setting aside the judgment for possession. This makes it unnecessary to consider the respondent's contention that the judgment should be affirmed on the basis that the appellant had failed to remedy the second Default Notice dated 4 April 2011. That argument raises difficult questions concerning the construction of s 80(4) of the Consumer Credit Code and s 88(5) of the National Credit Code and the Court has not heard full argument on those questions.

Mr Hammond's application under s 46(4)

69 For Mr Hammond to have been a necessary party to the possession proceedings, the judgment for possession sought by the respondent against the appellant as registered proprietor must have "directly" affected his rights or liabilities: John Alexander's Clubs Pty Ltd at [131]-[132].

70 In John Alexander's Clubs Pty Ltd, Walker Corporation's unregistered interest as mortgagee of the Option Land was liable to be displaced if the relief sought by White City Tennis Club - a constructive trust over and transfer of that land to the Club - was granted and that transfer registered so as to make the Club's interest indefeasible. For that reason the orders sought directly affected its right as unregistered mortgagee. In News Ltd v Australian Rugby Football League Ltd (1996) 64 FCR 410 the rights and liabilities of the players and coaches under their Super League employment contracts were directly affected by the restraining orders sought: esp at 525, 527. For that reason they should have been joined as necessary parties.

71 The right which Mr Hammond asserts in relation to the Faulconbridge property is as a joint beneficial owner with the appellant. He does not assert that he has any personal equity or other right as against the respondent or in respect of the property, other than by reason that the appellant holds her registered interest beneficially for them jointly. Any such beneficial interest is subject to the statutory and contractual rights which the respondent has as registered mortgagee.

72 The effect of any judgment for possession on Mr Hammond is only indirect and consequential on the fact that it is given against the appellant as registered proprietor. For that reason, Beazley JA was correct to conclude at [19]:

"JP Morgan is not concerned with the interests of those who stand further down the ladder of claimable interests. It has a first registered mortgage which takes priority over any other interest and it has not, in seeking to enforce its interest, engaged in any conduct that affects any interest of an equitable nature claimed by Mr Hammond. Rather, Mr Hammond is seeking, as against his wife, as registered proprietor, an interest in property."

73 Her Honour was also correct to dismiss the balance of the relief sought by Mr Hammond. The appellate jurisdiction of this Court does not extend to dealing with issues concerning the existence or non-existence of equitable interests as between parties where those issues have not already been the subject of proceedings at first instance.

74 Mr Hammond's application for a stay of execution of the writ of possession pending any application for special leave to appeal to the High Court should also be dismissed. It is, in my view, clear that Mr Hammond was not a necessary party to the proceedings for possession. It follows that it is not appropriate to grant the stay he seeks: Rinehart v Welker [2012] NSWCA 1; 285 ALR 191.

Proposed orders:

75 The orders I propose are as follows:

(1) Appeal be dismissed.

(2) Appellant to pay the respondent's costs of the appeal.

(3) The stay of execution of the writ of possession issued on 12 April 2012 be dissolved.

(4) Mr Hammond's motion for review of the decision of Beazley JA of 13 August 2012 and other relief be dismissed.

(5) Mr Hammond to pay the respondent's costs of that application.

76 BERGIN CJ in Eq: I agree with Meagher JA.

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Decision last updated: 18 September 2012