Hammond v. JP Morgan Trust Australia Limited and Anor [2012] HCATrans 299 (16 November 2012)

Last Updated: 21 November 2012

[2012] HCATrans 299

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Sydney No S298 of 2012

B e t w e e n -

PATRICK HAMMOND

Applicant

and

JP MORGAN TRUST AUSTRALIA LIMITED ACN 050 294 052

First Respondent

TRACIE HAMMOND

Second Respondent

Office of the Registry
Sydney No S306 of 2012

B e t w e e n -

TRACIE HAMMOND

Applicant

and

JP MORGAN TRUST AUSTRALIA ACN 050 294 052

First Respondent

PATRICK HAMMOND

Second Respondent

Applications for special leave to appeal

HEYDON J
GAGELER J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 16 NOVEMBER 2012, AT 2.19 PM

Copyright in the High Court of Australia

____________________

MR HAMMOND: Your Honours, I am Patrick Hammond.

HEYDON J: Is your wife here today?

MR HAMMOND: She is not, your Honour.

HEYDON J: Could the name of Tracie Hammond be called outside the Court three times?

MR J. STOLJAR, SC: While that is happening, I appear with my learned friend, MR P.T. NEWTON, for the first respondent in each of those applications. (instructed by Kemp Strang)

No appearance, your Honour.

HEYDON J: Thank you. Mr Hammond, I think we might hear your oral submissions.

MR HAMMOND: Thank you, your Honours. Your Honours, there are a couple of reasons that I give for why this Court should grant special leave to appeal. The first one is that Meagher JA asked himself the wrong question when applying the principle in respect of joinder. I will take you to page 72 of the application book. At paragraph 69, his Honour sets out the basis for his consideration and says:

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 –

He cites the authority that I have referred to, being John Alexander’s Clubs. Now, if I could take you to John Alexander’s Clubs – I think there should be a bundle there – at paragraph 132. This was in respect of an application by Walker Corporation.

HEYDON J: Wait a moment, Mr Hammond. I will share Justice Gageler’s copy. Yes, Mr Hammond.

MR HAMMOND: Thank you, your Honour. This was an application by Walker Corporation who had sought to be joined in a matter where its rights and liabilities in respect of a property were affected. The Court of Appeal in New South Wales came to a similar conclusion, as they have in the present case, that Walker Corporation’s claim could be brought by separate proceedings and that it was not necessary to join it as a party.

Special leave was granted. The basis of Walker Corporation’s application was that there was a difference of opinion between the Court of Appeal and the Full Federal Court in News Ltd v Australian Rugby Football League Ltd. This Court held that the decision in that case, in News Ltd, was the correct approach to be adopted. I will go to that now because it is quite relevant. Where the orders sought establish or recognise a proprietary or security interest in land, chattels or a monetary fund, all persons who have or claim an interest in the subject matter are necessary parties. This is because an order in favour of the claimant will, to a corresponding extent, be detrimental to all others who have or claim an interest. Looking at that principle, it predetermines who will be directly affected. The Court does not need to ask itself will a person be directly affected because it has already been laid down by this Court that anybody who has or claims an interest will be directly affected.

So it is my submission, your Honours, that his Honour Meagher JA asked himself the wrong question. What he should have asked was does Mr Hammond have or claim an interest in the property that is the subject of these proceedings? Clearly, the answer to that question was yes. So, as a consequence of that, it would follow that I am a person who is directly affected. Now, the importance of this in the public interest is that if you accept the premise that it is fundamental to the due administration of justice that the courts of Australia faithfully follow the decisions of this Court then it is inherent to that premise that this Court corrects decisions that fail to comply with its decisions.

A further matter that I would raise – I would ask you to keep that open there because I will refer back to that section – is back on page 72 of the application book at paragraph 71, the final sentence of that paragraph. Meagher JA says:

Any such beneficial interest is subject to the statutory and contractual rights which the respondent has as registered mortgagee.

That, your Honours, constitutes a denial of natural justice because it effectively resolves any issues between myself and JP Morgan in respect of the property. It effectively grants a security interest to JP Morgan in respect of the property that I have an interest in without affording me an opportunity to be heard.

If we go back to paragraph 133 of John Alexander’s Clubs, you can see towards the bottom of that paragraph there is a number [83] and the court goes on to say:

That would be true if only personal remedies had been granted; but the constructive trust, a proprietary remedy, was granted in a way which resolved issues against Walker Corporation through creating indefeasible proprietary rights without its being heard.

In the same way in this case indefeasible security interests have been recognised and granted without affording me an opportunity to be heard. It has been contended that not only is there no money owing to JP Morgan under the mortgage, it has also been contended that this claim was not even brought on the instructions of JP Morgan. There is some evidence to support those contentions. If we look at 134 in John Alexander, perhaps halfway through that paragraph, the court says:

Indeed, Walker Corporation was entitled to claim, if it wished, that the Club’s substantive case was insufficiently strong to succeed at all, whatever the remedy available if it did succeed to any extent.

Walker Corporation was entitled to call evidence against that substantive case.

The analogies between Walker Corporation’s application and my own application are significant. The questions do not need to be determined. What does need to be considered is my right to be heard and to call evidence in respect of that substantive claim and to defend my interest in the property.

These are two fundamental and key issues in these proceedings as to why special leave should be granted. In the first instance, his Honour Justice Meagher has asked himself the wrong question and failed to correctly apply the principles set out in John Alexander, and in the second instance I have been denied natural justice. It goes without saying that it was advanced that I did not have a proper opportunity, even at the appeal hearing, to make full oral submissions. I was standing at the back of the court and their Honours were going to dismiss my motion without hearing any argument, and on the strength of one submission from the back of the court they reserved judgment and proceeded from there.

But, your Honours, I can only rely on these principles that this Court has laid down that, as I see it, support my application unequivocally and that any appeal must inevitably succeed because of those principles that have been laid down by this Court. I think that it will, as set out in my submissions, raise debate. It will raise confusion in the intermediate and appellate jurisdictions as to what circumstances require joinder. Is it only claims by football players? Is it only unregistered mortgagees? What kind of claims? Then you will finish up where every person who has a claim should be able to come to this Court and appeal as of right to determine whether or not theirs is a claim that merits joinder.

Your Honour, these are the key points, I think, to be considered in respect of this application. It goes without saying that the Court of Appeal accepted the proposition that if I was a necessary party, pursuant to paragraph 137 of John Alexander, then I was entitled to have the judgment of the primary judge set aside. I think that those are the key submissions that I ask the Court to consider.

HEYDON J: Yes, thank you, Mr Hammond. We need not trouble you, Mr Stoljar.

The applicant appeared today to present oral arguments in addition to the written arguments in-chief and in reply to those of the first respondent which had been earlier filed. The background is that Justice Beazley, sitting in the Court of Appeal of the Supreme Court of New South Wales, refused Mr Hammond’s application to be joined as a party to his wife’s appeal to that court against Justice Johnson’s order granting the first respondent possession of Mrs Hammond’s property.

The Court of Appeal, Justice Basten, Justice Meagher and Justice Bergin, the Chief Judge in Equity, dismissed a motion filed by Mr Hammond to review Justice Beazley’s decision. The Court of Appeal held that Mr Hammond should only have been joined as a party if he were a necessary party. He was not a necessary party unless the order for possession directly affected his rights or liabilities. Mr Hammond claimed to be a joint beneficial owner with Mrs Hammond. Any such beneficial interest was subject to the statutory and contractual rights which the first respondent has as registered mortgagee. The effect of an order for possession on Mr Hammond was only indirect and consequential. The Court of Appeal also observed that its appellate jurisdiction did not extend to dealing with issues concerning the existence or non-existence of equitable interests as between parties where those issues have not been the subject of proceedings at first instance.

Mr Hammond raises, essentially, two points. First, he contends that the Court of Appeal did not afford him a proper opportunity to make full relevant submissions in respect of the application. His written submissions said:

At the substantive hearing of the appeal, the applicant’s motion for review was to be dismissed without hearing oral submissions. The applicant made a brief relevant submission after which judgment was reserved.

Mr Hammond has not demonstrated that the Court of Appeal stopped him from making a submission he wished to make, nor if it had, that that submission was material. Apart from the oral submission to which Mr Hammond referred, he relied on written submissions and read an affidavit. There is no reason to suppose that the Court of Appeal did not give those matters due consideration. Mr Hammond has not demonstrated that anything he wanted to say was left out of the written submission or, if it was, why the Court of Appeal should be criticised for this.

The second of Mr Hammond’s submissions rests on the assumption that he is a beneficial tenant-in-common with Mrs Hammond of her land. The first occasion on which Mr Hammond appears to have made that claim was on 7 August this year in the Court of Appeal. Whatever the powers of the Court of Appeal, and whatever is the desirable practice in the Court of Appeal, it is not, in general, desirable that this Court should have to decide an issue of the kind which underlies Mr Hammond’s assumption before it can turn to the consideration of a substantive ground of appeal.

For that reason, the submissions dependent on that assumption must be rejected. In any event, the Court of Appeal’s reasoning in relation to the fact that Mr Hammond ranks in priority after the first respondent is correct. Mr Hammond’s application for special leave to appeal is, therefore, dismissed. Do you seek costs, Mr Stoljar?

MR STOLJAR: Yes, your Honour.

HEYDON J: Can you say anything against a costs order, Mr Hammond?

MR HAMMOND: No, your Honour.

HEYDON J: Mr Hammond must pay the first respondent’s costs.

The other matter before the Court is Mrs Hammond’s application for special leave to appeal. She has sent a letter dated 1 November to the registry which says:

I refer to your letter dated 18 October 2012 and advise that if possible, I would like my husband, Patrick Hammond, to act on my behalf. If that is not possible, I would like my application for special leave to be determined on the written summary of argument. I do not expect to attend the Court but in the event that I should do so, I do not wish to present any oral arguments to the Court myself.

The balance of the letter relates only to Mr Hammond’s special leave application. Do you have any application, Mr Hammond?

MR HAMMOND: I am sorry, your Honour?

HEYDON J: Do you have any application to make?

MR HAMMOND: In respect of my wife’s application? I will if I am permitted to, your Honour.

HEYDON J: What is that application?

MR HAMMOND: The application is that in all circumstances, through no fault of either my wife’s or my own, there has been no hearing on the merits of this matter at any stage. There was a denial of natural justice by the primary judge in so much as on the day of the hearing, 3 April, he considered a further application from me to appear for my wife and, having refused that application, did not adjourn the matter or give her notice that further applications would not be considered and that she would either have to attend or obtain representation. He proceeded to hear the matter ex parte, so there was no opportunity for her to do anything about that.

There was a great deal of confusion through the Court of Appeal process because of the advent of amicus curiae, who essentially told me, or asked me – with no disrespect to him because I appreciate that he was giving up his time – but he essentially asked me not to seek to do anything in respect of my wife’s application as it may interfere with what he was trying to do and consequently I made no submissions. I was not certain as to whether the court would permit me to make submissions in her behalf or what to do. There was a great deal of confusion, partly from the various judges – some judges granting leave to appear, some judges refusing leave to appear. This in itself is, in my view, an issue of some significance in the public interest.

As stated in my submissions, we hold that everybody in this country is entitled to a fair trial, but my wife has not had one. It should be noted that it is not through any fault of ours. I have fully participated in the court process for four years, including one successful appeal, and then on the back of a successful appeal the solicitors for the respondent wrote and said that they would object to my appearing for my wife on the grounds of standing. They were fully aware that she is not capable of appearing in her own behalf for health reasons, but that notwithstanding, there may be other issues and other circumstances where people for one reason or another do not have the ability to come and appear before a court and make a cogent argument, but they may have a child, a husband, a mother, a father, who could advance an argument for them and thus have their interest to some degree represented, as opposed to not having their interest represented at all.

There are numerous matters that were raised in her defence, which included objections to the statement of claim, the validity of the statement of claim, the plaintiff’s entitlement to raise the claim, defences under the relevant credit legislation and even an allegation that there was misrepresentation in the terms of the mortgage. So there were various defences that were raised and that have never been tried. There is evidence, as I say, to support the contentions, but for one reason or another there has been no opportunity to address the issues.

In August 2011, I appeared before Davies J and was going to file a motion seeking to strike out the plaintiff’s claim and his Honour prohibited me from doing that. He wanted to see it first and I said okay. Then I asked for an extension of time in a motion that was filed in July. I asked for an extension of time because I had not been provided with various documents by the solicitors from the respondent. That was heard on 8 August and he said he would deal with the motion on 26 August, and the motion was not dealt with. In the Court of Appeal I raised issues with regards to the

solicitors who bring this claim in the name of JP Morgan. They were not addressed in the judgment that was handed down at all.

Again, I have attempted to raise the issue in this Court challenging the retainer and Mr Griffin, the Deputy Registrar, has pointed out to me that application for special leave is appellate in nature and these are matters that have to be addressed at first instance. It raises two questions in my mind. One is if a solicitor does not appear for a party or does not have a contract of retainer with a party and they succeed in carrying through a first instance then they cannot be challenged and they can continue to maintain the benefit that comes from their actions where they are not contracted and retained by the party in litigation. That seems to fly in the face of principles which say emphatically that a person will not be permitted to retain the benefit of a deception or a fraud. No court in this land will permit it. That was Gleeson in SZFDE v The Minister, I think, from memory – sorry, it has gone from me. But the Chief Justice was citing Lord Denning from Lazarus Estates Ltd v Beasley.

It was quite an emphatic statement and I am of the view, based on all the material that has come through my hands, that the solicitor on record was originally instructed by Challenger Non-Conforming Finance and some time in 2009 the action has been maintained on the instructions of Advantege Financial Services Pty Ltd, and there is evidence to suggest that it is for the benefit of Perpetual Trustees Victoria Ltd. So these things are issues. There is evidence to support those contentions, but there has been no opportunity to advance any of those arguments or have a fair hearing in any respect of the matters that would be raised in defence of the alleged claim. Thank you for hearing me.

HEYDON J: Thank you, Mr Hammond. We will not trouble you, Mr Stoljar.

Mrs Hammond did not appear at the hearing today of her application for special leave to appeal. She did file detailed written submissions. The background is that she fell into default in repaying a loan secured over her property. The Supreme Court of New South Wales, Justice Johnson, made an order in favour of the first respondent for possession of Mrs Hammond’s property. The Court of Appeal of the Supreme Court of New South Wales, Justice Basten, Justice Meagher and Justice Bergin, dismissed an appeal. Mrs Hammond seeks special leave to appeal to this Court.

The first argument she relies on is that she was denied natural justice by reason of Justice Johnson’s decision to refuse to grant her husband leave to appear on her behalf. That decision was made on 9 March 2012. Before the substantive hearing on 3 April 2012, Mrs Hammond filed an outline of submissions. She did not attend on 3 April 2012.

On 22 March and 3 April 2012, Justice Johnson refused further applications by Mr Hammond for leave to represent his wife. Justice Johnson did so because of a conflict of interest between Mrs Hammond and Mr Hammond. Mrs Hammond was present at the Court of Appeal hearing and did not protest when that court arranged for counsel to act as amici curiae to protect her interests and permitted evidence to be called which had not been called before Justice Johnson.

The principal point Mr Hammond made today was that the appointment of amici curiae had the effect of preventing him from putting argument on behalf of his wife. He says that accordingly his wife has suffered unfairness in the proceedings. She did not, however, tender evidence explaining why she did not attend before Justice Johnson. She has not indicated how she suffered any injustice, nor has she endeavoured to demonstrate any error in Justice Johnson’s discretionary decision to refuse her husband’s three applications, a matter of practice and procedure.

The second contention Mrs Hammond advances is that the lender was not the first respondent but another person. She also contends that the proceedings have been commenced and maintained by a person who is a stranger to the mortgage sued on. The evidence is overwhelmingly against those contentions.

Thirdly, Mrs Hammond argues that the notice of default on which the first respondent is relying cannot be relied on because of promissory estoppel, waiver by election or abandonment. The Court of Appeal was correct to reject that contention for the detailed reasons it gave.

If special leave were granted the appeal would have no prospects of success. The application for special leave to appeal is therefore dismissed and the applicant must pay the costs of the first respondent.

MR STOLJAR: May it please the Court.

AT 2.45 PM THE MATTER WAS CONCLUDED