Shirley and Terrence Goater had their home and business repossessed by the Commonwealth Bank on May 13. 

The Goaters (borrowers) defaulted on their mortgage to the bank and lodged a complaint with the Financial Ombudsman Service but the complaint was terminated after an agreement between the borrowers and the bank was made.

The Goaters were required to comply with a schedule of repayments of their accounts and the bank was to be informed about payments to the local council.

 Goaters were to be given a seven-day reminder notice if there was a breach to the agreement, followed by a further seven-day notice if proceedings were to start.

On November 27, 2013 a notice was sent to Goaters by the bank that they breached the agreement by failing to pay their water rates, and that proceedings were to commence.

The Goaters did not immediately respond to the notice or seek advice, resulting in a failure to file a defence to prevent the bank applying for default judgement.

A belated attempt to file a defence failed to prevent a default judgement being entered resulting in a writ of possession being issued and the Goaters being evicted.

The Goaters stated that they did not believe they were in default under the agreement with the new repayment schedule maintained, and that a letter from the Moree council - the basis for which CBA started action - was not accurate as it stated no payments had been made, while bank statements proved money had been transacted.

What appeared to have been defaults had arisen because the bank had set up an automatic debit on the borrowers’ account, unbeknownst to the Goaters who had made direct transfers, which in turn resulted in them exceeding their overdraft limit.

The couple originally sought orders from the Supreme Court to overturn this decision and lost, but appealed to the NSW Court of Appeal. 

On November 7, the court found in favour of the Goaters and set aside the bank’s default judgment against them and the bank subsequently restored the Goaters to possession.

Up until the Court of Appeal decision, the law was that once a bank repossessed someone’s home on the basis of a default judgement, a defendant could not get the judgment set aside. 

The Court of Appeal overturned this so irrespective of whether repossession has taken place the court can still set aside the default judgement if it is in the interests of justice.

The Goaters are now seeking indemnity costs against the bank on the basis that they acted inappropriately and unfairly. 

They will also be filing a claim against the bank for loss of income and for hurt and suffering.