Abram, J. v Bank of New Zealand

[1993] FCA 915

NOT FOR DISTRIBUTION

-

91s ,93

JUDGMENT No. ...... ...,,,,,,.., a ..,,, ,,,,.

IN THE FEDERAL COURT OF AUSTRALIA	) )
NEW SOUTH WALES DISTRICT REGISTRY )	No NG 42 of 1993
GENERAL DIVISION

BETWEEN:	JOSEPH ABRAM AND JANETTE DAWN ABRAM
Applicants

_. AND BANK OF NEW ZEALAND
First Respondent
DAVID TIETJEN
Second Respondent
VANESSA DIKKENBERG
Third Respondent
MICHAEL J FITZPATRICK
Fourth Respondent

CORAM :	HILL J
PLACE	: SYDNEY
DATED	: 21 OCTOBER 1993

EX TEMPORE REASONS FOR JUDGMENT

application to discontinue against them.

The present proceedings numbered NG 42 of 1993, are one of two proceedings commenced by the applicants, Mr and Mrs Abram, against the Bank of New Zealand ("the bank") and to which Mr Fitzpatrick is named as fourth respondent. Mr Tietjen and MS Dikkenberg are also named as respondents in these proceedings, although the applicants wish to amend their

The other proceedings brought by the applicants were numbered NG 90 of 1993. It was disposed of on a strike out application by Einfeld J who struck out the statement of claim (unreported, 19 February 1993). The applicants then appealed to the Full Court of this Court.

When the appeal came on for hearing it was suggested to Mr and Mrs Abram that they seek leave in matter NG 42 of 1993 to re-plead rather than pursue the avenue of the appeal and that course appears to have been adopted by Mr and Mrs Abram. The appeal was, it would seem, then dismissed (unreported, Full Court, 30 September 1993).

In matter NG 42 of 1993 there was also an interlocutory hearlng before Foster J. In that interlocutory proceeding the applicants sought an order restraining the bank from exerclsing its power of sale under registered mortgage Y337025 pending the disposal of the proceedings. The

respondents, for their part, sought to persuade his Honour to
dismiss the proceedings as being vexatious, to strike out the

statement of claim or stay the proceedings. In the result, Foster J ordered that proceedings NG 42 of 1993 be stayed until further order of the Court (unreported, 29 April 1993). His Honour did, however, restrain the bank from exercising its powers under the mortgage until further order of the Court but did so, as his Honour's judgment makes clear, in aid of the appeal which was then pending in the Full Court. His Honour said that he had reached the conclusion that the exercise of the mortgagee's rights should be restrained provided that the appeal could be heard expeditiously. His Honour did not enjoin the bank from exercising the power of sale in the proceedings NG 42 of 1993 but rather in proceedings NG 90 of

1993.

Subsequently, the applicants moved the Court for what, in essence, amounted to two orders. The first for leave to flle an amended statement of claim; the second enjoining the bank from exercising its powers until further order. Although the notice does not specifically deal with it, I take the applicants also to be seeking a removal of the stay of the proceedings imposed by Foster J. The case has proceeded on the basis that this is the case.

The bank submits that the statement of claim should

not be permitted to be amended because it raises no cause of

vexatious. As to this second argument, so far as it turns	action against the bank or, alternatively, that it is
upon the fact that this is not the first occasion upon which Mr and Mrs Abram have sought to amend the statement of claim,
I would not for that reason regard their application to amend
now as vexatious, particularly having regard to the suggestions made to them by the Full Court that this be the procedure which they should adopt.
The amended statement of claim, while perhaps drawn by someone with some legal knowledge, is hardly a model of
precision of pleading. I must, however, take into account the
fact that Mr and Mrs Abram are not legally represented and while I am conscious of the fact that it is possible to do injustice to the bank in an attempt to assist a litigant in person, I think the interests of justlce do require me to give some special attention to the position of the unrepresented litigant.
The cases pleaded in the statement of claim involve the applicants, inter alia, proving the following facts:

(1) that Mr Abram had been granted a credit line in conjunction with a BNZ Gold American Express Card of $10,000 being an unsecured facility accessible via a particular "Smarter Account" number;

(2) that the applicants had responded to an advertisement offering mortgage finance by the bank and consequently had applied for what is described as "The Smarter

Mortgage" ;

(3) that the applicants had attended a meeting at the bank on 3 April 1989 with Mr Fitzpatrick who was a legal adviser and legal representative of the bank;

(4) that Mr Fitzpatrick failed to warn or advise the applicants that the signing of the mortgage would involve a security not only for the new facility which was being granted under the "Smarter Mortgage" but also would have the consequence that the unsecured "Smarter Account" facility would also become secured;

(5) that Mr Fitzpatrick dissuaded the applicants from obtaining advice from a solicitor and although under an obligation so to do failed properly to explain the various documents signed by the applicants and the consequences of them.

The applicants allege that these matters, alone or in combination, give rise to three causes of action. First, it is alleged that the bank owed a fiduciary duty to the applicants which it breached in the circumstances alleged. Second, it is alleged that the bank owed a duty of care, arising out of these facts, which it breached. Finally, it is alleged that there was a breach of "contractual obllgatlons" by the bank. The precise contractual obligations breached are not set out in the statement of claim. By inference, it presumably is alleged that there was some implied term which was breached and clearly the applicants must, in due course, provide to the bank particulars of such terms as are said to be breached and if so the precise language in which the alleged term is said to be expressed.

The bank has renewed an offer to the Court before me to undertake not to enforce the mortgage so far as it relates to the line of credit established under the American Express "Smarter Credit Llne". This offer is made without admission at this stage. The making of that offer leaves the applicants, at this stage, at risk only in relation to the enforcement of the mortgage to the extent of moneys advanced under the "Smarter Mortgage Line".

In this respect I have been told from the bar table that in addition to the sum of $169,232 said to be principal owing under the "Smarter Mortgage Line" ("the facility"), interest to today's date amounts to $28,300 and a further amount of $36,000, being the bank's costs in the proceedings

NG 90 of 1993, are also to be added to the account, or perhaps

have already been added to it.

As I have already indicated, the pleading is not particularly precise but is sufficiently precise to enable the bank to know the case it has to meet provided, that the facts said to give rise to the fiduciary duty, or duty of care as the case may be, are the facts alleged in the statement of claim and only those facts.

It would, in my opinion, be an exercise in futility
to require Mr and Mrs Abram to endeavour to plead with greater

precision, as that would most likely involve only further

at the end of the day, create no greater certainty than is	lnterlocutory disputes between the parties and would probably,
presently there. I do not think it can be said that the statement of claim as such does not raise a cause of action against the bank. It clearly does in respect of the line of credit and the fact that it does is not particularly in dispute between the partles. However, I do think that there is sufficient in the statement of claim to show at least an arguable case of breach of fiduciary duty and perhaps breach of duty of care which, if ultimately found, could lead to the conclusion that the mortgage, registered number Y337025, should be set aside or varied in some way.
I would not in these circumstances therefore refuse Mr and Mrs Abram leave to amend the statement of claim in the manner sought, but subject to it being quite clear that the facts alleged to create the fiduciary duty or duty of care are limited to those facts pleaded in the statement of claim.
The question then arises as to whether I should grant to the applicants an injunction restraining the bank from selling the property the subject of the mortgage. The general principle, as expressed in Inalis v Commonwealth Bank (1972) 126 CLR 161, is that the Court will not normally enjoin a mortgagee exercising powers under what on its face is a valid mortgage unless the mortgagor brings into court the moneys owing under that mortgage.
The general principle is not, of course, inviolate and particularly in cases where the mortgage itself is under attack the courts endeavour, so far as is possible, to do justice as between the parties and may, to adapt the language of one of the decisions, mould the order appropriately. This is particularly so where not only is the security under attack but also where the applicants may be in financial difficulties and those difficulties have arisen out of conduct of the mortgagee.
There is no direct evidence before me as to the financial position of the applicants, although Mr Abram has told me from the bar table that he would be unable to pay into court any money at all.
Counsel for the bank pressed me only to grant injunctive relief on the basis that the whole of the moneys owing to the bank (perhaps except the $10,000 potentially unsecured) be paid into court. However, having regard to the fact that the property in question is the home of Mr and Mrs Abram and that the subject matter of the litlgatlon might very well disappear if such an order were made (it being clear that Mr and Mrs Abram could not comply with it in any event), I do not think that that is an appropriate order.
During the course of argument Mr Abram conceded that he was aware that the moneys owing under the facility were to be advanced to him and his wife secured over the house. He says that the terms of the facility were that it was a "perpetual facility". He alleges that at the time the facility was taken out he was told that it would be the only facility he would ever need. He agrees that he understood the concept of "perpetual facility" to mean that the facility could be retained provided the llmit, which was $170,000, was
not exceeded. He concedes also that a large sum of money, certainly around $100,000 if not more, was advanced under the facility to his wife and himself and that neither this amount nor interest thereon has been paid. He says, however, that for the reasons indicated in the statement of claim he should not be requlred to treat the amount advanced to him as secured.
In these circumstances it seems to me that justice can appropriately be done to both partles only on the basis that the initial agreement between the parties be treated as still on foot. That is to say, on the basis that the facility be maintamed approximately at its limit of $170,000 and that Mr and Mrs Abram be required to bring into court, if they can, the difference between the facility amount and the amount presently owing on it and continue to pay into curt an amount at least equivalent to interest (which I am told from the bar table is presently at the rate of 9.75 per cent albeit
variable), depending no doubt on the bank's interest rate applicable to similar accounts.
Counsel for the bank submitted that if I were to be of such a view I should require Mr and Mrs Abram to bring into court additionally two further amounts: first, the difference between the agreed American Express "Smarter Credit Line" account limit of $10,000 and Mr Abram's present balance of
approximately $12,000; and secondly, an amount of $36,000 representing costs as I have already indicated.
Given the offer to the court that the American Express "Smarter Credit Llne" not be enforced, I do not see why Mr and Mrs Abram should be required to bring into court any such difference and I would certainly not require them so to do. Further, the amount of $36,000 is at the moment an untaxed amount and I would not be lnclined to require that, at this stage, to be brought into court, albeit that I am fully aware that it is likely that the terms of mortgage would permit the bank to add an amount to their security representing such costs.
I would therefore indicate that I would propose to grant an injunction to Mr and Mrs Abram restraining the bank from exercising its powers of sale, but only upon condition that Mr and Mrs Abram pay within 28 days of today into court
an amount of $28,000, and to further undertake to pay into court on the 14th day of each month interest properly due on
the mortgage to the bank in the preceding month. Such injunction would of course continue until further order. As the condition may be satisfied within 28 days of today, the convenient course seems to me at this stage to leave the injunction granted by Foster J, on 29 April 1993, in place until the expiration of that period. If the condition be fulfilled I will then vacate the order granted by Foster J, which was intended clearly to continue only until the appeal was disposed of, and grant a fresh injunction in the present proceedings.

I would order that the stay ordered by Foster J on

29 April 1993 be lifted and give leave to the applicants to

flle and serve an amended statement of claim. I will hear

submissions as to a time-table for the further dlspositlon of

the case and as to the question of costs.

I certify that this and the

preceding ten (10) pages
are a true copy of the Reasons
for Judgment herein of his Honour

Mr Justice Hill.

Associate:  7.e (&tla/,fi

oat.:  9 Nov~~2ec. IY43

Mr Abram appeared on behalf of the Applicants

Counsel and Solicitors Dr GA lick instructed by

for First to Third  Respondents:	Clayton Utz
Date of Hearing:	21 October 1993