Anderson v Westpac Banking Corporation
[2016] VSCA 172
•20 July 2016
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S APCI 2016 0032
S APCI 2016 0081
| LENA ANNIKA ANDERSON | Applicant /Cross Respondent |
| V | |
| WESTPAC BANKING CORPORATION (ABN 33 007 457 141) | Respondent / Cross Applicant |
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| JUDGES: | WHELAN, McLEISH JJA and CAVANOUGH AJA |
| WHERE HELD: | MELBOURNE |
| DATE OF HEARING: | 20 July 2016 |
| DATE OF JUDGMENT: | 20 July 2016 |
| MEDIUM NEUTRAL CITATION: | [2016] VSCA 172 |
| JUDGMENT APPEALED FROM: | [2016] VCC 119 (Judge Cosgrave) |
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PRACTICE AND PROCEDURE — Application for leave to appeal against order granting summary judgment for possession of property — Order for possession already stayed — Imminent trial —Application adjourned.
PRACTICE AND PROCEDURE — Cross application for leave to appeal against order dismissing application for summary judgment for debt — Order effectively granting unconditional leave to defend — Whether any right to appeal — Supreme Court Act 1986 s 17A(6) — County Court Act 1958 s 74 — Imminent trial — Interests of justice — Cross application dismissed.
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| APPEARANCES: | Counsel | Solicitors |
| For the Applicant / Cross Respondent | In person | |
| For the Respondent / Cross Applicant | Mr S D Hay | Gadens Lawyers |
WHELAN JA:
In 2009, St George Bank Limited, which for all relevant purposes is now the plaintiff, Westpac Banking Corporation (‘the bank’), made two loans to the defendant, Ms Anderson. The loans were for $168,000 and $112,000, and were secured by a mortgage over a unit which she had bought in Reservoir (‘the property’).
In 2014 the bank received a letter from a firm of solicitors claiming that Ms Anderson owed Owners Corporation PS621012F (‘the owners corporation’) the sum of $22,369.68. Without consulting Ms Anderson, the bank paid that sum to the claimant and debited Ms Anderson’s first loan account. Ms Anderson was most unhappy with this action. She stopped paying the instalments due on her loans. In January 2015 the bank gave Ms Anderson a default notice and in March 2015 it began a proceeding in the County Court seeking possession of the property.
Ms Anderson defended the bank’s claim and brought a counterclaim based upon what she claimed was the wrongful debiting of the sum of $22,369.68.
In August 2015 the bank unsuccessfully applied for summary judgment before a judge in the County Court. The bank was unsuccessful because of the dispute over the debited sum of $22,369.68.
In October 2015 the bank reversed the $22,369.68 debit and the interest which had been charged on that sum.
The bank then amended its claim so as to add claims for recovery of $197,549.30 on the first loan and $106,751.78 on the second loan (as at 16 October 2015).
The bank made a second application for summary judgment seeking both possession of the property and judgment for the sums allegedly due on the loans. That second application was heard by the same judge who had heard the first.[1]
[1]There is a question as to whether the bank ought to have been permitted to make the second application for summary judgment, at least insofar as it related to the claim for possession: see D A Christie Pty Ltd v Baker [1996] 2 VR 582, 584–6 (Brooking JA). This issue was raised by the Court but not by Ms Anderson. Counsel for the bank said he had had no notice of the issue and was not in a position to address it.
By an order made 1 March 2016 the judge gave the bank judgment for possession of the property but otherwise dismissed the bank’s (second) application. In effect, the judge refused to give the bank judgment for the debts it claimed and refused to summarily dismiss Ms Anderson’s counterclaim. The trial of the proceeding concerning those matters is fixed for 6 September 2016.
Ms Anderson now seeks leave to appeal from the judgment for possession of the property and, by a cross application, the bank seeks leave to appeal from the order whereby its summary judgment application was otherwise dismissed.
The pleaded issues
The current pleadings are an amended statement of claim dated 6 November 2015, an amended defence and counterclaim dated 6 December 2015, and a further amended reply and defence to counterclaim dated 17 December 2015.
In her defence Ms Anderson admits the loan and security agreements upon which the bank relies, admits a failure to pay the instalments provided for in those agreements, and admits that she was given the default notice and that she did not make the payments demanded by that notice. She pleads that she was not and is not in default and she denies that she is indebted to the bank for the amounts claimed. She alleges that there were implied terms in the loan and security agreements. Ms Anderson contends that under the express terms of the relevant agreements and under the implied terms which she alleges, the bank was entitled to debit the disputed sum of $22,369.68 only in circumstances where she was then in default and where the bank had asked her first to make the payment. Ms Anderson alleges that the bank was also under a duty to act fairly and reasonably, responsibly and ethically. Ms Anderson contends that in debiting the amount of $22,369.68 the bank acted in breach of the terms which she alleges. She pleads that she did not pay the instalments otherwise due because of the circumstances of the wrongful debit, her concern about the security of any further funds to be applied to her loans, advice which she asserts she gave the bank that she would be directing repayments into a separate bank account until the error was rectified, and the fact that she then became unemployed ‘due to the effect of this dispute on her capacity to properly function at work’.
In her counterclaim Ms Anderson alleges that the breaches alleged resulted in a ‘fraudulent claim’ being met ‘enabling a theft’ from her loan account. The loss and damage which she contends she suffered is the following:
(a) Stress, anxiety and mental anguish resulting in illness;
(b) Loss of earnings from 1 July 2014 to 25 November 2015;
(c) Loss of enjoyment of life and property.
In addition to seeking damages, Ms Anderson seeks an injunction restraining the bank from purporting to exercise the rights of a mortgagee and seeks costs on an indemnity basis.
In its reply and defence to counterclaim the bank contends it was entitled to debit the sum of $22,369.68 pursuant to the express terms of the loan and security agreements. The express terms relied upon are all premised on the existence of an obligation owed by Ms Anderson to the owners corporation.
The primary judgment
The relevant primary judgment for the purposes of these applications was delivered on 22 February 2016.[2]
[2][2016] VCC 119 (‘Reasons’).
The judge set out the facts in greater detail than I have done and set out the contentions of the parties. The judge found in favour of the bank insofar as it sought possession for the following reason:
Assuming for the purposes of argument that the bank was not entitled to pay the owners corporation fees and costs and debit them to the first loan account, either at all or without informing Anderson before and/or obtaining her consent, at best, Anderson would have a claim in damages for breach of contract against the bank. This would diminish the amount payable to the bank in relation to the loans. But it would not extinguish the debt owing to the bank, or justify a finding of repudiation by Westpac of its obligations, or affect the claim to possession of the property.[3]
[3]Ibid [28].
In reaching this conclusion the primary judge relied in particular upon Commonwealth Bank of Australia v MLD Financial Services and Management Pty Ltd (‘MLD’).[4]
[4][2015] NSWSC 1476.
In relation to the bank’s claim to recover the debt the judge’s conclusion was as follows:
In relation to Westpac’s claim for debt, I accept that, given the claim by Anderson about the increase in the amount owing under the first loan, there is an issue to be examined. As I commented in my earlier judgment refusing the bank’s initial application for summary judgment, the question of whether the bank must ask Anderson about the payment of the owners corporation fees before making such a payment on her behalf raises an issue about the construction of the bank loan and security documents and whether the bank acted consistently with its obligations and entitlements. Even though Westpac has endeavoured to restore Anderson to the economic position she would have been in if the bank had not unilaterally paid the amount said to be due to the owners corporation, there remains a question about the legitimacy of its actions.[5]
[5]Reasons [30].
The judge considered the terms of the loan and security agreements and reached the conclusion that he was not satisfied Ms Anderson did not have a real prospect of success on the issue of whether the express terms required her approval or consent before the relevant debit could be made, and on the issue of whether the implied terms alleged were applicable and, if applicable, whether they were breached.[6]
[6]Ibid [32].
Finally, the judge concluded that the interests of justice were best served by conducting a hearing into the merits of the issues raised even if the court might ultimately find that Ms Anderson had no defence or setoff.[7] In this connection the primary judge also referred to the possibility of a claim for unconscionable conduct. He referred to the fact that such a claim had not been pleaded but had observed that that did ‘not necessarily mean that there is no issue which might properly be raised’.[8]
[7]Ibid [33].
[8]Ibid [34].
The bank’s application for leave to appeal
The bank seeks leave to appeal both his Honour’s refusal to give the bank judgment for the debts it claims (‘the debts decision’) and the refusal to summarily dismiss Ms Anderson’s counterclaim (‘the counterclaim decision’).
Section 61 of the Civil Procedure Act2010 provides that, subject to s 64, a court may give summary judgment upon application if it is satisfied that a defence ‘has no real prospect of success’. Section 64 provides for an overriding discretion to allow a proceeding to go to trial if it is not in the interests of justice to summarily dispose of the proceeding or if the dispute is of such a nature that only a full hearing on the merits is appropriate.
Under rule 22.08 of the County Court Civil Procedure Rules 2008, on the hearing of an application for summary judgment the court may
give the defendant leave to defend with respect to the claim or the part of the claim to which the application relates either unconditionally or on terms as to giving security, paying money into court, time, the mode of trial or otherwise.
The judge gave the bank judgment for possession of the property but otherwise dismissed the bank’s application. In doing so the judge concluded that he was not satisfied Ms Anderson did not have a real prospect of success in relation to the bank’s debt claims and her counterclaim and that the interests of justice were best served by conducting a hearing into the merits of the issues raised.
The effect of the order insofar as it concerned the debt claims was that Ms Anderson was granted unconditional leave to defend.[9]
[9]See Southern Region Pty Ltd v The Minister for Police and Emergency Services [2003] VSCA 105 [6]; R G Carter Ltd v Clarke [1990] 2 All ER 209, 213.
Section 17A(6) of the Supreme Court Act 1986 provides:
An appeal does not lie to the Court of Appeal from an order giving unconditional leave to defend a proceeding.
Section 74 of the County Court Act 1958 relevantly provides:
Any party to a civil proceeding who is dissatisfied with any judgment or order of the court constituted by a judge other than an associate judge may appeal from the same to the Court of Appeal with leave of the Court of Appeal … .
It was submitted on behalf of the bank that s 17A(6) of the Supreme Court Act does not operate as a bar to an appeal from an order of a County Court judge giving unconditional leave to defend because the right of appeal is contained in s 74 of the County Court Act and is not subject to that restriction. The submission was that the restriction in s 17A(6) applies only to orders giving unconditional leave to defend made in the Trial Division of this Court. The bank relied upon a decision of this Court in Moorabbin Transit Pty Ltd v Bekhit[10] which dealt with the interaction between s 74 of the County Court Act and s 10(1)(c) of the Supreme Court Act.
[10][2016] VSCA 70 (‘Moorabbin Transit’).
The issue of the effect of s 17A(6) was not raised in the submissions of the parties but was raised by the Court itself. Ms Anderson is unrepresented. We have not had the benefit of considered submissions on the issue of the application of s 17A(6). On any view, the bank requires leave to appeal and, as I have reached the conclusion that leave should not be granted, it is unnecessary for me to resolve the issue of the application of s 17A(6) save to observe that I am tentatively of the view that s 17A(6) does apply and that I cannot discern any reason in principle why a distinction would be drawn in this respect between an order made in the Trial Division of this Court and an order made in the County Court. A decision to give unconditional leave to defend is a discretionary decision.[11] The only consequence of such an order is that a matter must go to trial. Even if s 17A(6) does not act as a bar, it would be a rare case where leave to appeal such a decision would be appropriate.
[11]Australian Can Co Pty Ltd v Levin [1947] VLR 332, 335.
Counsel on behalf of the bank submitted that the primary judge had made errors in relation to both the debts decision and the counterclaim decision.
First, it was submitted that the relevant agreements contain a provision which reads as follows:
You must pay all amounts due under this loan agreement in full without setting off amounts you believe we owe you and without counterclaiming amounts from us.
It was submitted on behalf of the bank that the judge had erred in failing to give effect to this provision which operated so as to prevent Ms Anderson from claiming any amount by way of setoff or counterclaim until she had paid all amounts claimed by the bank to be due.
Secondly, it was submitted on behalf of the bank that the issue concerning the wrongful debit could only affect the first loan and that the judge had failed to address the fact that the second loan was unaffected on any view.
Finally, it was submitted that Ms Anderson’s counterclaim must fail because she cannot establish the damages which she claims. It was submitted that she cannot claim damages for personal injury for non-economic loss because she cannot satisfy the provisions of s 28LE of the Wrongs Act 1958, and that she cannot establish her claim for loss of earnings because that claim must be too remote. When asked about the claims made by Ms Anderson for an injunction and for indemnity costs, counsel for the bank submitted that she had no real prospect of success in relation to those matters.
In relation to what would be the injustice if leave to appeal were refused, counsel on behalf of the bank submitted that the injustice was that the bank would be forced to answer allegations at a trial based upon a disputed debit of approximately $22,000 which had since been reversed in any event.
Counsel for the bank accepted that the provisions of s 14A to s 14D of the Supreme Court Act apply to the bank’s application. It is an unresolved issue as to whether those provisions apply to appeals under s 74 of the County Court Act or whether the traditional test set out in Niemann v Electronic Industries Ltd[12] is the test to be applied.[13] If s 14A to s 14D apply, even if the bank establishes a real prospect of success, this Court retains a discretion to refuse leave.[14]
[12][1978] VR 431.
[13]Moorabbin Transit [2016] VSCA 70 [38].
[14]Kennedy v Shire of Campaspe [2015] VSCA 47 [14].
In my view the bank’s application for leave to appeal from the debts decision and from the counterclaim decision should be refused. My tentative view, without hearing full submissions, is that s 17A(6) of the Supreme Court Act does act as a bar to the proposed appeal, but, if I am wrong about that, leave should be refused in any event because:
(1)The proposed appeal is from a discretionary judgment of a kind in respect of which leave would rarely be appropriate.
(2)The only consequence of the maintenance of the order is that a trial must be conducted. The trial is already fixed for 6 September 2016. There is no substantial injustice to the bank, in my view, in the bank being required to go to trial in the circumstances existing here.
(3)Whilst the bank has a real prospect of success (as opposed to a fanciful prospect) in establishing error by the primary judge, in the circumstances here the primary judge’s decision is not attended with sufficient doubt to justify the grant of leave, given that the only consequence of maintenance of the order is that a trial will be held, and given that that trial is itself imminent.
Ms Anderson’s application for leave
Ms Anderson’s submissions made it clear that the grounds upon which she wishes to contest the judgment for possession given against her are grounds which raise the same factual issues as are dealt with in her defence and counterclaim. These are all issues which are the subject of the trial fixed for hearing on 6 September 2016. To embark upon Ms Anderson’s appeal at this point would require an analysis of those contested factual issues.
The judgment for possession is already stayed by a consent order of this Court until the hearing and determination of Ms Anderson’s application for leave to appeal and, if leave is granted, until the determination of the appeal.
Counsel for the bank accepted that there are no factual issues which Ms Anderson will be precluded from raising in the trial on 6 September 2016 by virtue of the existing judgment for possession.
In my view this Court should not embark upon an attempt to analyse the contested factual issues which are to be finally determined in the trial fixed for 6 September 2016.
In the circumstances Ms Anderson’s application for leave to appeal the judgment for possession should be adjourned to a date to be fixed after the hearing and determination of the matters fixed for trial on 6 September. If there is any continuing efficacy to the application, Ms Anderson can bring the matter on for hearing again then. At that time this Court will have the benefit of the factual findings in the court below which (absent an appeal) will bind both her and the bank.
McLEISH JA:
I agree.
CAVANOUGH AJA:
I agree.
I would only add that if Ms Anderson’s application for leave to appeal to this Court against the grant of summary judgment for possession ultimately returns to this Court, it may then be necessary to consider whether the bank was entitled to make the second application for summary judgment for possession of the property or whether the County Court ought to have entertained it or ought rather to have dismissed it as an abuse of process. Alternatively, it may be necessary to consider whether the County Court judge should have at least considered whether or not to dismiss the second application as an abuse of process.[15]
[15]See D A Christie Pty Ltd v Baker [1996] 2 VR 582, 584-6 (Brooking JA); LexisNexis Butterworths, Civil Procedure: Victoria, vol 1 (at Service 298) [I 22.04.30]; Nominal Defendant v Manning (2000) 50 NSWLR 139; Civil Procedure Act 2010 Part 4.4; Interpretation of Legislation Act s 40.
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