Andrea Rita Imboden as Trustee for the Imboden Reilly Property Trust v Bendigo & Adelaide Bank Ltd - [2022] NTSC 82

CITATION:Andrea Rita Imboden as Trustee for the Imboden Reilly Property Trust v Bendigo & Adelaide Bank Ltd & Anor [2022] NTSC 82
PARTIES:ANDREA RITA IMBODEN as Trustee for the Imboden Reilly Property Trust
v

BENDIGO AND ADELAIDE BANK LTD

AND

REID, Stuart George

TITLE OF COURT:  SUPREME COURT OF THE NORTHERN TERRITORY
JURISDICTION:  SUPREME COURT exercising Territory jurisdiction
FILE NO:2022-00498-SC
DELIVERED:  12 October 2022
HEARING DATES:  1 March 2022
JUDGMENT OF:  Blokland J

CATCHWORDS:
CIVIL PROCEDURE – Costs – Application for discontinuance of
proceedings – Leave of Court – Leave granted –Following application for
leave to discontinue – Application for injunction – No cause of action
pleaded – No cause of action pleaded or identified at hearing – Actions of
defendants not unreasonable - Leave granted to discontinue the proceedings
– Plaintiff to pay the defendants costs.
Supreme Court Rules: 1987 (NT) Order 25.05

REPRESENTATION:
Counsel:
Plaintiff:M Powell
Defendants:C Walter
Solicitors:
Plaintiff:Powell & Co Legal
Defendants:Ward Keller
Judgment category classification:    C
Judgment ID Number:  BLO2207
Number of pages:  13

IN THE SUPREME COURT
OF THE NORTHERN TERRITORY
OF AUSTRALIA
AT DARWIN
Andrea Rita Imboden as Trustee
for the Imboden Reilly Property Trust v Bendigo
& Adelaide Bank Ltd & Anor [2022] NTSC 82

No. 2022-00498-SC
BETWEEN:

ANDREA RITA IMBODEN AS TRUSTEE FOR THE IMBODEN REILLY PROPERTY TRUST

Plaintiff

AND:

BENDIGO AND ADELAIDE BANK LTD

First Defendant

AND:

STUART GEORGE REID

Second Defendant

CORAM: BLOKLAND J
RULING ON COSTS UPON LEAVE BEING GRANTED TO DISCONTINUE ACTION
(Delivered 12 October 2022)
Introduction

By originating motion filed on 25 February 2022, the plaintiff sought orders restraining the first and second defendants,[1] from advertising and/or proceeding with a sale by auction, of a property in Berrimah ‘the Property’.[2] The plaintiff sought a further order that the first defendant make arrangements for settlement of the mortgage loans over the Property registered in favour of the first defendant. It was sought that this order take effect by no later than 4:00pm ACST on 1 March 2022 and that arrangements be made by the first defendant with the Police Credit Union. The Police Credit Union was the plaintiff’s new financier after the plaintiff had defaulted on the mortgage loans.
The matter was listed before this Court on 1 March 2022, after service of the originating process on the defendants.
At the hearing, or shortly before it, the Court was notified the plaintiff would be seeking leave to discontinue the proceedings. Order 25.03 of the Supreme Court Rules permits a party to withdraw at any time with leave of the Court or with the consent of all other parties.[3] Liability for costs as a result of any discontinuance is to be determined in accordance with the relevant rules relating to costs.[4]
The defendants did not object to the discontinuance of the proceedings but sought their costs associated with defending the action. The plaintiff objected to that course.
The parties have an extensive history of financial arrangements between them. It is not necessary to set out the entirety of the history here, but some of it, particularly events close to the hearing are relevant to this ruling. The defendants argued the proceedings should never have been brought. Having reviewed the material, I readily agree. It was difficult to ascertain precisely on what basis the plaintiffs sought to injunct the defendants. This necessarily has a significant bearing on the costs issue.
Counsel for the plaintiff stated that if the Court granted leave to discontinue the proceedings, an appropriate notice would be filed as the relief was no longer necessary. She informed the Court that the transaction the plaintiff was concerned about was finalised on 28 February 2022, the day before the scheduled hearing.
The defendants’ position was that leave should only be granted, conditional upon payment of the defendants’ costs of and incidental to the proceeding. After hearing further submissions, the course adopted on behalf of the defendants seemed entirely reasonable.
At the conclusion of the hearing on 1 March 2022, I indicated leave would be granted to the plaintiff to discontinue the proceedings,[5] the question of costs was reserved to allow time to familiarise myself with the history of the matter to determine whether, as appeared on the face of it, there was no good reason to bring the action and consequently that the plaintiff should bear the costs.
Background to these proceedings
In short, in 2015 the Imboden Reilly Property Trust (the Trust)[6] refinanced mortgage loans over several properties from the ANZ bank to the Bendigo and Adelaide Bank (The Bank). The Bank, through the Darwin branch manager, set up a property portfolio. According to the Trust,[7] without the consent of its trustees, the Bank placed all of the properties, including the family home, in the commercial portfolio.
The Trust contends it became aware that this had taken place when the Bank called in all the loans, including the loan over the family home, after three years. Statutory notices were served on the trustees in October 2019, with the amount owing at that time stated as $2,647,909.20. This amount comprised two separate loans which had expired on 29 May 2018 and 1 March 2019 respectively. The plaintiff did not have the funds to pay out the loans on all properties, so the Bank threatened to foreclose.
A lengthy dispute followed between the Trust and the Bank, during which a complaint was made against the Bank to the Australian Financial Complaints Authority (AFCA) in late 2019. According to the plaintiff, the AFCA found the Bank, its conduct, the manner in which it originally set up and administered the loans, and the inclusion of the family home within the commercial portfolio, to be in breach of the National Consumer Credit Protection Act 2009 (CW). The plaintiff told the Court the conduct of the Darwin branch manager and the Bank’s refusal to enter into refinancing arrangements (unless the AFCA complaint was withdrawn) was not addressed by the AFCA. From the plaintiff’s point of view, those issues remained unresolved.
Whatever the rights and wrongs of the dispute before AFCA and I am not in a position to make any findings on that point, according to the affidavit of Carolyn Walter, the consequence of the complaint was initially to prevent any further enforcement of the first defendant’s securities at that time. More significantly and of relevance to this matter is that on 30 June 2021, AFCA dismissed the complaint. Any previous findings made by AFCA do not have significant bearing on this matter that I can see.
On 2 July 2021, on behalf of the Bank, Carolyn Walter wrote to the plaintiff’s solicitor confirming AFCA had closed its file and offered the trustees an opportunity to submit a proposal, without prejudice to the Bank’s enforcement rights. The correspondence between the parties reveals something of a mismatch between what the Bank was proposing and how the plaintiff responded. The Trust’s answers were not directly responsive, but not a great deal turns on that.
The trustees fell behind on a number of loan payments, but claimed that they continued to pay the home loan and commercial loan repayments in full, and in addition had been making some payments towards the loan remaining on three town units they owned, which had all been sold to reduce their debt to the Bank. The family home was sold in November 2021 (to the Trustees’ adult children) in an attempt to further reduce debt.
In August 2021, the plaintiff provided the Bank with an unsigned document which asserted that NAB had unconditionally approved refinancing the Trust, but this did not eventuate. The trustees continued attempts to refinance their loans, with first and second tier lenders. The Court was provided with some evidence of this pattern. The plaintiff received an ‘Indicative Letter of Offer’ from October 2021 from the Police Credit Union Ltd. Additionally, the plaintiff requested access to the Child Care Centre that operated at one of the properties; this access was allowed on certain conditions. The first defendant contended the plaintiff had been non-compliant with the conditions allowing access to the Child Care Centre. The ‘Indicative Letter of Offer’ was sent to the Bank, with advice that the trustees were expecting a formal offer of settlement would be issued once an updated valuation of the Property, the subject of this dispute, took place.
In late October 2021, Stuart George Reid was appointed as agent for the mortgagee in possession over the Property. The trustees state that they were not notified of this at the time, but were alerted to it by their insurance broker a few days later. The second defendant seized all rental income from the Property, as well as other costs. According to the trustees, this seizure meant the trustees lost all income and became reliant on credit and financial assistance from their adult children. Their credit cards were also cancelled by the Bank.
In early February 2022, solicitors for the trustees informed the Bank that finance from the Police Credit Union Ltd had been approved. The plaintiff claimed that an executed copy of the ‘Facility Agreement (Commercial Lending)’ was provided to the Bank’s solicitors. A copy of this agreement was provided to the Court. However, solicitors for the Bank stated that the finance agreement was not executed by the Police Credit Union at that time. Additionally, the finance agreement contained a number of conditions, which the defendants believed would not be met by the plaintiff.
Further correspondence continued between the parties, which included requests from the plaintiff which purported to require responses from the defendant’s solicitors. As a result of this, in the correspondence from the Bank, the defendants reserved all rights to charge for further legal fees incurred, due to responding to the plaintiff’s requests.
In addition to providing the ‘Facility Agreement (Commercial Lending)’ document, the plaintiff’s solicitors also requested a settlement date from the Bank. The following day, the plaintiff became aware that the Property was being advertised as ‘for sale’ through L.J. Hooker. The plaintiff claimed that the Bank was evasive about providing contact details of the settlement division of the Bank.
Carolyn Walter’s affidavit of 25 February 2022 confirms that the first defendant was ready to settle on 28 February 2022 and that if that occurred, the Bank would cease the auction of the Property which at that time was listed for auction on 3 March 2022. The plaintiff became aware of the proposed settlement date of 2 March 2022, which was the day prior to the scheduled auction of the Property. The plaintiff’s finance broker liaised with the Bank to bring the settlement date forward to 24 February 2022, a few days before the advertised auction. The settlement did not take place on 24 February 2022. Solicitors for the Police Credit Union arranged settlement for 28 February 2022.
The plaintiff claims the Bank did not provide a written statement or confirmation that it would not sell the Property if the settlement was delayed, and while the advertisement of the sale of the Property continued. Across this later correspondence, the plaintiff informed solicitors for the defendants that if the defendants failed to provide a written undertaking to that effect, they would be forced to file proceedings and would be seeking their costs. As no undertaking to that effect was received, the plaintiff filed for the current injunctive relief to halt the advertising for the sale and sale of the Property, depending on whether settlement was reached.
Prior to the hearing in this Court, settlement was reached and the advertisement for sale of the Property was removed from the internet. The defendants contacted the plaintiffs to advise that the auction was to be cancelled and that the further legal costs incurred were to be incorporated into the payout figure of 18 February 2022. The plaintiff requested the within proceedings be dismissed with no order as to costs. The Bank did not recalculate the payout figure to include the further legal costs which would have led to cancellation of the settlement on 28 February 2022.
Hearing before this Court
When this matter came before the Court on 1 March 2022, settlement of finance between the Police Credit Union and the plaintiff had already taken place. So too had settlement with the Bank. The Court was told the Police Credit Union had been registered as the mortgagee. The Bank was removed from the property’s title. Counsel for the plaintiff told the Court there had not yet been formal confirmation that the auction had been cancelled. It was acknowledged the advertisement for the auction had been removed from the internet. For those reasons, relief would no longer be sought by the plaintiff. Instead, leave to discontinue the action was sought. It was indicated leave would be granted. The only remaining issue was costs.
Clearly the first defendant was entitled to enforce the security it had over the Property. Statutory notices enabling the mortgagee to take possession were served with appropriate notice. The bank settled its payout figure on 18 February 2022. The Bank was in a position to settle from that time.
The Bank provided its estimated costs in terms of the payout figure to the Police Credit Union. That was done on the basis there would be no further work required by the bank and settlement would take place in the terms arrangement by both parties. Settlement teams for both sides confirmed settlement on 25 February 2022. Settlement was also confirmed by the solicitor for the Bank. Correspondence relevant to the settlement clearly confirmed that until settlement, the Bank would continue to market the property until the day before the auction date of 3 March 2022, provided all relevant bank sums were paid in full.[8]
The Trust knew the second defendant had been engaged and had conducted significant preparatory work in an effort to sell the properties should the plaintiff continue to default on the mortgage. The costs incurred in preparation of sale and continued marketing need to be seen against a history of previous proposed settlements which did not eventuate. There were sound and relevant commercial reasons for the Bank to continue marketing the property. A determination was made by the Bank that the best way to recover outstanding borrowings was to enforce against the Property.
The plaintiff’s case was without merit. Had the matter of injunctive relief proceeded, it was doomed to fail. Counsel for the plaintiff argued the Police Credit Union was ‘dragging its feet’ which meant there were outstanding issues for other parties. All parties had a concern that the financial settlement may not proceed. Against this submission the documentary evidence shows the parties were ready for and anticipating settlement on 25 February 2022; the Bank was ready from 18 February 2022.
Counsel for the plaintiff could not point to any cause of action the plaintiff could rely on if this matter went to hearing for substantive relief. There is a complaint about the Bank not assisting in the settlement process in a timely manner, but that does not give a basis for proceeding in this manner. In any event, the correspondence between all parties does not support such a contention. There was no challenge to the Bank’s right to exercise its enforcement rights. The fact that as at 9 February 2022 the Trust notified the Bank it had secured finances and the bank did not respond to certain requests to restrain from enforcement does not take the matter any further. There was simply no cause of action that was pointed to. Nor was any pleaded.
Given the history of this matter, I am satisfied that the Bank did not behave in an unreasonable manner. It was appropriate that if settlement did not occur, the Bank could enforce its rights.
As a result of matters unrelated to this case, I was unfortunately unable to complete reasons until recently. I apologise to the parties and counsel for the delay. However, I do not accept that I should respond to an email received by my Associate, indicating that new information had come to light and the plaintiff now does not wish to discontinue the action or wishes to put further unspecified material.[9] I cannot have regard to extraneous correspondence of that kind which raises substantive issues.
Orders
The orders confirmed which were made on 1 March 2022 are:
1.        The Second Defendant’s name be amended to ‘Stuart George Reid’.
2.        The costs issue is adjourned for decision.
The Court indicated on 1 March 2022 that the plaintiff would be given leave to discontinue the action.
The Orders I make today are:
3.        The plaintiff is granted leave to discontinue the action.
4.The plaintiff is to pay the defendant’s costs of and incidental to this proceeding on the ordinary basis. The sum is to be determined by agreement and paid within 30 days from today or costs are to be taxed.
5.The costs order operates and may be enforced even if the plaintiff does not file the Notice of Discontinuance.
At the hearing I asked both counsel whether in order to save further appearances and costs, counsel would be prepared to accept this ruling by email. Both counsel agreed. These reasons will be forwarded to counsel by email.
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[1] An order was made on 1 March 2022 amending the second defendant’s name to ‘Stuart George Reid’.

[2] Section 5628 Hundred of Bagot; 107 Butler Road, Certificate of Title Volume 802 Folio 119 (“the Property”).

[3] Supreme Court Rules 1987 (NT) Order 25.03.

[4] Ibid, Order 25.05.

[5] Transcript, Andrea Rita Imboden as Trustee for the Imboden Reilly Property Trust v Bendigo and Adelaide Bank Ltd and Stuart George Reid, 1 March 2022 at 12.

[6] The Trust is also referred to as the plaintiff in these reasons.

[7] The following summary is drawn from the Affidavit of Rita Imboden, 27 February 2022; the Affidavit of Carolyn Louise Walter, 1 March 2022; the Affidavit of Michaela Elizabeth Powell, 1 March 2022.

[8] In particular, see two letters of Carolyn Walter to Powell & Co Legal, 14 February 2022.

[9] Email from Rodney Perkins/Plaintiff to Associate Blokland J, 10 October 2022.