Atkinson v Commonwealth Bank of Australia
[2020] WASC 226
•18 JUNE 2020
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: ATKINSON -v- COMMONWEALTH BANK OF AUSTRALIA [2020] WASC 226
CORAM: MASTER SANDERSON
HEARD: 18 MAY 2020
DELIVERED : 18 JUNE 2020
PUBLISHED : 18 JUNE 2020
FILE NO/S: CIV 1115 of 2020
BETWEEN: SHAUN LLOYD ATKINSON
Plaintiff
AND
COMMONWEALTH BANK OF AUSTRALIA
Defendant
Catchwords:
Pre-action discovery - Claim against bank - Plaintiff not establishing it 'may' have cause of action - Turns on own facts
Legislation:
Nil
Result:
Plaintiff's claim dismissed
Category: B
Representation:
Counsel:
| Plaintiff | : | J Slack-Smith |
| Defendant | : | MD Cuerden SC |
Solicitors:
| Plaintiff | : | Lightwater Legal |
| Defendant | : | Corrs Chambers Westgarth |
Case(s) referred to in decision(s):
Nil
MASTER SANDERSON:
This was the plaintiff's application for pre-action discovery. Both parties agreed the jurisdiction to order discovery was dependent upon the plaintiff establishing it may have a cause of action against the defendant. That is sometimes referred to as the jurisdictional question. After hearing argument on that matter, I indicated to the parties I was not satisfied the plaintiff had established it may have a cause of action. I advised I would produce written reasons for that decision. These are those reasons.
At the commencement of the hearing I dealt with the defendant's objections to the amended affidavit of the plaintiff affirmed 7 April 2020 and filed in support of the application. To a large extent the objections were conceded. Otherwise objection was taken to certain paragraphs on the basis they were argumentative, irrelevant or speculation based upon unsubstantiated facts. To understand the nature of the defendant's objections it is first necessary to say something about the relevant facts. What follows is largely taken from written submissions filed on behalf of the plaintiff. While none of these facts would appear to be controversial, I should emphasise that I have proceeded on the basis that the plaintiff will be able to establish these facts. The defendant did not concede that was the case. In any event, in recounting these facts, I am not in any way making findings intended to bind a court in any future hearing.
Prior to June 2008 the plaintiff and his then partner were registered proprietors of a property in Margaret River. On 7 June 2008 they agreed to sell the Margaret River property to one Carlin for an amount of $4,050,000.[1] The sale was subject to Carlin obtaining finance for around 60% of the purchase price - an amount of approximately $2,430,000.[2] The plaintiff says that around August 2008 Carlin made two oral representations to him. First, that he (Carlin) had obtained finance approval from the Commonwealth Bank for $2,500,000 which was, of course, insufficient to enable him to settle.[3] Second, he said that if the plaintiff provided him with vendor finance in an amount of $1,500,000, then the Commonwealth Bank would agree to the settlement.[4] Of course, the Commonwealth Bank is not in a position to know whether or not these representations were made by Carlin to the plaintiff. But for the purposes of this application it did not argue otherwise.
[1] Plaintiff's submissions in support of application for pre-action discovery filed 1 May 2020, [4].
[2] Plaintiff's submissions in support of application for pre-action discovery filed 1 May 2020, [4].
[3] Plaintiff's submissions in support of application for pre-action discovery filed 1 May 2020, [5.1].
[4] Plaintiff's submissions in support of application for pre-action discovery filed 1 May 2020, [5.2].
On 16 September 2008 the sale contract was varied to extend the settlement date on the condition that the parties enter into a vendor finance contract under which Atkinson and his partner would advance $1,500,000 to Carlin to enable Carlin to settle.[5] Pursuant to this vendor finance contract, Carlin was to provide a second mortgage over the Margaret River property and a mortgage over a property he owned in Swanbourne.[6]
[5] Plaintiff's submissions in support of application for pre-action discovery filed 1 May 2020, [6].
[6] Plaintiff's submissions in support of application for pre-action discovery filed 1 May 2020, [7].
Settlement occurred on or around 19 September 2008.[7] The title to the Margaret River property shows a mortgage to the Commonwealth Bank registered on that date and a mortgage to the plaintiff and his partner registered on 18 December 2008.[8] The Commonwealth Bank consented to the second mortgage. The same position applied to the Swanbourne property - a mortgage to the Commonwealth Bank was registered on 19 September 2008 and a mortgage to the plaintiff and his partner on 18 December 2008.[9] The Commonwealth Bank also consented to that second mortgage.
[7] Plaintiff's submissions in support of application for pre-action discovery filed 1 May 2020, [8].
[8] Plaintiff's submissions in support of application for pre-action discovery filed 1 May 2020, [9].
[9] Plaintiff's submissions in support of application for pre-action discovery filed 1 May 2020, [10].
It would seem that, in fact, the Commonwealth Bank lent to Carlin a lot more than $2,500,000. In 2017 the Commonwealth Bank commenced proceedings against Carlin for just under $4,000,000 plus interest.[10] They also sought possession of both the Margaret River property and the Swanbourne property. In or around December 2019 the Commonwealth Bank and Carlin entered into a settlement deed.[11] Pursuant to that deed, Carlin delivered up possession of the Margaret River property and the Swanbourne property and agreed to pay the Commonwealth Bank $700,000.[12] Given that the total value of both properties is likely to be less than what is owed to the bank, it would appear the plaintiff will not be paid anything on the sale of the two properties over which he holds a second mortgage.
[10] Plaintiff's submissions in support of application for pre-action discovery filed 1 May 2020, [12].
[11] Plaintiff's submissions in support of application for pre-action discovery filed 1 May 2020, [14].
[12] Plaintiff's submissions in support of application for pre-action discovery filed 1 May 2020, [14.1] – [14.2].
The nature of the objections taken by the defendant to the plaintiff's affidavit can be illustrated by quoting par 16 of that affidavit. It is in the following terms:
The Defendant's intention to sell the Margaret River Property is in conflict with the Plaintiff's vendors lien for unpaid purchase price and the Plaintiff's prior ranking mortgage security.
Clearly that statement is inadmissible. There is nothing in the evidence to establish the plaintiff had a 'vendor's lien'. The plaintiff had a registered interest in both the Margaret River property and the Swanbourne property as second mortgagee. It did not have - and it could not have - any 'prior ranking mortgage security'. A second mortgage is just that - a mortgage which ranks in priority behind a first mortgage. If there had been a third mortgage then the plaintiff's security would have ranked in priority to that third mortgage. No matter which way the paragraph is viewed, and no matter how benign an approach is adopted, the paragraph cannot stand as evidence.
There was one paragraph to which objection was taken which I allowed to stand. That was par 11. It is in the following terms:
I have recently become aware that, contrary to the Defendant's assertion that Carlin and the Defendant entered into a written Low Documentation Complete Home Loan 'on or about 18 August 2008', the Defendant did not enter into a purported credit contract until around November 2008, when Elena Collica of CBA faxed Carlin a Low Documentation Home Loan Declaration for completion.
The defendant objected to this paragraph on the basis it was hearsay and the plaintiff had not sworn to his belief the hearsay information was correct. I would accept that the form of the paragraph is not in accordance with the rules. However on balance I was satisfied that, pushing the boundaries, it was possible to say the plaintiff had obtained the information from Ms Elena Collica and he accepted it to be true and correct. The evidence is of limited probative value. It should have been put in a way that complied with the rules. But on balance I was satisfied it was possible by reading the affidavit overall to accept the plaintiff had been given certain information and he believed the information to be true.
In his written and oral submissions, counsel for the plaintiff identified four potential causes of action. They were:
1. Fraud;[13]
2. Misleading or deceptive conduct;[14]
3. Statutory unconscionable conduct;[15] and
4. A claim arising from tacking of further advances.[16]
[13] Plaintiff's submissions in support of application for pre-action discovery filed 1 May 2020, [C2].
[14] Plaintiff's submissions in support of application for pre-action discovery filed 1 May 2020, [C3].
[15] Plaintiff's submissions in support of application for pre-action discovery filed 1 May 2020, [C4].
[16] Plaintiff's submissions in support of application for pre-action discovery filed 1 May 2020, [C5].
On registration of its mortgage the Commonwealth Bank obtained an indefeasible title subject to the exception for fraud. As counsel for the plaintiff said in his submissions fraud means actual fraud rather than equitable fraud. Dishonesty is essential. A false representation is fraudulent if it was made knowingly, without belief in its truth or recklessly or carelessly, whether it be true or false. The starting point then is to identify what representation was allegedly made by the Commonwealth Bank to the plaintiff. The answer is there was no such representation. It is nowhere alleged in the plaintiff's affidavit that he or his solicitors asked the Commonwealth Bank how much they were advancing to Carlin. It may well be Carlin misrepresented the position to the plaintiff. But that was not a representation of the Commonwealth Bank. Leaving to one side representations, there is no conduct of any sort identified in the plaintiff's affidavits which could arguably give rise to fraud. The plaintiff could not possibly have a cause of action against the Commonwealth Bank.
As to misleading and deceptive conduct, the conduct has to be the failure by the Commonwealth Bank to advise the plaintiff it was lending to Carlin more than $2,500,000 and the greater amount would be secured over the Margaret River and Swanbourne properties. Remembering Carlin was a customer of the Commonwealth Bank, it is clear no duty or obligation existed which required the Commonwealth Bank, to gratuitously advise the plaintiff of the level of Carlin's borrowings. Apart from anything else the Commonwealth Bank had a duty of confidentiality to Carlin. If the plaintiff or his solicitors had approached the bank and asked how much Carlin was borrowing, the Commonwealth Bank could not have provided an answer unless they obtained approval from Carlin. In any event, there is no evidence such a request was made. Given the plaintiff cannot establish a representation by silence or otherwise there is no cause of action.
The argument as to unconscionable conduct runs this way. The plaintiff alleges the Commonwealth Bank was aware when Carlin entered into the loan he did not have the means to make repayment. It follows, the actions of the Commonwealth Bank in entering into the loan were unconscionable and that unconscionable conduct had led to loss on the part of the plaintiff. With respect, on those facts the plaintiff does not have a cause of action. There may or may not have been unconscionable conduct as between Carlin and the Commonwealth Bank. But the statute does not extend any right of action against the Commonwealth Bank to a person in the position of the plaintiff. The authorities make that clear. The plaintiff does not have an action against the Commonwealth Bank for unconscionable conduct.
Finally there is the issue of tacking. The plaintiff says the amount the Commonwealth Bank is seeking from Carlin exceeds the amount of the mortgage by some $60,000. It is not difficult to imagine this amount is made up of interest and costs. But even if there is a doubt on the evidence as to how this amount is calculated, it simply would not warrant the discovery sought by the plaintiff. So while I would accept there may be an argument on this issue, it is not in and of itself sufficient to warrant an order for discovery.
For these reasons I dismissed the plaintiff's claim. The plaintiff ought pay the defendant's costs of the application, including reserved costs.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
CB
Associate to Master Sanderson18 JUNE 2020
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