Australia and New Zealand Banking Group Limited v; Bragg (No. 2)

[2015] NSWSC 1903

Supreme Court

New South Wales

Medium Neutral Citation:	Australia and New Zealand Banking Group Limited v; Bragg (No. 2) [2015] NSWSC 1903
Hearing dates:	14 December 2015
Date of orders:	14 December 2015
Decision date:	14 December 2015
Jurisdiction:	Common Law
Before:	Davies J
Decision:	The Defendants’ Notice of Motion filed 4 December 2015 is dismissed.
Catchwords:	PROCEDURE – amendment - proceedings for possession of land – matter fixed for hearing – late application by defendants to amend defence to rely on unjustness of contract – second defendant is a corporation – contract entered into for trade or business – no evidence of circumstances surrounding entry into loan contract – application dismissed
Legislation Cited:	Contracts Review Act 1980 (NSW) Competition and Consumer Act 2010 (Cth)
Category:	Procedural and other rulings
Parties:	Australia and New Zealand Banking Group Limited (Plaintiff) Joseph Ralph Bragg (First Defendant) Conjola Investments Pty Ltd in its own right and as Trustee for the L C Investment Trust (Second Defendant)
Representation:	Counsel: P Newton (Plaintiff) In person via telephone conference (Defendants) Solicitors: William James (Plaintiff) Self-represented (Defendants)
File Number(s):	2015/65627

Judgment

1. This matter is fixed for hearing on 1 and 2 March 2016. The Defendants now apply by Notice of Motion filed on or about 4 December for leave to amend their Defence to rely on "unjust and unfair lending, improvident lending, unconscionable lending and breach of the National Consumer Protection Act 2009 (Cth) (sic)” and they seek leave to file a cross-claim seeking damages.

2. The proceedings commenced on 3 March 2015. The Defendants have at all times acted for themselves in the matter. The bank entered into a loan agreement to lend money to the Second Defendant on security of a development property purchased by the Second Defendant. The Second Defendant is in occupation of the property, presumably because he is the Director of the Second Defendant.

3. The matter came before me for early judicial directions on 24 July 2015 because Defences had been filed on behalf of each of the Defendants on 22 and 23 July. Those Defences were not properly pleaded. However, I noted in the judgment that I gave when I struck those Defences out that the Defendants gave some indication that the proceedings might be defended on the basis of the Contracts Review Act 1980 (NSW). I said there,

It appears the Defendants will rely on the Contracts Review Act 1980 and the breaches of the Code of Bank Practice but whether the Defendants can rely on the Contracts Review Act might be thought to be a moot point because the First Defendant informed me that the moneys were borrowed for development purposes and one of the borrowers was the Second Defendant, being a company.

4. Because there appeared to be a defence of some sort disclosed, I struck the Defences out but gave leave to the Defendants to file further defences in the matter. A further Defence was filed on 24 August 2015. It purported to be filed only on behalf of the First Defendant. However, the affidavit verifying suggests that it is filed on behalf of both Defendants. I am prepared to regard it as filed for both Defendants.

5. That Defence did not, on its face, rely at all on the Contracts Review Act. The Defence was not in fact properly pleaded but no further point was taken about that by the Plaintiffs. What was asserted in that Defence was that the Defendants defaulted because of extra conditions they said that the Bank imposed upon them after the contract was entered into.

6. The Bank ultimately filed a reply on 11 September 2015 where it pleaded a Settlement Deed entered into subsequent to the original loan agreement of 8 July 2011 and a further loan agreement of 20 June 2012. That Settlement Deed was dated 13 June 2014. It was further pleaded that the Defendants were estopped from pleading or producing evidence that would have denied that arrangement.

7. The matter thereafter proceeded by way of preparation for a hearing on the basis that the principal issue between the parties concerned that deed of settlement. It was only in a directions hearing on 6 November 2015, at a time when the Defendants had failed for a second time to file evidence in accordance with directions, that the First Defendant raised the matter of what he described as a “fair loan” or an “unjust loan”. When I pointed out to him that that was not pleaded as a defence, he told me that that was always how he was intending to defend the matter, and that he had referred to the unjustness of the contract in affidavits that he had filed. I directed that if he wished to amend his pleadings, (given that a hearing date had been appointed) he would need to file a Notice of Motion, and I indicated that he would need to explain in any affidavit he filed why this had not been raised at an earlier time.

8. The affidavit filed in support of the Motion is not satisfactory in explaining why the matter was not raised earlier. It simply says that he failed to realise he had not included that matter in his Defence. The difficulty for the Defendant is highlighted by the fact that in my judgment of 24 July I had identified, as I thought, that he was going to rely on the Contracts Review Act and I gave him leave to plead a further defence so that that matter could be properly identified and pleaded.

9. The First Defendant has drawn my attention this morning to paragraph 4 of his affidavit of 14 October 2015 which he says shows that he always intended to raise the unjustness of the loan and had done so in his evidence filed. Paragraph 4 reads as follows:

The ANZ was fully aware that we had assets and funds for settlement but very little cash flow made up of government benefits and some part time work. That is why they have structured the loan to have the loan payment come out of the loan capital.

That paragraph then makes the reference to two documents which were annexures to that affidavit described as Document 2 and Document 4. Document 4 is of some importance because it is an email from the Relationship Manager of the ANZ to the First Defendant, probably in or around May 2011. That email says relevantly, "As per our recent discussions in your emails, the structure of the approved facility has been based on the information that you have provided to us." It then went on to set out how the loan structure was to be made up. On that basis, the way the loan was to be repaid came about at the behest of the Defendants. That tends to suggest that paragraph 4, at least, is not evidence of any unjustness in the making of the loan agreement.

10. Putting aside the fact that there is scant evidence in any of the affidavits filed by the Defendants to show facts and circumstances that could lead to a conclusion that there was an issue concerning the unjustness of the contract, the Defendants suffer from a serious problem arising from s 6 of the Contracts Review Act. Section 6(1) provides that a corporation may not obtain relief under the Act. Accordingly, the Second Defendant cannot plead the unjustness of the contract pursuant to that Act.

11. Section 6(2) provides that a person may not be granted relief under this Act in relation to a contract so far as the contract was entered into in the course of or for the purpose of a trade business or profession carried on by the person. The loan from the bank to the Second Defendant was for the development of cabins which were to be built on the site. The property had been purchased by the Second Defendant from BankWest for the purpose of completion of the cabins and the sale of them. To the extent that the First Defendant became a party to the loan arrangements (that seems to be asserted in the Reply in relation to the Deed of Settlement of 13 June 2014), the contract appears to be one for the purpose of the trade business or profession being carried on by the Defendants for the completion of these cabins and their sale.

12. In those circumstances, leave to allow reliance on the Contracts Review Act would be futile.

13. I am not satisfied in any event that in the evidence to date, the Defendants have established any fact or circumstances that would entitle them to argue about the unjustness of the contract initially entered into with the Bank. Nor is there any evidence to demonstrate, at this late stage, that there is some breach of the Competition and Consumer Act 2010 (Cth).

14. For those reasons, the Notice of Motion filed by the Defendants is dismissed. The matter will proceed to trial on the issues contained in the pleadings being the Statement of Claim filed 3 March 2015, the Defence filed 24 August 2015 and the Reply dated 11 September 2015.

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