Australia & New Zealand (ANZ) Banking Group v Rayner - [1999] WASC 234

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: AUSTRALIA & NEW ZEALAND (ANZ) BANKING GROUP -v- RAYNER & ANOR [1999] WASC 234

CORAM: MASTER BREDMEYER

HEARD: 24 NOVEMBER 1999

DELIVERED : 30 NOVEMBER 1999

FILE NO/S: CIV 1944 of 1999

BETWEEN: AUSTRALIA & NEW ZEALAND (ANZ) BANKING GROUP (ACN 005 357 522)
Plaintiff
AND
DAVID KENNETH RAYNER
SUSAN JOY RAYNER
Defendants

Catchwords:

Summary judgment - Defences of negligence, unconscionable conduct, misleading and deceptive conduct

Legislation:

Nil

Result:

Application allowed

Representation:

Counsel:

Plaintiff: Mr D J Clark
Defendants: Mr D K Rayner in person

Solicitors:

Plaintiff: McCusker & Harmer
Defendants: In person

Case(s) referred to in judgment(s):

Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447
Eng Mee Yong v Letchumanan [1980] AC 331
Muschinski v Dodds (1985) 160 CLR 583
Webster v Lampard (1993) 177 CLR 598

Case(s) also cited:

Australian Can Co Pty Ltd v Levin & Co Pty Ltd [1947] VLR 332
Bank fur Gemeinwirtschaft v City of London Garages Ltd [1971] 1 All ER 541
Cordinup Resorts Pty Ltd v Terana Holdings Pty Ltd, unreported; SCt of WA; Library No 970739; 23 December 1997
Fancourt v Mercantile Credit Ltd (1983) 154 CLR 87
General Credits (Finance) Pty Ltd v Shipton Holdings Pty Ltd & Anor, unreported; SCt of WA; Library No 2054; 19 May 1977
Hospital Contribution Fund of Australia v Hunt (1982) 44 ALR 365
Miles v Bull [1968] 3 All ER 632
White v Johnston (1886) 8 ALT 53

MASTER BREDMEYER: This is an application by the plaintiff for summary judgment against both defendants under O 14. The appearance purports to be on behalf of both defendants but is signed by Susan Joy Rayner only. I think nothing turns on that. Mr Rayner, who appears in person, has not challenged this appearance. I accept it as an appearance on behalf of both defendants and I accept that he represented both defendants in his argument before me.
Summary judgment is a jurisdiction which should be exercised with great care and should never be exercised where there is a real question of law or fact to be decided. The plaintiff relies on affidavits of Ms Woods annexing relevant documents and an affidavit of Mr Clark. The defendants rely on an affidavit of Mr Rayner which I consider is filed on behalf of both defendants. He is also produced written submissions and a list of authorities.
The plaintiff's case as set out in the affidavits and in the statement of claim is that the defendants are the owners of property at 61 Hawford Way, Willetton which they have owned since 1981. It was initially mortgaged to the WA Building Society, Mortgage No C241611on 27 October 1981. I am told that Town & Country Bank took over that mortgage. The property was later mortgaged to the ANZ Bank, Mortgage No C998140 on 12 April 1985. Those two mortgages were discharged on 13 January 1988 when a new first mortgage was granted to Australian Guarantee Corporation and a second mortgage No D649526 to the ANZ Bank. The latter mortgage was discharged on 6 July 1990 when a new mortgage No E398292 was granted to Town & Country Building Society.
New arrangements were made in 1992. On 6 May 1992 the two existing mortgages to Australian Guarantee Corporation and Town & Country Building Society were discharged and two new mortgages were granted to Town & Country Bank Ltd registered as E875113 for $96,210 and E875114 for $34,000. The defendants have two accounts with the bank. In 1995 the ANZ Bank took over the Town & Country Bank. In what follows a reference to the plaintiff should be understood as a reference to the ANZ Bank or to its predecessor the Town & Country Bank.
The bank sues on the two mortgages granted on 6 May 1992 already mentioned. The payments under the first mortgage were $809 per month, later reduced to $694 per month. The payments under the second mortgage were $499 per month later reduced to $441 per month. The defendants paid the instalments regularly until early 1998 and then the payments ceased. As at 25 August 1999, the defendants owed 18 monthly instalments on the first mortgage and 15 monthly instalments on the second mortgage. In a letter dated 27 October 1998, Mr Rayner wrote about the arrears. He said they were struggling to maintain payments and asked the bank to accept two instalments of $2000 each, one on 14 November 1998 and one on 24 November 1998. With that letter he enclosed a cheque for the initial instalment for 14 November 1998. The cheque was banked on 2 November but later dishonoured. A further cheque of $4000 was received on 1 December 1998 but also dishonoured.
In January 1999 a letter of demand was sent to the defendants which has not been exhibited. On 26 March 1999 Mr Rayner wrote to the bank and asked the bank to give its consent to clearance of arrears from 5 April 1999 to 9 April 1999 "as obviously we shall encounter the four day break for Easter within the agreed 14 days". He advised that an application for re-finance of $116,000 had been lodged with BankWest on 25 March 1999 and that he was awaiting the outcome of that application. He also stated that further applications for finance had been lodged with RAMS, Aussie Home Loans and GIO.
Mr Rayner's affidavit states that in 1986 the plaintiff presented to the defendants a new product of the bank known as "Corporate Cash Power Visa Account" (the account) and in connection with that the bank represented:
1.that the account would at all times be subject to the mortgage held by the plaintiff, that is, mortgage C241611;
2.it was a further condition that any discharge of the mortgage would include all repayments of all moneys secured including such amount payable to the account;
3.all documentation would be noted and endorsed with relevant terms recognising the mortgage security.
Relying on those representations the defendants then duly executed the documentation providing for the upstamping of the mortgage to include the agreed credit limit. In oral argument Mr Rayner said that the sum involved was $10,000 which was for his martial arts academy. The affidavit continues that in November 1987 Mr Rayner requested an account of all moneys due and payable to the plaintiff and he requested that mortgage C241611 be discharged. That mortgage was discharged on 13 January 1988. Shortly after that discharge he received a letter of demand from the bank dated 20 January 1988 stating that the account was overdrawn to the extent of $17,585.63. The letter stated that the last deposit was made on 13 November 1987:
"The situation is far from satisfactory and unless regular monthly deposits to cover principal repayment and interest are maintained we will be forced to exercise our rights under our mortgage."
The letter was addressed to Fighting Arts International Group Administration, 61 Hanford Way (sic), Willetton.
In oral argument Mr Rayner says he was shocked to receive that letter because in view of the representation he considered that the discharge of the mortgage discharged all debt to the bank.
I quote from parts of his affidavit:
"8.As this was clearly an error I contacted the bank to explain that the debt had been discharged. Various requests and attempts to solve the problem revealed that the Plaintiff had negligently failed to secure the credit facility of the accounts as had been represented to the Defendants.
9.The Plaintiff had failed to secure the monies as agreed and required, and Mortgage ..C241611 was not of a type that facilitated additional sums to be secured.
10.As a result of this I met with a Mr Hollins an authorised officer of the Plaintiff, who during the meeting revealed that the Plaintiff had negligently failed to properly secure a significant number of similar accounts for the same reason. The Plaintiff then had potential liabilities of very significant amounts of money.
11.He further indicated that the Plaintiff was prepared to do anything to recover its money and reduce its liability exposure.
12.I advised the Plaintiff and Mr Hollins that in my opinion the Bank had acted negligently and I did not accept the debt."
The second defence relied on by the defendants is unconscionable conduct by the plaintiff between May 1986 and May 1992. I quote from his affidavit on that topic:
"1.Following my advice to the Plaintiff regarding the negligent action of the Plaintiff, the Defendants then became subject to a bombardment of actions by the Plaintiffs officers aimed at recovering the banks position and the ever escalating debt without going public. The Defendants were subjected to a tirade of:
i.Unpleasant threatening phone calls at all times of the day.
ii.Letters threatening sale of the house under the said mortgage which had already been discharged (refer Annexure DK1).
iii.Bank officers attending the property and making all sorts of threats always in an aggressive manner calculated at drawing attention to the scene. Phone calls from real estate agents salesmen, removalists, valuers etc saying they have the Banks authority to undertake relevant acts in order to sell the property.
2.This pattern of harassment coercion and duress was maintained relentlessly.
3.The conduct finally resulted in the Defendants surrendering to the pressure of the Plaintiffs actions.
4.The Plaintiff actions were manifestly a breach of the provisions of the Trade Practices Act."
The final matter raised in the affidavit is the plaintiff's unconscionable, misleading and deceptive conduct between May 1982 to the date of these proceedings. I quote from part of his affidavit:
"1.The Plaintiff has engaged in systematic deliberate and calculated misleading and deceptive conduct for the benefit of obtaining a pecuniary advantage.
2.Mortgages E875113 and E875114 convey an implied right for a mortgagor to repay fees, charges and interest thereon, the Plaintiff's notices fails in all regard to provide the necessary particulars required to exercise the right held by the mortgagor.
3.The Plaintiff has deliberately withheld relevant and necessary financial information necessary to permit the mortgagor to comply with para (7) of the mortgage, which states inter alia …"
The defendant then annexes an arrears notice dated 15 December 1998 on Account No 75365404 setting out:
Date Last Repayment Due  25 NOV 98
Repayment Amount  $ 444.00
Arrears Amount  $2704.90
Arrears Fee  $    35.00
Total Now Due  $ 2739.90
The defendant says that balance shown is misleading and deceptive in that it applies at the time of printing not of receipt. At the time of receipt the balance required to clear the debt has already changed. It does not provide particulars of such a daily amount for additional interest charges. It does not provide particulars of the arrears interest rate, whether it be the same as applying to the principal sum or to some other rate. It does not provide particulars of how the arrear days are counted. It does not provide particulars whether the interest is applicable to the whole of the balance or the arrears amount. The lack of such particulars is misleading and deceptive. The defendants will claim all alleged arrears, fees charged to the account together with interest thereon which are breach of the Trade Practices Act.
The affidavit goes on to state that in relation to these two 1992 mortgages the bank relied upon a false valuation that did not truly represent the value of the mortgaged property. At the time of the valuation the valuer arrived at the property and during the course of performing the valuation produced a document which he advised had the figures of the valuation which he had to achieve for the plaintiff. The value arranged to achieve for the plaintiff was inflated and not a true representation of a fair market price. This inflated valuation was arranged by the plaintiff to ensure the debt to equity ratios for the first and second mortgages was maintained and that the loan did not appear to breach the bank's lending ratio criteria. The plaintiff then further breached its own lending criteria in manipulating income levels to show that the defendants would be able to meet their repayment obligations in respect of the two mortgages. The plaintiff has constantly and repeatedly breached the terms of the mortgage and the schedule thereof in respect of default provisions in order to obtain a pecuniary advantage. The plaintiff's conduct has been deliberate, calculated and systematic.
In this kind of case the court should accept the defendants' evidence as true unless it is inherently incredible, see Webster v Lampard (1993) 177 CLR 598 at 604 and 608. I can elaborate on that statement of the law by quoting from the Privy Council per Lord Diplock in Eng Mee Yong v Letchumanan [1980] AC 331 at 341:
"Although in the normal way it is not appropriate for a judge to attempt to resolve conflicts of evidence on affidavit, this does not mean that he is bound to accept uncritically, as raising a dispute of fact which calls for further investigation, every statement in an affidavit however equivocal, lacking in precision, inconsistent with undisputed contemporary documents or other statements by the same deponent or inherently improbable in itself it may be."
I consider that the defendants' evidence of negligence is inherently incredible and should not be believed. The discharge of the 1981 mortgage C241611 on 13 January 1988 could not discharge the debt. The discharge of a mortgage discharges the mortgage only. It discharges the security. It does not necessarily discharge the debt. It is incredible that any such representation was made because, although the bank discharged the 1981 mortgage, it immediately took a new mortgage registered on the same day. The bank would only take a mortgage to secure moneys owing. The new mortgage No D649526 no doubt secured all moneys then owing to the bank. There was never a period when the bank's debt was not secured by a mortgage. Moreover, all that is ancient history. The 1988 mortgage was itself discharged in 1990 and replaced by another which was, in turn, replaced by the 1992 mortgages. The plaintiff is suing on those 1992 mortgages. If the defendants were shocked on receipt of the letter of 20 January 1988 because it was based on a misrepresentation, then why not sue then for misleading and deceptive conduct? The period of limitations - three years - has now expired. And why take out new mortgages with the same bank in 1990 and 1992?
The second defence relied upon of unconscionable conduct by the plaintiff between May 1986 and May 1992 also has no substance. Whether the threatening phone calls from the bank were unpleasant or not has no bearing on the legal rights of the parties which are largely governed by the contractual documents. The defendants complain of letters threatening the sale of the house under the mortgage which had already been discharged. There is no substance in that. As I have said, the bank replaced its 1981 mortgage with a 1988 mortgage. Unconscionable conduct as an equitable cause of action is not as wide as the ocean. Unconscionable conduct usually refers to a class of case in which a party makes unconscientious use of his superior position or bargaining power to the detriment of a party who suffers from some special disability such as illness, ignorance, inexperience, drunkenness, impaired faculties, financial need or other circumstances. Relief on the ground of unconscionable conduct will be granted when unconscientious advantage is taken of an innocent party whose will is overborne so that it is not independent and voluntary or when such advantage is taken of an innocent party that he is unable to make a worthwhile judgment as to what is in his best interest. See Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 at 459 and 461. If unconscionable conduct is made out the court can avoid the original contract, as in Amadio, or can order that the party guilty of it holds an asset in trust, in whole or in part, for the innocent party, see for example Muschinski v Dodds (1985) 160 CLR 583. I consider that the alleged misconduct by the bank mentioned in the affidavit, which relates to attempts to enforce a security and not to the formation of the contract, could not, as a matter of law, amount to unconscionable conduct which would vitiate the contract. Nor does it amount to a breach of the Trade Practices Act.
The defendants' third defence relates to the plaintiff's unconscionable, misleading and deceptive conduct between May 1992 to the date of these proceedings. I fail to see that any of the matters raised in the defendant's affidavit under these headings provides an issue of law or fact which needs to be decided.
I will deal specifically with one other matter raised by Mr Rayner. I have already quoted from the defendant's letter to the bank of 26 March 1999 asking for further time to clear the arrears from 5 to 9 April 1999 to allow for the Easter break and advising that an application to re‑finance for $116,000 had been lodged with BankWest, Cannington. The defendant says that this letter is privileged because in an earlier letter dated 14 January 1999 he marked the correspondence without prejudice. He has exhibited to his letter a copy of that letter and he says that that privilege should apply to the later letter of 26 March 1999. I do not see why that should be so. Also the letter of 26 March 1999 does not contain any settlement offer.
I consider the defendant has raised no issue of fact or law that needs to be decided at a trial and that there is no other reason why a trial should be conducted. I propose to award summary judgment to the plaintiff against both defendants. The defendants will be required to give up possession of the land within a specified time and to pay the costs of this application and the costs of the action.