Bankwest a Division of Commonwealth Bank of Australia v Mann [No 2]
[2017] WASC 23
•3 FEBRUARY 2017
BANKWEST A DIVISION OF COMMONWEALTH BANK OF AUSTRALIA -v- MANN [No 2] [2017] WASC 23
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2017] WASC 23 | |
| Case No: | CIV:2092/2014 | 18 JANUARY 2017 | |
| Coram: | ALLANSON J | 3/02/17 | |
| 7 | Judgment Part: | 1 of 1 | |
| Result: | Application dismissed | ||
| B | |||
| PDF Version |
| Parties: | BANKWEST A DIVISION OF COMMONWEALTH BANK OF AUSTRALIA KEVIN ROBERT MANN |
Catchwords: | Practice and procedure Application to determine preliminary issue Where part of defence must also be struck out Turns on own facts |
Legislation: | Nil |
Case References: | Bankwest A Division of the Commonwealth Bank of Australia v Mann [2015] WASC 187 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
KEVIN ROBERT MANN
Defendant
Catchwords:
Practice and procedure - Application to determine preliminary issue - Where part of defence must also be struck out - Turns on own facts
Legislation:
Nil
Result:
Application dismissed
Category: B
Representation:
Counsel:
Plaintiff : Mr S K Dharmananda SC & Mr C P Strike
Defendant : In person
Solicitors:
Plaintiff : Corrs Chambers Westgarth
Defendant : In person
Case(s) referred to in judgment(s):
Bankwest A Division of the Commonwealth Bank of Australia v Mann [2015] WASC 187
- ALLANSON J:
The proceedings
1 Bankwest commenced these proceedings by a writ filed 5 August 2014. The early history of the proceedings is set out in Bankwest A Division of the Commonwealth Bank of Australia v Mann [2015] WASC 187, a decision of Acting Master Gething (now Gething DCJ), delivered on 28 May 2015, on an application by Bankwest for summary judgment against Mr Mann:
For the better part of the last three decades Kevin Mann has been involved in the management of hotels and nightclubs. At the end of 2012 he and his business partners, through a number of companies, owned two nightclubs in Rockingham, a lease of the Reef Hotel in Bunbury, development land on Victoria Street in Bunbury, the Geraldton Hotel and the Zuu Nightclub (also in Geraldton). One of those companies was Prodale Pty Ltd. The Victoria Street property and the Geraldton properties were acquired using finance facilities from Bankwest, which is now a division of Commonwealth Bank of Australia (Bankwest), the borrower being Prodale (Prodale Facilities). Mr Mann guaranteed the Prodale Facilities.
Bankwest asserts that there were breaches of the facility agreements entitling it to issue notices of default and terminate the Prodale Facilities. In August 2011 it imposed penalty interest of 5% on the Prodale Facilities. In December 2012 it appointed receivers to Prodale and proceeded to sell its assets. Prodale has since been placed in liquidation. By writ filed on 5 August 2014, Bankwest commenced an action against Mr Mann seeking to enforce the guarantee. It also seeks to terminate and recover two home loans made to Mr Mann personally, as well enforcing as a mortgage securing those home loans.
By application dated 23 December 2014, Bankwest applied for summary judgment against Mr Mann pursuant to Rules of the Supreme Court 1971 (WA) (RSC) O 14 r 1. As the application was filed more than 21 days after the date on which Mr Mann entered his appearance, Bankwest has applied for leave to bring the application.
The application was argued before me on 20 April 2015. At the hearing it became apparent that the parties should be given a short opportunity to file supplementary affidavits and submissions on two issues on which evidence was sought to be given from the bar table. I made directions for this to occur.
Mr Mann filed a defence on 20 November 2014 and an amended defence, adding a counterclaim, on 15 January 2015…. He says that no loan repayments were ever missed and that each of the businesses was operating at a healthy profit. Mr Mann makes a number of assertions of illegality and misconduct against Bankwest.
2 The acting master found that Bankwest had not verified all of the facts upon which its claim was based. He also held that defences raised by Mr Mann under the Australian Consumer Law and in equitable estoppel were arguable. On the claim that the conduct of Bankwest was unconscionable, his Honour said:
I am also satisfied that, if this finding were made at trial, it is arguable that an appropriate remedy would be for the court to refuse to enforce the Guarantee, the First Home Loan, the Second Home Loan and the Mortgage pursuant to [Australian Consumer Law] section 243(c). I am thus satisfied that Mr Mann has an arguable defence to Bankwest's claim based on unconscionable conduct in contravention of ACL s 21 [81].
3 Accordingly, the application for summary judgment was dismissed and Mr Mann was given unconditional leave to defend the claim.
4 In December 2016 Bankwest filed an amended substituted statement of claim, to some extent simplifying its earlier plea. Mr Mann filed an amended second substituted defence in January 2017.
5 At a strategic conference on 18 January 2017 Bankwest proposed this application which is designed to quickly resolve these proceedings, not by determining the merits of all of the claims but by separately deciding the claim in relation to the first home loan.
Bankwest's claim regarding the first home loan
6 Bankwest pleads that in early 2006 it provided financial accommodation to Mr Mann in the form of a home loan in the total sum of $200,000. Bankwest pleads that the first home loan agreement contained cl A15.7 under which, except to the extent that Mr Mann had a right of set off granted by law which Bankwest cannot exclude by agreement, Mr Mann is obliged to pay all amounts in full without setting off amounts he believes Bankwest owes him and without counterclaiming amounts from Bankwest (the suspension clause). It also pleads that by cl A20.1, Mr Mann agreed that a certificate signed by a bank officer was admissible evidence of any fact or matter stated in it, for example that a default has occurred under the loan or any security, or that an amount is payable by Mr Mann to Bankwest, and, unless the contrary is established, the certificate is conclusive evidence: par 39.
7 In par 44, Bankwest pleads that, as at 18 March 2014, Mr Mann was in default under the first home loan agreement. On or about 18 March 2014 Bankwest caused Mr Mann to be served with a notice of default stating that the sum of $9,808.50 was to be payable within 31 days and if Mr Mann failed to comply, all amounts owing under the first home loan (at 18 March 2014 totalling $55,231.73) would become immediately due and owing. Bankwest pleads, in par 48, that Mr Mann failed to pay the sum of $9,808.50 by the time specified or at all.
8 Bankwest further pleads at par 49 that the first home loan was secured by a mortgage granted in its favour over a property in Mandurah, and that the failure to pay the amounts due pursuant to the home loan agreement is a default under the terms of the mortgage. Bankwest's claim includes a prayer for orders that Mr Mann pay the sum of $56,284.49 and interest on that sum, and give and deliver up vacant possession of the Mandurah property.
9 In his substituted defence, Mr Mann pleads that he purchased the Mandurah property in 2003, and the first home loan was a reorganisation of finance at the time of the other finance facilities. He further pleads, in par 39, that the first home loan was paid each and every month and was, at the time of demand, more than $10,000 in credit. He pleads that Bankwest could not make a demand on the Mandurah property under the first home loan as it was never in default. Further, in par 39(f) he claims a defence of deceptive and misleading conduct and unconscionable behaviour under s 18 and s 21 of the Australian Consumer Law. In par 39(h), he pleads that Bankwest cannot rely on the documents of the first home loan or the mortgage 'as it must be declared void at the beginning because of the acts of deceptive and misleading conduct by Bankwest in obtaining the documents and security documents of the advanced facilities'. Mr Mann pleads the remedies available to the court include orders that the home loans, as associated securities to the advance facilities, may be declared void. In par 43 he pleads that the court may refuse to enforce the first home loan and the mortgage on the basis of unconscionable conduct. In par 50 he pleads that the mortgages must be declared void 'at the beginning' and that Bankwest is estopped from enforcing the facilities. This, he asserts, would have the effect of removing the suspension clause in the mortgages.
10 These amendments to the defence were made after Bankwest first flagged its intention to apply for an order that the proceedings on the first home loan be dealt with separately, and to rely on cl A15.7 of the home loan.
The present application
11 Bankwest seeks to proceed only in relation to the first home loan. It says that if Mr Mann is unable to pay the amount outstanding under the first home loan then there is no utility in it pursuing these proceedings in respect of the guarantees and the second home loan (and the much greater amount owing under them). If Bankwest is successful, and Mr Mann is unable to pay the amount outstanding, it proposes to seek orders staying the balance of the proceedings, including its own claim, until such time as Mr Mann pays the amount outstanding under the first home loan. The practical result is that the proceedings will be resolved, although there will be a determination of only one small part of them.
12 Bankwest proposes that its application be heard as a preliminary issue. It submits that the application would meet the objectives of case flow management as it would avoid the cost and time involved in hearing the balance of the dispute. The preliminary issue could be resolved in a day. The trial of the whole of the claim would require weeks. Bankwest submits that the issues are relatively clear and simple: whether there is an amount outstanding and what is the proper construction of the 'suspension clause', cl A15.7. Those issues can be resolved without recourse to complex factual issues and there would be minimal overlap of the issues to be heard in the application and at the final hearing. Bankwest accordingly proposed that the following questions be determined as preliminary issues:
1. Does an amount remain outstanding from Mr Mann to Bankwest in respect of the first home loan? If so, how much?
2. Does any liability on the part of Mr Mann depend on Bankwest making a demand for payment? If the answer is no, is Mr Mann obliged to make payment of the outstanding amount under A21.1 of the first home loan and 3.1 of Mr Mann's mortgage to Bankwest? If the answer is yes, did Bankwest make a valid demand for payment?
3. Do clauses A15.7 of the first home loan or 9.2(a) of Mr Mann's mortgage (or both) preclude Mr Mann from advancing any of the claims against Bankwest included in his second substituted counterclaim dated 21 October 2016 and the amended substituted defence dated 9 January 2017 until payment is made to Bankwest of the total amount outstanding under the first home loan?
13 It became apparent at the strategic conference that the issues sought to be determined by Bankwest could not be as readily separated as first contemplated, because of the amendments made to the defence by Mr Mann after this application was flagged. Specifically, the plea by Mr Mann of misleading and deceptive conduct and unconscionable conduct, as purely defensive pleas to the claim under the first home loan and the mortgage, may require the court to determine issues of fact which are complex and which strongly overlap with the allegations made by Mr Mann in relation to the balance of Bankwest's claim.
14 To overcome this problem Bankwest seeks to couple its application with an application to strike out, in part, the amended second substituted defence, on the grounds that the paragraphs pleading the defence under the Australian Consumer Law do not disclose a reasonable cause of action or defence, or are embarrassing, or both. There may be merit in Bankwest's strike out application, to the extent that the plea appears to rely on conduct subsequent to Mr Mann entering into the first home loan and mortgage. But this is not the occasion to determine whether that strike out application should succeed. What I am concerned with now is whether it should proceed at the same time as the hearing of the preliminary issue, when the effective resolution of the preliminary issue depends upon the court first being satisfied that the defences under the Australian Consumer Law should be struck out and that Mr Mann should not be permitted to re-plead them. That is the step I am not prepared to take. If the preliminary issue is to proceed, the strike out application must be decided first.
15 In the light of these comments, Bankwest needs to decide whether it wishes to proceed with the strike out application which, should it proceed, would be heard separately. Only were it wholly successful, with Mr Mann denied leave to re-plead, would it be appropriate to determine the proposed preliminary questions. To the extent the application seeks to have the strike out and the preliminary questions determined together, I dismiss it.
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