BankWest - a Division of Commonwealth Bank of Australia v Mann [No 3]

[2017] WASC 135

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   BANKWEST - A DIVISION OF COMMONWEALTH BANK OF AUSTRALIA -v- MANN [No 3] [2017] WASC 135

CORAM:   ALLANSON J

HEARD:   27 APRIL 2017

DELIVERED          :   19 MAY 2017

FILE NO/S:   CIV 2092 of 2014

BETWEEN:   BANKWEST - A DIVISION OF COMMONWEALTH BANK OF AUSTRALIA

Plaintiff

AND

KEVIN ROBERT MANN
Defendant

(BY ORIGINAL ACTION)

KEVIN ROBERT MANN
Plaintiff by Counterclaim

AND

BANKWEST - A DIVISION OF COMMONWEALTH BANK OF AUSTRALIA
Defendant by Counterclaim

(BY COUNTERCLAIM)
 

Catchwords:

Practice and procedure - Pleadings - Application to strike out defence - Whether pleading discloses reasonable defence - Whether pleading likely to prejudice, embarrass or  delay the fair trial of the action - Turns on own facts

Consumer law - Australian Consumer Law - Misleading and deceptive conduct - Remedies available - Agreement void ab initio - Turns on own facts

Legislation:

Australian Consumer Law (Cth), s 237, s 243
Rules of the Supreme Court 1971 (WA), O 1 r 4B, O 20 r 19

Result:

Plaintiff's strike out application granted

Category:    B

Representation:

Original Action

Counsel:

Plaintiff:     Mr S K Dharmananda SC

Defendant:     In person

Solicitors:

Plaintiff:     Corrs Chambers Westgarth

Defendant:     In person

Counterclaim

Counsel:

Plaintiff by Counterclaim :     In person

Defendant by Counterclaim   :     Mr S K Dharmananda SC

Solicitors:

Plaintiff by Counterclaim :     In person

Defendant by Counterclaim   :     Corrs Chambers Westgarth

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

Automotive, Food, Metals, Engineering, Printing & Kindred Industries Union of Workers Western Australian Branch v Bell-A-Bike Rottnest Pty Ltd [2005] WASCA 157

Awad v Twin Creeks Properties Pty Ltd [2012] NSWCA 200

Barclay Mowlem Construction Ltd v Dampier Port Authority [2006] WASC 281; (2006) 33 WAR 82

Dey v Victorian Railways Commissioners [1949] HCA 1; (1949) 78 CLR 62

General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125

Hart-Roach v Public Trustee (Unreported, WASC, Library No 980044, 11 February 1998)

I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd [2002] HCA 41; (2002) 210 CLR 109

Minogue v Human Rights and Equal Opportunity Commission [1999] FCA 85; (1999) 166 ALR 129

Murchison Zinc Company Pty Ltd v Thiess Contractors Pty Ltd [2000] WASCA 167

Pancontinental Mining Ltd v Posgold Investments Pty Ltd [1994] FCA 983; (1994) 121 ALR 405

Tobin v Dodd [2004] WASCA 288

1. ALLANSON J:  BankWest claims against Mr Mann under several agreements, including a home loan and mortgage.  His defence to that claim is substantially based on relief available under the Competition and Consumer Act 2010 (Cth) (Australian Consumer Law). The Bank applies to strike out parts of the defence, based on the Australian Consumer Law as not disclosing an arguable defence, and as embarrassing.

2. The Bank claims against Mr Mann that he:

   (1)owes $2,463,998.82 and interest pursuant to a Guarantee under which he guaranteed and indemnified the Bank in respect of the obligations of Prodale Pty Ltd;

   (2)owes $192,144.67 and interest under a home loan agreement (the First Home Loan);

   (3)owes $56,284.49 and interest under a second home loan agreement (the Second Home Loan);

   (4)is liable to give and deliver up possession of land under a mortgage securing the First and Second Home Loans and other borrowing.

3. The current application relates to the First Home Loan only.  The Bank applies for orders striking out pleas in Mr Mann's defence that the First Home Loan and mortgage are void by reason of misleading, deceptive and unconscionable conduct.  The Bank submits that those paragraphs, in the parts challenged, do not disclose a reasonable defence and may prejudice, embarrass or delay the fair trial of the action.

4. The paragraphs in question are pars 12, 39 (f) ‑ (h), 42 (g) and (h), 43, 44, 49, 50 (a) ‑ (c), (g) and (h), 51, 54, 55, and 60 (c). The impugned paragraphs have in common a claim that the court should find the First Home Loan and mortgage should be declared void under s 237 and s 243 of the Australian Consumer Law, or that the court, as an appropriate remedy under s 243, should refuse to enforce the First Home Loan and mortgage for conduct in breach of the Australian Consumer Law.

The principles

1. On an application to strike out pleadings, the court must apply case management principles and attain the objects set out in O 1 r 4B of the Rules of the Supreme Court 1971 (WA). It is necessary to consider the role of pleadings in the context of case management techniques, including the pre-trial exchange of witness statements and documents: see Barclay Mowlem Construction Ltd v Dampier Port Authority [2006] WASC 281; (2006) 33 WAR 82 [8]. Providing a pleading fulfils its basic function by identifying the issues, disclosing an arguable cause of action or defence, and apprising the other party of the case it has to meet at trial, then the action should proceed: Murchison Zinc Company Pty Ltd v Thiess Contractors Pty Ltd [2000] WASCA 167 [38]; Barclay Mowlem [5], [9].

2. The court will only strike out in a clear case:  General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125, 129 ‑ 130; Dey v Victorian Railways Commissioners [1949] HCA 1; (1949) 78 CLR 62, 91. In this application, it is contended that the pleading does not disclose a reasonable defence to the claim based on the First Home Loan: the question is whether it would be open to Mr Mann, on the facts he has pleaded, to prove facts at the trial which would constitute a defence to the matters raised in the Bank's claim: Pancontinental Mining Ltd v Posgold Investments Pty Ltd [1994] FCA 983; (1994) 121 ALR 405, 414; Automotive, Food, Metals, Engineering, Printing & Kindred Industries Union of Workers Western Australian Branch v Bell-A-Bike Rottnest Pty Ltd [2005] WASCA 157 [54].

3. The alternative ground in the strike out application is that the defence, or particular pleas in it, may 'prejudice, embarrass or delay the fair trial of the action'.  It is a composite phrase. Pleadings may be struck out on this ground

   because they are evasive, they conceal or obscure the real questions in controversy, they are ambiguous or not reasonably intelligible, they raise immaterial or irrelevant issues, they fail to confine the issues or state the case of the party in question with reasonable particularity, or they raise a case in terms which are simply too general.

   See Hart-Roach v Public Trustee (Unreported, WASC, Library No 980044, 11 February 1998) 8 ‑ 9 (Murray J).

4. I must have regard to the fact that Mr Mann is unrepresented, although he advised me that he has the benefit of informal assistance from a legal practitioner.  The role of the judge in civil proceedings where a party is not represented was discussed in detail in Minogue v Human Rights and Equal Opportunity Commission [1999] FCA 85; (1999) 166 ALR 129 [26] ‑ [30]; and see Tobin v Dodd [2004] WASCA 288 [14] ‑ [15]. I will not repeat those discussions. I approach this application, trying to ensure that there is noviable defence that is obfuscated by the form or expression of a document prepared by a self‑represented litigant.

The pleading

1. The Bank's primary point is simply stated: Mr Mann relies on acts and events after the entry into the relevant loan and mortgage, and those events cannot logically ground a claim about the efficacy of entry into the instruments.  It is useful to set out a brief chronology.

   (1)On or about 12 January 2006, the Bank and Prodale entered a facility agreement (the First Advance Facility) in the form of a fixed interest rate term loan for the purchase of a property in Victoria Street, Bunbury.

   (2)On 19 January 2006, Mr Mann executed a guarantee in respect of Prodale's obligations under the First Advance Facility.

   (3)On or about 24 February 2006, the Bank and Mr Mann entered a loan (the First Home Loan) for a total sum of $200,000.  The loan was secured by a mortgage over a property in Mandurah Terrace.  Mr Mann agrees with this, but says the property was purchased in 2003 and the Bank reorganised the finance when Prodale purchased the Victoria Street Property in 2006; he pleads the First Home Loan was 'a rearrangement of existing finance to accommodate the First Advance Facility'.

   (4)On or about 21 December 2007, the Bank and Prodale entered a facility agreement for the purchase of the Geraldton Hotel.

   (5)The Bank pleads that in June 2008, the Bank and Prodale varied and replaced both existing facilities with the Second Advance Facility.  Mr Mann denies that it varied the First Advance Facility and pleads that the second facility was a separate and distinct loan.

   (6)The terms of the First Advance Facility were varied in December 2008 and November 2010, and replaced in April 2011.

   (7)The terms of the Second Advance Facility were varied in December 2008 and October 2010, and replaced in April 2011.

   (8)The Bank pleads, and Mr Mann denies, that as at 18 March 2014, he was in default on the First Home Loan.

2. Specifically, in his response to the Bank's plea regarding the First Home Loan and mortgage, Mr Mann pleads that he first purchased the Mandurah property in 2003, and the Bank reorganised the finance when Prodale purchased the Victoria Street property in March 2006:  par 37 and 38. 

3. In those parts of the challenged paragraphs of the defence that relate to the First Home Loan and mortgage, Mr Mann pleads:

   (1)the First Home Loan and the mortgage should be declared void from the beginning:  par 12;

   (2)the defence relies on deceptive and misleading conduct and unconscionable behaviour 'before the Advance Facilities were created and at variations during the Advance Facilities':  par 39 (f);

   (3)the court can refuse to enforce the First Home Loan and mortgage:  par 39 (g);

   (4)the Bank cannot rely on the First Home Loan and the security must be declared void because of acts of deceptive and misleading conduct in obtaining the documents and security documents of the Advance Facilities:  par 39 (h);

   (5)the court can as an appropriate remedy refuse to enforce the First Home Loan and mortgage for unconscionable conduct:  par 42 (g);

   (6)the First Home Loan and the security must be declared void because of acts of deceptive and misleading conduct in obtaining the documents and security documents of the Advance Facilities:  par 42 (h);

   (7)the court can refuse to enforce the First Home Loan and mortgage for unconscionable conduct:  par 43 and 44;

   (8)the mortgage must be declared void because of deceptive and misleading conduct:  par 49;

   (9)the mortgage must be declared void from the beginning:  par 50 (a), (b), and (c);

   (10)the court can refuse to enforce the First Home Loan and mortgage for unconscionable conduct, which would have the effect of removing any suspension clause in the mortgage:  par 50 (g) and (h);

   (11)Mr Mann does not have an amount due to the Bank under the mortgage because the court may refuse to enforce the First Home Loan and the mortgage for unconscionable conduct:  par 51;

   (12)a court can refuse to enforce the mortgage for unconscionable conduct:  pars 54 and 55;

   (13)Mr Mann does not owe the Bank under the First Home Loan because the court may refuse to enforce the First Home Loan and the mortgage for unconscionable conduct:  par 60 (c).

4. Mr Mann pleads conduct in 2010 and 2011 which he asserts was misleading or deceptive:  par 10.  The earliest conduct he pleads as misleading or deceptive is in 2007:  par 11, par 12.

5. It is difficult to identify the conduct alleged to be unconscionable from the defence. I have had regard also to matters pleaded by Mr Mann in his counterclaim (filed as a separate document) where he identifies in more detail the conduct which he alleges contravenes the Australian Consumer Law. In the counterclaim, he alleges the Bank:

   (1)acted in a manner that prejudiced the viability and profitability of companies that he controlled:  par 4;

   (2)acted unconscionably in the enforcement of alleged events of default (under the Advance Facilities):  par 8;

   (3)illegally charged a penalty interest rate for 16 months from 10 August 2011 (under the Advance Facilities):  par 10;

   (4)appointed receivers and managers in December 2012, without proper cause: par 12; and

   (5)sold assets of Prodale and associated companies below market value and to its own employees and agents:  par 14.

The submissions

1. The Bank submits that, while Mr Mann pleads that the Bank engaged in acts of deceptive or misleading conduct or that its conduct was unconscionable, he does not plead that his execution of the First Home Loan or the mortgage was procured by unconscionable or other vitiating conduct on the part of the respondent. The conduct on which Mr Mann relies as contravening the Australian Consumer Law, to the extent that it is identified in the defence, is after the execution of the First Home Loan, and in relation to the negotiations in respect of the Second Advance Facility in 2007, and the variations and replacement of the Advance Facilities in 2010 and 2011. The Bank submits that the court could not, on the facts pleaded, declare the First Home Loan and mortgage void ab initio under s 243 of the Australian Consumer Law.

2. While Mr Mann contests the strike out application, he does not meet that primary point.  To a large extent, his responsive submissions are directed to evidence on an earlier summary judgment application by the Bank, and whether he was in default under the First Home Loan.  Those matters are not relevant on this application, which is solely concerned with the adequacy of the pleading.

3. The Bank also submits that to refuse to enforce the loan and mortgage would put Mr Mann in a better position, by relieving him of obligations under the loan and mortgage which are completely unrelated to the alleged misconduct.  The Bank relies only on the failure to pay amounts due under the First Home Loan as a default under the loan and the mortgage.   It submits that the First Home Loan is a distinct loan from the Advance Facilities, and that those facilities were made available to Prodale, not to Mr Mann. 

4. The relief available for breaches of the Australian Consumer Law, as for its predecessor in the Trade Practices Act, 'should be viewed not by reference to general law analogues but by reference to the rule of responsibility in the statute that is directed against misleading and deceptive conduct': see Awad v Twin Creeks Properties Pty Ltd [2012] NSWCA 200 [43], and the authorities cited there by Allsop P.

5. Despite the range of relief available to Mr Mann from the combination of s 237 and s 243, the relief must relate to loss or damage suffered or likely to be suffered because of the conduct of another person that was engaged in a contravention of a provision of specified parts of the Australian Consumer Law: s 237(1). The sections require the identification of a causal connection between loss or damage and contravention: I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd[2002] HCA 41; (2002) 210 CLR 109 [54]. By s 237(2), the order the court may make must compensate for loss or damage or prevent or reduce the loss or damage suffered because of the contravention.

6. I accept the primary submission on behalf of the Bank. The facts pleaded would not support a finding that any loss suffered or likely to be suffered as a result of Mr Mann entering the First Home Loan, or the Bank enforcing it, was because of conduct that contravened a provision of ch 2, 3 or 4 of the Australian Consumer Law. The conduct that he has alleged could not, having regard to how he pleads that it occurred, support a finding that the First Home Loan and mortgage are void. Nor, on the facts pleaded, could relief by refusing to enforce the First Home Loan relate to loss suffered or likely to be suffered because of conduct by the Bank in contravention of the Australian Consumer Law.

7. I am satisfied that the plea that the First Home Loan and mortgage are void ab initio does not disclose a reasonable defence.  The plea to that effect in pars 12, 39 (h), 42 (h), 49, and 50 (a) ‑ (c), will be struck out.  The plea that the court can refuse to enforce the First Home Loan, on the facts pleaded, similarly cannot be sustained.  The balance of the paragraphs challenged should be struck out.

8. The Bank also submitted that the Mr Mann's plea of misleading, deceptive or unconscionable conduct is too general and ambiguous to meet the objectives of pleading.  In particular, the Bank points to the difficulty in identifying the conduct said to be unconscionable.

9. It is unnecessary to decide those later points, as I accept the Bank's primary submissions. Those parts of the plea challenged cannot be the basis of a defence to the claim on the First Home Loan and mortgage. They are liable to be struck out under O 20 r 19(1)(a) as failing to disclose a defence, and r 19(1)(c), because they may prejudice, embarrass or delay the fair trial of the action.

Leave to replead

1. It is not desirable, at this stage, to determine whether any further amendment could lead to an arguable defence being shown.  I am not prepared to refuse any further amendment to the pleadings by an unrepresented litigant without knowing the terms of any new plea that Mr Mann may propose.  At the hearing I made orders with regard to the process to be followed for any further proposed amendments to the pleading.