Beckmann v Ors - [1998] QSC 176

IN THE SUPREME COURT

OF QUEENSLAND

No. 81 of 1994
Brisbane

Before White J

[Beckmann v Ors]

BETWEEN:

KENNETH WILSON BECKMANN

Plaintiff

AND:

NATWEST MARKETS AUSTRALIA LIMITED
(ACN 002 987 957) (formerly called Natwest Australia Bank Limited)
First Defendant

AND:

PRD REALTY (SUNSHINE COAST) PTY LTD
Second Defendant

AND:

LAGUNA REALTY
Third Defendant

REASONS FOR JUDGMENT - WHITE J
Judgment delivered 7 September 1998

CATCHWORDS: Strike out - failure to comply with orders - pleadings and evidence filed - whether discloses reasonable cause of action - self-represented litigant.

Counsel: Mr C Wilson for applicant/first defendant

Ms F B Greenwood for second defendant
Mr R Douglas for third defendant
Mr K Beckmann on his own behalf

Solicitors: MacGillivrays for applicant/first defendant

Thynne & McCartney for second defendant
Carter Newell for applicant/third defendant
Mr K Beckmann for himself as plaintiff/respondent

Hearing Date: 25 August 1998

REASONS FOR JUDGMENT - WHITE J

Judgment delivered 7 September 1998

The first defendant (“Natwest)” and third defendant (“Laguna Realty”) seek to have the plaintiff’s (“Mr Beckmann”) action struck out on the ground that the evidence which Mr Beckmann has filed and served to comply with orders of the court fails to disclose material which could support any reasonable cause of action. The second defendant (“PRD Realty”) supports the other defendants although it has filed no summons. Mr Beckmann represents himself. The present statement of claim is the fifth version of that pleading. Natwest has delivered a defence and counter-claim, the counter-claim relating to the balance of monies owing under a loan agreement, the other defendants a defence only and Mr Beckmann has delivered a reply and answer. The action is on the supervised case list.
On 6 March 1998 Moynihan SJA ordered, inter alia, that the trial proceed by way of affidavit and that on or before 6 May 1998 Mr Beckmann deliver to each of the defendants true copies of his affidavit and that of each of his witnesses detailing the evidence which he and each witness would adduce in support of his claim.
The affidavit filed by Mr Beckmann in his response to that order was submitted, on 10 June 1998 before me, to be so defective that the action ought to be struck out or Mr Beckmann required to file a fresh affidavit complying with the Rules and to file the evidence of any other witness upon which he proposed to rely at trial. The striking out application on that occasion was not greatly pressed but the defendants were anxious that the issues be adequately addressed by Mr Beckman in his material, not least so that they could respond, particularly in light of a less than clear statement of claim. On that occasion I attempted to explain to Mr Beckman that he should set out in numbered sequential paragraphs the facts which supported his claims against each of the defendants which he could swear to of his own knowledge. He was advised that this should be repeated in respect of the facts which each witness would swear of his or her own knowledge going to proof of the claims. Mr Beckmann indicated that some people he would wish to call declined to give him an affidavit. He was told that where a person declined to swear an affidavit or a statutory declaration he could subpoena that person to give evidence at the trial but that he should set down in writing as fully as he was able going to dates and circumstances what he expected each witness would say at the trial. Mr Beckmann then expressed in his own words the substance of those directions and conveyed the impression that he understood what was required. The orders made on 6 March were then varied as follows:
“That on or before 1 July 1998 the Plaintiff deliver his affidavit or affidavits in accordance with Order 41 of the Rules of the Supreme Court detailing the evidence which the Plaintiff and his witnesses (if any) will adduce at the trial of the action, provided that if any affidavit evidence of witnesses is not available, the Plaintiff will deliver by the said date a resume of that witness’s evidence and that the Plaintiff will not delivery any further affidavit or resume material other than material in response to the defendants’ affidavit material, without the leave of the court first obtained.”

Mr Beckmann served a further affidavit sworn by himself on 3 July 1998 together with numerous exhibits to it on the defendants. These contain a number of statutory declarations and draft affidavits from people whom, presumably, Mr Beckmann wishes to call at the trial to give evidence. Mr Beckmann has written to many individuals such as valuers and others associated with the impugned transactions in 1986 through to 1989 asking each a series of questions of the kind that might be asked in cross-examination inviting a response in affidavit form. Few have responded.
Mr Beckmann’s affidavit is objectionable as to form containing a great deal of hearsay material in the body of the affidavit and in the exhibits. The affidavit reads more like a written submission than a statement of relevant facts. Much of the material is irrelevant to what appear to be the matters in issue. There are some matters which Mr Beckmann says are in issue but which are not relevant to any pleaded cause of action or to any action against these defendants. Nonetheless, the jurisdiction peremptorily to terminate a claim must be exercised with care and this must be particularly so when a litigant has drafted his own pleadings and is required to reduce the evidence to support his claim to writing in an admissible form, Wentworth v Rogers (No.5) (1986) 6 NSW LR 534 per Kirby P at p. 536. The approach which the court should take to an application for summary termination of an action is to be found in the well known statement by Barwick CJ in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at pp. 129-8 where his Honour said:
“... the need for exceptional caution in exercising the power whether it be inherent or under statutory rules is the same. Dixon J. (as he then was) sums up a number of authorities in Dey v. Victorian Railways Commissioners (1) where he says (2): “A case must be very clear indeed to justify the summary intervention of the court to prevent a plaintiff submitting his case for determination in the appointed manner by the court with or without a jury. The fact that a transaction is intricate may not disentitle the court to examine a cause of action alleged to grow out of it for the purpose of seeing whether the proceeding amounts to an abuse of process or is vexatious. But once it appears that there is a real question to be determined whether of fact or law and that the rights of the parties depend upon it, then it is not competent for the court to dismiss the action as frivolous and vexatious and an abuse of process.” Although I can agree with Latham C.J. in the same case when he said that the defendant should be saved from the vexation of the continuance of useless and futile proceedings (1), in my opinion great care must be exercised to ensure that under the guise of achieving expeditious finality a plaintiff is not improperly deprived of his opportunity for the trial of his case by the appointed tribunal. On the other hand, I do not think that the exercise of the jurisdiction should be reserved for those cases where argument is unnecessary to evoke the futility of the plaintiff’s claim. Argument, perhaps even of an extensive kind, may be necessary to demonstrate that the case of the plaintiff is so clearly untenable that it cannot possibly succeed.”

Here the argument is not so much that there is no reasonable cause of action however unsatisfactory the pleading, but that Mr Beckmann has no material which he has produced in response to the order of the Court on which he can support his claim after two attempts to do so.

I will attempt to summarise that appear to be the allegations of fact, the issues and relate them to the evidence which Mr Beckmann has produced. It will be necessary to mention a number of matters irrelevant to the claims but which occupy Mr Beckmann greatly. Many of the documents to which reference will be made are incomplete, although I accept that the whole is available, in Mr Beckmann’s material. Further he focuses much of his attention on small matters of detail which do reveal errors in certain valuations, such as describing a part completed house on one property as of two levels when it should have been described as three, and an advertisement relating to the sale of a property stating the distance of the property from Maleny as 6 kilometres instead of 16.
Briefly, Natwest lent Mr Beckmann $750,000 in 1986 which he applied to the purchase of the Fitzroy Hotel in Nanango. The loan was secured by a mortgage granted by Mr Beckmann in favour of Natwest over the hotel, some rural land owned by him near Cooroy and a house property at Maleny. Mr Beckman defaulted in repaying in accordance with the loan agreement and Natwest sold the mortgage properties in 1988 and 1989. The proceeds were insufficient to clear the debt to Natwest and that is the subject of a counter-claim for an amount as at the date of the pleading on 21 October 1996 of $1,048,600. Should Natwest be successful in its application it has undertaken not to pursue the counter-claim. PRD Realty was retained by Natwest to sell the rural property. Laguna Realty apparently introduced potential purchasers in respect of that land. Mr Beckmann alleges that the properties were sold at less than their market value and, by implication, that the first defendant failed to take reasonable care to ensure that the properties sold at market value. The allegation of negligence against the second and third defendants is that they failed to consult Mr Beckmann and keep him informed of offers to purchase the real estate which they were selling, that they ignored his proposals about the land, placed a sale sign in an incorrect place and permitted the ultimate purchaser to enter the land prior to settlement, and their conduct as agents which caused the land to be sold at a value less than its market value.
Mr Beckmann began negotiations to buy the Fitzroy Hotel at Nanango in June 1986. It appears that a contract with a price of $825,000 or thereabouts for the hotel was drawn up for finance through another financier but did not proceed. Natwest appointed a valuer, Michael J Glynn and Associates, to value the Fitzroy Hotel and the rural land and possibly the house property for mortgage security purposes. The valuer gave a market value for the hotel and plant and equipment (in respect of which, it seems, there was a bill of sale) of $818,000, the rural land at $325,000 and the house property at $95,000. The valuer had been given the earlier contract and the trading figures and profit and loss accounts for the hotel covering the previous 12 months by Mr Beckmann’s finance broker. Natwest approved a loan facility of $750,000 to Mr Beckmann to assist in the purchase of the Fitzroy Hotel and did so on the basis of a first mortgage security over all of the properties.
The sum of $750,000 was advanced to Mr Beckmann on 23 December 1986. In breach of the loan agreement Mr Beckmann failed to pay interest on the loan on 23 April 1987 and thereafter. On or about 9 September 1987 Natwest exercised its option under the securities and demanded the amount due and owing under the loan agreement. Mr Beckmann did not comply with that demand. On or about 8 December 1987 Natwest appointed receivers to the Fitzroy Hotel who appointed a manager to the hotel. The hotel operated at a trading loss and was sold in June 1989 for $390,000. The rural land on 3 titles was sold in about May 1988 for $200,000 and the house property for $52,000.
Mr Beckmann alleges that Natwest knew or ought to have known that he was relying upon the skill and knowledge of Natwest in purchasing the hotel. There is no evidence advanced by Mr Beckmann to support this allegation even if alone, it is a sufficient allegation to found a claim. His material suggests that Natwest was at least the second financier approached, that he had formed the intention to purchase the hotel many months previously and had the assistance of a finance broker, a hotel broker, a solicitor and possibly an accountant in respect of his purchase of the hotel. A letter from his solicitor at the time of purchase, to the Law Society, produced by Mr Beckmann, asserts that the solicitor urged caution and suggested that Mr Beckmann have the vendors’ figures audited. Although there is no weighty evidence of fraud by the vendors of the hotel such as an audit of the hotel’s books prior to purchase, comments in the correspondence exhibited by Mr Beckmann particularly that of his former solicitor and from a subsequent valuer appointed by Natwest to value the hotel prior to sale, suggest that the hotel’s figures had been grossly inflated aided by the vendors’ ownership of two hotels. The Tarong Power Station construction had brought a lot of workers into the district in the early to mid 1980s which had brought some prosperity to the towns nearby, including Nanango and particularly to the hotels and this is likely to have affected the price of earlier hotel sales which were used as comparable sales. The observations by declarants produced by Mr Beckmann are that this economic buoyancy had gone by the time Mr Beckmann purchased the hotel.
The basis for the allegation that the properties were sold well below their market value is the valuation by Natwest’s valuer in 1986. Natwest obtained further valuations for all the properties at the time it proposed selling as mortgagee which showed significant reductions from those given in 1986. Mr Beckmann does not produce any evidence himself as to a greater value for the hotel at the time when it was sold. His evidence concerning the other properties I shall return to in due course. Nor does he demonstrate by evidence any want of reasonable care on the part of Natwest in its choice of receivers and the advertising for sale of the hotel. He asserts that the manager installed by the receivers was incompetent. The manager’s removal by the receivers may tend to support that assertion but the man was said to have local experience and he was replaced by a couple against whom there was no complaint with a detailed plan to get the figures to a reasonable level for a sale. Mr Beckmann has commented himself upon the figures for this period suggesting that the insurance premiums were too high and the throughput of beer kegs was unlikely to be remotely correct. These allegations of mismanagement are only relevant to the counter-claim unless it can be shown that the poor trading figures in the 18 months or so of the receivership were as a consequence of a careless appointment by the receivers who were appointed by Natwest and led to the alleged low price finally achieved for the hotel.
Mr Beckmann complained to the police about what he saw as fraudulent conduct on the part of the vendors of the hotel and the police reported on these investigations twice. These reports have caused Mr Beckmann some distress. They are not before the court and Mr Wilson for Natwest says that his client would not use them at the trial of the action should it proceed. The matter of the police reports has distracted Mr Beckmann and they have assumed a significance to him which is not readily understandable. They do not appear relevant to any claim against any of the defendants.
Mr Beckmann’s material contains numbers of statutory declarations from a range of people who have either worked or who drank at the Fitzroy Hotel but far from supporting his assertions about the value of the hotel they state that the clientele of the hotel was dwindling when he bought it because the work on the local power station was concluded and the extra workers in the district were leaving. There is no evidence to support the assertion that Mr Beckman relied upon the skill and knowledge of Natwest in purchasing the hotel and it is difficult to see how this could be so even on the limited facts adduced.
The 3 parcels of rural land were sold for $200,000 in May 1988 which Mr Beckmann asserts was less than their market value. He alleges that they should have been marketed as separate lots or as 2 lots. They were offered for sale as a whole but were available should that not occur in separate lots. There was no interest shown in the land at auction which Mr Beckmann attended. PRD Realty’s auctioneers comment in his report on the auction to Natwest suggested that Mr Beckmann’s contribution at the auction was unhelpful to a sale but, in any event, there was no interested purchaser.
None of the properties sold at auction.
There is no obligation on a mortgagee to await an improvement in the market, before selling Henry Roach (Petroleum) Pty Ltd v Credit House (Vic) Pty Ltd [1976] V.R. 309 per Lush J at p. 313. Mr Beckmann made some proposals about marketing those lands as a resort or back-packers complex with quite unrealistic figures mentioned. Whilst PRD Realty declined to reply it seems that Mr Beckmann’s letters were passed on to Natwest. It is a complaint that PRD Realty and Laguna Realty did not keep Mr Beckmann reasonably informed of any offers to purchase the land. There is no obligation on the part of the agents appointed by the mortgagee to do so, and no specific obligation for the mortgagee to do so either, but comments have often been made in the cases about the desirability of doing so if only to forestall complaints, Australia and New Zealand Banking Group Ltd v Bangadilly Pastoral Co Ltd (1978) 139 CLR 195 per Aickin J at p. 229. Apart from a general urging that the land should be sold for $1M no commercially sensible proposal was, on Mr Beckmann’s evidence, advanced.
In his affidavit Mr Beckmann deposes that Laguna Realty received an offer for one lot of 151 acres for $150,000 and did not pass it on. Mr Beckmann asserts that 2 employees at the time would say that they received the offer for $150,000 but that it was not taken up by Natwest. Natwest had appointed PRD Realty to act as its agent to sell the rural property. Laguna Realty was not its agent but it seems it introduced potential purchasers to PRD Realty. Mr Beckmann deposes in paragraph 37 of his affidavit that the claims of negligence against PRD Realty depend largely on evidence from 2 people formerly employed by Laguna Realty, Debbie Johnstone and Ken Entriken who refuse to provide an affidavit or statement or, it seems, speak to Mr Beckmann. He suggests that they told him that they had a buyer for one of the lots at $150,000. A Mr Bill O’Brien from Elders seems to have, according to Mr Beckmann, said much the same thing. Mr Beckmann produced an old piece of paper on which he says he made some notes:
“Laguna Realty 476699. Debbie refused to give surname on 4/4/88. Claims I had story wrong after I called a couple of days earlier.
Elders Bill O’Brien had buyer for one lot at about $150,000.
On 25/5/88 Ken Entriken from Laguna Realty Cooroy restated parties regarding sale of [illegible] land not fair. At Hall Woombye.”

Mr O’Brien in a recent conversation with Mr Beckmann denies that he spoke of any offer of $150,000 but had observed that in his opinion the land was worth $300,000 at the time. He will have to be subpoenaed if any evidence is to be adduced from him.

Mr Beckmann alleges that Natwest failed to appoint competent agents to sell the real estate but does not adduce evidence of that apart from the assertion that everything was sold for less than the values which had been attributed to them several years earlier. One of Mr Beckmann’s particulars of negligence in the sale of the rural properties was that the “for sale” signs were put on state forest land rather than his property. There is no evidence adduced by him that any potential purchaser was dissuaded from looking at his land because of that error or of paying a higher price than was achieved and it was mentioned at the auction and to potential buyers.

Another matter which has caused Mr Beckmann a great deal of distress and which is said to be another particular of negligence against PRD Realty and Laguna Realty is an allegation that the purchaser of the rural land had survey pegs placed in position to subdivide the land some months before the contract had completed. Whilst one can readily understand the distress that that might cause Mr Beckmann nonetheless it does not appear to be causative of any losses. Mr Beckmann refers to a contract which he had with a Mr D Hewitt to remove timber from the rural land which he was deprived from exercising after the sale of the land. Mr Hewitt has sworn that he paid for the timber in advance to Mr Beckmann and has not been reimbursed. That is a matter for Mr Hewitt.
There are vague hints throughout the affidavit and various notes written by Mr Beckmann that some deals must have been done to achieve these low prices. There is nothing in his material which goes anywhere near supporting any such inference.
Mr Beckmann has also sought recently a statement of charges by the receivers in respect of running the Fitzroy Hotel. This goes to the question of the quantum of the counter-claim which Natwest has undertaken not to pursue should the action be struck out. The material is now no longer available due to mergers between two firms of accountants some years ago.
Mr Beckmann has become distracted from his main task of putting his evidence in admissible form by seeking a writ of non party discovery against Mr Peter Crawford, a solicitor at Surfers Paradise. This relates to the possibility that Mr Crawford may have a complete copy of an earlier contract. It is not apparently relevant to the matters in issue between the parties.
Mr Beckmann handed up a document which in part states:
“As there are key witnesses who have not responded to requests to supply affidavits of evidence relating to trespass on the plaintiff’s land before the purchaser’s contract settled whilst the plaintiff’s property was in the possession of the mortgagee who was the first defendant in this action and which associated matters also relate to the second and third defendants as well as the selling of the said property at undervalue. The plaintiff makes application to the Hon court for an Order under Order 25 Rules 21 and 22 of the Supreme Court Rules for the following witnesses to respond to the request for affidavits already made by the plaintiff. They are Mr Ken Entriken, Mrs Debbie Johnston, Mr Max Imhoff, Mr Carl Beckmann, Mr Bill O’Brien.”

Despite much questioning by me, Mr Beckmann was unable to add to anything in his material as to what any of the proposed witnesses might say by way of evidence at the trial of the action. It seems unlikely that matters will improve even if an adjournment were granted and leave were given to Mr Beckmann to attempt to put together appropriate material.

Even if the deficiencies in the pleading are put to one side, as the defendants have done for the purposes of this application, and it is assumed that the issue is indeed whether there was a breach of the obligations imposed by s.85 of the Property Law Act. Apart from the valuation obtained by Natwest prior to the loan agreement Mr Beckmann has been unable to show that he has any admissible evidence to support that claim. He proposes to call apparently hostile or, at the least, unco-operative witnesses without the benefit of statements who he would seek to cross examine.
Mr Beckmann was directed to focus upon a statement of his own evidence relating to the matters in issue between the parties and a precis of the evidence which he would expect other witnesses would give when subpoenaed to appear at the trial. I am concerned that Mr Beckmann should not be shut out from what might prove to be a genuine claim over the price which was achieved for his hotel and other properties. There is no doubt that there was a significant discrepancy between the valuation prepared for Natwest prior to the loan and the valuations obtained prior to the mortgagee sale. It may be explained on the unaudited figures from the vendors of the hotel provided through Mr Beckmann to the Natwest valuer, and the past high prices obtained for this and other hotels because of the workers from the power station. Mr Beckmann does not even indicate that he would wish to obtain another independent valuation of the hotel and other properties as at mid 1988, nor in respect of the house property and the land. There are several valuations for the house property with one as high as $80,000 but it is clear on the material produced by Mr Beckmann and in the detailed comments in the other valuations for this property that a partially built house in breach of regulations described as “an eyesore” in one valuation would be difficult to sell. The bid at auction was only $30,000. Trinity W Richards & Associate’s report on the hotel in April 1988 stated that $490,000 was “the very top price for this business”.
The defendants’ legal representatives so far as the material reveals and in court conducted themselves fairly towards Mr Beckmann. He acknowledges the frustration they may feel in dealing with his inadequate material. They submit that expense is also a factor. There is now some $44,000 owing in respect of costs orders against Mr Beckmann and there is no prospect of recovery. These events occurred between 10 and 12 years ago so that the prospect of accurate recollection must be quite diminished and the potential for prejudice is high.
I am not persuaded that any further opportunity if it were afforded to Mr Beckmann would result in advancing the matter. There is on the available evidence very clearly no case against the second and third defendants. There is no evidence before the court or foreshadowed which would suggest that there was any prospect of success in the claims against the first defendant. There is no prospect of such evidence becoming available.
The action should be struck out.