Bendigo and Adelaide Bank Ltd v Smith
[2019] WASC 296
•16 AUGUST 2019
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
CITATION: BENDIGO AND ADELAIDE BANK LTD -v- SMITH [2019] WASC 296
CORAM: ACTING JUSTICE STRK
HEARD: 21 MARCH 2019
DELIVERED : 16 AUGUST 2019
FILE NO/S: CIV 2153 of 2018
BETWEEN: BENDIGO AND ADELAIDE BANK LTD
Plaintiff
AND
CHRISTOPHER COLIN SMITH
First Defendant
CLARISSE SMITH
Second Defendant
Catchwords:
Practice and Procedure - Summary judgment for possession in favour of registered mortgagee against holder of unregistered interest - Default under mortgage - Whether there is an arguable defence based on estoppel - Turns on own facts
Legislation:
Bankruptcy Act 1966 (Cth)
Civil Judgments Enforcement Act 2004 (WA)
Residential Tenancies Act 1987 (WA)
Rules of the Supreme Court 1971 (WA)
Transfer of Land Act 1893 (WA)
Result:
Application dismissed
The defendant is given conditional leave to defend
Category: B
Representation:
Counsel:
| Plaintiff | : | JC Yeldon |
| First Defendant | : | No appearance |
| Second Defendant | : | DW Thompson |
Solicitors:
| Plaintiff | : | CWS Lawyers |
| First Defendant | : | In Person |
| Second Defendant | : | In Person |
Case(s) referred to in decision(s):
Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552
Bankwest (A Division of Commonwealth Bank of Australia) v Mann [2015] WASC 187
Bastitstatos v Roads and Traffic Authority of New South Wales [2006] HCA 27; (2006) 226 CLR 256
Baumgartner v Baumgartner (1987) 164 CLR 137
Deputy Commissioner of Taxation v Lafferty [2017] WASC 257
Fancourt v Mercantile Credits Ltd [1983] HCA 25; (1983) 154 CLR 87
Fazio v Fazio [2010] WASC 263
GEL Custodians Pty Ltd v Dewar [2014] WASC 177
Gillett v Holt [2001] Ch 210
HSBC Bank Australia Ltd v Mavaddat [2015] WASC 153
Hughes v Metropolitan Railway Company (1877) 2 App Cas 439
Hughes v St Barbara Mines Ltd [No 4] [2010] WASC 160
Legione v Hateley [1983] HCA 11; (1983) 152 CLR 406
Mason v Wagonga Local Aboriginal Land Council [2002] NSWSC 351
Mavaddat v HSBC Bank Australia Ltd [No 2] [2016] WASCA 94
Morgan v Pallister [2004] WASC 188
Moscow Narodny Bank Ltd v Mosbert Finance (Aust) Pty Ltd [1976] WAR 109
Official Trustee in Bankruptcy v Tooheys Ltd (1993) 29 NSWLR 641
Re Ferndinando (1993) 42 FCR 243
Saleh v Romanous [2010] NSWCA 274; (2010) NSWLR 453
Silvester v Sands [2004] WASC 266
Smart v Prisoner Review Board (WA) [2012] WASC 48
Spencer v Commonwealth [2010] HCA 28; (2010) 241 CLR 118
Sutton Investments Pty Ltd v Realistic Investments Pty Ltd [2017] WASCA 14
The Bell Group Ltd (in liq) v Westpac Banking Corporation [No 9] [2008] WASC 239; (2008) 39 WAR 1
Tipperary Developments Pty Ltd v The State of Western Australia [2009] WASCA 126; (2009) 38 WAR 488
Wallingford v Mutual Society (1880) 5 App Cas 685
Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7; (1988) 164 CLR 387
Wentworth v Rogers (No 5) (1986) 6 NSWLR 534
Westpac Banking Corporation v The Bell Group Ltd (in liq) [No 3] [2012] WASCA 157; (2012) 44 WAR 1
Wright v Wright [2002] WASC 30
ACTING JUSTICE STRK:
Bendigo and Adelaide Bank Ltd seeks summary judgment against Clarisse Smith. The Bank seeks an order that Ms Smith give the Bank vacant possession of the land at 24 Usher Meander, Baldivis, being Lot 1663 on Deposited Plan 54294 and being the whole of the land comprised in Certificate of Title Volume 2660 Folio 455 (Property).
For the reasons set out below, summary judgment will not be entered in favour of the Bank against Ms Smith.
In these reasons, I address the following matters:
(a)the history of the proceeding and the parties;
(b)the application for summary judgment as against Ms Smith;
(c)whether the Bank has a prima facie case for judgment;
(d)Ms Smith's position;
(e)disposition - whether there a question which ought to be tried; and
(f)conclusion and orders.
The history of the proceeding and the parties
In July 2018, the Bank commenced this proceeding against Christopher Colin Smith (Ms Smith's estranged husband) by writ of summons, claiming as follows:[1]
(a)The Bank and Mr Smith had entered into a loan agreement dated 5 December 2012, pursuant to which the Bank had advanced to Mr Smith the total principal sum of $477,848.18. The sum was allocated to 3 separate loan accounts: $442,480.18 to an offset home loan account (first loan account); $20,368 to a Home Line loan account (second loan account); and $15,000 to a Visa card account (third loan account).
(b)Mr Smith was (and remains) the sole registered proprietor of the Property.
(c)The moneys owed by Mr Smith to the Bank were secured by a mortgage over the Property registered at Landgate on 11 January 2013 and numbered M154690 (Mortgage).
(d)From 18 May 2016, Mr Smith was made bankrupt under the Bankruptcy Act 1966 (Cth) by way of a debtor's petition. Pursuant to the Bankruptcy Act s 58, and as at the date of bankruptcy, Mr Smith's interest in any property including real property became vested in his bankruptcy trustee except to the extent that the Bank, as a secured creditor, was able to realise or otherwise deal with its security.[2]
(e)In March 2018, Mr Smith was in monetary default under the terms of the loan agreement and the Mortgage. Under the terms of the Mortgage, if Mr Smith was in default, the Bank had the right to enter on and take possession of the Property.
(f)Despite written demand, Mr Smith failed to remedy the default; remained in possession of the Property; and refused, and continued to refuse to deliver up possession of the Property to the Bank.
Default judgment against Mr Smith
[1] See the statement of claim filed 4 July 2018. These matters were also deposed to by Veronica Stanbridge in an affidavit filed on 11 September 2018 in support of the Bank's application as against Mr Smith for default judgment in a mortgage action pursuant to the Rules of the Supreme Court 1971(WA) O 13 r 6.
[2] By operation of the Bankruptcy Act s 58(5).
No appearance having been entered by Mr Smith following service of the writ of summons, the Bank requested that default judgment be entered against him pursuant to the Rules of the Supreme Court 1971 (WA) (RSC) O 13 r 6.
In the affidavit sworn by Mark John Diamond (the solicitor with carriage of this matter for the Bank), and filed on 11 September 2018 in support of the Bank's application for default judgment, Mr Diamond deposed as follows.[3]
12.I verily believe that the [Property] is currently occupied by member of the Defendant's immediate family.
13.The basis for my belief is that on 22 August 2018 I spoke with Claire Smith by telephone. Claire Smith is the wife of the Defendant and is also an authorised third party on the Defendant's loan account.
14.Mrs Smith advised me that she and her children were still residing at the [Property] but that the Defendant had moved out and was living nearby …
15.Mrs Smith also advised me that she was aware of the current legal action and that she would contact the [Bank].
[3] See also the affidavit affirmed by Veronica Stanbridge (an employee of the Bank), and filed on 11 September 2018 in support of the Bank's application for default judgment, par 29 ‑ 31.
On 20 September 2018, leave was granted to the Bank to enter judgment against Mr Smith in the following terms.
2.The defendant, within 28 days after service of this judgment, give the plaintiff vacant possession of the property at 24 Usher Meander Baldivis in the State of Western Australia being Lot 1663 on Deposited Plan 54294 and being the whole of the land in Certificate of Title Volume 2660 Folio 455.
3.Costs to be taxed.
When judgment was entered, Ms Smith was not a party to the proceeding. By letter dated 17 August 2018, the solicitors for the Bank had given Ms Smith notice of the proceeding pursuant to the Residential Tenancies Act 1987 (WA) s 81B. The notice assumed that the Property was a rental premises.[4]
Steps taken by the Bank to enforce the judgment
[4] Affidavit of Ms Smith filed 10 January 2019, par 54, CS‑3.
By letter dated 19 October 2018, the solicitors for the Bank gave Ms Smith notice that the Bank had secured a judgment from the court entitling the Bank to possession of the Property.[5] By that letter, the Bank demanded Ms Smith vacate the Property.
[5] Affidavit of Ms Smith filed 10 January 2019, par 62, CS-4.
Following judgment, the Bank applied to the court for a property (seizure and delivery) order pursuant to the Civil Judgments Enforcement Act 2004 (WA) s 95. The order, addressed to the sheriff, was made on 5 November 2018. The order empowered the sheriff, using any force and assistance that is reasonably necessary in the circumstances, to enter the Property and evict from it any person who was not lawfully entitled to be on the Property.[6]
Application made by Ms Smith pursuant to the Civil Judgments Enforcement Act s 15
[6] Civil Judgments Enforcement Act 2004 s 96(1)(a).
On 3 December 2018, Ms Smith applied in the proceeding for a suspension order under the Civil Judgments Enforcement Act s 15 on an urgent and ex parte basis. She sought to suspend enforcement of the property (seizure and delivery) order made on 5 November 2018. In support of the application, Ms Smith filed an affidavit on 3 December 2018.
The application was listed before the duty Judge on 3 December 2018. A suspension order was not made. However, interim orders were made, the effect of which were to stay enforcement of the property (seizure and delivery) order. The application was relisted on 11 December 2018. Given the imminent holiday period, the Bank did not oppose a further extension of the interim orders.
Ms Smith's application for a suspension order under the Civil Judgments Enforcement Act s 15 was not ultimately pressed. In later submissions filed by Ms Smith, it was acknowledged that she lacked standing to seek a suspension order, as she was not a person against whom the enforcement order in question was made.[7]
Application made by Ms Smith pursuant to the Civil Judgments Enforcement Act s 103
[7] Outline of submissions filed by Ms Smith on 14 February 2019, par 6.
On 10 January 2019, Ms Smith filed an application made pursuant to the Civil Judgments Enforcement Act s 103. Ms Smith requested that the court exercise its discretion to amend or cancel the property (seizure and delivery) order made on 5 November 2018. The application was grounded on the following propositions.
First, while a property (seizure and delivery) order that relates to real property empowers the sheriff to enter the property and evict from it any person who is not lawfully entitled to be on the property,[8] it does not empower the sheriff to evict a person who is lawfully entitled to be on the property.
[8] See the Civil Judgments Enforcement Act s 96(1)(a).
Secondly, as the holder of an equitable interest in the Property by reason of her contributions to the purchase of the Property and to improvements to the Property, Ms Smith is not a 'person who is not lawfully entitled to be on the property'.
Thirdly, no order for possession had been made against Ms Smith.
Application made by Ms Smith to be joined as a defendant
By a motion filed on 10 January 2019, Ms Smith applied to be joined as the second defendant to the proceeding pursuant to the RSC O 18 r 10. The motion was supported by three affidavits sworn by Ms Smith and filed on 10 January 2019; 1 February 2019; and 14 February 2019, respectively.
On 14 February 2019, an order was made with the consent of the Bank joining Ms Smith to the proceeding.[9] The joinder of Ms Smith as a defendant and the operation of the RSC O 13 r 6 (5), resulted in a stay of enforcement of the judgment for possession entered against Mr Smith. Ms Smith's application under the Civil Judgments Enforcement Act s 103 became unnecessary and it was not pressed.
[9] ts 42, 14 February 2019.
The application for summary judgment as against Ms Smith
At the hearing on 14 February 2019, the Bank indicated that it would proceed by way of an application for summary judgment as against Ms Smith, seeking possession of the Property. The parties were granted leave to rely on affidavits previously filed in the proceeding at the hearing of the Bank's application for summary judgment. Programming orders were also made which allowed for the filing of additional affidavits and submissions.
The principles with respect to the court's power to order summary judgment are well established and may be summarised as follows.
An application for summary judgment pursuant to the RSC O 14 r 1 must be supported by an affidavit verifying the facts on which the claim is based and stating that there is no defence to the claim.[10] A defendant may show cause against an application for summary judgment by affidavit or otherwise to the satisfaction of the court.[11]
[10] RSC O 14 r 2(1).
[11] RSC O 14 r 4(1).
Ordinarily, a party is not to be denied the opportunity to place their case before the court in the ordinary way, and after taking advantage of the usual interlocutory processes.[12] Accordingly, summary judgment must be granted only in the clearest of cases, where there is a degree of certainty about the ultimate outcome of the proceeding if it went to trial.[13] Put another way, the power to order summary judgment will not be exercised unless it is clear that there is no question to be tried.[14]
[12] Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552 [57].
[13] Mavaddat v HSBC Bank Australia Ltd [No 2] [2016] WASCA 94 [59]; Spencer v Commonwealth [2010] HCA 28; (2010) 241 CLR 118 [24], [53] – [55]; Bastitstatos v Roads and Traffic Authority of New South Wales [2006] HCA 27; (2006) 226 CLR 256 [46]; Agar v Hyde [57]. See also Sutton Investments Pty Ltd v Realistic Investments Pty Ltd [2017] WASCA 14 [24] cited in Deputy Commissioner of Taxation v Lafferty [2017] WASC 257 [53].
[14] Fancourt v Mercantile Credits Ltd [1983] HCA 25; (1983) 154 CLR 87, 99.
The Bank, in bringing the summary judgment application, bears the legal onus of establishing that there is no real question to be tried. But, once the Bank has satisfied the requirements of the RSC O 14, it has a prima facie right to an order for summary judgment, and the evidentiary burden falls on Ms Smith to satisfy the court that there is a triable issue or an arguable defence.[15] To do so, it is necessary for Ms Smith, whether by affidavit or otherwise, to 'condescend upon particulars' and provide sufficient details of her defence.[16]
[15] Moscow Narodny Bank Ltd v Mosbert Finance (Aust) Pty Ltd [1976] WAR 109, 110; see also Bankwest (A Division of Commonwealth Bank of Australia) v Mann [2015] WASC 187 [46]; HSBC Bank Australia Ltd v Mavaddat [2015] WASC 153 [24]; GEL Custodians Pty Ltd v Dewar [2014] WASC 177 [25]; Wright v Wright [2002] WASC 30 [19]; Morgan v Pallister [2004] WASC 188 [4] cited in Deputy Commissioner of Taxation v Lafferty [54].
[16] Moscow v Narodny Bank Ltd v Mosbert Finance (Aust) Pty Ltd (113), citing Wallingford v Mutual Society (1880) 5 App Cas 685, 704 cited in Deputy Commissioner of Taxation v Lafferty [54].
On 18 February 2019, the Bank filed its application for summary judgment. A statement of claim which included a pleading as against Ms Smith was subsequently filed,[17] together with an affidavit that complied with the RSC O 14 r 2(1),[18] such that the conditions precedent to the exercise by the court of the jurisdiction to give summary judgment to the Bank were met.
[17] As required by the RSC O 14 r 1(1).
[18] The Bank's statement of claim against Ms Smith filed 13 March 2019.
At the hearing of the Bank's application, counsel for the Bank read the following affidavits: the affidavit of Jayne Elizabeth Gurney (Bank Manager) filed 14 March 2019; the affidavit of Mark John Diamond (solicitor) filed 11 September 2018; the affidavit of Veronica Stanbridge (Bank Manager) filed 11 September 2018; and the affidavit of Ms Gurney filed 24 January 2019.[19]
[19] ts 68, 69 (21 March 2019).
Ms Smith read the affidavits sworn by her and filed on 10 January 2019; 1 February 2019; 25 February 2019; and 6 March 2019.[20] The Bank's objections to the affidavits relied upon by Ms Smith were not ultimately pressed.[21]
[20] ts 78 (21 March 2019).
[21] ts 84 (21 March 2019).
Prima facie case
The Bank's claim for damages
The chamber summons for summary judgment refers to a claim by the Bank for damages against Ms Smith. A claim for damages was not pleaded in the statement of claim filed by the Bank, and it was properly withdrawn by counsel at the hearing of the application for summary judgment.[22]
The Bank's claim for possession
[22] ts 68 (21 March 2019).
The Bank's case as against Ms Smith is put at par 10 of the statement of claim, where the Bank pleads as follows.
The plaintiff says since 3 December 2018 the second defendant has had no lawful entitlement to reside in or be on the Property by reason that the plaintiff's rights under its Mortgage M154690 were indefeasible to the second defendant's claims by the operation of section 68(1) of the Transfer of Land Act 1893 (WA).
The statement of claim disclosed a cause of action as against Ms Smith, although it would appear to not be in a form that would be acceptable if the action was to proceed.[23]
[23] Lexis Nexis, Civil Procedure Western Australia, Vol 1, (looseleaf as 25 July 2019) 'Orders 14 ‑ 28' at [14.1.1].
It is common ground that Mr Smith is the sole registered proprietor of the Property; that he became the registered proprietor on 11 January 2013; and that the Mortgage was registered in favour of the Bank on the same date.
I am satisfied that the Bank's claim for possession of the Property is a good one and that the affidavits filed on behalf of the Bank do verify that:
(a)at all material times the Bank had a first ranking registered mortgage over the Property;
(b)under the terms of the Mortgage, among other things, the Bank has the right to enter on and take possession of the Property if Mr Smith defaulted under the terms of the loan agreement and the Mortgage; and
(c)Mr Smith has defaulted under the terms of the loan agreement and the Mortgage, and that default has not been remedied despite demand.
The Bank having established a prima facie case, the evidentiary onus shifts to Ms Smith to demonstrate that there is an arguable defence or other reason for trial.
Ms Smith's position
Ms Smith contends that the Property was purchased in 2013 as her marital home with Mr Smith; that Ms Smith continues to reside at the Property with her children; and that she also continues to work from the Property.[24]
[24] Ms Smith's outline of submissions filed 5 March 2019 par 2, affidavit of Ms Smith filed 3 December 2018; and affidavit of Ms Smith filed 10 January 2019 par 3 ‑ 5, 12, 74.
Ms Smith claims to have an equitable interest in the Property by reason of her contributions to the repayments made to the Bank,[25] and her contributions to improvements to the Property.[26] In this regard, Ms Smith deposes that from time to time, she made payments to the Bank. She says that payments were made by her directly to the Bank, and through payments made to the Bank via an account held jointly by Ms Smith and Mr Smith.[27] Ms Smith says that she also funded improvements made to the Property.[28]
[25] Ms Smith's outline of submissions filed 14 February 2019 par 13.1, citing Baumgartner v Baumgartner (1987) 164 CLR 137.
[26] Ms Smith's outline of submissions filed 14 February 2019 par 13.1, citing Silvester v Sands [2004] WASC 266.
[27] Affidavit of Ms Smith filed 3 December 2018; affidavit of Ms Smith filed 10 January 2019 par 15‑ 16, 18, 22.
[28] Affidavit of Ms Smith filed 10 January 2019 par 9 ‑ 10.
Ms Smith also claims to have an equitable interest in the Property by reason of the agreement reached as between Ms Smith and Mr Smith's trustees in bankruptcy. In this regard, Ms Smith deposes to having entered into an agreement with Mr Smith's trustees in bankruptcy which was intended to have the trustees relinquish their interest in the Property to Ms Smith for payment of an agreed amount.[29]
Alleged agreement reached as between Ms Smith and the Bank
[29] Affidavit of Ms Smith filed 10 January 2019, par 23 ‑ 27, 'CS‑2'.
Ms Smith says that she has an arguable defence to the Banks' claim for possession founded on an agreement that she reached with the Bank. Ms Smith says that the Bank, having entered into an agreement with her, should not now be allowed to renege on that agreement.[30] Further, Ms Smith contends that the factual circumstances to which she deposes raises an estoppel that would prevent the Bank from taking action to have her evicted from the Property.[31]
[30] Ms Smith's outline of submissions filed 5 March 2019 par 14; and ts 77 (21 March 2019).
[31] Ms Smith's outline of submissions filed 5 March 2019 par 15; and ts 77 (21 March 2019).
In summary, Ms Smith alleges that:
(a)she communicated with the Bank, through its officer or employee named 'Dora';[32]
(b)because of those communications, Ms Smith formed the understanding that she had entered into a repayment plan to bring arrears on the loan for the Bank up to date, and that the Bank would not take action to evict her from the Property;[33] and
(c)Ms Smith attempted to make payment in reliance on that plan, and did in fact make a payment.[34]
[32] Affidavit of Ms Smith filed 10 January 2019, par 49; Affidavit of Ms Smith filed 6 March 2019, par 3 ‑ 25.
[33] Affidavit of Ms Smith filed 10 January 2019, par 49.
[34] Affidavit of Ms Smith filed 10 January 2019, par 50, 53; Affidavit of Ms Smith filed 1 February 2019, par 8 – 13; Affidavit of Ms Smith filed 6 March 2019, par 27 ‑ 28.
Ms Smith deposes as follows.[35]
[35] Affidavit of Ms Smith filed 10 January 2019, par 49 ‑ 53.
49.On 23 July 2018 I telephoned the bank again, and had a long conversation with a person who introduced herself as Dora. I agreed to a repayment plan with her. Under that plan I was to pay $1000 a week to bring the loan back up to date, and the plaintiff was to hold off taking any action to take possession of the Property or to evict me from it.
50.On 31 July 2018 I paid the plaintiff $2000.
51.On 3 August 2018 I telephoned Dora and said words to the effect:
"I am worried that Christopher will withdraw money from the account I am paying into. He went to a local bank branch and did that once before, in late 2016."
52.She said words to the effect:
"Don't worry – I will make sure that doesn't happen."
53.On 6 August 2018 I made a further payment of $1000 to the plaintiff.
…
In a later affidavit, Ms Smith deposes as follows.[36]
[36] Affidavit of Ms Smith filed 6 March 2019, par 4 - 28.
4.On Monday 23 July 2018 I had taken the day off from working in my salon in order to do bookwork and other administrative tasks from home.
5. My husband Chris had given me a telephone number for the Bendigo and Adelaide bank ('the Bank').
6. I called that number shortly after lunchtime (Western Australian time).
7.When my call was answered I said words to the effect:
"Could you put me through to your arrears department, please?"
8.My call was then transferred.
9.The person who picked up my-call said words to the effect:
"This is Dora speaking. What can I do for you?"
10.I said words to the effect:
"My name is Clarisse Smith I need to talk to someone about arrears owing on my home at 24 Usher Meander, Baldivis, in Western Australia. The loan and the property are in the name of my husband Chris, but he has authorized me to speak to the Bank."
11.Dora said words to me to the effect:
"I will have to ask you some security questions."
12.Once she asked me those questions, and once I had answered them correctly, Dora said words to the effect:
"Please explain your situation to me."
13.I then said words to the effect:
"The home I am living in with my children is registered in the name of my husband Chris. We have recently broken up and he has moved out. I have discovered that he has fallen behind in mortgage repayments, and he says the Bank is going to take the house and sell it. This is my home - I have put money into it and I don't want to have to move. I want my children to have a stable place to call home. I have taken the day off work to try and sort this and other things out."
14.Dora then said to me words to the effect:
"OK, I understand. I'm sorry, but I am working from home today and I will have to put you on hold while I check some things."
15.She then put me on hold. When she came back and took me off hold, she said words to the effect:
"I can see that you are in arrears with your payments. There are some other charges on the account as well. These are legal fees relating to non-payment of instalments. But I understand that you want to clear things up and move forward. How much can you afford to pay to do that?"
16.It was my understanding that the basic mortgage payment was approximately $580 per week, and that there were also two other loans associated with the house. So I said words to the effect:
"I could pay $1000 per week."
17.Dora then said words to the effect:
"I will just have to put you on hold again for a short while."
18.She proceeded to put me on hold. When she came back to our call she said words to the effect:
"If you pay $1000 per week, it isn't going to clear the arrears very quickly. It could take a few months."
19.I replied in words to the effect:
"If I can pay more I will."
20.Dora then said words to the effect:
"I can see that you made a payment of $3000 on 16 July. We can move forward from then, counting that as 3 weeks payments."
21.I then said words to the effect:
"That would be great. But I have to know - will this stop the legal proceedings Chris has told me about? I don't want to lose the house."
22.Dora replied in words to the effect:
"Yes, it will, as there will be a payment arrangement in place and you will already have made some payments and are willing to keep paying."
23.I then said words to the effect:
"Yes, I am more than happy to proceed with that arrangement if it means I won't lose my home. But there's one thing I am a bit worried about. We have been able to have this conversation because Chris signed an authorization that allowed the Bank to talk to me. Can he withdraw that authorisation?"
24.Dora replied in words to the effect:
"Yes, he could. You will just have to hope that he doesn't, because it could make things a bit difficult."
25.We finished our conversation at that point.
26.I have tried to obtain telephone records from Telstra so that I can point to the entry relating to my call to Dora. Whilst Telstra has said they will provide them, they have not yet done so despite my having made the request on an urgent basis.
27.Re-reading paragraphs 8 to 13 of my affidavit sworn 31 January 2019, which refer back to paragraphs 50 and 56 of my affidavit sworn 10 January 2019, I see that I have spoken of:
(a)making a payment of $2000 on 31 July 2018, which failed to go through to the Bank, and of making the payment again to a different account.
(b)making a further payment of $1000 on 6 August 2018.
28.I wish to clarify my account of events by stating that the 6 August payment of $1000 was my attempt to make the 31 July payment again. On 6 August I did not have access to the extra $1000 needed to make up the 31 July payment on that date, but thought I would have that extra $1000 in the next day or so.
Disposition - is there a question which ought to be tried?
Ms Smith does not assert that she has an arguable defence to a claim for possession by the Bank by reason of her asserted equitable interest in the Property.[37] The Mortgage is a first registered mortgage. The proposition that Ms Smith's asserted equitable interest overrides that of the Bank, as holder of a first registered mortgage, in circumstances where there is no suggestion or assertion of fraud, is unsustainable in law,[38] and was not pressed by Ms Smith. Rather, Ms Smith contends that she has an arguable defence to the Bank's claim grounded on the agreement that she says was reached with the Bank. Ms Smith seeks to restrain the enforcement by the Bank of its rights under the Mortgage by a defence based on estoppel.
[37] ts 77 (21 March 2019).
[38] Transfer of Land Act 1893 (WA) s 68.
Ms Smith has had the benefit of some pro bono assistance. Counsel appeared on her behalf at a number of hearings, including the hearing of the application for summary judgment. Counsel also prepared the written outline of submissions. However, Ms Smith was not represented in the proceeding and the extent to which Ms Smith was able to access advice is not clear. Accordingly, it is appropriate that I approach the documents in which she articulates her defences to the Bank's action for possession with some flexibility.[39]
[39] Wentworth v Rogers (No 5) (1986) 6 NSWLR 534, 536 – 537, 543; Smart v Prisoner Review Board (WA) [2012] WASC 48 [10]; cited in HSBC Bank Australia Ltd v Mavaddat [83].
The Bank says that at no time was a formal arrangement entered into between the Bank and either Mr Smith, Ms Smith or both of them jointly.[40] There is a clear factual contest in this regard.
[40] Affidavit of Jayne Elizabeth Gurney, an employee of the Bank, filed 24 January 2019, par 20.
It was never intended that when the facts are in dispute, actions should be disposed of summarily. The court does not dispose of the factual merits on a conflict of affidavits. If a version of the facts is put forward by the defendant which is not inherently incredible, then in the absence of any opportunity of cross‑examination it is incumbent on the court to proceed on the basis that it will ultimately be accepted at the trial of the action.[41]
[41] Lexis Nexis, Civil Procedure Western Australia, Vol 1, (loose leaf as at 25 July 2019) 'Orders 14 ‑ 28' at [14.3.3].
I do not view Ms Smith's evidence as being inherently incredible, and so proceed to determine the application for summary judgment on the basis that the version of facts put forward by her would ultimately be accepted at the trial of the action.
Does Ms Smith have an arguable defence based on estoppel?
Ms Smith seeks to restrain the enforcement by the Bank of its rights under the Mortgage. A promissory estoppel operates as a restraint on the enforcement of rights.[42]
[42] Hughes v Metropolitan Railway Company (1877) 2 App Cas 439, 448; Legione v Hateley [1983] HCA 11; (1983) 152 CLR 406, 432 – 433; Saleh v Romanous [2010] NSWCA 274; (2010) NSWLR 453 [62], [74].
For the purposes of determining the summary judgment application, I refer to the summary of the elements of promissory estoppel from the decision of Brennan J in Waltons Stores (Interstate) Ltd v Maher:[43]
In my opinion, to establish an equitable estoppel, it is necessary for a plaintiff to prove that (1) the plaintiff assumed that a particular legal relationship then existed between the plaintiff and the defendant, or expected that a particular legal relationship would exist between them and, in the latter case, that the defendant would not be free to withdraw from the expected legal relationship; (2) the defendant has induced the plaintiff to adopt that assumption or expectation; (3) the plaintiff acts or abstains from acting in reliance on the assumption or expectation; (4) the defendant knew or intended him to do so; (5) the plaintiff's action or inaction will occasion detriment if the assumption or expectation is not fulfilled; and (6) the defendant has failed to act to avoid the detriment whether by fulfilling the assumption or expectation or otherwise.
[43] Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7; (1988) 164 CLR 387, 428 – 429. As observed by Gething A/M in Bankwest (A Division of the Commonwealth Bank of Australia) v Mann [63], this passage has been endorsed in a number of decisions in this jurisdiction. See by way of example: Tipperary Developments Pty Ltd v The State of Western Australia [2009] WASCA 126; (2009) 38 WAR 488 (McLure JA, with whom Newnes JA agreed); Fazio v Fazio [2010] WASC 263 [445] (Martin CJ); Hughes v St Barbara Mines Ltd [No 4] [2010] WASC 160 [786] (Kenneth Martin J); The Bell Group Ltd (in liq) v Westpac Banking Corporation[No 9] [2008] WASC 239; (2008) 39 WAR 1 [3535] ‑ [3549] (Owen J).
Ms Smith contends that a promissory estoppel arose from statements made by an officer of the Bank (that is, 'Dora'), which induced Ms Smith to form the understanding that she had entered into a repayment plan with the Bank, and to make payment to the Bank in reliance.
On the evidence before me, it is arguable that Ms Smith assumed that a particular legal relationship then existed between her and the Bank (that is, that she had entered into a repayment plan), or expected that a particular legal relationship would exist as between her and the Bank and, in the latter case, that the Bank would not be free to withdraw from the expected legal relationship.
There may be argument as to whether the alleged representations made by on behalf of the Bank constituted a sufficiently clear and unambiguous representation. However, accepting all the facts alleged by Ms Smith to be true (as is appropriate in the context of a summary judgment application), I am not satisfied that her defence and claim of promissory estoppel in relation to the Property is untenable on this basis. On the evidence before me, it is arguable that the Bank induced Ms Smith to adopt the assumption or expectation.
At the hearing of the Bank's application, I enquired of counsel appearing for Ms Smith whether it was possible for the Bank to have entered into a direct arrangement with Ms Smith concerning the Property (that is, an arrangement did not include the registered proprietor, or his trustees in bankruptcy).[44] In response, counsel referred to and sought to rely upon the Transfer of Land Act s 116, which section concerns the rights of mortgagees generally. No authority was referred to in support of the submission. The parties were given an opportunity to file supplementary written submissions concerning the application of s 116 at the conclusion of the hearing of the summary judgment application.[45] Neither party did so.
[44] ts 79, 21 March 2019.
[45] ts 84, 21 March 2019.
I have considered whether there is any evidence that Ms Smith acted or abstained from acting in reliance on the assumption or expectation. The key action taken by Ms Smith in reliance on the representation appears to have been to make payments to the Bank. Given the evidence of receipt of moneys by the Bank and of the alleged conversation with Dora, it is arguable that Ms Smith acted in reliance, and the Bank knew or intended Ms Smith to act in reliance.
Beyond showing reasonable reliance upon a clear and unequivocal representation, Ms Smith must establish reliance on the promise to her detriment. A sufficient causal link between that reliance and the detriment must be proven; the issue is not whether Ms Smith suffered detriment, but whether she acted to her detriment on the basis of the relevant assumption.[46]
[46] GE Dal Pont Equity and Trusts in Australia (7th ed) [10.220], citing Re Ferndinando (1993) 42 FCR 243, 247; Gillett v Holt [2001] Ch 210, 232; Mason v Wagonga Local Aboriginal Land Council [2002] NSWSC 351 [40].
It is asserted that Ms Smith will suffer detriment if the arrangement with the Bank is not honoured. No further particulars as to detriment were provided.[47] Adopting a conservative or narrow view of the calculation of detriment, on the evidence before me, it appears that there is a question to be tried as to whether Ms Smith's action (being the payment of moneys to the Bank), might ground a finding of reliance by Ms Smith on the Bank's promise to her detriment. Materiality may be in issue.
[47] ts 77 (21 March 2019).
There is a question to be tried as to whether the Bank failed to act to avoid the alleged detriment by not honouring the alleged agreed repayment plan.
At the hearing of the Bank's application, I was briefly addressed as to whether ordering enforcement of the alleged promise in the circumstances was a remedy available to Ms Smith.[48] It would appear to be arguable that a remedy available to Ms Smith, assuming the other elements of estoppel are met, is the making good of the relevant assumption on which she acted.[49]
[48] ts 82 (21 March 2019).
[49] GE Dal Pont Equity and Trusts in Australia (7th ed) [10.270 – 10.300].
On behalf of the Bank, it was submitted that Ms Smith's position might be likened to a party who seeks relief against forfeiture.[50] Further, on behalf of the Bank, it was noted that '… normally, someone who seeks equity will, in that circumstance, have to do equity and pay the amounts. And …, the evidence shows that Mrs Smith was never able to honour the terms of the agreement she now alleges in her evidence. …'[51]
[50] ts 83 (21 March 2019).
[51] ts 31 (21 March 2019).
The Bank contends that the bank statements attached to Ms Smith's affidavit dated 31 January 2019 clearly shows that she was living on a week to week basis and was incapable of making $1,000 weekly payments. The Bank further asserts that Ms Smith's 2017 tax return showed an annual income in an amount that would make the alleged arrangement improbable.[52] The Bank contends that Ms Smith's business operated at a loss based on the Bank's review of the profit and loss statement annexed to Ms Smith's affidavit filed on 25 February 2019.[53] The Bank also complains that Ms Smith's assertions of her estimated turnover was not based on any factual matters.[54]
[52] Affidavit of Ms Smith filed 25 February 2019 'CS-18'.
[53] Affidavit of Ms Smith filed 25 February 2019 'CS-19'.
[54] Bank's outline of submissions filed 1 March 2019 par 10(f).
By the affidavit of Ms Smith filed on 25 February 2019, Ms Smith seeks to further explain her financial circumstances. However, as noted above, it was never intended that, when the facts are in dispute, actions should be disposed of summarily. The Bank's assertions as to Ms Smith's capacity to fulfil her part of the agreement cannot sway the balance of the application. It is not appropriate that I make a finding, as pressed by the Bank, that Ms Smith's financial circumstances makes the alleged arrangement with the Bank improbable.
I have weighed in the balance the fact that after Ms Smith became aware of the Bank's intention to take possession of the Property, she did not continue to make weekly payments to the Bank. As to this matter, the following submission was made on her behalf.[55]
17.The [Bank] has argued that even if a repayment agreement was made between [Ms Smith] and the [Bank], [Ms Smith] has not adhered to it. [Ms Smith] did in fact make some payments, but it is clear that even so the [Bank] continued to take steps to take possession of the Property. In those circumstances the [Bank] should not be heard to complain that [Ms Smith] ceased making payments.
[55] Outline of submissions filed 5 March 2019 par 17.
Inequitable conduct by a representee will not always deny an estoppel; rather, the issue rests on an examination of all of the circumstances of the case.[56] Given that there is no inflexible rule sought to be invoked on behalf of the Bank, it is not appropriate that the issue be resolved on a summary basis.
[56] GE Dal Pont Equity and Trusts in Australia (7th ed) [10.350], citing Official Trustee in Bankruptcy v Tooheys Ltd (1993) 29 NSWLR 641, 651.
The precise scope of promissory estoppel remains unsettled.[57] Accepting all the facts alleged by Ms Smith to be true, I am not satisfied that her defence and claim of promissory estoppel in relation to the Property is so untenable that it cannot possibly succeed. The foundation of an equitable estoppel is a finding by the court that it would be unconscionable in the circumstances of the case for one party to exercise its legal rights against another.[58] Arguably, this is such a case. It is not appropriate that the issues referred to above be resolved on a summary basis.
[57] Westpac Banking Corporation v The Bell Group Ltd (in liq) [No 3] [2012] WASCA 157; (2012) 44 WAR 1 [1738] – [1768].
[58] Waltons Stores (Interstate) Ltd v Maher, 419 cited in Bankwest (A Division of the Commonwealth Bank of Australia) v Mann [74].
Conclusion and orders
In all of the circumstances and having given careful consideration to the documents before me and to the submissions made, I am satisfied that there is a question to be tried.
Having reached that conclusion, it is not appropriate that I enter judgment in favour of the Bank. Given that there will be a trial of the issues, it is also not appropriate that I express concluded views as to any of the defences raised. The summary judgment application should be dismissed and Ms Smith given leave to defend.
The court may give a defendant against whom an application for summary judgment is made leave to defend the action, either unconditionally or on such terms as to giving security or time or mode of trial or otherwise as it thinks fit.[59] Ms Smith will have leave to defend the action on the condition that she makes payment of $1,000 per week. I will hear the parties as to the appropriate form of order, including whether the payment is made to the Bank or into court.
[59] RSC O 14 r 4(3).
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
EP
Associate to Principal Registrar Strk
16 AUGUST 2019
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