Bernstrom v National Australia Bank Ltd

[2002] HCATrans 400

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Brisbane  No B49 of 2002

B e t w e e n -

ANITA BERNSTROM

Applicant

and

NATIONAL AUSTRALIA BANK LTD

Respondent

Application for a stay

CALLINAN J

(In Chambers)

TRANSCRIPT OF PROCEEDINGS

AT BRISBANE ON MONDAY, 14 OCTOBER 2002, AT 11.00 AM

Copyright in the High Court of Australia

MR J.T. BRADSHAW:   If your Honour pleases, I appear for the applicant/appellant.  (instructed by the applicant)

MR R.J.M. LILLEY:   If it please your Honour, I appear for the respondent.  (instructed by Thynne & Macartney)

HIS HONOUR:   Yes, Mr Bradshaw.

MR BRADSHAW:   If your Honour please, I read an application for special leave filed on 24 July, a judgment of the Chief Justice on 20 September 2001, the order made on the same day, a transcript of the proceedings, a summons by the applicant dated 2 October and a supporting affidavit of the applicant dated 2 October and both filed on 7 October.  Your Honour, I seek leave to file and read the statement of claim in the original proceedings and I sought from my client an answer to further and better particulars which were provided prior to the hearing, but I did not get the proper ones and I only have the request for further and better particulars, but at least I will give your Honour an idea as to the particulars that were given to the respondent prior to the hearing.

HIS HONOUR:   That is really part of the record, Mr Lilley, I suppose.

MR LILLEY:   It is, your Honour.  I do not ‑ ‑ ‑

HIS HONOUR:   Thank you.  Yes, you have leave, Mr Bradshaw.

MR BRADSHAW:   Thank you.  I have filed today a synopsis of argument and I read that, your Honour.  Those are my documents.

HIS HONOUR:   Thank you, Mr Bradshaw.  Yes, Mr Lilley.

MR LILLEY:   Your Honour, I am not sure how much of the High Court file your Honour has up here.  Does your Honour have an affidavit of David Riggs and an affidavit of Leanne Bou‑Samra that we have filed in the Court?

HIS HONOUR:   I do not know whether we do.

MR LILLEY:   They were filed on 17 September.  I have copies for your Honour if they are ‑ ‑ ‑

HIS HONOUR:   All right.  Perhaps if you provide the copies, Mr Lilley, then we will save some time.

MR LILLEY:   Your Honour, I also have prepared an outline of argument, a chronology which I have shown to my learned friend and I have a copy of the decision of Jennings Construction v Burgundy Royale for your Honour, which is generally accepted as setting out to the extent one can principles ‑ ‑ ‑

HIS HONOUR:   That is a decision of the Court of Appeal, is it, Mr Lilley?

MR LILLEY:   No, it is a decision of the ‑ ‑ ‑

HIS HONOUR:   I see, a decision of the former Chief Justice.

MR LILLEY:   Yes, your Honour.

HIS HONOUR:   All right, yes.  Thank you, Mr Lilley.

MR LILLEY:   Thank you, your Honour.

HIS HONOUR:   Mr Bradshaw, I have read some of the papers.  I do not say I am familiar with all of it, but can you tell me this, I can just get the chronology.  When was the default?  What was the date of the default?

MR BRADSHAW:   My understanding was April 2001.

MR LILLEY:   March 2001.

HIS HONOUR:   March or April 2001, all right, yes.

MR BRADSHAW:   If your Honour pleases, we do not accept there was a default.  There were moneys – we say that there was ‑ ‑ ‑

HIS HONOUR:   $10,000 was paid and you say that rectified any defaults, do you?

MR BRADSHAW:   Yes, your Honour.  That was to cover an overdraft and the overdraft facility was purely and simply to service the loan and the sons were making repayments in accordance with the loan obligations and at the same time the overdraft facility was being utilised and that is what caused these proceedings to be instituted, that we allege that there was a double dipping and because the overdraft had to be extinguished within six months or by the end of June or some time, the sons were becoming concerned that not only were they meeting the current payments but the overdraft facility was going further and further into arrears and they were going to, in effect, be paying double the amount that they were obligated to.  That was the trigger for the plaintiff to institute proceedings.

HIS HONOUR:   All right.  I will come back to that to try to get a little more detail, but does your client have planning approval for this activity that she is carrying out?

MR BRADSHAW:   At the council level, yes, and for the second time and it is subject to an appeal by a neighbour and it is presently before the Planning and Environment Court and it was last mentioned approximately 12 August before his Honour Judge White.

HIS HONOUR:   And is that activity being carried on?  Is your client actually conducting ‑ ‑ ‑

MR BRADSHAW:   Yes.

HIS HONOUR:   ‑ ‑ ‑ what is it, an eco park?

MR BRADSHAW:   Yes.

HIS HONOUR:   Is it an environmental park?

MR BRADSHAW:   It is a safari lodge.

HIS HONOUR:   Safari lodge.  Is it actually being conducted as a safari lodge?

MR BRADSHAW:   Yes, your Honour.

HIS HONOUR:   Yes.  Is it generating income?

MR BRADSHAW:   That I do not know.  I presume so, yes, your Honour.

HIS HONOUR:   All right.  Now, can I return to what you were telling me before.  What do you say the state of the borrowing and repayments was in March 2002?  How much money did your client owe?

MR BRADSHAW:   In instalment payments or in lump sum?

HIS HONOUR:   No, in a lump sum?

MR BRADSHAW:   I am sorry, your Honour ‑ ‑ ‑

HIS HONOUR:   If you do not mind, I will ask Mr Lilley some of these things and you can tell me whether they are contentious or not.

MR BRADSHAW:   Can I give a general figure, if Mr Lilley….in the range of 280,000 to 290,000.

HIS HONOUR:   So your client owed between 280,000 and 290,000 approximately?

MR BRADSHAW:   That is my recollection, your Honour.

HIS HONOUR:   In about March 2000, is that right?

MR BRADSHAW:   Yes, your Honour.

HIS HONOUR:   And under the security documents what repayments was your client obliged to make?

MR BRADSHAW:   In the order of 2,490, I think, and it was subject to variation of interest which it had just varied at that time, but it was in the order of 2,500, your Honour.

HIS HONOUR:   About 2,500 per month.

MR BRADSHAW:   And the arrangement with the sons – one son was paying $1,500 and the other son, Shane, was paying $1,000.

HIS HONOUR:   All right.  But, Mr Bradshaw, obviously your client had been unable to meet the payments and that was why the sons intervened or became involved and started to make payments on her behalf, is that right?

MR BRADSHAW:   Well, not strictly, your Honour, because the repayments were being met from the overdraft facility which of course was ‑ ‑ ‑

HIS HONOUR:   Now, who had the overdraft facility?

MR BRADSHAW:   My client.

HIS HONOUR:   It was in her favour.

MR BRADSHAW:   To a sum of 20,000 from ‑ ‑ ‑

HIS HONOUR:   With a limit of 20,000, yes.

MR BRADSHAW:   I did not anticipate this, your Honour, so I am going very much from memory, but my ‑ ‑ ‑

HIS HONOUR:   Well, you see at this stage I have to look at – I am really looking at the balance of convenience at the moment, which is relevant, I think.  It is a little like an injunction.

MR BRADSHAW:   Well, if your Honour would forgive me for just giving rough round figures ‑ ‑ ‑

HIS HONOUR:   No, that is all right.  Mr Lilley will correct them if they are out anyway.

MR BRADSHAW:   My recollection is that it had got to about 15,000 at the time of the meeting, the overdraft.

HIS HONOUR:   So it was still within the limit, is that right?

MR BRADSHAW:   It was within the limit but it was getting towards the upper end of the limit.

HIS HONOUR:   All right.

MR BRADSHAW:   I am sorry, I am told it has gone over the limit, but in any event that is when $10,000 was paid and my client, Shane, offered 15,000 and the Bank, having regard to his financial circumstances of earning approximately 20,000 to 25,000 a year, said, “No, 10,000 would suffice at this stage.”

HIS HONOUR:   So the son or sons brought the overdraft to ‑ ‑ ‑

MR BRADSHAW:   To an acceptable ‑ ‑ ‑

HIS HONOUR:   ‑ ‑ ‑ well within the limit.

MR BRADSHAW:   Within the limit.

HIS HONOUR:   And what do you say was the agreement that was struck at that meeting then?

MR BRADSHAW:   The agreement then was that the overdraft facility of 20,000 would be extinguished within six months and that the sons would meet the repayments, Shane in the sum of $1,000 and Harold in the sum of $1,500 a month, and that will be shown, if your Honour has a copy of I think it is Riggs’ affidavit to show payments, you will see in November and December payments of 1,500 and 1,000 separately.

HIS HONOUR:   All right.  Well, Mr Bradshaw, did those payments continue though?

MR BRADSHAW:   They paid November, December.  Shane continued on in January and February but Harold was concerned about the overdraft and he would not pay until the Bank ceased the double dipping.

HIS HONOUR:   What do you mean by “double dipping”?

MR BRADSHAW:   Well, the overdraft facility was there to service a loan and that was still being utilised each month and at the same time the sons were paying the loan obligations.  So the Bank, instead of getting 2,500 a month, were getting 5,000 a month, 2,500 from the overdraft facility and 2,500 from the sons.

HIS HONOUR:   All right.  Well, what is the state of the accounts now then?  What is the outstanding debt to the Bank?

MR BRADSHAW:   Mr Lilley’s contention is correct, that when the dispute arose my client has not paid anything since then.

HIS HONOUR:   So that the total indebtedness would be very much in excess of $290,000 then.

MR BRADSHAW:   Yes, your Honour.

HIS HONOUR:   Well, assuming everything else in your favour for present purposes, why should I grant a stay unless you make some proposal with respect to the amount of money that is outstanding?

MR BRADSHAW:   The unique feature of this matter is that the Bank’s interest financially would be protected by my client remaining in possession and pursuing her application before the Planning and Environment Court.

HIS HONOUR:   Well, no, she is not pursuing the application.  She is defending an appeal.

MR BRADSHAW:   I am sorry, she is defending it and we have asked ‑ ‑ ‑

HIS HONOUR:   The council will defend that too, will it not?

MR BRADSHAW:   No, your Honour.  The council have approved our ‑ ‑ ‑

HIS HONOUR:   Yes.  Well, therefore, they will defend their decision by opposing any objection to the planning application.

MR BRADSHAW:   Yes, your Honour.  But if there is no ‑ ‑ ‑

HIS HONOUR:   But, Mr Bradshaw, why should I grant you a stay when your client has a liability, a very substantial liability, in respect of which no reductions have been made.  Have not been made for, what, 18 months or more?

MR BRADSHAW:   March 2001.

HIS HONOUR:   Well, yes, 18 months.  There has been no money paid by your client to the Bank, or on behalf of your client, since, what, March 2001?

MR BRADSHAW:   Yes, your Honour.

HIS HONOUR:   And what is the interest, 7 or 8 per cent effective?

MR BRADSHAW:   I am not ‑ ‑ ‑

HIS HONOUR:   Then there would be penalty interest on top of that.  The overdraft limit would have been exceeded.  There would be another $40,000 in indebtedness, would there not?

MR BRADSHAW:   If that was the only barrier, I am sure I would be able to get instructions from Cairns to make a proposal in the interim to at least meet the Bank’s commitment in that regard.

HIS HONOUR:   Well, Mr Bradshaw, even assuming everything else in your favour, I do not see how at the moment I could possibly grant you the relief you are seeking unless the accounts were brought into order now.  Let me just ask Mr Lilley a question, if you do not mind.

MR BRADSHAW:   If your Honour please.

HIS HONOUR:   Mr Lilley, are you able to give me any detailed figures in relation to this?

MR LILLEY:   Yes, your Honour.  The debt from ‑ ‑ ‑

HIS HONOUR:   I do not think need evidence in this.  It is self‑evident there is a liability.

MR LILLEY:   The debt at the time the proceedings commenced was 294,000 and your Honour’s calculation is quite correct.  It is now 334,422 as at 1 August.

HIS HONOUR:   Right.  Thank you, Mr Lilley.  Mr Bradshaw, I have to say to you that your application for special leave does not look very promising to me, but I am not going to prejudge that, although I have to look at the prospects in considering the matter overall, that is the matter that is before me today.  But I could give you a date for a special leave application.  I could give you a somewhat accelerated date which I think is 14 March next year, but let me say this to you, I do not think I could even possibly entertain granting you a stay unless the accounts were brought up to date and some satisfactory provision were made to ensure that the accounts have remained in order until 14 March.  It would only be at that point that I consider, I think, whether I could grant you a stay.

In those circumstances, you would not be prejudiced, Mr Lilley, I do not think, would you?

MR LILLEY:   No, your Honour.  If the interest that has been outstanding all the time is paid and it continued to be paid, we could not be prejudiced but at this stage it must be eating into the value of our security.

HIS HONOUR:   Yes.  Well, that will continue over the next, what, five months or so before there can be a hearing.

MR LILLEY:   Yes, your Honour.

MR BRADSHAW:   Your Honour, may I ask this:  your Honour would be in Brisbane until the end of the week?

HIS HONOUR:   No, I will not be, Mr Bradshaw, but I will be in Brisbane tomorrow.  But, no, I am not, I am going to go to Sydney on Wednesday.  I will not be in Brisbane after tomorrow evening in fact – after tomorrow, Wednesday morning.

MR BRADSHAW:   Obviously, it is not going to take long for me to get instructions.  It may take a little while.

HIS HONOUR:   I think, Mr Bradshaw, we would need to see the colour of your money before we could even launch into this. 

MR BRADSHAW:   Not being terribly commercial, your Honour, the rough figures:  an immediate payment of 40,000 and a commitment to pay 2,500 per month until 14 March.

MR LILLEY:    It is going to be a bit more.  It was, in round figures, 40,000 on 31 August and now it is mid‑October.

HIS HONOUR:   Why do you not get a precise calculation, Mr Lilley, and you can tell Mr Bradshaw what that is.

MR LILLEY:    Certainly, your Honour.

HIS HONOUR:   Yes, Mr Bradshaw.

MR BRADSHAW:   I am sorry, I was just presuming, when your Honour said to bring the matter up to date, you were referring to the payments from March 2001 to date, the interest repayments from then.

MR LILLEY:   Sorry.  Your Honour, I should seek clarification.  That is the interest difference.  Are we talking to bring the payments up to date?

HIS HONOUR:   Mr Lilley, I suppose the payments should really be brought up to date but, put it this way, at the moment I am not inclined to say that there should not be a stay.  I am not inclined to say that there should not be a stay if the interest is brought right up to date and satisfactory arrangements are made to pay interest and ‑ ‑ ‑

MR LILLEY:   I could not argue prejudice if all of the interest was paid and continued to be met.

HIS HONOUR:   Yes.  I am not overlooking that that does not include capital but you would at least have $40,000‑odd in your pocket if Mr Bradshaw’s clients can find the money.

MR LILLEY:   Yes, your Honour.

HIS HONOUR:   And, of course, I would have to grant you liberty to apply so that if there were any default you could come back before me, that is, between now and 14 March.

MR LILLEY:    Yes, your Honour.  My general submission is that even without prejudice to us, there is no basis for a stay.

HIS HONOUR:   Yes, I understand that.  I just do not like to deny somebody the fruits of a possibly successful application which could happen if your client is reasonably well protected in the circumstances.

MR LILLEY:    I understand that, your Honour.

HIS HONOUR:   Thank you, Mr Lilley.  Mr Bradshaw, in the circumstances, I do not think I can adjourn this beyond tomorrow and not simply because I will not be here after tomorrow, because I can be reached

on video anyway in Sydney or elsewhere, it is just, I think, another 24 hours is really as much as your client is entitled to.

MR BRADSHAW:   If your Honour pleases.

HIS HONOUR:   I will not make any final order now.  I am not even saying that I will grant you a stay.  I am prepared to give you 24 hours to see what you can come up with, and depending upon what you do come up with, we will decide what we will do.  Which means, Mr Lilley, that I am going to give you an opportunity to put in any points you want to put at all tomorrow, even if money is found and available.  You understand that.

MR LILLEY:   Thank you, your Honour.

HIS HONOUR:   It may well be, Mr Lilley, it is in your client’s interest to get something in the hand now anyway.  That often turns out to be a more satisfactory way of getting money, by some sort of more gentle coercion than pursuing it in bankruptcy and other proceedings.

MR LILLEY:   Yes, your Honour.

HIS HONOUR:   All right, I will adjourn this matter then until 11 o’clock tomorrow.

AT 11.22 AM THE MATTER WAS ADJOURNED
UNTIL TUESDAY, 15 OCTOBER 2002