Birch v National Australia Bank Limited; Campbell v Illawarra Golf Club (No.5)
[2014] NSWSC 949
•18 July 2014
Supreme Court
New South Wales
Medium Neutral Citation: Birch v National Australia Bank Limited; Campbell v Illawarra Golf Club (No.5) [2014] NSWSC 949 Hearing dates: 10 July 2014 Decision date: 18 July 2014 Jurisdiction: Common Law Before: Adamson J Decision: In proceedings 2011/382861
(1) Pursuant to r 13.4(1)(a), (b) and (c) of the UCPR order that the fifth defendant's defence and cross-claim be dismissed.
(2) Pursuant to r 14.28(1)(a), (b) and (c) of the UCPR order that the fifth defendant's defence and cross-claim be struck out in its entirety.
(3) Pursuant to r 13.1 of the UCPR, order that the plaintiffs are entitled to possession of the land situated at and known as 87 Princes Highway, Maddens Plains, New South Wales 2508 (Receivers and Managers Appointed), with the following folio identifiers:
(a) Lot 2 in Deposited Plan 240566;
(b) Lot 3 in Deposited Plan 240566;
(c) Lot 4 in Deposited Plan 240566;
(d) Lot 1 in Deposited Plan 1048847; and
(e) Auto consol 8659-94,
(Property)
(4) Grant leave to the plaintiffs to issue a writ of possession in respect of the Property.
(5) Subject to a written application to my associate within 7 days for a different order, order the fifth defendant, Mr Birch, to pay the plaintiffs' costs.
In proceedings 2013/282086
(1) Pursuant to r 13.4 of the UCPR dismiss the proceedings as an abuse of process.
(2) Subject to a written application to my associate within 7 days for a different order, order the plaintiff, Mr Birch, to pay the costs of the proceedings
Catchwords: CIVIL PROCEDURE - application for summary judgment of a claim for possession and summary dismissal of cross-claim - summary judgment and dismissal granted - no triable issue and no viable cause of action or defence - abuse of process and vexatious proceedings - embarrassing statement of claim and draft pleading - respondent's history of manipulating court processes by obtaining adjournments and deferrals through engaging legal practitioners and dispensing with their services - delay of court proceedings to the detriment of the applicant Legislation Cited: Australian Securities and Investments Commission Act 2011 (Cth), s 12 CB, s 12CC
Contracts Review Act 1980 (NSW), s 7, s 9
Uniform Civil Procedure Rules 2005 (NSW), r 13.1, r 13.4Cases Cited: Birch v National Australia Bank Limited; Campbell v Illawarra Golf Club Pty Limited (No.4) [2014] NSWSC 503
Commercial Banking Co of Sydney v Pollard [1983] 1 NSWLR 74
General Steels Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125Category: Principal judgment Parties: Proceedings: 2013/282086
Proceedings: 2011/382861
Christopher Brian Birch (Plaintiff)
National Australia Bank Limited (First Defendant)
Christopher Robert Campbell (Second Defendant)
Vaughan Neil Strawbridge (Third Defendant)
Christopher Robert Campbell & Vaughan Neil Strawbridge (Plaintiffs)
Illawarra Golf Club (First Defendant)
David Hawkins (Second Defendant)
Richard Dorey (Third Defendant)
Stephen Dorey (Fourth Defendant)
Christopher Brian Birch (Fifth Defendant)Representation: Counsel:
2013/282086
Mr Birch in person (Plaintiff)
A Spencer (Defendants)2011/382861
A Spencer (Plaintiffs)
Mr Birch in person (Fifth Defendant)
Solicitors:2013/282086
2011/382086
Minter Ellison (Defendant)
Minter Ellison (Plaintiffs)
File Number(s): 2013/282086 2011/382861 Publication restriction: Nil
Judgment
Introduction
By amended notice of motion dated 26 May 2014, Christopher Campbell and Vaughan Strawbridge (the receivers) applied to strike out the defence filed by Christopher Birch to their claim for possession of certain property at Illawarra which is used as a golf course (the property) and for summary judgment for possession of the property.
Mr Birch is one of two registered proprietors of the property. The other registered proprietor of the property is Sandra Tarrant. Ms Tarrant is an undischarged bankrupt (the sequestration order having been made on 18 October 2011) whose trustees do not wish to be heard against the receivers' claim for possession. For reasons which appear from my judgment in Birch v National Australia Bank Limited; Campbell v Illawarra Golf Club Pty Limited(No. 4) [2014] NSWSC 503 the defence filed by Mr Birch was originally in the form of a statement of claim which was filed on 18 September 2013. It is the only document filed by Mr Birch in these proceedings or in proceedings which he commenced which are heard together with these proceedings.
The receivers' application for summary judgment
Whether there is evidence of the facts on which the claim is based
The receivers have adduced evidence which establishes the following.
In 2004 Mr Birch and Ms Tarrant (the owners) entered into various agreements to develop the property. Ms Tarrant's husband, David Hawkins, was also involved although he was not a registered proprietor of the property. There were four separate agreements (the Development Agreements) each of which was dated 13 August 2004:
(1) Loan Agreement between Links Investco No. 2 Pty Limited (Links Investco) on the one hand and the owners on the other;
(2) Development Application Agreement between the owners and their respective companies, C. B. Birch Pty Limited and SNAD Pty Limited (the promoters) and Links Illawarra Developments Pty Limited (Links Developments);
(3) Put and Call Option Deed between the owners and Links Illawarra Holdings Pty Limited (Links Holdings); and
(4) Sale of Business Agreement between the owners, Links Holdings and Mr Hawkins.
The effect of the Development Agreements was that Links Investco would borrow $5m from its financier (which, in the events that happened, was the National Australia Bank Limited (the NAB)) and lend the money to the owners for a term of two years to permit them to draw down a maximum of $5m. It was a condition precedent of the Loan Agreement that the owners would grant a mortgage over the property to the financier that advanced funds to Links Investco if the financier required it. The Links companies would seek approval for the development of the property which would include a mix of permanent dwellings and short-stay accommodation. The golf course and club house would be upgraded as part of the development. If the development was approved, Links Holdings or its nominee would purchase the property for $5m. A further payment of half the increase in the value of the property as a result of the approval, less any expenses incurred, would be paid to the promoters. If the development did not proceed, the $5m would be repaid. The Sale of Business Agreement involved the purchase by Links Holdings of the business that was conducted on the property for a nominal sum. Mr Hawkins guaranteed the owners' obligations under the agreement and played a role in the business and the promotion of the development.
All of the Development Agreements were prepared by Maddocks lawyers. Mr Birch signed the Loan Agreement on his own behalf; the Development Application Agreement on his own behalf and on behalf of C. B. Birch Pty Limited as a director; the Put and Call Option Deed on his own behalf and the Sale of Business Agreement on his own behalf.
Pursuant to cl. 3.2 of the Loan Agreement the owners gave notice to Links Investco that they wished to make a drawing on 21 September 2004 of $5m to be disbursed as follows:
(1) Edcay P/L $4m (being the amount owing to pay out the then first mortgagee)
(2) Ms Tarrant $500,000
(3) Mr Birch $500,000
Links Investco approached the NAB for a loan facility. On 14 September 2004 the NAB sent a letter of offer to Links Investco in which it offered $5m until 31 August 2005. The offer stipulated that the security required for the loan would include registered mortgage over the property and a limited guarantee and indemnity for $5m to be given by the owners.
Links Investco accepted the NAB's offer. The owners executed a guarantee and indemnity in which they guaranteed the repayment by Links Investco of the $5m. The guarantee and indemnity was in a standard form subject to clauses 6.2 to 6.5 which limited the NAB's right of recovery to sale of the property. In other words, the NAB was precluded from recovering any shortfall from the owners themselves. The owners executed the guarantee and indemnity and initialled the clause which contained clauses 6.2 to 6.5. In respect of each guarantor Alan Crompton, a solicitor from the firm of Peters Crompton Worrall, certified that on 20 September 2004 he had explained the effect of the guarantee and indemnity to the guarantor who appeared to be aware of and to understand the nature and effect of the guarantor's obligations. Mr Crompton also certified that he was a legal practitioner instructed and employed by the guarantor independently of the NAB. Each of the owners acknowledge receipt of copies of the relevant documents.
Each of the owners executed the mortgage over the property in the presence of Mr Crompton on 20 September 2004. Memorandum 7652469D, which is incorporated into the mortgage, provides that "amount owing" includes:
"all amounts for which at that time you are or may become actually or contingently liable to the Bank for any reason, including all amounts for which you are or may become liable to the Bank in respect of any . . . guarantees. . ."
By instruction dated 21 September 2004, Links Investco required bills to be drawn down in an amount of $5m. Monies were advanced on that date and applied as per the disbursement authority set out above. The NAB became the first registered mortgagee of the property.
The loan monies were not repaid on the due date or at all. In about May or June 2010 the owners executed, in the presence of Mr Hawkins, a deed with the NAB entitled "Illawarra standstill and acknowledgement deed" (the Standstill Deed). The recitals to the Standstill Deed are as follows:
A The Financier [NAB] and Links No.2 [Links Investco] have entered into the Letter of Offer which has now expired.
B Sandra Tarrant, Christopher Birch, Links Illawarra [Links Holdings] and Links Living have guaranteed the obligations of Links No.2 to the Financier and have provided the Securities to the Financier to secure their obligations under the guarantees.
C The facility provided under the Letter of Offer has expired and the Financier has called on the Obligors to pay the Secured Monies.
D The Obligors have requested the Financier to forebear from acting to enforce the rights that have accrued to it as a result of the failure to pay the secured monies.
E The Financier agrees to forebear from acting to enforce certain of its rights upon the terms set out in this deed.
The term "Obligor" is defined as each of the Parties other than the Financier. The NAB is "the Financier". The other parties are Links Investco, Links Holdings and each of the owners.
The Standstill Deed relevantly provides:
2. Securities valid and binding
Each of the Obligators agrees and acknowledges that any security, guarantee or undertaking created or given by it in favour of the Financier;
(a) continues in full force and effect;
(b) is binding and enforceable against it in accordance with its terms:
(c) subject to any limitations specified in the relevant security, secures the Total Amount Owing.
In the deed, Mr Birch relevantly acknowledged that the NAB had validly demanded repayment of $5,099,098.34 and that this amount was due and payable, that the NAB was entitled to take possession of the property pursuant to the mortgage and that he consented to judgment to possession of the property and to appointment of receivers. Mr Birch also acknowledged and agreed that he would not take any steps to defend any proceedings commenced for possession of the property.
By deed dated 30 June 2011 the NAB appointed the receivers to the property.
The evidence adduced by the receivers has established that, when Mr Birch executed the mortgage and the guarantee and indemnity in return for the advance from the NAB through Links Investco, he obtained an immediate commercial benefit in that the mortgage with which the property was encumbered was discharged and he obtained $500,000 which was paid to the trustee of his family trust. He participated in the development for the purposes of profit. When the development approval was not forthcoming, he became a party to the Standstill Deed which bought him time to refinance the loan so that he would retain the opportunity to develop the property for profit. As consideration for the temporary forbearance, the NAB obtained certain promises from Mr Birch, including that he agreed that the amounts were outstanding and that the NAB was entitled to possession. Indeed he consented to possession. However, when refinancing did not occur, he reneged on the Standstill Agreement and, eventually, on 10 July 2014, alleged that it was an unjust agreement. The evidence on the motion does not reveal any basis on which a court would refuse to enforce the mortgage, the guarantee or the Standstill Deed.
The receivers have established that they have an entitlement to possession against Mr Birch by reason of the facts set out above. Mr Campbell has deposed to his belief that Mr Birch does not have a defence to the claim, as required by r 13.1(1)(b) of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR).
Whether there is a triable issue arising from any defence to the claim for possession or any cross-claim
As the receivers have adduced evidence to establish their claim for possession it is necessary to address whether there is a triable issue which would have the effect of making summary judgment of the claim for possession and summary dismissal of the cross-claim inappropriate. In order to determine whether any arguable defence or cross-claim has been articulated, I propose to outline the history of the matter since this indicates the extent to which Mr Birch has had an opportunity to formulate any defence which he might have to the receivers' claim for possession and any cross-claim against the NAB.
The course of the proceedings and the opportunities Mr Birch has had to formulate a defence to the claim for possession
By statement of claim filed in November 2011 the NAB commenced proceedings for possession of the property. The defendants to those proceedings were Illawarra Golf Club Pty Limited, Mr Hawkins, Richard Doney and Stephen Doney. Mr Spencer, who appeared on behalf of the NAB and the receivers, explained that the NAB relied on its contractual rights under the Standstill Deed as against the owners and therefore did not join them as defendants to the proceedings.
On 3 January 2012 Illawarra Golf Club Pty Limited filed its defence, which was signed and verified by Mr Birch as a director. In [11] of the defence it was alleged that the receivers "are not entitled to possession of the property".
On 1 August 2012 an affidavit sworn by Mr Birch was filed in the possession proceedings.
The statement of claim misspelt the names of Messrs Doney (by referring to them as Messrs Dorey). This was corrected by an amended statement of claim filed on 8 August 2012, following which Messrs Doney consented to judgment for possession. Illawarra Golf Club Pty Limited was wound up. Accordingly, Mr Hawkins was the only active defendant in the proceedings.
On 4 February 2013 Mr Birch filed a motion in the proceedings in which he sought various orders including an order that the mortgage be set aside. In his affidavit in support of the motion he did not refer to any representations said to have been made to him by NAB before he signed the mortgage.
On 6 February 2013 the matter was listed for directions before Garling J. Mr Hawkins appeared for himself. Mr Birch was not present. Mr Hawkins was granted leave to file an affidavit of Mr Birch sworn 5 February 2013. His Honour referred to the notice of motion filed by Mr Birch which had been made returnable on 15 February 2013. Mr Hawkins confirmed that it had been filed by Mr Birch who was not a party to the proceedings. The issue whether Mr Birch ought be joined as a party was ventilated in his absence but not decided.
On 15 February 2013, the first return date of the motion, the matter was listed before Garling J. Mr Birch sat at the bar table and asked Mr Hawkins to speak on his behalf. Garling J said that he was disinclined to complicate the proceedings by ordering that Mr Birch be joined and foreshadowed that if Mr Birch commenced separate proceedings they could be heard together with the receivers' proceedings. Mr Hawkins said, in the presence of and on behalf of Mr Birch that a draft statement of claim would be ready by 1 March 2013 because it was "advanced". Notwithstanding Mr Hawkins' statement, Mr Birch did not file his statement of claim until 18 September 2013. No explanation has been offered as to why it took so long for a statement of claim, which was already "well advanced", to be filed.
On 14 June 2013 Mr Hawkins filed an amended defence in which he made several allegations that the NAB had engaged in misleading and deceptive conduct and that the mortgage and the appointment of receivers was invalid.
On 12 July 2013 Mr Birch swore another affidavit in the proceedings which was filed by Mr Hawkins and was relied on by him at the hearing of the proceedings. The NAB and the receivers relied on Mr Birch's admission in [27] of his affidavit that no one from the NAB contacted him between August 2004 and August 2006. This covers the period of the advance, the execution of the mortgage and the guarantee and indemnity.
The possession proceedings were heard by Schmidt J on 30 and 31 July and 1 August 2013. Mr Hawkins called Mr Birch as a witness to give evidence in his defence. He made the following admissions:
(1) He understood that the document he executed was a mortgage and understood the general purport of the document and that if Links did not repay the NAB he would be required to do so or the NAB would be entitled to sell the property.
(2) He executed the mortgage because it was in his interests to do so at the time and he expected to obtain a return from the development of the property.
(3) To the extent to which there was an increase in the value of the property by reason of a development approval, this would have been to the financial advantage of Mr Birch's family trust.
(4) Of the $5m advanced, $4m was applied to discharge the existing mortgage over the property.
(5) He understood that the NAB held the certificate of title to the property and could sell the property if the debt secured by the mortgage was not repaid.
(6) He was not informed either by the NAB or by the Links companies of any other transactions between NAB and the Links companies and was unaware of any capital raising by the Links companies.
(7) He read and understood the purport of the Standstill Agreement although he did not have a particular recollection of where he was when he signed it. He understood that if the NAB was paid out, his obligations under the guarantee and indemnity and the mortgage would come to an end.
On 18 September 2013 Mr Birch filed a statement of claim against the NAB and the receivers in which he sought an order that the mortgage and the deed of appointment of the receivers be set aside. The pleading alleged several misrepresentations by the NAB and also alleged that s 7 and s 9 of the Contracts Review Act 1980 (NSW) had not been "complied with". There are also allegations of breach of the Australian Securities and Investment Commission Act 2001(Cth) which do not in terms apply.
On 20 September 2013, Schmidt J published reasons for her decision to make an order for possession of the property in favour of the receivers.
On 5 November 2013 the receivers filed a notice of motion in Mr Birch's proceedings seeking an order that the proceedings be dismissed and that the statement of claim be struck out. The motion was supported by an affidavit of Jon Karolczak sworn 5 November 2013 to which were exhibited two folders of documents which included the transaction documents, as well as the court documents in the receivers' proceedings and the transcript of the hearing before Schmidt J and her Honour's reasons for decision. This was the evidence on which the NAB and the receivers relied at the hearing before me on 10 July 2014.
The motion was listed for directions before Registrar Bradford on 21 November 2013. On 20 November 2013 Mr Birch left a voicemail message for Mr Beaton, the NAB's solicitor, to say that he was instructing solicitors who would be available on 25 November 2013 and asked that it be stood over to that date. This occurred.
On 25 November 2013 Mr Staples, solicitor of Russells Law, appeared on behalf of Mr Birch and sought four weeks to put on evidence in response to the motion. Directions were made accordingly, including a direction that Mr Birch file and serve his evidence in opposition to the motion by 20 December 2013. No evidence was filed or served.
On 28 November 2013 Mr Birch filed a motion in the possession proceedings for a stay of the writ of possession. The motion was heard by Bellew J on 10 December 2013. A temporary stay was granted pending the decision on the stay application.
On 13 January 2014 Mr Birch sent an email to Mr Karolczak foreshadowing amendments to his statement of claim. Mr Karolczak responded and asked for the proposed amended statement of claim to be provided as soon as possible, having regard to the next court date of 28 January 2014. Mr Birch did not respond.
On 28 January 2014 Mr McQuillen of counsel, who appeared on behalf of Mr Birch, informed the court that he had only been instructed that day and that Mr Birch was overseas. He sought and was granted an extension of time to file evidence and serve a proposed amended statement of claim. An extension to 28 February 2014 was granted and the matter was stood over to 3 February 2014 for the allocation of a hearing date. There was no appearance by Mr Birch on that date. At about 10 am on 3 February 2014 Mr Karolczak received a call from Mr McQuillen who proposed that the proceedings be stood over to 7 March 2014. This direction was made by consent.
Mr Birch neither served evidence nor any proposed amended statement of claim within the directed time of 28 February 2014. He did not respond to Mr Karolczak's correspondence on the topic. At the directions hearing on 7 March 2014 Mr McQuillen informed the court that Mr Birch would not be filing evidence. The motion was listed for hearing on 26 March 2014.
On 21 March 2014 Mr Birch sent an email to Mr Karolczak informing him that he had filed and served two affidavits and had issued two subpoenas and would be seeking an adjournment on 26 March 2014.
On 26 March 2014 Mr McQuillen appeared on behalf of Mr Birch who was not present. Mr McQuillen informed the Court that a person whom Mr Birch had cared for died the previous evening and sought an adjournment. Schmidt J adjourned the matter to 11 April 2014 for hearing.
On 1 April 2014 Bellew J refused the stay application and published reasons. His Honour dissolved the temporary stay.
The matter came before me on 11 April 2014. Because of my concern that Mr Birch had not been made a defendant to the receivers' possession proceedings, I made orders, the reasons for which are set out in Birch v National Australia Bank Limited; Campbell v Illawarra Golf Club Pty Limited(No. 4) [2014] NSWSC 503. These orders included orders that Mr Birch serve any evidence in opposition to the motion and any amended defence or cross-claim. At a further directions date, I directed Mr Birch to notify the NAB of any affidavits already served on which he proposed to rely.
Notwithstanding several communications from Mr Karolczak, Mr Birch neither served an amended pleading, evidence in opposition to the NAB's motion, nor identified any affidavits on which he proposed to rely.
On 28 April 2014 Mr Birch filed a notice of intention to appeal the refusal of the stay by Bellew J. However as no appeal was commenced within three months of the material date (1 July 2014), the notice lapsed.
At 10 am, at the commencement of the hearing of the NAB's motion on 10 July 2014 Mr Birch handed up to me and provided to Mr Spencer, who appeared for the NAB and the receivers, a document headed "Proposed Amended Statement of Claim", which he described as a "work in progress". This was the first amended draft provided notwithstanding that many had been earlier foreshadowed as set out above.
I stood the hearing of the matter down to midday to permit Mr Spencer to consider the draft document. This allowed sufficient time for the motion to be heard in the course of the day.
Later in the hearing, Mr Birch referred to affidavits which had been filed, although he had not read any such affidavits when I invited him whether he had any evidence in opposition to the motion. Mr Spencer objected to Mr Birch referring to affidavits which he had not notified the NAB would be relied upon. He submitted that the NAB had made forensic decisions as to what evidence to adduce on the motion in light of Mr Birch's failure to adduce any evidence. In these circumstances, I refused to allow Mr Birch to rely on evidence that had been filed and indicated that I would not regard his statements from the bar table as being evidence.
Whether the statement of claim as filed or the proposed amended statement of claim give rise to an arguable defence to the claim for possession
For procedural reasons I ordered that the statement of claim filed by Mr Birch stand as a defence and cross-claim in the receivers' proceedings for possession. However, I shall refer to the document as "statement of claim" since this is the title it bears.
The statement of claim as filed
Paragraphs [1] to [21] contain various allegations of fact, the significance of which is not apparent. For example it is alleged that the NAB provided banking services to various companies in the Links group and individuals associated with those companies and obtained various securities. No proper particulars are given of the loans or the securities. Nor is the relationship between the allegation and any relief claimed by Mr Birch articulated. There is an allegation that the receivers have not been appointed as receivers of other property, which, even if it were true, does not appear to be relevant.
Various terms and conditions of various agreements are referred to but not identified in any particulars and are, on some occasions, inconsistent with express terms in the agreements identified.
Paragraph [22] and the following paragraphs contain allegations of representations said to have been made "between April 2006 [sic, 2004] and September 2004" by "the First Defendant and the Links Group". No proper particulars are given of the representations. All that is referred to is the agreements themselves. In light of the admissions made by Mr Birch in the possession proceedings before Schmidt J, there is nothing to suppose that the NAB made any representations to Mr Birch. Indeed his evidence was to the contrary since he said that he had not met anyone from the NAB prior to executing the mortgage or guarantee. The allegation that Mr Birch relied on the representations in [23] cannot be made out, since, on his own admission, none was made. He has not adduced any evidence on this application that would undermine what he swore in the possession proceedings.
In [24] and [25] Mr Birch alleged that he did not receive copies of particular documents. The NAB has tendered a document in which he acknowledged receipt of such documents. However, of greater importance, it is not apparent how non-receipt of documents (even if it be established) could amount to a defence to a claim for possession or a basis for a cross-claim.
There follow allegations in [27] and [28] that Mr Birch was not told of the financial standing of the Links group or other transactions between them and the NAB. These cannot, as a matter of logic, form the basis of representations.
Paragraph [30] alleges an unparticularised agreement between the NAB and Links Group whereby it was agreed that a capital raising would be undertaken and that the monies raised would be used to discharge the debt of $5 million owed by Links to the NAB. The allegation is that the agreement was made without Mr Birch's "notice, knowledge or approval". It follows that he could not have acted in reliance upon it.
Paragraphs [31] and [32] refer to further agreements made between April and September 2006 which are not particularised. Paragraph [33] asserts that certain conditions attached to a loan approval given by the NAB to the Links Group. There is no suggestion that Mr Birch was a party to, or otherwise aware of those agreements or their terms. Paragraphs [34] and [35] allege that certain conduct was contrary to representations made and terms and conditions (presumably those referred to in the immediately preceding paragraphs). Paragraph [36] alleges that by reason of certain representations the NAB was somehow obliged to Mrs Birch and Ms Tarrant to discharge the debt to the NAB and the mortgage.
In [37], Mr Birch alleges that the NAB owed Mr Birch certain duties as a "financial services provider". The genesis of such duties is not articulated.
Paragraphs [38] and [39] plead breaches of representations said to have been made to Mr Birch. No such representations have been pleaded. Again, Mr Birch has admitted that he knew nothing about the matters referred to. Paragraph [42(a)] alleges baldly that the mortgage was "obtained as a consequence of undue influence, false and misleading conduct and representations made by the first defendant". Leaving aside the fact that as a pleading the paragraph is manifestly deficient, given that the Statement of Claim does not plead any such conduct prior to Mr Birch executing the mortgage, this claim is doomed to fail.
Paragraph 42(b) alleges that the NAB is not entitled to rely on the mortgage because it had a "conflict of interest" as a party to the capital raising and allowed the Links Group to retain certain monies. The interests which are said to give rise to a conflict are not identified, nor there any articulation of the basis on which conduct which post-dated the granting of the mortgage by a number of years could avoid the Mortgage.
In [42(d)] the allegation is made that the NAB has acted "improperly, unfairly and unconscionably in relation to the Plaintiff and his co-owner in all of its dealings with them". No proper particulars are furnished. In [42(e)] the allegation is made that because the NAB has acted "unconscionably in relation to its dealings with Mr Birch it should not be allowed to take advantage of its superior position." No explanation is given of this allegation.
Paragraphs [43] and [44] in large measure repeats earlier allegations that the NAB induced Mr Birch to executed the mortgage by representations made by the NAB and Links group. For the reasons already given, in the circumstances any such representation cannot be sheeted home to the NAB.
There is an allegation in [45] of non-compliance with s 12CB and 12CC of the Australian Securities and Investments Commission Act 2011 (Cth). Neither of those sections applies as lending money against the security of a mortgage is not the provision of financial services as defined by the Act.
In [46(a)] it is alleged that the NAB failed to comply with s 7 and 9 of the Contracts Review Act 1980 (NSW). Section 7 of the Contracts Review Act 1980 (NSW) confers jurisdiction on a court to alter contracts or make orders in respect of them. Section 9 lists the matters to be considered by the court. Neither section provides for a standard of conduct in respect of which "non-compliance" could sensibly be alleged.
In [46(b)] it is alleged that the NAB and Links group were "financial partners". This term is not defined; the allegation is not particularised; the significance of the allegation and how it could form a basis for any relief is not expressed.
In [47] and [48], the allegations against the NAB are repeated against the receivers.
There is no mention of the Standstill Deed in the statement of claim.
In my view, the statement of claim is embarrassing. It ought be struck out on the grounds that it is impossible to plead to, and is largely incomprehensible. It lacks any particularity, is internally inconsistent and is at odds with admissions elsewhere made by Mr Birch. I am unable to discern any defence to the receivers' claim for possession. Although there are terms used in the statement of claim that could amount to a defence, including a reference to the Contracts Review Act, there is no articulation in the pleading of how a transaction entered into for the commercial benefit of Mr Birch could be said to be unjust or any other basis on which he is not bound by the mortgage or the guarantee or that they could be set aside.
The proposed amended statement of claim
The draft pleading is no improvement on the filed version. It is similarly incoherent.
There are several allegations which are inconsistent with the receivers' uncontroverted evidence. For example on page 11 the following is alleged:
a. that neither the Plaintiff nor Sandra Lee Tarrant had sought or been given an opportunity to seek or obtain independent financial and/or legal advice in relation to entering into the said Guarantee and Indemnity or the Mortgage;
(i) the Plaintiff and Sandra Lee Tarrant attended the offices of the solicitors for Links, namely, Maddocks Lawyers on 21 September 2004 without being informed beforehand of the said Mortgage and Guarantee and Indemnity documents they were to be asked to sign.
(ii) the First Defendant knew that the Plaintiff and Sandra Lee Tarrant had not obtained independent financial and/or legal advice in respect to the Mortgage and/or Guarantee and Indemnity.
(ii) the First Defendant through its solicitors proceeded with the transaction of obtaining a Mortgage and Guarantee and Indemnity from the Plaintiff and Sandra Lee Tarrant when it knew that the Plaintiff and Sandra Lee Tarrant had not obtained independent financial and/or legal advice in relation to the entering into the said Mortgage and Guarantee and Indemnity
The difficulty with these allegations is that they are directly contradicted by the NAB's evidence (uncontroverted) that Mr Crompton certified that he had explained the effect of the mortgage and guarantee to Mr Birch and Ms Tarrant and that they appeared to understand the documents. As far as the documents reveal, Mr Crompton was independent of the solicitors for Links and had no connection with the NAB.
The only reasonably available inference is that Mr Birch is prepared to make allegations in filed and draft pleadings irrespective of their truth in circumstances where he is not prepared to adduce any evidence in response to the NAB's evidence.
The draft pleading makes reference to the Standstill Deed and alleges that it ought be set aside. I regard the allegations in respect of this deed as no more than opportunistic exploitation of observations made by Mr Spencer and me at an earlier mention date as to the effect of there being no challenge to the Standstill Deed.
Conclusion
The authorities refer to the general entitlement of a party to litigation to have his or her case determined at trial as long as there is a triable issue: General Steels Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129-130 per Barwick CJ. Summary dismissal or summary judgment is not ordered lightly. Nonetheless, the court must be alert to abuse of its processes and the capacity of some litigants to exploit their right to natural justice and use the processes of the court to cause delay and prejudice. The NAB's right to recover the outstanding debt from Mr Birch is limited to the value of the property. The debt substantially exceeds the value of the property. Any delay is accordingly prejudicial to the NAB and to Mr Birch's advantage.
In my view, Mr Birch has, as is demonstrated by the recitation of the various proceedings and directions hearings set out above, endeavoured to manipulate the court's processes to the detriment of the NAB, the receivers and the administration of justice. He has engaged legal practitioners and dispensed with their services to his advantage in seeking adjournments and deferrals. He has sought to portray himself as ingenuous, when his conduct of the proceedings has demonstrated that this is manifestly not the case.
The matters alleged in the statement of claim and the draft proposed pleading are potentially germane both to a defence to the receiver's claim for possession and to a claim for damages against the NAB (see Commercial Banking Co of Sydney v Pollard [1983] 1 NSWLR 74 at 77-78 per Rogers J). It is impossible to disentangle defensive allegations from those that might constitute a claim, if one were available.
In my view, the repetition and lack of coherence in the statement of claim and the draft pleading is the product of a lack of defence or viable cause of action. But for the chronology one might be disposed to allow a mortgagor and guarantor to replead. However, I consider that what has occurred between February 2013 and the hearing of this motion on 10 July 2014 is sufficient to indicate that there is no point whatsoever in affording Mr Birch further time. His failure to articulate a defence or a claim is evidence of there being none. His obfuscation can no longer provide a reason for an indulgence. He has not alleged or adduced evidence of any basis for relief from the terms of the guarantee, the mortgage or the Standstill Deed. He has articulated no arguable defence.
The receivers are entitled to summary judgment on their claim for possession pursuant to r 13.1 of the UCPR since there is no triable issue regarding their claim for possession or arguable defence to such claim. Further Mr Birch's proceedings ought be dismissed under r 13.4 of the UCPR on the basis that they are vexatious, no reasonable cause of action (or defence) is disclosed and they amount to an abuse of the process of the court since their only apparent purpose is to frustrate the enforcement by the receivers and the NAB of their legal rights.
The statement of claim ought be struck out on the basis that it discloses neither a cause of action nor a defence. It has a tendency to cause, and has in fact caused, prejudice to the receivers and the NAB, embarrassment in that it cannot be pleaded to and delay. For the reasons given in respect of the proceedings, it is an abuse of the processes of the court.
Orders
I make the following orders:
In proceedings 2011/382861
(1) Pursuant to r 13.4(1)(a), (b) and (c) of the UCPR order that the fifth defendant's defence and cross-claim be dismissed.
(2) Pursuant to r 14.28(1)(a), (b) and (c) of the UCPR order that the fifth defendant's defence and cross-claim be struck out in its entirety.
(3) Pursuant to r 13.1 of the UCPR, order that the plaintiffs are entitled to possession of the land situated at and known as 87 Princes Highway, Maddens Plains, New South Wales 2508 (Receivers and Managers Appointed), with the following folio identifiers:
(a) Lot 2 in Deposited Plan 240566;
(b) Lot 3 in Deposited Plan 240566;
(c) Lot 4 in Deposited Plan 240566;
(d) Lot 1 in Deposited Plan 1048847; and
(e) Auto consol 8659-94,
(Property).
(4) Grant leave to the plaintiffs to issue a writ of possession in respect of the Property.
(5) Subject to a written application to my associate within 7 days for a different order, order the fifth defendant, Mr Birch, to pay the plaintiffs' costs.
In proceedings 2013/282086
(1) Pursuant to r 13.4 of the UCPR dismiss the proceedings as an abuse of process.
(2) Subject to a written application to my associate within 7 days for a different order, order the plaintiff, Mr Birch, to pay the costs of the proceedings.
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Decision last updated: 18 July 2014
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