Blakeley v National Australia Bank

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FEDERAL COURT OF AUSTRALIA

Blakeley v National Australia Bank [2018] FCA 796

Appeal from: Application for leave to appeal:  Blakeley v National Australia Bank [2017] FCA 835
File number: WAD 417 of 2017
Judge: MCKERRACHER J
Date of judgment: 31 May 2018
Catchwords:

PRACTICE AND PROCEDURE – application for leave to appeal from a decision of a judge of this Court granting summary dismissal – where the primary judge held there to be no reasonable prospect of the applicant successfully prosecuting the proceeding – whether the respondent’s objection to competency and application for summary judgment ought to be granted – whether there is an appellable error

CONSUMER LAW – where the applicant sought to raise new claims not before the primary judge asserting unconscionable conduct under the Australian Securities and Investments Commission Act 2001 (Cth) and/or the Banking Code of Practice – whether there was ‘unconscionable conduct’ pursuant to s 12CC of the ASIC Act – where the forebearance deed was not an ‘unfair contract’- where the forebearance deed was not a ‘small business contract’ -where the statutory provisions relied upon by the applicant had not commenced application

Held:  application for leave to appeal dismissed with costs
Legislation:

Australian Securities and Investments Commission Act 2001 (Cth) ss 12BF(3), 12BF(4), 12BG, 12CB, 12CC

Bankruptcy Act 1966 (Cth) ss 58(1), 116(2)(g)(i)

Corporations Act 2001 (Cth) ss 127, 127(4), 129, 198E(1), 601AD(1A), 601AD(2)

Federal Court of Australia Act 1976 (Cth) ss 25(2B)(aa), 31A(2)

Treasury Legislation Amendment (Small Business and Unfair Contract Terms) Act 2015 (Cth) s 290A

Federal Court Rules 1979 (Cth) r 20.1

Federal Court Rules 2011 (Cth) r 26.01

Cases cited:

Australian Securities and Investments Commission v Cassimatis (2013) 220 FCR 256

Blomley v Ryan (1956) 99 CLR 362

Commonwealth Development Bank of Australia Limited v Kok [2003] FCA 90

Dey v Victorian Railways Commissioners (1949) 78 CLR 62

Faulkner v Bluett (1981) 52 FLR 115

Fortron Automotive Treatments Pty Ltd v Jones (No 2) [2006] FCA 1401

JBS Southern Aust Pty Ltd v Westcity Group Holdings Pty Ltd [2001] VSC 476

Jefferson Ford Pty Ltd v Ford Motor Company of Australia Ltd (2008) 167 FCR 372

Johnson v Buttress (1936) 56 CLR 113

Luck v Chief Executive Officer of Centrelink (2017) 251 FCR 295

Rogers v Asset Loan Co Pty Ltd [2006] FCA 1708

Samootan v Shea [2010] NSWCA 371

Spencer v Commonwealth of Australia (2010) 241 CLR 118

Wang v Anying Group Pty Ltd [2009] FCA 1500

White Industries Aust Ltd v Federal Commissioner of Taxation (2007) 160 FCR 298

Date of hearing: 31 January 2018
Date of last submissions: 12 February 2018
Registry: Western Australia
Division: General Division
National Practice Area: Commercial and Corporations
Sub-area: Commercial Contracts, Banking, Finance and Insurance
Category: Catchwords
Number of paragraphs: 60
Counsel for the Applicants: The Applicants appeared in person
Counsel for the Respondent: Ms K Link
Solicitor for the Respondent: Norton Rose Fulbright Australia

ORDERS

WAD 417 of 2017
BETWEEN:

HAROLD THOMAS JAMES BLAKELEY

First Applicant

HAROLD THOMAS JAMES BLAKELEY…

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Details
Case
[2018] FCA 796
Decision Date

CaseChat Overview and Summary

In the matter of Blakeley v National Australia Bank, the applicant, Blakeley, sought leave to appeal a decision of the Federal Court of Australia, which had granted summary dismissal of Blakeley’s claims against the respondent, National Australia Bank. Blakeley sought to challenge the bank's application for summary judgment and to raise new claims relating to unconscionable conduct. The primary judge had ruled that Blakeley had no reasonable prospect of successfully prosecuting the proceeding, and that the bank’s objections to competency and its application for summary judgment should be granted. The court was required to decide whether there was an appellable error in the primary judge’s decision.

The court considered the principles established in previous cases, including that the moving party does not need to demonstrate that the defence is hopeless or unarguable, and that the respondent party must present a sufficient outline of the evidence to enable the court to form a preliminary view about the merits. The court held that the primary judge had correctly applied the test in section 31A of the Federal Court of Australia Act 1976 and that there was no appellable error in the primary judge’s decision. The court noted that Blakeley had signed the forebearance deed in multiple capacities and that the claims he sought to pursue were within the scope of the deed. The court also found that there was no evidence to support Blakeley’s allegation that the deed was executed under duress or undue influence.

The court dismissed the application for leave to appeal and ordered that Blakeley pay the costs of the respondent. The court held that the primary judge had correctly exercised his discretion in granting summary judgment to the bank, and that there was no basis for the court to interfere with that decision. The court emphasised that the test for summary judgment is whether there is any issue that should be permitted to go to trial, rather than whether there is any issue that could arguably go to trial. The court found that Blakeley had not demonstrated that he had a real prospect of success at trial, and that the primary judge had correctly exercised his discretion in granting summary judgment to the bank.

Orders

Orders of the court

1. The application for leave to appeal is dismissed.

2. The applicants pay the costs of the respondent, to be assessed if not agreed.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

The task before the primary judge was to determine the Bank’s application under s 31A of the FCA which, relevantly, provides:31A Summary judgment…(2)The Court may give judgment for one party against another in relation to the whole or any part of a proceeding if:(a)the first party is defending the proceeding or that part of the proceeding; and(b)the Court is satisfied that the other party has no reasonable prospect of successfully prosecuting the proceeding or that part of the proceeding.(3)For the purposes of this section, a defence or a proceeding or part of a proceeding need not be:(a) hopeless; or(b) bound to fail;for it to have no reasonable prospect of success.…(emphasis added) In Wang v Anying Group Pty Ltd [2009] FCA 1500, Foster J said (at [43]):The critical words of s 31A(1), when applied to the present case, require me to be satisfied that the respondents have “… no reasonable prospect of successfully defending the proceeding …”. The following principles may be extracted from the authorities:(a)The moving party does not have to demonstrate that the defence is hopeless or unarguable;(b)The Court must consider the pleadings and the evidence with a “critical eye” in order to see whether the respondent party has evidence of sufficient quality and weight to be able to succeed at trial (Jefferson Ford Pty Ltd v Ford Motor Company of Australia Ltd (2008) 167 FCR 372 at [23] (p 382) (per Finkelstein J));(c)The respondent party is not obliged to present its whole case in order to defeat the summary judgment applicant but must at least present a sufficient outline of the evidence in order to enable the Court to come to a preliminary view about the merits for the purpose of considering the statutory test in s 31A(1)(b) (Jefferson Ford Pty Ltd 167 FCR 372 at [22] (p 382) (per Finkelstein J)); and (d)The test may require greater scrutiny of the pleadings and evidence in some cases than in others. In my judgment, the words of s 31A(1) compel a flexible approach. The real question in every case is not so much whether there is any issue that could arguably go to trial but rather whether there is any issue that should be permitted to go to trial. This seems to be the approach of Finkelstein J in Jefferson Ford Pty Ltd 167 FCR 372 and of Gordon J in the same case (as to which see [123]–[134] (pp 406–409)), although Rares J in that case at [73]–[74] (p 394) and in Boston Commercial Services Pty Ltd v GE Capital Finance Australasia Pty Ltd (2006) 236 ALR 720 esp at [45] (p 731) favoured a test which is much closer to the older test articulated in authorities decided under Rules of Court expressed in terms different from the language of s 31A(1)). It is true that a party does not need to show that they will probably succeed at trial. Nonetheless, a ‘real prospect’ means the case must be stronger than merely arguable: JBS Southern Australia Pty Ltd v Westcity Group Holdings Pty Ltd [2011] VSC 476 per Croft J (at [44]). The object is to avoid the cost and time of proceeding to trial, rather than consuming almost equivalent costs in a summary judgment application.

Ratio Decidendi

Legal Principle Established

The primary judge noted that Mr Blakeley signed as a director and company secretary on behalf of PMHB, his own capacity, and as trustee for the Blakeley Family Trust in accordance with s 127 of the Corporations Act 2001 (Cth), and also in his own capacity and as trustee for the HTJB Family Trust. The contentions before his Honour were similar to those now advanced, including the contention that the Forebearance Deed was not relevant to the claims Mr Blakeley identified in the proceeding, described in the pleading above. The primary judge rejected that submission and gave summary judgment in favour of the Bank. His Honour observed (at [27]) that plainly the various claims Mr Blakeley wished to pursue against the Bank were within the wide language of cl 10 of the Forebearance Deed, namely, claims ‘in respect of each of the Facilities, Securities and Guarantees’, as those terms were further defined in cl 1.1 of the Forebearance Deed. His Honour noted that cl 10 made it clear that the Bank may plead the Forebearance Deed as an ‘absolute bar and defence to any claim brought by the [applicants] in respect of’ any claim in relation to Facilities, Securities and Guarantees (at [28]). His Honour accepted the submission by the Bank, having regard to the terms of cl 1.2(m) of the Forebearance Deed, that the release was binding on subsequent trustees of the Blakeley Family Trust, including Mr Blakeley, if he was indeed a trustee of that Trust. The primary judge recognised that the claims that the applicants wished to pursue concerned unconscionable conduct, deceptive and misleading conduct, failure to abide by the law relating to quiet enjoyment and other alleged contraventions of Commonwealth legislation, but noted that these would all arise in connection with the Bank’s exercise of its rights pursuant to the Facilities, Securities and Guarantees as defined by the Forebearance Deed. They were all claims within the contemplation of the parties at the time when the release was given and were covered by the release. His Honour followed Commonwealth Development Bank of Australia Limited v Kok [2003] FCA 90. Any conditions precedent set out at cl 2.1 before the Forebearance Deed had been satisfied or waived as had the conditions precedent to the variation letter dated 11 April 2013 and the variation letter dated 27 May 2013. His Honour had evidence from the Bank supporting that proposition. The primary judge also noted that Mr Blakeley asserted that the Forebearance Deed was executed in circumstances of duress and undue influence, but observed that there was no evidence at all advanced by the applicants to support that allegation. Rather, as the Bank submitted, it was mere assertion. In any event, the primary judge accepted (at [33]) the Bank’s submission that such an allegation was inconsistent with:(1)the express acknowledgements in the Forbearance Deed that the borrowers and guarantors (as defined in the Forbearance Deed) entered into the Forebearance Deed:(a)'having first obtained independent legal advice': clause 3(j)(i) of the Forbearance Deed; and(b)'willingly and without reliance on any written or verbal statement or communication by or on behalf of [the Bank]': clause 3(j)(iii) of the Forbearance Deed; and(2)the terms of the variation letters dated 11 April 2013 and 27 May 2013, which record variations to the terms of the Forbearance Deed requested by the applicants.