Bryant, Adrian Cecil v Australia and New Zealand Banking Group Ltd

[1997] FCA 1204

IN THE FEDERAL COURT OF AUSTRALIA	1997JUDG
NEW SOUTH WALES DISTRICT REGISTRY	NG 610 of 1994

BETWEEN:

ADRIAN CECIL BRYANT
APPLICANT

AND:

AUSTRALIA & NEW ZEALAND BANKING GROUP LIMITED (ACN 005 357 522)
FIRST RESPONDENT

RAYMOND LUMLEY
SECOND RESPONDENT

JOHN B HAJJE
THIRD RESPONDENT

JUDGE:	LINDGREN J
DATE:	16 OCTOBER 1997
PLACE:	SYDNEY

REASONS FOR JUDGMENT
(ex tempore)

INTRODUCTION

There are before the Court two motions for hearing. The second and third respondents are not parties to either motion. The first motion is brought by the first respondent ("the Bank") against the applicant ("Mr Bryant") by an amended notice of motion filed 29 May 1997. Omitting par 1, which is not pursued, the Bank seeks the following relief:

“2.... paragraphs 22, 24, 27 and 31 of the Applicant's Third Further Amended Statement of Claim be dismissed pursuant to Order 20 Rule 2.

3.That the Applicant's Third Further Amended Statement of Claim and Third Further Amended Application be struck out in accordance with the Order of Lindgren J made 20 September, 1995.

4.In the alternative, leave to the Applicant to file a Fourth Further Amended Statement of Claim and Fourth Further Amended Application from 18 October, 1995 be refused.

5.That the Applicant give security for costs pursuant to Section 56 of the Federal Court of Australia Act.

6.That the Applicant pay the First Respondent's costs of these proceedings and of this Application.”

The second motion which is also brought by the Bank against Mr Bryant is brought by notice of motion filed on 1 October 1997.  In addition to an order for costs, it seeks, pursuant to 0 20 r 1 of the Federal Court Rules an order that the Bank have summary judgment on its cross-claim against Mr Bryant.  I made an order that both motions be heard together and that the evidence in one be evidence in the other save for all just exceptions.

The motions represent an attempt by the Bank to bring to an end a long saga of litigation between it and Mr Bryant. The proceedings have already resulted in judgments of mine delivered on 14 October 1994, 30 March 1995 and 20 September 1995, this last judgment having been the subject of an application for leave to appeal which was dismissed by the Full Court on 12 April 1996.

It is not a pleasant task to have to adjudicate upon a dispute arising between a farmer or grazier on the one hand and his mortgagee bank on the other.  Mr Bryant is, by the account of the affidavits filed and read in support of his case, held in high regard in the local community as a grazier and veterinary surgeon, and has, I presume, invested a substantial part of his working life in building up his business.  The Bank on the other hand naturally looks to recover the principal and interest secured by its mortgages. However, the respective positions of the parties must be resolved in accordance with law.  Unfortunately for Mr Bryant, I have come to the conclusion that in accordance with law he fails and the Bank succeeds.  I would add, however, that Mr Abdul-Karim, who has appeared for Mr Bryant on the present motions, has said all that, I think, could fairly be said in favour of his client.

CHRONOLOGICAL SUMMARY OF BACKGROUND FACTS

In order to give an account of the history of the dealings between the parties I go first to an agreed chronology.  On 14 May 1990 Mr Bryant granted to the Bank five registered mortgages over five rural properties known as "Blair Hill Station", Glen Innes, "Furracabad Creek", Glen Innes, "Jervis", Urbenville, "Manning Run", Bonalbo and "Belmont", Urbenville.  On the same day the Bank advanced to or on account of Mr Bryant $2.1 million.  By 21 February 1992, Mr Bryant was wishing to refinance.  On that date the parties entered into a deed pursuant to which the Bank advanced $18,000 to Mr Bryant to enable him to pursue an application for refinance.  By that deed, Mr Bryant acknowledged owing the Bank $2,342,389.95 as at 21 February 1992, on which he also acknowledged that interest was accruing at the rate of $849.04 per day.

The refinancing did not take place. On 6 May 1993 the Bank served on Mr Bryant a demand calling for payment of the outstanding loan moneys of $2,743,944.34. A few days later, on 14 May, it served him a notice under s 57(2)(b) of the Real Property Act 1900 (NSW) with respect to the five properties.

On 27 June 1993, the Bank commenced a proceeding in the Supreme Court of New South Wales, No. 12086 of 1993, seeking possession and leave to issue a writ of possession in respect of the properties.  On 18 November 1993, Mr Bryant and the Bank entered into short minutes of orders in the Supreme Court proceeding.  This document calls for comment in certain respects in view of the role which it has played on the hearing of the motions.  An objective of the document was to grant to Mr Bryant time to refinance.  By consent, the Court ordered that the Bank have judgment for possession of the five properties and leave to issue a writ of possession.  It was also ordered by consent that the Bank should not, until 7 April 1994, cause a writ of possession to be issued, provided Mr Bryant performed the terms and conditions of the agreement contained in the short minutes. 

The agreement was fairly detailed and was contained in par 5. Paragraph 5 generally set out a regime by which Mr Bryant was to put the properties up for sale.  There was a provision that if he failed to satisfy or breached any term or condition of the agreement, the Bank would be entitled to enforce the judgment for possession and, in particular, would be entitled to issue the writ of possession.  In par 5(c), Mr Bryant acknowledged that as at 18 November 1993 the principal and interest due and owing by him to the Bank was $2,901,352.74. Of importance for present purposes is subpar 5(o) which was as follows:

“In the event that the Principal Sum is not paid and discharged on or before 7 April, 1994 then:

(i)The Plaintiff shall be entitled to enforce Orders 1, 2 and 3 hereof without notice to the Defendant.

(ii)As and from 7th April, 1994 interest shall accrue on the Principal Sum or the balance thereof at the Plaintiff's current index rate for lending over $100,000 which rate is published weekly in The Sydney Morning Herald.

(iii)The Defendant shall, in accordance with the security granted by the Defendant to the Plaintiff be responsible for the Plaintiff's legal costs and disbursements as and from 7 April, 1994.”

The only other provision of the agreement dated 18 November 1993 which need be noted is sub-par 5(q):

“In consideration of the Plaintiff entering into this agreement with the Defendant, the Defendant does hereby release the Plaintiff from all claims for compensation, damages or other remedy or claim whatsoever and howsoever arising out of the Plaintiff's and Defendant's Banker/Customer relationship, the Mortgages, its security documents, agreements for loans, advances and facilities, the subject of these proceedings.”

Pursuant to the agreement of 18 November 1993, on 24 November 1993, Mr Bryant listed the five properties for sale with Dalgety Winchombe FGC.  On 24 February 1994 Mr Bryant advised the Bank that "Manning Run", "Belmont" and "Jervis" were to be auctioned on 6 April 1994 and that "Blair Hill Station" and "Furracabad Creek" were to be auctioned on 7 April 1994.

On 7 April 1994, the auction sale of "Blair Hill Station" failed to attract a bid and Mr Bryant withdrew the other four properties from auction.

On 4 May 1994, the Bank issued writs of possession in respect of all five properties in the Supreme Court proceeding and the Sheriff's officer served notices to vacate on the occupiers requiring that vacant possession be given as follows:

"Blair Hill Station"      20 May 1994

"Furracabad Creek"     20 May 1994

"Jervis" 2 June 1994

"Manning Run"          2 June 1994

"Belmont" 2 June 1994.

Possession of "Furracabad Creek" was delivered to the Bank by the Sheriff's officer on 20 May 1994 as required by the notice and possession of "Jervis", "Manning Run" and "Belmont" was delivered to the Bank by the Sheriff's officer on 2 June 1994 in accordance with the notice.  The one property outstanding, and by far the most substantial of all five properties, "Blair Hill Station", remained in the possession of Mr Bryant.

On 6 June 1994, Mr Bryant and the Bank entered into a document called "Acknowledgment and Undertaking".  The background to this agreement is found in correspondence between the solicitors for Mr Bryant and the Bank.  Mr Bryant's solicitors had outlined their client's program for sale of livestock and the Bank was willing, subject to terms, to allow Mr Bryant the opportunity of selling the livestock.  The Acknowledgment and Undertaking of 6 June 1994 has played some part on the present hearing and therefore I need to say more of it.

It was recited that Mr Bryant had requested the Bank to grant him a licence to access the properties in order to remove livestock and personal belongings.  It was agreed that Mr Bryant would vacate "Blair Hill Station" on 9 June 1994 and would co-operate with the Sheriff in facilitating the delivery of vacant possession of "Blair Hill Station" by the Sheriff to the Bank.  The licence in favour of Mr Bryant for which the document provided was to terminate at 12.00 noon on 14 July 1994 and it was agreed that if Mr Bryant should remain in occupation or should access any of the five properties after that time, he would be trespassing.  Of particular importance is subcl 1(f) which was as follows:

“1. BRYANT UNDERTAKES, COVENANTS, ACKNOWLEDGES AND AGREES:

...

(f)That if goods of Bryant including livestock or goods under his control remain on any or all of the Properties after the expiration of the Period or after this licence has been determined the ANZ shall be entitled to remove same without being liable for any loss or damage whatsoever, howsoever occasioned and all costs and expenses of removal shall be recoverable as a debt due by Bryant to the ANZ.  It shall be lawful for the ANZ to see such goods, livestock and chattels as may be left by Bryant on such Properties and any costs or expenses incurred by the ANZ in so doing shall be a first charge on the proceeds of any such sale and any deficiencies shall be recoverable from Bryant.  The ANZ shall further be entitled to deduct from any surplus in its hands any amount due to the ANZ in respect of any monies due by Bryant to ANZ.”

There are two other subclauses of cl 1 of the Acknowledgment and Undertaking which must be noted.  These are subclauses (m) and (o)(c) which were as follows:

“(m)That Bryant shall have access to the Properties at the sole risk and liability of Bryant and Bryant hereby releases to the full extent permitted by law, the ANZ and its servants and agents from all claims and demands of every kind and from all liability which may arise in respect of any accident or damage to property or death of or injury to any person of whatsoever nature or kind in or near any of the Properties or the improvements contained on any or all of the Properties and Bryant agrees that the ANZ shall have no responsibility or liability for any loss of or damage to any person or property, livestock and chattels of Bryant whatsoever.  Bryant shall effect a public risk policy of insurance in a minimum sum of $5,000,000.00 in respect of each of the properties which policy shall note the ANZ as an interested party and Bryant shall, when required by the ANZ, produce evidence of such insurance to the Bank.”

“(o)Bryant further agrees, acknowledges and declares that should the ANZ, in its sole and unfettered discretion, determine that Bryant has breached any term or condition of this Acknowledgment and Undertaking then:

(a)...;

(b)...

(c)The ANZ shall, upon the expiration of the Period [the six week period commencing on 2 June 1994 and ending on 14 July 1994] or the determination of this licence, be entitled to deal with any personal belongings, chattels and livestock remaining on any or all of the Properties in accordance with clause 1 (f) hereof. Notwithstanding the provisions of this clause the ANZ may elect in its sole discretion, to utilise the provisions of the Impounding Act 1993 with respect to any livestock left on any of the Properties.”

(It was common ground that at some unidentified time the parties agreed to extend the period referred to, to 9 August 1994.)

On 9 June 1994, Mr Bryant delivered possession of "Blair Hill Station" to the Bank by the Sheriff but Mr Bryant was permitted to remain in occupation pursuant to the Acknowledgment and Undertaking.  In June/July 1994 Mr Bryant arranged through Elders Pastoral for a "complete stock herd dispersal auction" to be held at Glen Innes Saleyards on 13 July 1994.  On 6 July 1994, however, Mr Bryant cancelled the proposed auction.  On 14 July 1994, Mr Bryant did not vacate "Blair Hill Station" and did not remove his livestock and personal belongings, as required by the Acknowledgment and Undertaking.  In fact, he remained in occupation until 9 August 1994.  On that date the New South Wales Police delivered vacant possession of "Blair Hill Station" to the Bank.   After that date, Mr Bryant's personal belongings, plant, equipment and livestock remained on the properties and, in particular, on "Blair Hill Station".  Also on 9 August, the Bank appointed Agricultural Investments Australia Pty Ltd to maintain, manage and care for the livestock remaining on the properties for the purpose only of their sale.

On 11 August 1994, the Bank notified Mr Bryant that any livestock remaining on the properties after 13 August would be sold pursuant to the Acknowledgment and Undertaking.  As at 19 August 1994, Mr Bryant had taken in excess of 340 head of cattle but most remained.  On 19 August 1994 the Bank made arrangements through its agents for the livestock to be sold progressively over a period from late August to on or about 20 September 1994.  Cattle were sold on Tuesday 30 August, Wednesday 31 August, Monday 12 September and Tuesday 20 September.  The net proceeds of sale received by the Bank amounted to $381,667.99.

On 12 September 1994, Mr Bryant launched the present proceeding by filing an application and statement of claim.  At that time none of the five properties had been sold, some of the cattle had been sold and some of the cattle had not been sold.  With the application, Mr Bryant filed a notice of motion seeking an injunction restraining the Bank from dealing with the proceeds of sale of livestock and from selling further livestock.  On 6 October 1994, the Bank filed a notice of motion seeking summary dismissal of the proceeding. 

On 14 October 1994 I gave my first judgment in this matter.  It will speak for itself and I will not attempt to summarise it.  It suffices to say that the proceeding was dismissed in so far as it related to the relief claimed in certain paragraphs of the application, and the statement of claim was struck out with leave to re-plead.  I also ordered that further consideration of the motion, to the extent that it related to the remaining paragraphs in the application, be reserved.  By consent, Mr Bryant's own motion seeking injunctions was dismissed. 

On 18 October 1994 Mr Bryant filed an amended application and an amended statement of claim.

On 24 October 1994, the Bank obtained an injunction restraining Mr Bryant from disrupting auction sales of the properties.  The five properties were sold by the Bank in October and November 1994.

I referred above to the filing of an amended application and an amended statement of claim on 18 October 1994.  The Bank foreshadowed an application for an order dismissing the proceeding or, alternatively, striking out the amended statement of claim.  That application did not need to be pursued because the parties consented to the making of an order on 30 March 1995 that within 21 days from that date, Mr Bryant supply to the Bank a draft of a further amended statement of claim "seeking relief only in respect of post mortgage conduct of the Bank, being relief consistent with my reasons for judgment of 14 October 1994".  Various other orders were also made on 30 March 1995. 

A second further amended application and a second further amended statement of claim were filed on 19 April 1995.  These were the subject of a further motion by the Bank for summary dismissal.  That motion was brought by the notice of motion filed on 6 October 1994 (as the parties treated the Bank’s motion for summary dismissal as referring to the proceedings as constituted by the current application and the current statement of claim), and was the subject of my Reasons for Judgment dated 20 September 1995.  Again those Reasons will speak for themselves.  The result was that I ordered that the proceeding should be dismissed in relation to the claims for relief referred to in pars 3, 4, 5, 6, 7 and 8 of the second further amended application, leaving certain claims for relief on foot.  I noted however, that even some of those heads of relief were unnecessary and some were inappropriately expressed.

I also noted that the substance of what would survive would be a claim for damages arising out of the alleged liability of the Bank to Mr Bryant arising out of the management of the properties, the sale of the properties and the sale of the livestock.  Finally, because so much of the second further amended statement of claim would need to be struck out, what would remain would need to be recast.  I followed the course of ordering that the whole of the statement of claim be struck out and indicated that I would grant Mr Bryant leave to re-plead within a limited time.  There was an application for leave to appeal from that order which was dismissed by a Full Court on 12 April 1996 and Mr Bryant was ordered to pay the Bank's costs.

A third further amended application was filed on 18 October 1996 and a third further amended statement of claim was filed on the same date.  The third further amended application seeks the following relief:

“1.      Damages.

2.        Exemplary damages.

3.A declaration that the management of the properties by the bank's manager was negligent.

4.A declaration that the bank's action in selling the properties and the livestock was in breach of the bank's duty to the applicant.

5.A declaration that the conduct of the third and fourth respondents was negligent and/or in breach of their contract with the applicant.

6.A declaration that the applicant is entitled to an equitable set-off for his damages against any monetary claim brought by the bank.

7.A declaration that the bank holds the proceeds of sale of the properties and/or the livestock on constructive or resulting trust for the applicant.

8.An account as between the applicant as mortgagor and the bank as mortgagee.”

THE PRESENT HEARING

Much of the argument today and yesterday has focused on the third further amended statement of claim which accompanied the third further amended application.  By the third further amended statement of claim, Mr Bryant pleads, relevantly, that on or about 9 June 1994, the Bank entered into possession of the five properties and placed them in the hands of a manager.  It is common ground that for the purpose of the allegation of negligent management shortly to be noted, it is only in respect of the period after 9 August 1994 that that allegation is made against the Bank.

It is pleaded in par 21 that at all material times Mr Bryant was a registered veterinary surgeon and conducted a breeding program amongst his cattle which were genetically selected to develop certain traits in order to increase the value of the herd.  There follow pars 22 to 32.  Because of their importance I will set them out verbatim:

“22.The manager of the properties was negligent in that he did not manage the properties with the due skill and care required or expected of a manager in the circumstances.

PARTICULARS

22.1The properties were, at all material times, undergoing severe drought conditions.

22.2The manager left the cattle on the property to graze rather than be hand fed allowing some to die.

22.3The cattle were a carefully genetically selected herd bred for certain special inherited traits under a breeding programme devised and pursued by the applicant over a period of 25 years.

22.4The manager did not treat the herd as a special stud group genetically selected over 25 years but treated them in the way one would treat ordinary beef cattle bred solely for slaughter.

23.By reason of the terms of the agreement, the bank became entitled under it to sell, and did sell, the applicant's livestock.

24.The said sale was, in the circumstances, negligent and the applicant has thereby suffered loss and damage.

PARTICULARS OF NEGLIGENCE

24.1.1Despite the cattle herd's special value as a breeding herd genetically selected for certain traits over a period of 25 years, the bank sold them as beef cattle for slaughter.

24.1.2The applicant repeats the matters particularised under paragraph 22.

24.1.3The bank sold the herd in a depressed market.

24.1.4The bank sold the applicant's fine wool sheep in a depressed market.

PARTICULARS OF DAMAGE

24.2.1Valuations will be supplied.

24.2.2The applicant repeats the matters particularised under particulars of negligence.

24.2.3The value of the herd as breeding stock genetically selected for certain traits has been irretrievably lost.

25.      In or about late 1994, the bank sold the properties.

26.The bank, as mortgagee in possession, owed the applicant a duty of care to act in good faith and not sacrifice his interest.

27.In breach of the duty pleaded in paragraph 26 the properties were sold for an undervalue and the applicant has thereby suffered loss and damage.

PARTICULARS

27.1At the time of the sales, the bank was in possession of valuations exceeding the price at which it sold.

27.2The bank sold in a depressed market during a severe drought.

27.3The bank was not obliged to sell in a depressed market.

27.4The sale price obtained for the properties was not sufficient to meet the amount claimed as outstanding by the bank under the mortgages.

28-30. *

31.In the premises, the bank's sale of the properties and cattle was negligent and in contumelious disregard for the rights of the applicant.

PARTICULARS

31.1-31.2  *

31.3The bank occupied the properties as mortgagee in possession and owed the applicant concomitant duties as such.

31.4  *

31.5The bank had, at the time of sale, not obtained or sought any money judgment.

31.6The bank sold both the properties and the livestock without regard to the special value both had to the applicant.

31.7The applicant reserves the right further to particularise this allegation after discovery.

32.By reason of the matters pleaded and particularised in paragraph 31, the applicant claims exemplary damages.”(emphasis in original)

[The asterisks indicate that something in an earlier form of the pleading was omitted in the present one.]

The Bank's current defence to the third further amended statement of claim is found in an amended defence which was filed on 29 May 1997.  The Bank also filed a cross-claim on 21 April 1997 seeking a money judgment against Mr Bryant.  The judgment sought is based on the amounts advanced under the five mortgages plus interest less credit for the net proceeds of sale of the five properties and of the livestock.  The amount of the judgment sought is $668,843.32 as at 27 March 1997 and interest up to judgment at the rate of 10 per cent per year, or such rate as might be determined by the Bank from time to time, or an amount of interest in accordance with the Federal Court Rules.

As recently as 18 September 1997, Mr Bryant filed a document entitled "Reply and Amended Defence to Cross-Claim".  This document, relevantly, addresses the respective paragraphs in the Bank's cross-claim and levels against the Bank complaints which are not identical with those made in the third further amended statement of claim.  This has posed a problem on the hearing of the present motions.  The argument yesterday concentrated exclusively on the third further amended statement of claim.  On the basis of these submissions counsel for the Bank submitted that the third further amended application should be dismissed and the Bank should have judgment on its cross-claim.  However, no separate submissions were addressed yesterday to Mr Bryant’s amended defence to the Bank's cross-claim.  I raised this matter and submissions have been made today by both parties, addressing this document.

I am told that the affidavits which have been filed by the Bank in respect of the allegations made in the third further amended statement of claim are voluminous but are not addressed to the somewhat more detailed and expansive, but nonetheless challenged, allegations now made by Mr Bryant in his recently filed defence to the cross-claim.

THE BANK'S SUBMISSIONS RELATING TO THE THIRD FURTHER AMENDED STATEMENT OF CLAIM

The first submission made by the Bank is that the allegations of negligence made against it in the third further amended statement of claim cannot succeed because of subcl 1(f) of the Acknowledgment and Undertaking dated 6 June 1994.  It will be recalled that subcl 1(f), set out earlier, provided that the Bank was to be entitled to remove livestock "without being liable for any loss or damage whatsoever, howsoever occasioned".  It will also be recalled that in a separate sentence that subclause provided that it should be lawful for the Bank to sell the livestock.  The Bank submits that the exclusion of liability applies not only to the physical removal of the livestock but also to the selling of it.  It is put that the removal and the selling are so closely interrelated that a reading of the exclusion clause in the context of the contract as a whole leads to the view that the exclusion of liability related to the selling as well.  On the construction of “exclusion clauses”, counsel for the Bank referred to: Sydney City Council v West (1965) 114 CLR 481; Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500 at 510; Nissho Iwai Australia Ltd v Malaysian International Shipping Corporation (1989) 167 CLR 219 at 227-8; and Glebe Island Terminals Pty Ltd v Continental Seagram Pty Ltd (1993) 40 NSWLR 206 (NSW/CA) at 231-4 (Sheller JA). 

I do not accept the Bank's submission.  It seems to me that it would be taking subcl 1(f) too far to make it do the work desired for it by the Bank.  It was not inevitably the result of removal that the Bank would sell the livestock.  The Bank had another course open to it, namely, that of utilising the provisions of the Impounding Act 1993 (NSW) pursuant to subcl 1(o)(c).

Exactly how the Bank would utilise those provisions is not elaborated upon in the Acknowledgment and Undertaking.  It seems that the particular provisions to which the Acknowledgment and Undertaking was intended to refer are those relating to the impounding of animals by occupiers of private land.  Section 12 of the Act provides:

“An occupier of private land may impound any animal that is trespassing on the land.”

The parties' intention through subcl 1(o)(c) seems to have been that for the purpose of the Act the parties agreed to treat the Bank as the “occupier of private land” and Mr Bryant’s livestock as “trespassing” on that land.  But some of the provisions of the Act may not have accommodated easily the facts of this case.  Section 12 empowers the occupier of private land to impound any animal that is trespassing on the land.  The notion of “impounding” signifies taking possession of something under a power conferred by the Act.  The parties did not agree upon what would amount to a “taking of possession” of Mr Bryant’s cattle by the Bank after 9 August 1994 in the unusual circumstances of the present case.  Again, s 13 of the Act would have required the Bank, after impounding the cattle, to inform Mr Bryant of their whereabouts and then either to have delivered the animals to the nearest convenient public pound or to have kept them on the land for a period of not more than four days, and then, if they had not been “claimed” by Mr Bryant, to have had them delivered to the nearest convenient public pound.  If Mr Bryant claimed the cattle, the Bank would have been entitled (see s 13) to do one of the following:

(a)release or send them to him upon his paying in full the expenses actually incurred by the Bank in providing the cattle with food, water and veterinary care;

(b)if Mr Bryant had declined to pay, to have the cattle delivered to the nearest convenient public pound;

(c)to release or send the cattle to Mr Bryant without his having reimbursed the Bank for its expenditure mentioned.

I do not propose to say more about how the Act would have applied.  What is important for present purposes is that the Acknowledgment and Undertaking expressly allowed delivery to a pound under the Act as an alternative to the Bank's proceeding to sell.  For this reason alone I do not think it can be said that the exclusion provision contained in subcl 1(f) necessarily applied to a selling by the Bank.

However, it seems to me that the context in which the authority to sell was given to the Bank by subcl 1(f) was such as to make it difficult for Mr Bryant to contend that the Bank owed him a duty of care touching the sale.  That context is that the cattle remained on the properties in consequence of a breach by Mr Bryant of his undertaking to deliver up vacant possession.  The Bank had no security over the livestock and their presence on the properties was an obstacle to the Bank's exercising its power of sale in respect of the properties themselves.

Thus the view should be favoured that the Bank was entitled in its own interests to rid the properties of the livestock with a minimum of expense and a minimum of delay.  In fact, as noted earlier, the Bank notified Mr Bryant of its intention on 11 August 1994 and began its selling program soon afterwards.  I do not mean to decide that there could not be a duty of care owed by the Bank to Mr Bryant to be performed by the Bank’s following a special course if a special factual context were pleaded and proved, but that is not this case.

Against the above background, I now proceed to address the third further amended statement of claim.  It would be possible to spend a very considerable amount of time on various paragraphs in the document but I think that I can adequately indicate my views fairly shortly.

Paragraph 22:

This paragraph, which was set out earlier, pleads that the manager of the properties:

"was negligent in that he did not manage the properties with the due skill and care required or expected of a manager in the circumstances.”

In relation to the cattle, the allegation is in respect of only the short period from 14 August 1994 down to the various dates in August and September 1994 when the cattle were sold.  The particulars relate only to the cattle, not to the freehold, and so it is unnecessary to consider par 22 as an allegation of negligence in relation to the management of the freehold.

The particulars in subpars 22.1 and 22.2 relate to an allegation that because of drought conditions the manager should have handfed the cattle rather than allow them to graze, as a result of which some of the cattle died.  There are no particulars given beyond what I have set out earlier.  More importantly, there are no facts pleaded giving rise to the claimed duty of skill and care.  The question arises why a duty requiring handfeeding should be imposed on the Bank in respect of the period from 9 August 1994 down to the times of the progressive sales of the livestock in later August and September.  The livestock remained the property of Mr Bryant.  The Bank had his authority to sell in order that it might be in a position to sell the properties as mortgagee.  In the absence of a pleading of special facts, the Bank was not under a duty to spend money improving the condition of the cattle in order to realise a higher price at sale.  The Bank was surely under no greater obligation than that of a mortgagee and a mortgagee would not be under such a duty in the absence of special circumstances giving rise to it.

I thought that special circumstances might be revealed by the evidence and I invited counsel for the parties to refer me to any relevant evidence, since this might be pertinent to an issue of leave to re-plead.  There are some references to the condition of the cattle in Mr Bryant's affidavit, sworn 17 September 1997, but these are equivocal.  For example, Mr Bryant rejects allegations that his livestock were in "very poor condition" or "extremely poor condition" and asserts that, given the prevailing drought, his livestock could best be described as "store" and "certainly comparable to if not better then [sic] the condition of any livestock in the neighbouring properties in the area".

Mr Bryant asserts in his affidavit that the amount of hay fed to livestock at Blair Hill Station over the three weeks prior to their sale was "simply sufficient for sustenance only and would not in the slightest have improved the condition of the livestock prior to their auctioning".  But in the absence of a pleading of special circumstances (I do not say that they were available to be pleaded) the Bank owed no duty to improve the cattle’s condition.  It is, perhaps, not amiss to note that the Impounding Act 1993 (NSW) in subs 13(2) provides that where an occupier of private land has foisted upon him or her trespassing animals, the occupier must ensure that any animal kept on the land after it is impounded is provided with "adequate" food, water and veterinary care. On the other hand, what seems to underlie Mr Bryant’s thinking, as revealed in his affidavit, is the assumption that the Bank was obliged to improve the condition of the livestock after 9 August 1994 with a view to realising a higher price. It was not.

Mr Bryant also makes a general allegation that there was a paddock on the eastern boundary of Blair Hill Station which may have been neglected.  Again, it is difficult to find in this allegation the degree of specificity which one is entitled to expect in the third further amended statement of claim - the fourth attempt by Mr Bryant to plead his cause of action against the Bank.

Moreover, there is the evidence given by Mr Craig Dawson Thomas in an affidavit sworn 21 August 1997.  He says in par 6 of that affidavit that,

“The cattle that were offered for sale were in strong store condition and in no better or worse condition than most of the stock in the New England area in the winter of 1994.”

Mr Thomas is a licensed auctioneer, stock, station and real estate agent who swore his affidavit in Mr Bryant’s case.

In summary, I am clearly of the view that the Bank was not, on the facts pleaded or revealed by the evidence to which I was referred, under any obligation to improve the condition of the livestock.  I find nothing in the affidavits to which I have been taken which suggests that, if given a further chance, Mr Bryant would be able to plead facts supporting a duty which would be breached by a failure to handfeed, and the pleading in subpars 22.1 and 22.2 is too vague to be allowed to stand as a pleading either of a duty of care or as a breach of it.

I turn now to subpars 22.3 and 22.4 which were set out earlier. These subparagraphs are also expressed far too generally. Subparagraph 22.3 might be intended to suggest that the herd possessed special added value if kept together and sold as an entity rather than broken up. But this is not made explicit.  I do not know what the pleader means in par 22.4 by referring to the "treatment" of cattle on the one hand as a “special stud group genetically selected over 25 years” and on the other hand as “ordinary beef cattle bred solely for slaughter”.  Again, it is important to remember that the period of which we are speaking is the period from 9 August 1994 down to dates in late August and September when the sales were effected. 

Paragraph 23:

It is correctly accepted in par 23 of the third further amended statement of claim that by reason of the terms of the Acknowledgment and Undertaking, the Bank became entitled under it to sell, and did sell, Mr Bryant's livestock. 

Paragraph 24:

It is pleaded in par 24 that the sale itself "was, in the circumstances, negligent" and that in consequence, Mr Bryant "suffered loss and damage."  The particulars of negligence that are given touching the selling are problematical.  In par 24.1.1, it is stated that despite the herd's "special value as a breeding herd genetically selected for certain traits over a period of 25 years", the Bank sold the cattle as beef cattle for slaughter.  To me this conveys an allegation that, acting with due care, the Bank would have sold the herd as a whole rather than “in parcels”. But it is not alleged that sale of the herd as an entity would have realised a higher price and, of course, the question “How much higher?” is not addressed.

Moreover, the evidence shows that selling in parcels is precisely what Mr Bryant himself had intended to do, at least at one stage. Under cover of a letter from his then solicitors Beilby Poulden Costello dated 30 March 1994 to the Bank's solicitors, Everingham Solomons, Mr Bryant forwarded a proposal by Mr R M Carige, licensed auctioneer, stock, station, real estate and business agent, for a progressive sale program over the period April 1994 to December 1994.  It is true that there also is in evidence an advertisement, apparently placed by or on behalf of Mr Bryant for the sale which did not eventuate on 13 July 1994, in which he advertised for sale 1000 head "complete herd dispersal”, but these words do not necessarily convey the idea that the complete herd would be put to auction en bloc. An equally plausible view is that the entire herd would be put up for sale on the one occasion, but in parcels on that occasion.

Again the fundamental problem with par 24 is that there are no facts pleaded giving rise to the duty of care relied upon. I do not think that in the context of the Acknowledgment and Undertaking, the Bank was under a duty to maximise the return from the sale.  The Bank was entitled, in my view, under that agreement to sell as soon as possible in order to be rid of the cattle.  It suffices then to say that in my opinion there is no proper pleading of facts giving rise to the duty relied on by Mr Bryant, and there is no reason to think that Mr Bryant will, if given a further chance, be able to plead such facts.

I turn next to subpar 24.1.2. This states that Mr Bryant repeats the matters particularised under par 22.  I have dealt with par 22 above.  Strictly a negligent management is not a particular of negligent selling but I presume that what is meant is that because of negligent management, what was sold was not worth what it would otherwise have been worth.  However, what I have said in relation to the allegation in par 22 of negligent management is sufficient to dispose of par 24.1.2.

Subparagraphs 24.1.3 and 24.1.4 complain that the Bank sold in a depressed market.  It is clear in my view that the Bank was not under a duty to await an upturn in the market and was entitled under subcl 1(f) to sell without delay if it should so see fit.  In this respect, at least, I think that the Bank was in a position comparable to that of a mortgagee which has become entitled to exercise its power of sale; cf China and South Sea Bank Ltd v Tan Soon Gin [1990] 1 AC 536 (PC); Westpac Banking Corporation Ltd v Kingsland (1991) 26 NSWLR 700 (NSWSC/Cole J).

Paragraph 27

It remains for me to deal with pars 27 and 31.  In par 27 it is complained that the properties were sold for an under value and that this constituted a breach of the Bank's duty of care and duty to act in good faith and not to sacrifice Mr Bryant's interest (pleaded in par 26).  The mere fact that a property was sold for less than what might be objectively regarded as its “value” is not a breach of a duty owed by the mortgagee.  I made this clear in my reasons for judgment dated 20 September 1995 at pages 40 to 41.  The particulars contained in par 27 include in subpars 27.2 and 27.3 a repetition of the allegation of selling in a depressed market. As observed above, the Bank was entitled to sell in the market which prevailed at the time, whether it was depressed or not.

It is not to the point as pleaded in par 27.4, that the sale price obtained was not sufficient to pay the amount claimed as outstanding by the Bank under its mortgages. 

Paragraph 31:

Paragraph 31 of the third further amended statement of claim makes allegations in relation to both the properties and the cattle.  It pleads that the sale was both negligent "and in contumelious disregard for the rights of the applicant".  The words quoted are not a cause of action and cannot survive.  Again, there are no facts pleaded to show a basis upon which there was a duty of care providing a foundation for the allegation of negligence.

It is true that it is particularised that the Bank was a mortgagee, but as mortgagee it was not obliged to await an upturn in the market, and was not obliged to obtain a money judgment first before selling (cf par 31.5).  The power of sale given to a mortgagee is given to the mortgagee for its own benefit and it is entitled either to sell immediately or to delay in selling.  It is true that it is not entitled to sacrifice the interests of the mortgagor.  It is also true that it must act in good faith. But there are no facts pleaded here to show that the Bank sacrificed Mr Bryant’s interests or acted in bad faith.

Consequences for the third further amended application

The result of what I have said to date is that in my view the third further amended statement of claim, in so far as it pleads causes of action against the Bank, cannot survive. The next question to arise is whether the third further amended application should be dismissed or whether Mr Bryant should be granted leave to file a fourth further amended statement of claim. I am of the view, unfortunately from Mr Bryant's perspective, that the time has come when no further amendment should be allowed.  Mr Bryant has had the benefit of the Bank's discovery for some six months and has had four attempts to plead a cause of action against the Bank.  However sympathetic one may feel with Mr Bryant in respect of his position as a grazier and veterinary surgeon who, as I said at the outset, is apparently highly regarded by people who have filed affidavits in the proceeding, his case persists in ignoring the Bank's legal rights. At the risk of an overgeneralisation, his complaint is that the Bank could have done better for him in the way in which it sold his properties and cattle.  Perhaps it could have.  But there was no obligation on it to achieve the best possible result in the interests of the mortgagor.  Again, what is overlooked is that the powers given to a mortgagee are given in its own interest, and that a mortgagee's conduct must be of a totally different order from merely not doing the best by the mortgagor before the mortgagor will be entitled to relief. Nothing that has been pleaded by Mr Bryant to date comes near to acknowledging that position. 

The result will be, subject to what I say shortly, that the application now represented by the third further amended application will be dismissed.

The Bank’s motion for summary judgment on its cross-claim

The next question is what is to happen on the second motion brought by the Bank, that is to say, the motion for judgment on its cross-claim.  I have studied Mr Bryant’s amended defence to the Bank's cross-claim.  Again, it would be possible to spend a great deal of time addressing, paragraph by paragraph, the problems with this pleading.  Many of the allegations made are similar to those made in the third further amended statement of claim, although, as I indicated earlier, they are somewhat more elaborate.

Perhaps a convenient way of expressing the conclusions which I have reached is to say that the earlier judgments which I have given in this proceeding on 14 October 1994 and 30 March 1995 resolve all issues as to the existence of the Bank's power of sale, as to the validity of the mortgages, and as to the binding nature of the agreements dated 18 November 1993 and 6 June 1994.  In relation to the Bank's conduct as to management and sale, the present amended defence to the cross-claim adds nothing to the third further amended statement of claim.

There are a few matters calling for special comment. One is a letter dated 19 August 1994 from Everingham Solomons to Mr Raymond Lumley, barrister at law then appearing for Mr Bryant.  In that letter, the Bank, through its solicitors, made a without prejudice offer. The letter stated that the offer was made without prejudice to the Bank's existing rights and was not a waiver of those rights or an offer to be bound in any way. One cannot possibly get out of that letter an estoppel which is pleaded in par 10 of Mr Bryant’s amended defence to the cross-claim. 

There are several allegations of a contravention of s 51AA of the Trade Practices Act 1974 (Cth) but there are no facts pleaded to support the allegations.

In par 20 there is a reference to a “breach” by the Bank of the “Impounding Act 1898” [sic] and of the “Stock Diseases Act 1923”, but the Bank was not selling under those Acts: it was selling pursuant to subcl 1(f) of the Acknowledgment and Undertaking dated 6 June 1994.

Although what I have said is a very summary way of dealing with Mr Bryant’s amended defence to the cross-claim, I think that it will be sufficiently clear from the above why it cannot survive.  It is true, as counsel for Mr Bryant submits, that the content of the amended defence to the cross-claim does not arise directly on the hearing of the present motions. It does arise indirectly, however, since I would be reluctant to deal with either the motion relating to the third further amended statement of claim or the motion for summary judgment without adverting to it. While the amended defence is not Mr Bryant’s fourth attempt to plead a defence to the cross-claim, it should be treated as if it were, because it covers the same ground as the third further amended statement of claim.  I should note, as implied earlier, that counsel for the Bank objects to having to deal with the amended defence to the cross-claim in view of the recency of it, and, in particular, the fact that it was filed after the affidavits addressing the third further amended statement of claim were filed.

CONCLUSION

The result of all of the foregoing reasons is that on the first motion there will be an order that the third further amended application be dismissed pursuant to O 20 r 2  of the Federal Court Rules and there will be an order that Mr Bryant pay the Bank’s costs of the proceeding. In relation to the second motion, however, there is a question of the amount for which judgment is to be given on the cross-claim.  The Bank has read an affidavit by Mark Andrew Woolnough sworn 28 July 1997 to the effect that as at 28 July 1997, Mr Bryant was indebted in the sum of $689,043.82. A question has been raised as to the method of calculation of interest down to the date of judgment. In order to minimise inconvenience, the Bank has said that it is willing to have interest calculated on any of three bases, that provided for in its mortgages, that provided for in subpar 5(o) (ii) of the short minutes of orders dated 18 November 1993, or that which would be ordered under s 51A of the Federal Court Act 1976 (Cth).

It seems to me that the proceeding should be stood over to a time to meet counsel's convenience when short minutes of order could be handed up incorporating a calculation of interest based on whichever of those rates of interest yields the least amount of money.  It is something on which counsel should be able to agree.  My intention is to grant the Bank judgment on its cross-claim at that time. The interest to be included will be calculated down to the date of judgment and will be reflected in short minutes of orders to be brought in.  There will, of course, also be the usual order for costs in favour of the Bank on the cross-claim.

I stand the matter over to a date to be fixed by arrangement with my Associate for the making of orders and, if necessary, the making of submissions as to the orders to be made.  I will not make an order for the supply of written submissions but if any issues are to be the subject of submissions, written outlines of them should be provided to my Associate in advance of the hearing.

I certify that this and the preceding twenty-two (22) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren

Associate:

Dated:            4 November 1997

Counsel for the Applicant (respondent on the motions):	Mr M S Abdul-Karim
Solicitors for the Applicant:	John McEncroe & Company
Counsel for the First Respondent (applicant on the motions):	Mr R L Montgomery
Solicitors for the First Respondent:	Everingham Solomons
Date of Hearing:	15, 16 October 1997
Date of Judgment:	16 October 1997