Catlin v National Australia Bank Ltd - [2004] WASC 135

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: CATLIN & ANOR -v- NATIONAL AUSTRALIA BANK LTD & ANOR [2004] WASC 135

CORAM: MASTER NEWNES

HEARD: 14 MAY 2004

DELIVERED : 18 JUNE 2004

FILE NO/S: CIV 2200 of 2002

BETWEEN: ADRIENNE MARIE CATLIN
ADRIAN CHARLES STEPHEN CATLIN
Plaintiffs
AND
NATIONAL AUSTRALIA BANK LTD
First Defendant
INDIRAN RAJADURAI
Second Defendant

Catchwords:

Practice and procedure - Application to dismiss claim as disclosing no reasonable cause of action - Claim for breach of mortgagee's duty on sale - Plaintiffs litigants in person - Relevant principles - Turns on own facts

Legislation:

Nil

Result:

Action dismissed

Category: B

Representation:

Counsel:

Plaintiffs:     In person
First Defendant             :     Ms P E Cahill
Second Defendant         :     No attendance

Solicitors:

Plaintiffs:     In person
First Defendant             :     Jackson McDonald
Second Defendant         :     Freehills

Case(s) referred to in judgment(s):

21st Century Promotions Australia Pty Ltd v Telstar Corporation Ltd [2000] SASC 353
Baldry v Jackson (1976) 2 NSWLR 415
Brickfield Properties Ltd v Newton [1971] 3 All ER 328
Cabassi v Vila (1940) 64 CLR 130
Catlin & Anor v National Australia Bank & Anor [2003] WASC 245
Catlin & Anor v Registrar of Titles [2003] WASC 94
Coutts & Co v Duntroon Investment Corporation Ltd & Anor [1958] 1 All ER 51
Eshelby v Federated European Bank Ltd [1932] 1 KB 254
Lall v 53‑55 Hall Street Pty Ltd [1978] 1 NSWLR 310
Rajski v Seitec, unreported; NSWSC; Court of Appeal; 16 June 1986
Re Keystone Knitting Mills Trademark [1929] 1 Ch 92
Southern Goldfields Ltd v General Credit Ltd (1991) 4 WAR 138
Water Authority of Western Australia v AIL Holdings Pty Ltd (No 2) (1993) 10 WAR 233
Wigan v Edwards (1973) 47 ALJR 586

Case(s) also cited:

Nil

MASTER NEWNES: This is an application by the first defendant for an order that the action be dismissed and judgment be entered for the first defendant, on the ground that the proposed statement of claim discloses no reasonable cause of action.
The writ of summons in this action was issued on 26 August 2002. In the proceedings, the plaintiffs made a number of claims against the first defendant. On 17 December 2003 the amended statement of claim against the first defendant was struck out and the plaintiffs' claim against the first defendant dismissed, except as to a claim for damages in respect of the sale of the plaintiffs' property by the first defendant as mortgagee. The plaintiffs were given leave to file an amended statement of claim in respect of that claim on or before 30 January 2004.
An amended statement of claim was subsequently filed. The first defendant then applied for the action to be dismissed on the ground that the amended statement of claim disclosed no reasonable cause of action. When that application came on for hearing on 30 April 2004, Mrs Catlin, who appeared on behalf of the plaintiffs, accepted that the amended statement of claim was deficient. The plaintiffs were ordered to file and serve any proposed re‑amended statement of claim on or before 7 May 2004. A minute of proposed re‑amended statement of claim was filed on that date and at the resumed hearing on 13 May 2004 the first defendant renewed its application to have the claim dismissed, on the ground that the minute disclosed no reasonable cause of action.
It is unnecessary for the purposes of the present application to go into the history of the matter in any detail. Suffice it to say that the first defendant held a mortgage over the plaintiffs' residence in Karratha and the plaintiffs defaulted on payments due under the mortgage. On 3 May 2002, on the application of the first defendant as mortgagee, an order for possession was made by this Court. The first defendant took possession in October 2002. In February 2003, a mortgagee's auction of the house was conducted. No bids were received at or above the reserve price of $220,000 and immediately following the auction the house was sold for $220,000 by private treaty.
The plaintiffs say that the house was sold for substantially less than its true value and in breach of the first defendant's duty as mortgagee. The plaintiffs claim as damages the difference between the sum of $220,000 obtained on sale and what they contend was the true value. Although the latter figure is not clearly identified in the minute of amended statement of claim, it appears to be a figure in the order of $300,000.
The minute of statement of claim dated 7 May 2004 pleads, for the first time, the dates of the events upon which the plaintiffs rely as giving rise to the claim. It is clear that all of the relevant events occurred after the writ of summons in this action was issued. As I have said, the writ was issued on 26 August 2002. The first defendant took possession of the property in October 2002 and the sale of the house, upon which any damage suffered by the plaintiffs occurred, did not take place until February 2003. The alleged breaches of the first defendant's duty to the plaintiffs occurred between November 2002 and February 2003.
In my view, it follows that the plaintiffs are unable to prosecute the claim in this action.
The principle that a cause of action must be complete in all respects at the time at which the writ is issued is well established and of long standing: see Re Keystone Knitting Mills Trademark [1929] 1 Ch 92 per Lord Hanworth MR, at 103; Eshelby v Federated European Bank Ltd [1932] 1 KB 254; Cabassi v Vila (1940) 64 CLR 130 per Williams J (with whom Rich ACJ agreed), at 148; Coutts & Co v Duntroon Investment Corporation Ltd & Anor [1958] 1 All ER 51 per Harman J, at 53; Wigan v Edwards (1973) 47 ALJR 586; Baldry v Jackson (1976) 2 NSWLR 415. In Wigan v Edwards (supra) Gibbs J pointed out, however, that the rule was purely one of procedure and can be varied or abolished by statute.
In Water Authority of Western Australia v AIL Holdings Pty Ltd (No 2) (1993) 10 WAR 233, it was held that the rule remains unaffected by the provisions of the Rules of the Supreme Court. It was held that O 20 r 10, which provides that "subject to rules 8(1) and 11, a party may in any pleading plead any matter which has arisen at any time, whether before or since the issue of the writ", does not permit the pleading of a cause of action which arose after the writ was issued, but only matter relevant to an extant cause of action. A similar conclusion has been reached in respect of the equivalent provisions in New South Wales: Baldry v Jackson (supra), and in South Australia: 21st Century Promotions Australia Pty Ltd v Telstar Corporation Ltd [2000] SASC 353.
That conclusion is consistent with O 20 r 2(2), which provides that a statement of claim must not include any claim in respect of a cause of action unless that cause of action is mentioned in the writ or arises from facts which are the same as, or include or form part of, facts giving rise to a cause of action so mentioned. That rule does not permit an amendment that would require proof of any facts additional to those required to be proved to establish the causes of action mentioned in the writ: Brickfield Properties Ltd v Newton [1971] 3 All ER 328 per Sachs LJ (with whom Edmund Davies LJ agreed), at 333, and Cross LJ, at 342.
I might also add that it is doubtful whether in this case the indorsement on the writ is sufficient to include a claim of the nature now sought to be advanced. While that would ordinarily be a matter that could be cured by amendment to the writ, for the reasons I have given it does not seem to me that that is open to the plaintiffs.
I would, in any event, refuse leave to amend the statement of claim in terms of the minute and would dismiss the claim.
In the minute, the plaintiffs rely on essentially three grounds for their claim that the first defendant failed to act bona fide to obtain the best price reasonably obtainable in the circumstances. The plaintiffs say, first, that the first defendant allowed the lawns and gardens to die and did not secure the property to prevent the vandalism that occurred, with the result that the value of the property was substantially diminished before sale; secondly, that the first defendant failed to obtain a "proper" valuation and sold the house without regard to its true value, knowing that its true value was substantially more than $220,000; and thirdly, that the first defendant sold the property after the unsuccessful auction by private treaty to a sales representative employed by the real estate agency which had had conduct of the sale of the property on behalf of the first defendant.
The plaintiffs say, in relation to the first ground, that when the first defendant took possession of the house in October 2002 the lawns and gardens "were in a lush and healthy condition". They allege that the lawns and gardens were a feature of the house and added substantially to its value. The plaintiffs say that when they inspected the house on about 7 January 2003 the lawns and gardens were dead. They immediately advised the first defendants of that and on the plaintiffs' next inspection of the house on about 4 February 2003 all the dead plant material had been removed, leaving the garden devoid of any plants and the lawn dead. By this time, some windows in the house had been broken due to vandalism.
In relation to the second ground, the plaintiffs say that on 2 December 1997 they obtained a valuation of the house from a licensed valuer who valued the house in the sum of $280,000. In early 2002, that valuer told the plaintiffs the house would have increased in value by at least $20,000 since his valuation. They say that, in about August 2002, the proprietor of Ray White Karratha, the real estate agent subsequently engaged by the first defendant, informed them that the value of the house was in the order of $290,000 to $300,000.
According to the plaintiffs, the first defendant provided them with a copy of a valuation report it had obtained and which was dated 12 November 2002. The plaintiffs do not say what the amount of the valuation was, but it was apparently substantially less than the figures they had been given. They discovered that the valuation had been prepared by the same valuer who had previously valued the house for the plaintiffs. The plaintiffs say that prior to the auction they advised the first defendant of the 1997 valuation and what the valuer had said to them in early 2002.
The plaintiffs plead that, based on the valuation of 12 November 2002, the first defendant set a reserve price that was substantially less than the true value of the house and did not have regard to the 1997 valuation and the comment of the valuer in early 2002. The plaintiffs also say that, based on the valuation of 12 November 2002, the first defendant sold the house at a price that was substantially less than its true value.
In relation to the third ground, the plaintiffs say that, immediately after the unsuccessful auction, the property was sold for the reserve price of $220,000 to a person whom the first defendant knew was a sales representative employed by the selling agent, Ray White Karratha. It is alleged that the first defendant knew that the purchaser was employed by the agent as such knowledge is to be imputed to it because Ray White Karratha was its agent. The plaintiffs allege that the employee had access to confidential information, including the reserve price and the valuation of the house. I should mention that they also plead the employee was in breach of the Real Estate Agents' Code of Conduct by failing to declare to the first defendant that she was a real estate representative employed by the agent.
The duty of a mortgagee exercising a power of sale was not in issue on the application. It was accepted that the relevant principles are set out in Southern Goldfields Ltd v General Credit Ltd (1991) 4 WAR 138. It was there held that a mortgagee's obligation upon exercising the power of sale is to endeavour bona fide to obtain the best price reasonably available. The mortgagee may not wilfully or recklessly sacrifice the interests of the mortgagor, but the mortgagee is not answerable simply for negligence in the exercise of the power of sale. A further outlay of money by the mortgagee to increase the surplus available to the mortgagor upon sale is only required where the additional expenditure is "manifestly safe". The mortgagee is not expected to take risks for the benefit of the mortgagor. If the mortgagee has acted bona fide and taken reasonable precautions to obtain a proper price, the mortgagor cannot complain, even if the price obtained was below market value and even if, by waiting or spending more money on the property, a better price could have been obtained.
There is, in my view, no foundation pleaded in the minute for the allegation that the first defendant did not act bona fide in failing to maintain the lawns and gardens and to secure the property to prevent vandalism. The fact that the lawns and gardens died is not, of itself, enough to establish a want of bona fides, nor is the fact that windows were broken in the unoccupied house. As Mrs Catlin commented in the course of argument, plants die very quickly at that time of the year in the Pilbara heat if not adequately watered. In fact, it is not pleaded that the lawns and gardens died from lack of water, as opposed to some other cause, but assuming the former were the case, there is nothing pleaded that is capable of establishing that that occurred as a result of a lack of care on the part of the first defendant, much less a failure by the first defendant to act bona fide in connection with the sale. Even a want of care on the part of the first defendant (if established) would not be sufficient to make it liable in damages to the plaintiffs. The same considerations apply to the allegations about windows being broken due to vandalism.
In my view, there is equally no foundation in the minute for the allegation that the first defendant did not act bona fide in the sale of the house and that it failed to obtain a proper valuation. On the plaintiffs' own case, the first defendant obtained a valuation from a licensed valuer and set the reserve, and sold the house, on the basis of that valuation. I might note that it seems the valuation was obtained before the alleged deterioration of the property. The facts, if proved, that the plaintiffs had obtained a higher valuation from the same valuer some five years earlier and that the plaintiffs had told the first defendant that the valuer had informed them in early 2002 that the house was worth at least $300,000, fall a long way short of establishing that, in proceeding on the basis of the current written valuation it had obtained from the valuer, the first defendant was not acting bona fide.
The other matter relied upon by the plaintiffs was the sale of the house after the unsuccessful auction to a representative of Ray White Karratha, the real estate agent.
I should mention that it appeared in the course of argument that the only basis upon which the plaintiffs allege the first defendant knew the purchaser was an employee of the real estate agent is constructive knowledge arising by the contract of agency between the first defendant and the real estate agent. The plaintiffs expressly plead that the purchaser did not disclose on the contract of sale that she was an employee.
In any event, there is, in my view, no foundation for the claim. The property was sold at the reserve price, having been passed in at auction when the reserve price was not reached. There is no evidence that a better return could have been obtained b all the additional costs and delays inevitably involved in doing so. In the circumstances pleaded, there was, in my view, no obligation on the first defendant to put the property back on the market and it was entitled to accept the best price it could then obtain.
Although the plaintiffs feel aggrieved that the property was sold to a person whom they believe had knowledge of the reserve price and an appreciation of what the plaintiffs say was the real value of the property, the fact is that, as pleaded, they have suffered no loss by reason of the sale. The purchaser, regardless of the fact that they may have had that knowledge, paid more than any other potential purchaser at the time had demonstrated a willingness to pay. There is nothing to suggest that the purchaser or anyone else would have been prepared to pay a higher price.
In my view, none of the grounds relied upon, either individually or cumulatively, make out an arguable case that the first defendant was in breach of its duty to the plaintiffs.
The current minute of amended statement of claim is the third attempt the plaintiffs have made to formulate a claim against the first defendant in respect of the sale of the house. The claim was first pleaded in an amended statement of claim of 4 August 2003. That claim was struck out as disclosing no reasonable cause of action on 17 December 2003: Catlin & Anor v National Australia Bank & Anor [2003] WASC 245. The plaintiffs then served a minute of amended statement of claim on 30 January 2004 and, in the face of opposition to that minute by the first defendant, filed a further minute of amended statement of claim on 7 May 2004. The plaintiffs had earlier applied to extend a caveat they had lodged on the title to the property. That application was dismissed on 6 May 2003: see Catlin & Anor v Registrar of Titles [2003] WASC 94. In each instance, the plaintiffs have relied, in substance, upon the grounds pleaded in this minute.
The plaintiffs are unrepresented and due allowance must be made for that. A court will be slow to dismiss a claim by reason of a defective pleading prepared by an unrepresented litigant where there is reason to believe that the pleading is capable of being put in order and that once it is put in order it is capable of disclosing an arguable cause of action. As Mahoney JA said in Rajski v Seitec, unreported; NSWSC; Court of Appeal; 16 June 1986 at 22, "the court will, I think, be careful to examine what is put to it by a party in person to ensure that he has not, because of the lack of legal skill, failed to claim rights or to put forward arguments which otherwise he might have done." The Court of Appeal of New South Wales observed in Lall v 53‑55 Hall Street Pty Ltd [1978] 1 NSWLR 310, at 314, that "courts always have been alert to the possibility that under irrelevancy there may be merit". But equally, as the Court went on to note in that case, the point can be reached where the pursuit of the rights of a litigant in person can become an instrument of injustice to his opponent. They also stressed the public interest in the finality of litigation.
In this case the point is fast approaching, if it has not been reached, where, even bearing in mind the disadvantages the plaintiffs face in acting in person, any further indulgence to allow the plaintiffs to attempt to plead an arguable case would itself work an injustice to the first defendant. There must come an end to it. Even more significantly, however, there is, in my view, no reason to believe that further indulgences for that purpose would be of any avail. Nothing has been advanced which suggests that the plaintiffs have an arguable case. In those circumstances, no further indulgence would be justified.
I would therefore refuse leave to amend in terms of the minute and would dismiss the action.