Commonwealth Bank of Australia v Fanning

[2021] VCC 924

IN THE COUNTY COURT OF VICTORIA

AT MELBOURNE

COMMERCIAL DIVISION

Revised
Not Restricted
Suitable for Publication

BANKING AND FINANCE LIST

Case No. CI-21-00076

COMMONWEALTH BANK OF AUSTRALIA (ABN 48 123 123 124)	Plaintiff / Defendant by counterclaim
v
PADRAIG JOSEPH FANNING	Defendant / Plaintiff by counterclaim

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JUDGE:	HIS HONOUR JUDGE COSGRAVE
WHERE HELD:	Melbourne
DATE OF HEARING:	22 June 2021
DATE OF RULING:	13 July 2021
CASE MAY BE CITED AS:	Commonwealth Bank of Australia v Fanning
MEDIUM NEUTRAL CITATION:	[2021] VCC 924

RULING
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Subject:SUMMARY JUDGMENT 

Catchwords:              Summary judgment – Loan agreement – Promissory note – Mortgage

Legislation Cited:      Civil Procedure Act 2010 (Vic)

Cases Cited:            Collis v Bank of Queensland Limited 2021 VSCA 17.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	No appearances	Gadens
For the Defendant	Self-represented

HIS HONOUR:

Introduction

1This application concerned a summons issued by the plaintiff (“the CBA”) on 20 May 2021 seeking summary judgment against the defendant (“Fanning”) pursuant to sections 61 and 63 of the Civil Procedure Act 2010 (Vic) both with respect to the CBA’s claim and the counterclaim by Fanning. As part of the application, the CBA sought:

(a)   possession of all that piece of land being Lot 91 on Plan of Subdivision 214421X and being the land more particularly described in Certificate of Title Volume 09965 Folio 853, being the land situated at and known as 6 Hopper Court, Mill Park in the State of Victoria (“the property”);

(b)   payment by Fanning of $546,736.91 together with interest on that amount from 13 May 2021 to the date of payment; and

(c)   judgment against Fanning on his counterclaim.

2At the hearing of the plaintiff’s application Mark Andrews (“Andrews”), sought to appear as a McKenzie friend for Fanning. In the general exercise of my discretion, I allowed Andrews to address the court on Fanning’s behalf. I note in passing that Fanning acknowledged that he paid Andrews for his assistance in fighting the bank. Although he sought to characterise the payment as a donation, Fanning provided money or some other valuable consideration to Andrews for his services. It is unfortunate that people in a difficult position such as Fanning are given false hope by the likes of individuals such as Andrews. Whatever Fanning paid Andrews, it was not money well spent.

CBA’s claim

3The CBA’s claim was uncomplicated.  The essential elements, which were proved by CBA’s affidavit evidence, were as follows.  It alleged that:

(a)   pursuant to a written loan agreement made around 16 January 2018, the CBA agreed to provide, and Fanning agreed to accept, financial accommodation.  The loan amount was $520,000;

(b)   in consideration of the loan, Fanning granted the CBA a registered mortgage over the property.  Fanning was the registered proprietor of the property;

(c)   by 31 August 2020, Fanning had defaulted on the terms of the financial accommodation and mortgage by failing to make monthly payments when due;

(d)   the CBA, by written notice dated 1 September 2020, demanded the repayment by 16 October 2020 of $28,021.36 (being arrears of $27,584.11 and enforcement expenses of $437.25); and

(e)   Fanning did not remedy the default and pay the amount outstanding by the due date or at all.

4At the hearing, pursuant to powers granted by its loan and secured documentation, the CBA produced a certificate signed by Steven Edwards on 21 June 2021 verifying that the total amount owed by the defendant was $552,772.99.

Fanning’s defence

5Fanning filed a defence and counterclaim in which he made a number of admissions, mainly, that:

(a)   he signed a document entitled ‘Bankwest Home Loan Contract’;

(b)   a mortgage was registered over the property;

(c)   he received the notice of demand sent by the CBA’s lawyers; and

(d)   he did not make any payment to the CBA after receiving that demand.

6In addition, Fanning admitted at the hearing that he signed the mortgage which the CBA registered over the property.

7Notwithstanding these admissions, Fanning denied that he had any liability to the CBA and that the CBA had any entitlement to judgment against him.  In essence, Fanning’s position was that:

·        the loan agreement did not constitute a binding contract because the CBA and he had signed on different pages of the alleged loan agreement and the signatures were not witnessed;

·        the mortgage was not enforceable because there was no debt secured by it;

·        the loan was not advanced to him;

·        he was not in default of the loan agreement or mortgage and was not indebted to CBA for any amount;

·        although he denied the validity of the agreement and the mortgage, he had paid the debt owing to CBA by giving it a promissory note; and

·        CBA acted unconscionably and in breach of the Banking Code of Practice by not responding to demands Fanning made for further and better particulars about the loan and by commencing these proceedings before replying to correspondence from Fanning.

Consideration

8In my view, the various issues raised by way of defence and counterclaim lack legal substance and are not likely to have a real, as opposed to a fanciful, chance of success.  I address each of the points raised by Fanning in turn.

Loan agreement

9There is no legal requirement that for an agreement to be valid and effective, the parties’ signatures must appear on the same page or be witnessed. In the present case, CBA and Fanning entered a written agreement and CBA advanced loan monies to Fanning or at his direction. There was a binding agreement between them.

Mortgage

10In my view, the mortgage secures the amounts which were advanced under the loan agreement. It is simply not tenable to contend that there is no debt secured by the mortgage.

The loan was not advanced

11It is clear from the material that loan funds were advanced as directed by Fanning. The bank statements exhibited to the affidavit of Kellie Ward, a CBA employee, shows where the funds were directed: $262.73 was paid to the bank for loan fees; $112,985.18 was paid as a loan dispersal; $406,357.09 was paid as instructed to PEXA presumably to repay an existing mortgage; $395.00 was paid to the bank for the loan package.

12The bank’s statements also show monthly payments which appear to be made in discharge of Fanning’s obligations under the CBA loan.

The promissory note

13Fanning argued that he was not in default nor indebted to CBA and, in any case, had tendered payment by a promissory note.

14The promissory note relied upon is an unusual document. In using this document, Fanning appears to have taken the advice and assistance rendered by Andrews.

15The promissory note partially incorporates a Bankwest bank statement on Fanning’s account. Fanning relied upon the fact of the same “Bankwest” appearing on the top left corner of the document together with the bank’s insignia. The promissory note contained various typed ‘Notes’ numbered 1-12 plus a range of other typed clauses that purportedly bound the recipient of the note. The promissory note claimed to have a value of $650,000.00 and, hence, was sufficient to discharge the debt owed to the CBA.

16Fanning argued that the notice of demand from the CBA constituted a refusal by the bank to accept the promissory note. This was said to be a breach of contract between CBA and Fanning because the parties had agreed to deal in legal currency – this included promissory notes issued in Australian dollars. By breaking the agreement and rejecting the promissory not as valid payment, Fanning said that the CBA created a situation in which he became entitled to a payment or damages equal to four times the disputed amount – that is, 4 x $650,000.00 = $2.6 million.

17In my opinion, the alleged promissory note was valueless and ineffective. Even if the note were effective and did have value, the CBA informed Fanning more than once that it did not accept the so called promissory note. It was under no obligation to do so. The document was a piece of paper devoid of the legal significance which Fanning sought to give it. Of itself, it had no effect upon the underlying obligations between the parties. Like the alleged promissory note referred to in Collis v Bank of Queensland Limited,[1] Fanning could not explain precisely how the alleged promissory note discharged the underlying obligation to the bank in the absence of the CBA’s acceptance of the promissory note.

[1]             2021 VSCA 17.

Unconscionable behaviour

18A plaintiff in litigation does not have any obligation either to provide further and better particulars before issuing proceedings against a party or to give advance notice that a proceeding will be initiated. The fact that Gadens did not respond to Fanning’s correspondence in the way he sought does not invalidate the proceeding or the actions taken by the CBA after issuing the proceeding.

Conclusion

19In my judgment neither Fanning’s defence nor his counterclaim has a real prospect of success. Accordingly, I make the following orders:

(a)there be judgment for the plaintiff in the sum of $552,772.99 inclusive of principal and interest;

(b)judgment for the plaintiff for possession of all that piece of land being Lot 91 on Plan of Subdivision 214421X and being the land more particularly described in certificate of title volume 09965 folio 853 and being the land situated at and known as 6 Hopper Court, Mill Park in the State of Victoria;

(c)judgment for the plaintiff on the counterclaim and the counterclaim be dismissed; and

(d)the defendant pay the plaintiff’s costs of this proceeding including the costs of and incidental to the application, such costs to be taxed on a standard basis in default of agreement.