Commonwealth Bank of Australia v Merrett
[2001] VSC 379
•3 October 2001
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
PRACTICE COURT
No. 7169 of 2000
| COMMONWEALTH BANK OF AUSTRALIA | |
| Plaintiff | |
| v. | |
| GREGORY MAXWELL MERRETT AND CHERYL KAYE MERRETT | Defendants |
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JUDGE: | ASHLEY, J. | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 3 October 2001 | |
DATE OF JUDGMENT: | 3 October 2001 | |
CASE MAY BE CITED AS: | Commonwealth Bank of Australia v Merrett and Anor | |
MEDIUM NEUTRAL CITATION: | [2001] VSC 379 | |
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Summary judgment - Claim by bank for possession of land and money sum - Appeal from order of Master granting leave to defend - Appeal dismissed.
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| APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr R.D. Shepherd | G.S. Ray |
| For the Defendants | Mr M. Bruce | Dwyer & Co. |
HIS HONOUR:
This is an appeal from an order made by Master Wheeler on 21 August 2001, by which the Master dismissed an application on summons by the plaintiff, the Commonwealth Bank of Australia, for summary judgment against the defendants and, alternatively, for orders that the defendants' defence be struck out. The matter agitated before me on the appeal was the plaintiff's entitlement to summary judgment.
The plaintiff bank by its statement of claim alleges that at material times the defendants, Gregory and Cheryl Merrett, were the registered proprietors of the land described in Certificate of Title Vol.9850 Folios 582 and 583, land situate at Torquay. That is not in controversy.
The plaintiff further alleges that by instrument of mortgage dated 22 January 1997 the defendants mortgaged the land to the plaintiff to secure to it the payment and satisfaction of all moneys and liabilities which it had already lent, or thereafter lent, to South Gippsland Hotel-Motel Pty Ltd, including inter alia all moneys which became owing under or by virtue of any guarantee provided to it by the defendants in respect of financial accommodation or the indebtedness of any other person or corporation, any money expended by the plaintiff, fees, costs and expenses incurred by it in connection with enforcement of the mortgage and any deed or instrument collateral thereto, together with interest on all such money paid.
The plaintiff then alleges that it made loans and advances and provided facilities and accommodation to the borrower by way of a bills discount facility, which upon maturity was transferred to a bill matured account (I call this facility, conveniently "the bills facility") and advances on an overdraft account.
Further according to the statement of claim, the borrower made default in payment on the bills facility and upon the overdraft account. Demands, it is alleged, were made on the borrower in March 2000. Those demands were respectively for sums of around $192,000 and $162,000. The borrower did not comply with the demands. Simultaneously, the plaintiff alleges, it made demand upon the defendants for the payment of similar sums. The defendants did not comply with those demands. Thereafter, according to the statement of claim, demand was made on the defendants by notice in an amount of $364,763.03. But the defendants failed and refused to pay such sum. This recitation leads on to an allegation that, as at 12 April this year, the defendants' indebtedness was in an amount of $308,637.79 together with interest accruing daily. The relief sought by the plaintiff is an order for possession of the land and for a money judgment of $322,777.10. It is unnecessary for me to attempt to reconcile the various figures.
By their defence the defendants admit that they executed an instrument of mortgage. But they say, in short, that they were led to believe before and at the time of its execution that it secured the payment and satisfaction of particular moneys and liabilities that the plaintiff had agreed to lend the borrower, being an overdraft facility in the sum of $50,000 and a bills discount facility in the sum of $163,750. They allege that they knew nothing of their being liable in a money sum by reason of the mortgage or the common provisions attaching thereto. They claim that they knew nothing of the existence of the memorandum of common provisions which the plaintiff claims was incorporated in the mortgage, and upon the terms of which it relies. The circumstances in which, they allege, the full nature and extent of the obligations imposed upon them by the mortgage were not made known to them involve what may shortly be described as discreditable conduct on the part of the plaintiff.
The defendants further assert by their defence that in late October 1998 the plaintiff agreed to lend additional amounts to the borrower, the amount of the additional borrowings being, as I perceive it, somewhat differently described in different documents placed before the court. They allege that the bank indicated that it would not grant the borrower additional facilities without the defendants agreeing to that course, but that, notwithstanding they did not signify agreement, the bank went ahead and granted the borrower such additional facilities. It follows from what they contend was the obligation imposed upon them by the mortgage that, in substance, they contend that it did not secure the additional facility granted to the borrower in or about late October 1998 in the absence of their consent.
The demands made by the plaintiff upon the defendants were evidently predicated on the footing that the defendants had a money liability to the plaintiff and that it was a money liability to the extent of facilities granted pursuant to the late 1998 arrangement. The plaintiff's money claim against the defendants is founded on that assumption. Its claim for possession is founded upon the non-payment of moneys the dimensions of which were determined by the extended facility granted in late 1998.
According to the argument advanced today for the plaintiff, the defendants had admitted entering into a mortgage; they had admitted that certain moneys had been provided to the borrower pursuant to the overdraft and bills facility. They agreed that a demand had been made upon them. They accepted that they had not met the demand. So, according to the plaintiff, it must necessarily succeed in obtaining an order for possession and, as well, judgment for the full amount of the moneys owing by the borrower, and thus themselves.
Counsel for the defendants necessarily conceded that his clients had executed a mortgage. But he argued that the circumstances in which it had been procured, which had served to conceal its reach, made the instrument one that his clients could properly argue should be set aside. In that event the plaintiff would be deprived of a vehicle for obtaining possession of the land. Moreover, no money sum would be, or could be, the subject of judgment against them.
In considering whether the plaintiff should have summary judgment, it is necessary to carefully examine whether there is a real case to be investigated, whether there is a real uncertainty as to a plaintiff's right to judgment. The court should not be distracted from making an order favourable to the plaintiff simply because any number of matters are thrown up by a defendant as a means of creating apparent issues where none, on close analysis, are seen to exist.
In the present case, I think that the defendants should have leave to defend and to pursue their counter-claim. It seems to me that there is a need for close scrutiny of certain factual matters, in part turning upon the course of events preceding the execution of the mortgage, and in part pertaining to the events surrounding the grant of the extended facility in October 1998. The result of such scrutiny might be favourable to the plaintiff in all respects; but on the present state of the pleadings and the material placed before the court supporting and opposing the present application, it might also be the case that the plaintiff would be held to have no money claim against the defendants.
Then, as to the question whether the plaintiff should be entitled to possession, an issue seems to arise, on the defendants' case, whether the mortgage should be set aside and, if so, then on what terms. The terms upon which the mortgage might be set aside cannot, in my opinion, be determined here and now. I do not think it can be said, contrary to the argument advanced for the plaintiff, that the terms of any setting aside of the mortgage would necessarily involve the plaintiff's paying an amount secured by the mortgage, assuming that such amount is itself clear-cut.
Some other matters were debated in the course of argument today. One of them was whether the decision of the High Court in Garcia v. National Australia Bank Ltd[1] had anything to say about the present case. The Master thought that it did. Counsel for the plaintiff submitted today that it did not. Counsel for the defendants submitted to the contrary. I am far from clear that Garcia should be regarded as pertinent, but that is a matter best left to trial, at which stage the evidence will permit the potential relevance of the principles discussed in Garcia to be more closely considered.
[1](1998) 194 C.L.R. 395.
Another issue that was debated today concerned the amounts that were demanded by the bank both from the borrower and the defendants. In the case of the defendants, it was not limited to the amounts which, on their case, the mortgage secured. Whether that made the demands upon them demands not authorised by the mortgage and, if so, what should be the significance of that fact is another matter that may require consideration at trial. I do not regard it as being determinative one way or the other of the application made by the plaintiff today.
Again, counsel for the plaintiff relied, by analogy, on an aspect of the decision of Von Doussa, J. in Rogers v. RESI Statewide Corporation Ltd & Ors. (No.2)[2]. I respectfully doubt whether, on either the plaintiff's case or, more particularly, the defendants' pleading, it would be necessary for the plaintiff to call that aspect in aid. The possible relevance of that case cannot, however, simply be put to one side. As the trial unfolds it might be seen to have relevance in answer to the defendants' case.
[2](1991) 32 F.R. 344 at 352-354.
In the event, as I said earlier, the defendants should have leave to defend. They should be at liberty to pursue their counter-claim. The appeal should be dismissed.
(Discussion ensued.)
HIS HONOUR: Could the parties please, between now and tomorrow morning, put their heads together as to a time-table? If counsel could drop me a memo signed by both of you, I will make the orders accordingly without putting you and your clients to the expense of coming back to court.
COUNSEL:Certainly, Your Honour.
(Discussion ensued as to costs.)
HIS HONOUR: I will formulate the orders precisely tomorrow, but in substance the appeal will be dismissed with costs. Leave will be given to the defendants to defend, and they will be at liberty to pursue their counter-claim.
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