| JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA LOCATION : PERTH CITATION : COMMONWEALTH BANK OF AUSTRALIA -v- SZCZUREK & ANOR [2005] WADC 249 CORAM : REGISTRAR KINGSLEY HEARD : 10 NOVEMBER 2005 DELIVERED : 16 DECEMBER 2005 FILE NO/S : CIV 1463 of 2005 BETWEEN : COMMONWEALTH BANK OF AUSTRALIA (ABN 48 123 123 124) Plaintiff
AND
JERZY EDMUND STANISLAW SZCZUREK
First Defendant
KAYE MARIE CROSS
Second Defendant
Catchwords: Practice - Application for summary judgment
Legislation: Property Law Act (1969) (WA), S 125 (1)
Rules of the Supreme Court (1971), O 14
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Result:
Judgment for plaintiff Representation:
Counsel:
Plaintiff : Mr D K J Skender
First Defendant : Ms K L Guerinoni
Second Defendant : No Appearance
Solicitors:
Plaintiff : Gadens Lawyers
First Defendant : Kott Gunning
Second Defendant : Colin Garber & Associates
Case(s) referred to in judgment(s):
Macquarie Bank v Lin [2005] QSC 221
Case(s) also cited:
Allstate Life Insurance Co v Australia & New Zealand Banking Group Ltd (No 32) (1996) 64 73; 136 ALR 627
Australian Can Co Pty Ltd v Levin & Co Pty Ltd [1947] VLR 332
Bank of Western Australia Ltd v Marsh [2000] WASC 208
Bank of Western Australia Ltd v Ponga, unreported; SCt of WA; Library No 980697; 2 December 1998
Clark v The Union Bank of Australia Limited (1917) 23 CLR 5
Commonwealth v Verwayen (1990) 170 CLR 394
Cordinup Resorts Pty Ltd v Terana Holdings Pty Ltd (1997) 143 FLR 18
David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353
Eng Mee Yong v Letchumanan [1980] AC 331
Equity Access Pty Ltd v Westpac Banking Corporation (1990) ATPR 40-994
Evans Deakin & Co Pty Ltd v Kaiser Engineers & Constructors Inc [1968] Qd R 379
Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87
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Gomba Holdings (UK) Ltd v Minories Finance Ltd (No 2) [1993] Ch 171
Grundy v Ley [1984] 2 NSWLR 467
Industrial Acceptance Corporation Ltd v Tarulli [1974] WAR 125
Moscow Narodny Bank Ltd v Mosbert Finance (Aust) Pty Ltd [1976] WAR 109
State of Western Australia v Rothmans of Pall Mall (Australia) Ltd [2001] WASCA 25
Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514
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1 REGISTRAR KINGSLEY: This is the plaintiff's application for summary judgment against the first-named defendant. The plaintiff has judgment against the second-named defendant.
2 The criteria to be applied in relation to an application pursuant to O 14 of Rules of the Supreme Court is clear. The power to order summary judgment should be exercised with great caution, and should not be exercised unless there is no real question to be tried. After the issues have been explained to the court, there must be a real uncertainty which requires full argument, or full investigation of the facts, as to the plaintiff's right to judgment. Whilst the court will not dispose of factual merits where there is conflict of affidavits, a court is not bound to accept uncritically every statement in an affidavit. The court is entitled to examine the statements in an affidavit against contemporaneous documentation or other statements. 3 The plaintiff is the successor in law of the State Bank of New South Wales which traded as Colonial State Bank. The plaintiff provided two facilities to the defendants namely: A fixed rate home loan in the sum of $100,000 secured over 28 Godwin Avenue, Manning, (the fixed rate loan) and; A rate saver home loan in the sum of $315,000 secured over 28 Godwin Avenue, Manning and Lot 102 The Grove, Margaret River (the rate saver loan). 4 In or about October 2001 the defendants sold Lot 102 The Grove, Margaret River (the Margaret River property) and settlement took place in October 2001. At settlement the plaintiff received $97,964.45 from the defendants. In October 2001 the defendants also sold 28 Godwin Avenue, Manning (the Manning property), and at settlement the plaintiff received no money in discharge of its mortgages. It would appear, through mistake, the plaintiff, whilst producing a discharge of mortgage, did not receive any funds. 5 It would appear there is no dispute that the plaintiff provided the fixed rate loan and the rate saver loan, and that the total advance was $415,000. There is no dispute the total advance was secured by mortgages over the Margaret River property and the Manning property. There is also no dispute that the plaintiff has received the sum of $97,964.45 when the Margaret River property was sold. The plaintiff says that the defendants have received a total of $540,000 in cash in circumstances where the combined sale price of both the Manning
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property and the Margaret River property was $685,000 and that the amount secured by mortgages to the plaintiff was $415,000. 6 The first-named defendant opposes the application for summary judgment and submits there are a number of defences: • The defence of estoppel. • Whether or not money was paid to the first-named defendant by mistake. • Whether there was misleading or deceptive conduct. • Whether the parties entered into an agreement described by the plaintiff as the variation agreement. • What amount the plaintiff is entitled to claim from the first-named defendant. 7 The first-named defendant admits that in October 1998 he and the second-named defendant entered into the fixed rate loan which was secured over the Manning property. The loan amount was $100,000. Sometime later, both defendants decided to use the equity in the Manning property to purchase the Margaret River property. In December 1999, the defendants entered in the rate saver loan. The loan amount was $315,000. 8 The relationship between the defendants broke down in October 2001 and there was a decision by the defendants to sell both the Manning property and the Margaret River property. The first-named defendant deposes that he instructed a settlement agent to pay out all the loans and split the proceeds of the settlement equally between himself and the second-named defendant. 9 The first-named defendant then deposes that in November 2001 he received a letter from Colonial Bank advising that the bank had received $97,964.45 at the settlement of the Margaret River property which repaid the rate saver loan. This confirmed his understanding that the facility had been paid out at settlement. The first-named defendant exhibits at p 11 of his affidavit the settlement statement for the sale of the Margaret River property together with, at p 14, a letter from the Colonial Bank stating that repayment of the home loan with reference No 2267141 was effected on 24 October 2001. The reference No 2267141 refers to the rate saver loan. 10 Thus, the first-named defendant is saying that the Margaret River property, having been sold at $310,000 and that both he and the
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second-named defendant collectively receiving some $200,000, the balance of $97,000 was sufficient to discharge a $315,000 mortgage that had been secured some two years prior. 11 The Manning property was sold in October 2001 and at settlement in November 2001 both the first-named and second-named defendants received $170,567 each. 12 In late 2001, the first-named defendant applied for a further loan with the plaintiff for the purchase of a property in Como. The application for finance was made on basis that he had no other mortgages or loans, and this application for finance was approved by the plaintiff.
Estoppel 13 The first-named defendant raises a defence of estoppel. The first-named defendant says that there has been estoppel by representation which precludes the plaintiff from asserting a right inconsistent with the fact on which the first-named defendant has acted. In this case the first-named defendant submits that he assumed that the mortgages on the Margaret River property and the Manning property had been fully discharged at settlement. Further, the first-named defendant says that, in subsequently granting a further mortgage without reference to the monies from the Margaret River property or the Manning property being outstanding, the plaintiff has played a part in adopting or persisting in the assumption and now should not be allowed to act in a manner inconsistent. 14 The plaintiff contends that in determining whether there has been an estoppel one must consider the reasonableness of the reliance by the first-named defendant in acting upon the assumption. Thus, the plaintiff argues, was the assumption made by the first-named defendant that a $315,000 loan had been repaid upon receipt of $97,964 a reasonable assumption. 15 Macquarie Bank v Lin [2005] QSC 221 at [258] makes the point that an estoppel can be denied upon the basis that the relevant assumption by the party claiming the estoppel was unreasonable. The reasonableness of the representees reliance is an element of an estoppel by representation. In terms of an equitable estoppel (or an over-arching doctrine of estoppel), the reasonableness of the conduct of the party in acting upon the assumption is a circumstance relevant to whether a departure from the assumption would be unconscionable.
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16 Whilst it might have been the assumption of the first-named defendant that, after settlement of the Margaret River property and the Manning property, there was enough money to pay out all loans, in my opinion it was not a reasonable assumption to make even after receipt of Colonial Bank's statement for the period ending 8 November 2001. That statement discloses a nil balance for the fixed rate loan. However, even a cursory examination of the loan history would indicate that the monies paid to Colonial Bank could not fully discharge the monies owing.
17 In June 2001 the plaintiff forwarded a statement for the period ending 30 June 2001 showing a balance owing on the rate saver loan of $297,272.25. A bank statement forwarded to the plaintiff for the period ending 31 December 2001 shows the balance owing on the rate saver loan as $294,538.01. The 30 June 2002 statement shows a balance of $300,497.32. 18 Accordingly, I am of the opinion that the first named defendant could not reasonably consider the payment of $97,964.45 could discharge the securities over the Manning property and the Margaret River property. Therefore the defence of estoppel is not reasonably open to the first named defendant.
Mistake 19 The first-named defendant submits that, if there was in fact a shortfall in the monies to be paid to the plaintiff, this was caused by the mistaken payment of monies by the plaintiff to the defendants. The first-named defendant submits that it is a defence to a claim to recover money paid under a mistake that there has been such an adverse change in position in reliance of the payment, and an honest belief when the first-named defendant learnt of the transfer that he was entitled to receive and retain the monies. The first-named defendantrelies on s 125(1) Property Law Act 1969 (WA). In my opinion there is no arguable defence of mistake. There has been no payment by the plaintiff to the defendant by mistake, whether in law or in fact. The only relevant payment by the plaintiff to the defendant is the monies that were originally secured by the mortgages over the Margaret River property and the Manning property. The only mistake, if there was a mistake, was the release of security. But this does not, in my opinion, fall within the ambit of a defence of mistake.
Misleading and Deceptive Conduct 20 The first-named defendant submits that he has a defence by way of misleading and deceptive conduct. The first-named defendant contends
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that he was misled into thinking he was free of debt by the actions of the plaintiff. These actions refer to the grant of a loan by the plaintiff on the basis that no monies were owing by the plaintiff to the defendant. 21 However, whilst the fixed rate loan summary in November 2001 disclosed that the loan was at zero, the first-named defendant had been receiving loan summaries for the rate saver loan from 30 June 2001 showing that there was a balance of $297,646 and that that sum was increasing over the ensuing months. Thus whilst the first-named defendant might well have considered at 8 November 2001 that the rate saver loan had been discharged, by 31 December 2001 and thereafter, the first-named defendant would have been disabused of that notion. The first-named defendant makes no comment in relation to the loan summaries in relation to the rate saver home loan that were forwarded by the bank to him. Accordingly, I have difficulty accepting that the first-named defendant has been misled into thinking he was free of debt.
Variation Agreement 22 The first-named defendant contends that there was a Variation Agreement suggesting that the plaintiff was willing and prepared to become an unsecured lender of $111,410. The first-named defendant disputes the existence of the agreement. The Variation Agreement came about because the plaintiff, as a condition to releasing its security over the Margaret River property, required the balance of the rate saver loan to be reduced to $111,410. 23 The first-named defendant deposes that he was not aware of any arrangement to reduce the loan to release the mortgage. However, there is evidence that by notices dated 15 October 2001 to both defendants the defendants were given notice of the variation. In any event, par 10.2 of the home loan contract provides the plaintiff can change the terms of the contract at any time without the consent of the first-named defendant, except that they cannot change anything which the loan details say the bank cannot change. The Variation Agreement does not fall within the exception. Accordingly, I see no issue in relation to the variation agreement.
The Amounts Claimed 24 The first-named defendant contends that there is confusion in relation to the amounts claimed by the plaintiff. Whilst the amounts owing under the rate saver loan or the fixed rate loan moved from $153,125 to $362,362 within a short period of time, the plaintiff relies on
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the certificate of amount due and payable (the Dobbs certificate) as the basis for saying there is no argument in relation to what amount is owing by the first-named defendant to the plaintiff. That certificate is conclusive evidence of the amount owing. 25 Whilst I accept that I should be slow to enter judgment for the bank against the first-named defendant, I am unable to conclude that there is a legal remedy available to the first-named defendant. Accordingly, I enter judgment. 26 The loan contract at cl 20.2 provides that the first-named defendant will indemnify the plaintiff for liability, loss or costs in connection with actions, proceedings, claims and demands in connection with the property. The obligation to pay costs in the manner is a personal covenant which continues despite the discharge of the mortgages. Unless there are exceptional circumstances the Court should exercise its discretion in a manner consistent with the contractual provisions. 27 There being no exceptional circumstances, I am of the opinion that the costs to be paid are to be on an indemnity basis. 28 Accordingly, there will be judgment for the plaintiff against the first-named defendant in the sum of $372,911.76 together with interest as pleaded until judgment, together with costs of the action and of the application, including costs reserved to be taxed on an indemnity basis.
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