Commonwealth Bank v Muirhead - [1995] QSC 105

IN THE SUPREME COURT

OF QUEENSLAND

BRISBANE No. 1452 of 1994

[Commonwealth Bank v. Muirhead]

BETWEEN:
  COMMONWEALTH BANK OF AUSTRALIA
  ACN 123 123 124
  Plaintiff

AND:
  GEORGE ARTHUR ROBERT MUIRHEAD
  AND STEPHANIE SUSAN MUIRHEAD
  Defendants

REASONS FOR JUDGMENT - THOMAS J.

Delivered 5 June 1995

CATCHWORDS: BILLS OF EXCHANGE - bill discount facility - whether signature of A "for and on behalf of A and B" satisfies s.97(1) of Bills of Exchange Act - whether authority for signature "of either of us . . to draw . . bills" sufficient - whether notice of dishonour necessary under s.54 - loan arrangements entitling bank to debit account upon non-payment of bill.

PRACTICE - summary judgment - whether triable issue.

Counsel:P.D. McMurdo QC for the plaintiff
R.W.R. Parker QC for the defendants

Solicitors:Gadens Ridgeway for the plaintiff
Walsh Halligan Douglas for the defendants

Hearing Date: 25 May 1995

IN THE SUPREME COURT

OF QUEENSLAND

BRISBANE No. 1452 of 1994

[Commonwealth Bank v. Muirhead]

BETWEEN:
  COMMONWEALTH BANK OF AUSTRALIA
  ACN 123 123 124
  Plaintiff
AND:
  GEORGE ARTHUR ROBERT MUIRHEAD
  AND STEPHANIE SUSAN MUIRHEAD
  Defendants

REASONS FOR JUDGMENT - THOMAS J.

Delivered the 5th day of June 1995

This is an application for summary judgment in which the Bank claims $1,722,984.49 for money lent. The claim is for the balance due after crediting proceeds of a receiver's sale of the defendants' properties.
           The defendants have filed affidavits with a view to showing that there are questions in dispute which ought to be tried. Their counsel, Mr Parker QC, relied on three points which he submitted demonstrate this. Two of them are directed at the alleged inadequacy of proof of liability for that part of the loan which is said to have been advanced by means of a bill discount facility. The other point is that the sale by the receiver of property securing the defendants' loan was at undervalue and it is asserted that rights are thereby raised in the defendants to resist the present claim.
           The material, both from the plaintiff and the defendants, shows that in June 1990 the Bank advanced money to the defendants, made payments at their request and provided credit totalling $4.025 million. This was granted, pursuant to the defendants' application, in the following way:

(a)       fixed rate bill discount facility gross amount

3,000,000

(b)       bill discount facility limited

100,000

(c)       fully drawn loan

675,000

(d)       overdraft limit

250,000

TOTAL:

$4,025,000

As already observed, the main focus of submissions on behalf of the defendants relates to the validity of the bill discount facility. The parties also bound themselves, with respect to these advances, to the terms of certain bills of mortgage (which enabled a receiver to be appointed upon default), and an authority respecting the joint account of the defendants with the Bank.
The advances pursuant to the bill facilities are established, inter alia, by exhibits 1 and 2 to the affidavit of Ms Crowther. The Bank's letter of 15 June 1990 confirms that

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [1995] QSC 105
Decision Date: 5 June 1995

CaseChat Overview and Summary

The Commonwealth Bank of Australia filed an application for summary judgment against George Arthur Robert Muirhead and Stephanie Susan Muirhead, seeking repayment of a debt amounting to $1,722,984.49, following the sale of the defendants' property by a receiver. The defendants contested the claim, arguing that there were triable issues that should be decided in a trial. The central issue before the court was whether the bank could rely on the bill discount facility to claim the outstanding debt from the defendants. Additionally, the defendants claimed that the sale of their property by the receiver was at an undervalue, potentially entitling them to resist the bank's claim.

The court examined the loan agreement, which included a fixed rate bill discount facility, a fully drawn loan, and an overdraft limit, totaling $4,025,000. The bank had provided the Muirheads with credit through two bill discount facilities, which were used to pay off existing debts. The court considered the arguments that Mr. Muirhead was not bound by the bills signed only by Mrs. Muirhead, and that no notice of dishonour was provided under the Bills of Exchange Act. The court rejected these arguments, finding that Mrs. Muirhead had the authority to sign the bills on behalf of both defendants and that notice of dishonour was unnecessary as the default triggered the bank's right to debit the account.

The court concluded that the defendants had defaulted on their obligations, making the loan repayable. It further held that the sale by the receiver was not an issue since there was no evidence of the bank's knowledge or acquiescence in the undervaluation. The court found that the bank was entitled to rely on the statements of its officers as prima facie evidence of the amount owing. Ultimately, the court granted judgment in favour of the Commonwealth Bank of Australia for the amount claimed, with costs to be taxed.

Orders