Edwards v Commonwealth Bank of Australia Ltd

[2008] QSC 253

SUPREME COURT OF QUEENSLAND

CIVIL JURISDICTION

FRYBERG J

2008 QSC 253

No 9110 of 2007

DARRIN WILLIAM EDWARDS	Plaintiff
and
COMMONWEALTH BANK OF AUSTRALIA LTD	Defendant
BRISBANE ..DATE 09/10/2008

ORDER
HIS HONOUR: This is an application for summary judgment by

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the defendant against the plaintiff. The plaintiff, who is a
respondent, of course, to the application, opposes the third
party having any right to take part in the application because
the third party has not given notice of intention to defend

nor filed a notice of defence despite the effluxion of far	10
more time than is allowed for those steps to have been taken.
It is fairly apparent that the third party has no intention,
at least unless something changes, of complying with the rules
of the Court. No material has been put before me to justify	20
why the third party should not have complied with the rules of the Court.
The plaintiff's objection, however, is that because the third
party has not come on the record as against it, in any way,	30
even on the third party proceedings, it is not a person who
ought to be allowed to intervene. The third party submits
that I ought to hear its arguments now because there is the
possibility if the application is unsuccessful that further
down the track in the course of the plaintiff's application	40
for leave to administer interrogatories to it, it will raise the question of the plaintiff's prospects of success as against the defendant as a discretionary ground for refusing leave to the plaintiff to administer the interrogatories.
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It seems to me that that is very speculative. In my judgment, because that is so speculative, because the third party is in breach of the rules, because the third party has not shown any desire to defend the plaintiff's claim against the defendant 1-2 ORDER 60

present application.	10
I will, therefore, not hear from the third party on it.
...
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HIS HONOUR: This is an application for summary judgment by
the defendant, the Commonwealth Bank of Australia. The
plaintiff is the assignee of all of the rights of Finance
Express Queensland Proprietary Limited, a company which
carries on money lending in the short term high risk loan	30
shark market.
That company has assigned all its relevant rights, such as they are, to the plaintiff and although at one point there were issues arising out of that assignment none is now before	40
me, with the result that the application for summary judgment can proceed on the same basis as if the rights being considered were those of that company.
The plaintiff alleges that on the 18th of May 2006, at the	50
advanced some money by telegraphic transfer via the ANZ

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and because I have been told by counsel for the third party
that there is very little that, in any event, his argument
will add to that of the defendant, it seems to me, unnecessary
and, indeed, undesirable to involve the third party in the

request of a man who it's now conceded was a fraud, it loose expression and, it seems to me, necessary to look more 1-3 ORDER 60

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precisely at what had happened.

What happened was that the company, Finance Express, entered
into a loan agreement with the man Daewood, pursuant to which

it agreed to lend him an amount of $163,990. By clause 2.1 of	10
the agreement the money was to be lent or loaned, as the
agreement less felicitously put it, on the date set out in
item 1 of the schedule. There was no date set out in item 1
of the schedule. That, it seems, is not of any consequence
now.	20
The money was to be disbursed to various people and in various ways and the details of that disbursement were controlled by a document entitled, "Disbursement Authority" which, the bank
submitted was one of the loan documents. It took the form of	30
a request and direction from the borrower to the lender to disburse the advance:

(1) as an establishment fee payable to the lender itself

in its own interest of $16,600; 40

(2) to the lender itself as two months' prepaid interest

of $21,390;

(3) to a company called, "Melbourne Corporate Services" 50

of $40,000; the purpose of that is irrelevant for

present purposes; and, finally

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(4) to the borrower in the amount of $86,000.

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The authority continued, "If the funds are to be by way of
telegraphic transfer, please provide full bank details below",
a sentence which was followed by the name of the account,

Daewood Developments, the bank, the CBA, and the BSB and

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account number of the account to which the TT was to go.

...

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HIS HONOUR: The present proceedings are concerned with that

$86,000, although given the nature of the proceedings, one
suspects that there is more at stake between the parties than
just this particular $86,000.

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The events which happened were that following that agreement

and in purported performance of its obligations under the

agreement, Finance Express instructed the Australian and New

Zealand bank which is presently the third party in these

proceedings, to remit the money in accordance with the

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particulars to which I've just referred. It did that using a

document which appears at page 40 to the exhibits to the

affidavit of Mr Edwards in which it instructed the ANZ bank

that the beneficiary of the payment was to be Daewood

Developments and instructed it as to the account number and

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bank to which the money was to be remitted.
09102008 D.1 T(2)10-11/SAC(BNE) M/T BRIS5 (Fryberg J) 1-5 ORDER 60

The statement of claim alleges and I think it is accepted for	1
the purposes of these proceedings, that on the 18th of May 2006 the remittance was made. It does that in the paragraph to which I have already referred and the evidence shows that the ANZ bank did remit the money by telegraphic transfer on

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that day. I use the term "the money" loosely as a matter of
convenience. That is how it has been used by the parties and
it is convenient to do that because continued reference to

complex choses in action does not advance the present debate.

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When the money was received by the defendant it did not do as the finance company had instructed the ANZ bank to procure to be done, that is to say, it did not pay the money into an
account named Daywood Developments and bearing the number

given. It paid it into an account bearing the number given

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but with a different account name. It has not revealed the name of the account, citing alleged privacy reasons and has not, in the material before me at least, revealed who withdrew

the money soon after it was deposited into that account.

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The plaintiff claims that the defendant knew of the interest of Finance Express (and I will use the term "interest" loosely for the moment) and that it owed Finance Express a duty of care to adopt prudent procedures, to take care in transferring money, to act within the ambit of the limited authority

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provided by the telegraphic transfer and otherwise to take all
reasonable and necessary steps - it says types in the
statement of claim but I presume it means steps - to protect
and preserve the money of the company entrusted to it.
09102008 D.1 T(2)10-11/SAC(BNE) M/T BRIS5 (Fryberg J) 1-6 ORDER 60

Today's argument has focused largely on the question of	1
whether the money was indeed the money of the company at the time that it was paid by the bank into an account which did not have the name directed by the plaintiff.

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There can, I think, be no doubt that Finance Express's obligation under the loan contract was to have the money paid into an account bearing the name and number given by the man Daewood. It attempted to do that. It did not succeed in doing it. The money went into the numbered account but it had

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a different name.

There can, I think, be little doubt that had the money got into an account with the correct name and the correct number it would have become the property of Mr Daewood. It seems to

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me at least arguable, that until that happened the money did
not become his property, with the consequence that it must
have been the property of Finance Express. In saying that, I
am, of course, again using the shorthand. I do not mean to

fall into the error of supposing that money in the bank is

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other than the bank's property but I am summarising the effect
of complex choses in action.

It is, I think, arguable that Finance Express's obligation was to get the money into the nominated account and until it did

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so it is arguable it had not performed its obligation under
the loan contract and therefore, the loan had not been made.
There is no evidence that Daewood ever actually got the money.
Indeed, the suggestion is rather to the contrary.
09102008 D.1 T(2)10-11/SAC(BNE) M/T BRIS5 (Fryberg J) 1-7 ORDER 60

I do not think that this is a case where the only view open is	1
that the rights which Finance Express had were converted into simply a debt owed to it by Daewood. That is the argument advanced centrally on behalf of the defendant. It is submitted that in a fundamental way Finance Express did not

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have the sort of rights which were needed in order, even
arguably, to support its claim. In particular, counsel
referred me to the decision of the House of Lords in
Westdeutsche Landesbank Girozentrale v. Islington London

Borough Council and to dicta of Lord Goff in that case as well

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to other passages.

I confess that I do not find that case particularly helpful. apart from one passage in the statement of claim in the prayer

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for relief which was not supported by counsel in argument.

In my judgment, it is arguable that the plaintiff has a claim against the bank. I think that it may be the case that is to say that Finance Express retained an interest in the money

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sufficient to support a claim in negligence against the bank.

One might think that there are a number of obstacles in the plaintiff's way in achieving success in these proceedings but it does not seem to me that this is a matter so clear that I

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ought to dispose of the proceedings summarily. I hope I do
not do the defendant's arguments an injustice by not dealing
with the points of law argued forcefully by Mr Kelly in
greater length but it seems to me that on the balance of it
09102008 D.1 T(2)10-11/SAC(BNE) M/T BRIS5 (Fryberg J) 1-8 ORDER 60

the matter should go to trial and should be ventilated with	1
proper evidence. It may well be that when it gets to trial the pleadings will take on some other causes of action and other defences added to what is now in those pleadings but that is not a matter of concern today.

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For those reasons, the summary judgment application is dismissed.

...

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HIS HONOUR: I order that paras (b) and (c) of the prayer for relief in the statement of claim be struck out.

...

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HIS HONOUR: The costs of the application are best dealt with by making them costs in the cause, that is to say they should follow the event for each party. The merits of the ultimate

claim should determine the matter in part because I sense that

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this is a case with some sense of adventure to it and which
may well end up if it goes ahead as a test case but which may

otherwise not. Costs to be costs in the cause.

...

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HIS HONOUR: The directions I propose to make are:

1)    Order that the third party forthwith file a notice of intention to defend.

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09102008 D.1 T(2)13/PAF(BNE) M/T BRIS05 (Fryberg J)

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2)    Extend time for the third party to file and serve a defence

(a) if the plaintiff files and serves an amended

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statement of claim against the defendant on or
before the 6th of November 2008, to a date to be

fixed;

(b) otherwise to the 13th of November 2008.

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3) Liberty to apply.

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