George Notaras and Anna Notaras v St George Bank Limited ABN 92 055 513 070, Dibeek Holdings Pty Limited ACN 003 580 738, Leda Holdings Pty Limited ACN 001 404 557

[2005] ACTCA 23

GEORGE NOTARAS and ANNA NOTARAS v ST GEORGE BANK LIMITED ABN 92 055 513 070, DIBEEK HOLDINGS PTY LIMITED ACN 003 580 738, LEDA HOLDINGS PTY LIMITED ACN 001 404 557 [2005] ACTCA 23 (13 May 2005)

EX TEMPORE JUDGMENT

No. ACTCA 5 - 2005
No. SC 523 of 1997

Judge:           Crispin P
Court of Appeal of the Australian Capital Territory
Date:            13 May 2005

IN THE SUPREME COURT OF THE       )          No. ACTCA 5 - 2005
  )          No. SC 523 of 1997
AUSTRALIAN CAPITAL TERRITORY    )
  )

COURT OF APPEAL  )

ON APPEAL FROM A JUDGE OF THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

BETWEEN:GEORGE NOTARAS

First appellant

ANNA NOTARAS

Second appellant

AND:ST GEORGE BANK LIMITED

ABN 92 055 513 070

First respondent

DIBEEK HOLDINGS PTY LIMITED

ACN 003 580 738

Second respondent

LEDA HOLDINGS PTY LIMITED

ACN 001 404 557

Third respondent

ORDER

Judge:  Crispin P
Date:  13 May 2005
Place:  Canberra

THE COURT ORDERS THAT:

1. the application be dismissed;

2. the applicants to pay the costs of all respondents;

3. grant liberty to all respondents to make any further application in relation to a special costs order. 

IN THE SUPREME COURT OF THE       )          No. ACTCA 5 - 2005
  )          No. SC 523 of 1997
AUSTRALIAN CAPITAL TERRITORY    )
  )

COURT OF APPEAL  )

ON APPEAL FROM A JUDGE OF THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

BETWEEN:GEORGE NOTARAS

First appellant

ANNA NOTARAS

Second appellant

AND:ST GEORGE BANK LIMITED

ABN 92 055 513 070

First respondent

DIBEEK HOLDINGS PTY LIMITED

ACN 003 580 738

Second respondent

LEDA HOLDINGS PTY LIMITED

ACN 001 404 557

Third respondent

Judge:  Crispin P
Date:  13 May 2005
Place:  Canberra

REASONS FOR JUDGMENT

CRISPIN P:

1. This is an application for leave to appeal from a decision of Gray J who, on 2 February 2005, dismissed a motion by the first and second plaintiffs seeking to further amend their statement of claim, to add Gahahan Pty Ltd as a party to the proceedings.

1. It is, I think, unnecessary to set out the facts in any detail because they were adequately outlined in the reasons for judgment which his Honour gave in dismissing the proceedings.  It should, however, be observed that Gahahan was a company owned and controlled by the first and second plaintiffs, and was the owner of the Crown lease of the Tuggeranong Markets.  It mortgaged its interest in that property on 8 January 1990 to Civic Advance Bank Limited which was a predecessor to the first respondent.  The mortgage secured advances by Civic Advance Bank Limited to Gahahan from time to time and the first and second plaintiffs guaranteed the payment to the Civic Advance Bank Ltd of the moneys owed to it.  Gahahan duly defaulted in its obligations to make repayments of the loan, and by 1996 was indebted to that bank for an amount of approximately $7m.  The bank proceeded to exercise its power of sale.

1. On 8 April 1997, the second respondent, which was an assignee of the bank's rights under the mortgage, served a statutory demand on Gahahan as the assignee of the debt, claiming an amount due under the mortgage which, after deduction of the sale proceeds, amounted to $3,725,671.41. 

1. Proceedings to set aside the statutory demand were commenced on 28 April 1997 and on 11 June 1997 the second respondent commenced an action against the applicants to recover moneys pursuant to the guarantees.  The proceedings to set aside the statutory demand were determined by Whitlam J on 21 October 1997, when his Honour rejected the contention that there was a genuine dispute as to the existence or amount of the debt. 

1. A number of allegations had been made concerning the manner of disposition of the property.  It was put in essence, that the bank had ruthlessly sacrificed or at least recklessly sacrificed, the interests of the mortgagors due to improper advertising and other acts of impropriety such as dealing with a potential purchaser without notice to the present applicants.  In rejecting the contention that there was no genuine dispute, Whitlam J observed at pages 18 and 19 of his Honour's judgment: 

There is, however, not the slightest evidence that the Bank has sold and at an undervalue.  This case is the antithesis of a case such as Forsyth v Blundell (1973) 129 CLR 477, where Mason J said (at page 510) that the mortgagee “determined willy nilly on a sale to [the purchaser] for a price which would cover the moneys owing to it. Mr May was plainly anxious to obtain the highest price that he could for the bank, which suffered a mighty loss on the loan. All of the other matters raised in paragraph 21 of Mr Martin's affidavit in support of the application for preliminary discovery have now been clarified, and the additional evidence suggests no possible basis upon which the sale could be characterised as improper or irregular by reference to the particulars furnished in the statement of claim in proceedings number SC523 of 1997”.

1. Following his Honour's judgment, the matter seems to have lain substantially dormant, at least in relevant respects, until 22 August 2001 when the second and third respondents applied for an order that the proceedings, insofar as they were brought by Gahahan, be dismissed on the basis that they were vexatious and/or constituted an abuse of process.  The application relied upon contentions that the judgment of Whitlam J raised an issue estoppel or an abuse of process and also relied upon what was referred to as the Anshun principle, that being a reference to the case of Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589. Miles CJ ultimately determined that the proceedings, if continued by Gahahan, would be an abuse of process. In the end result, his Honour ordered that the proceedings, insofar as they had been brought by Gahahan, be struck out, and that the name of Gahahan be removed from the record. His Honour dismissed an application by the applicants for an order that they be permitted to conduct proceedings on behalf of Gahahan.

1. The proceedings before Gray J earlier this year were founded upon a notice of motion filed on 8 April 2003.  In essence the applicants contended that having acquired Gahahan's rights by way of assignment, they should be permitted to have Gahahan reinstated to the proceedings and be permitted to conduct the proceedings on its behalf.  They also sought leave to make quite extensive amendments to the statement of claim.

1. Gray J in his decision referred to the judgments of Whitlam J and Miles CJ and concluded, after reference to authorities, that the decision made by the Chief Justice had been interlocutory rather than final but that there were important aspects of public policy to be considered, having regard to the fact that after a hearing on the merits the applicants had already had the opportunity to raise the matters subsequently said to be determinative of the later proceedings.

1. His Honour said at paragraph 25 of this judgment:

In his submissions as to why I should entertain the application in the face of contentions as to it being an abuse of process, Mr Higgs SC, counsel for the plaintiffs, did not seek to rely upon a material change of circumstances or the discovery of new material which could not have reasonably been put before either Whitlam J or Miles CJ.  Initially he referred to the valuation evidence that he had placed before me.  In his decision in Gahahan Holdings v Dibeek (supra) I have already referred to Whitlam's J comment that “there is . . . not the slightest evidence that the Bank has sold at an undervalue”.  That comment would seem to put the plaintiffs on direct notice to address that issue.  That they did not do so in the proceedings before Miles CJ remains unexplained in the proceedings before me and I do not consider that justifies my reconsideration of that aspect.

1. His Honour then went on to deal with the relevant contentions, noting the existence of what counsel for the applicants had referred to as additional evidence, but observing that it had not been contended that such evidence had not been available at the time of the proceedings before Miles CJ and that no explanation had been given as to why it had not been put before his Honour.

1. His Honour proceeded to find that: 

. . . the facts reliant upon the material now before me and which the plaintiffs seek to plead, fall far short of establishing any obligation of bad faith, much less allegations of fraud or even any suggestion of collusive behaviour on the part of the defendants.  The plaintiffs’ difficulty in this case is their complete failure to identify facts from which any such inferences may reasonably be drawn that the Bank acted in bad faith or that Leda or its nominee, Dibeek, colluded in the Bank so acting.

1. His Honour then went on to refer to certain inferences that counsel for the applicants had sought to draw from the extensive material that had been provided.  His Honour found that it would be an abuse of process for the plaintiffs to amend their proceedings in the manner proposed by joining Gahahan as a party and to make the allegations proposed to be made in the further amended statement of claim.

1. An applicant for leave to appeal against an interlocutory decision is, of course, obliged to demonstrate that leave should be granted because the interlocutory decision is of significance and there is a serious issue to be determined in relation to one or more grounds of appeal.

1. In the present case, whilst I did initially have some doubt as to whether that leave should be granted in relation to the second of the two issues which were before his Honour, it seems to me that, whatever may have been the significance of the decision made by Whitlam J in 1997, the finding by Miles CJ to permit Gahahan to maintain the proceedings would have been an abuse of process even at that stage of the proceedings, made it almost inevitable that a later attempt to effectively revive the claim on behalf of Gahahan some years later would be found to constitute an abuse of process.  There is nothing in the judgment of Gray J that I can see upon careful consideration that suggests any error. 

1. I did, however, have some momentary concern that the position may have been somewhat different in relation to other amendments to the statement of claim because, in the proceedings before Whitlam J, the present applicants were not parties.  Those proceedings were purely and simply between Gahahan and the second respondent.  Furthermore, whilst the applicants were parties to the proceedings before Miles CJ, his Honour concluded only that the proceedings, if continued by Gahahan, would be an abuse of process in view of the decision made by Whitlam J.  Later in his Honour's judgment at paragraph 26, his Honour stated: 

A refusal of the application will not diminish whatever claim Mr and Mrs Notaras might have against the defendants.

1. Mr and Mrs Notaras are of course the present applicants.

1. It is, however, now clear that, insofar as the proceedings brought by Mr and Mrs Notaras have been maintained independently of any claim that Gahahan may have against the respondents, they relate to enforcement of the guarantees, and that the present amendments have been proposed for the sole purpose of permitting the applicants to maintain claims which are predicated upon the assignment of Gahahan's rights.  Accordingly, for present purposes it seems to me that the case is really dependent upon the applicants demonstrating that there are reasonable grounds for concluding that a Court of Appeal might ultimately uphold an appeal against his Honour's decision in relation to that issue.

1. Mr Higgs SC, who appeared on behalf of the applicants, forcefully contended that his Honour had gone beyond reliance upon the proposition that the relevant issues had already been substantially determined in earlier proceedings and that it would be an abuse of process to re-litigate them.  Mr Higgs submitted that his Honour had, in fact, embarked upon an examination of the relevant material and really considered the potential merits of the arguments that might properly be based upon that material.

1. Having read his Honour's judgment carefully I am unable to accept that his Honour did so, or, that if his Honour did so, such an appraisal played any significant part in his Honour's decision.  In the passage that I have already cited it may be noted that his Honour said:

That they [that is the applicants] did not do so in the proceedings before Miles CJ remains unexplained in the proceedings before me and I do not consider that justifies my reconsideration of that aspect.

1. It is true that his Honour went on to advert to additional evidence that was then before him but, before proceeding to discuss that evidence, his Honour noted that the applicants had not claimed that it had not been available at the time of the proceedings before Miles CJ and that no explanation had been given as to why it had not been adduced at that time.

1. In these circumstances it seems to me that what his Honour really did in making comments about the bulk of the evidence that had been before him was to indicate that it would, in any event, have made no difference.  I might add that no reason has emerged during the course of proceedings before me that would cause me to doubt the conclusions that his Honour had reached in relation to that evidence, though it seems to me to be unnecessary to consider this aspect.

1. In my view the fate of the applications before his Honour was inevitable given the approach taken by Miles CJ in 2001 and there is no viable ground of appeal in relation to the judgment of Gray J delivered on 2 February 2005.

1. For these reasons the application is dismissed.

His Honour then proceeded to order that the applicants pay the respondents costs and granted the respondents liberty to apply in relation to any special costs orders. 

I certify that the preceding twenty-three (23) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour President Crispin.

Associate:

Date:     31 May 2005

Counsel for the appellant/applicant:                  Mr D J Higgs SC with F Asjaff

Solicitor for the appellant/applicant:                  Nicholl & Co

Counsel for the first respondent:  Mr A Leopold

Solicitor for the first respondent:  Elrington Boardman Allport

Counsel for second and third respondent:         Mr MLD Einfeld QC with Mr IM Neil

Solicitor for second and third respondent:         Clayton Utz

Date of hearing:  13 May 2005

Date of judgment:  13 May 2005