Hall v Commonwealth Bank of Australia

[1999] FCA 1687

FEDERAL COURT OF AUSTRALIA

Hall v Commonwealth Bank of Australia [1999] FCA 1687

PETER GRAHAME HALL V COMMONWEALTH BANK OF AUSTRALIA

V7352 of 1999

JUDGE:         FINKELSTEIN J
DATE:           19 NOVEMBER 1999
PLACE:         MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	V 7352 of 1999

IN THE MATTER OF PETER GRAHAME HALL

BETWEEN:	PETER GRAHAME HALL Applicant
AND:	COMMONWEALTH BANK OF AUSTRALIA Respondent
JUDGE:	FINKELSTEIN J
DATE OF ORDER:	19 NOVEMBER 1999
WHERE MADE:	MELBOURNE

THE COURT ORDERS THAT:

1.   The application dated 23 June 1999 be dismissed

2.   The Applicant pay the Respondent’s taxed costs of the application.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	V 7352 of 1999

IN THE MATTER OF PETER GRAHAME HALL

BETWEEN:	PETER GRAHAME HALL Applicant
AND:	COMMONWEALTH BANK OF AUSTRALIA Respondent

JUDGE:	FINKELSTEIN J
DATE:	19 NOVEMBER 1999
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

1. Peter Grahame Hall seeks to set aside a bankruptcy notice that was served on him by the Commonwealth Bank of Australia. The bankruptcy notice is based on a judgment obtained in the Magistrates’ Court at Melbourne. Initially the motion to set aside the bankruptcy notice was heard by a Registrar of the Court who dismissed the motion because Mr Hall had failed to appear on the return day. Mr Hall now applies to review the decision of the Registrar as he is entitled to do: see s35A(5) of the Federal Court of Australia Act 1976 (Cth).

2. The Bank had commenced proceedings against Mr Hall for money due in respect of a cheque account that Mr Hall maintained with the Bank.  The claim was compromised by written terms of settlement made on 2 September 1998.  By those terms Mr Hall agreed to pay to the Bank $35,250 on or before 2 November 1998.  In default of payment the Bank was entitled to enter judgment for the amount of the debt, less any sum paid in the meantime.  

3. Mr Hall was not able to pay the amount due to the Bank on the date for payment.   On a number of occasions in November and December 1998, Mr Hall or his solicitor informed the Bank that the debt would soon be paid and requested the Bank not to enter judgment.  The Bank agreed to stay its hand. 

4. In addition to the debt due under the terms of settlement, Mr Hall was also indebted to the Bank under a business loan.  That debt was secured by mortgages over three properties, only one of which was owned by Mr Hall.  By late 1998 Mr Hall was in default under the terms of the business loan and the Bank had taken steps to sell the mortgaged properties by public auction to take place on 6 February 1999.

5. Mr Hall does not deny that he is indebted to the Bank in the amount claimed in the bankruptcy notice.  He alleges that he had entered into an agreement with the Bank that the debt would be paid after the sale of the three mortgaged properties.  Mr Hall says it was agreed that if the proceeds of the sale of the three properties resulted in a surplus after the payment of the business loan, that surplus would be applied to discharge or to partially discharge the debt due under the terms of settlement.  Mr Hall said he was to be told the balance that was payable by him after the sale of the three mortgaged properties.  He says that he was never informed of that amount, but instead the Bank entered judgment for the amount due without warning.  Thus, as I understand the argument, Mr Hall is in effect contending that the Bank was estopped from entering judgment by reason of his failure to pay the amount agreed under the terms of settlement.

6. Mr Hall’s case is to be found set out partly in two affidavits sworn by him in support of his motion to set aside the bankruptcy notice and partly from statements made by him during the course of his submissions.  Mr Hall appeared in person and, it seems, prepared his own affidavits.  While making submissions on the merits of the motion, Mr Hall referred to “facts” not set out in his affidavits.  In the circumstances, I allowed Mr Hall to take that course for the purpose of investigating whether there was any relevant additional material that could be put into proper form if necessary.  In the result, I did not invite Mr Hall to verify what he had told me either by giving oral evidence or by filing a supplementary affidavit.

7. Mr Hall is seeking to have me go behind the judgment to discover whether there was a debt which could found the judgment.  As I say, he did not deny that he had agreed to pay the Bank the amount mentioned in the terms of settlement, but he does deny that there was a debt due and payable at the time judgment was entered.  Although I have not found a case where the court has gone behind a judgment, other than for the purpose of determining whether there was a debt payable to the creditor, I will assume that it is permissible to take the course that Mr Hall invites me to take. 

8. As I understand the position, if I decide to go behind the judgment I would then need to determine whether the debt was in fact due to the Bank at the time judgment was entered.  In that regard the Bank would carry the burden of proving that it was entitled to the judgment that it obtained.

9. In the present state of the evidence I do not see that Mr Hall has made out a sufficient case for me to go behind the judgment.  But even if I were to take up the invitation to do so, I would not find that any estoppel operated against the Bank. 

10. As regards Mr Hall’s evidence, various versions of the facts are put forward.  In an affidavit sworn on 16 June 1999, Mr Hall said “with the final small loan of approximately $35,000 to be arranged for clearance at a time too [sic] be mutually agreed upon.  This was verbally agreed too [sic] with notification to follow, after the sale of the land at Phillip Island in February 1999 settlement 60 days.  After this sale, we expected to complete the last transaction with the Bank.  Then we are [sic] informed that judgment had been entered.”

11. In an affidavit sworn on 27 July 1999, Mr Hall deposed that he “agreed to land sales at Phillip Island to clear out 1 of the small business loans and up until the day before the auction, I attempted to still pay out our remaining debt.  This could not be completed, so we waited for the auction, which would then leave one small business loan for full clearance of all debt.”

12. In the course of his submissions, I asked Mr Hall precisely what had been agreed with the Bank.  He said he reached an agreement with the Bank in 1999, the nature of which was as follows (and I quote from the transcript):

    “The agreement was that we were allowed to wait till the auction of the land went through which was in February, and then after the settlement of the land or the auction of the land, depending what they were going to get for the land, then the Bank would give me a balance which we’d negotiate to confirm the balance of payment, and that was our arrangement.”

13. The difficulty with this evidence, to the extent that it purports to found an estoppel against the Bank, is that it is by no means clear precisely what arrangement Mr Hall did make with the Bank.  On one view he is suggesting some indeterminate arrangement concerning the payment of the debt due to the Bank.  It is by no means clear from any version of the arrangement that there was a promise made or undertaking given by the Bank that it would not enter judgment for the amount due under the terms of settlement until the sale of the three mortgaged properties.

14. On the view that is most favourable to Mr Hall the agreement was that the Bank would  take no action on the terms of settlement until the sale of the three mortgaged properties when the net balance due to the Bank could be ascertained and then be paid.  However, the difficulty with this version is that in mid to late January 1999, Mr Hall sought to redeem the mortgages.  As late as 5 February 1999, that is the day before the auction, Mr Hall inquired of the Bank whether payment of $18,000 to $20,000 would enable to him to obtain a discharge of two mortgages.  He was told that that sum would not be sufficient.  However, later that same day Mr Hall did pay $15,000 to the Bank to obtain a discharge of one mortgage.  Accordingly, when the auction took place on 6 February 1999, only two properties were sold. 

15. In my view, the fact that Mr Hall was seeking to obtain a discharge of the mortgages and did in fact obtain a discharge of one mortgage is sufficient to indicate to me that there was no agreement that the properties be sold by the Bank and that the proceeds of sale be applied first to discharge the business loan, and if there was a surplus then to discharge or to mostly discharge the amount due under the terms of settlement.  If there ever was such an agreement it had been discharged by 5 February 1999 when one of the properties was released from the arrangement.

16. Notwithstanding all this, the real basis for me rejecting the submission that the Bank was prevented or estopped from entering judgment against Mr Hall when it did is that the arrangement, which Mr Hall has explained to me and which is referred to in his two affidavits, is so uncertain in its scope and as to its effect that I cannot conceive that an estoppel could ensue. 

17. For these reasons, I would dismiss the application the effect of which is to affirm the decision of the Registrar.

I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finkelstein.

Associate:

Dated:              7 December 1999

Counsel for the applicant:	The applicant appeared in person
Solicitor for the Respondent:	Herbert Geer & Rundle
Date of Hearing:	29 July 1999 and 19 November 1999
Date of Judgment:	19 November 1999