James v The Bank of Queensland - [2009] WASC 339

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: JAMES -v- THE BANK OF QUEENSLAND [2009] WASC 339

CORAM: MASTER SANDERSON

HEARD: 29 OCTOBER 2009

DELIVERED : 23 NOVEMBER 2009

FILE NO/S: CIV 2442 of 2009

BETWEEN: JENNIFER FAY JAMES
Applicant
AND
THE BANK OF QUEENSLAND
Respondent

Catchwords:

Preaction discovery application - Turns on own facts

Legislation:

Rules of the Supreme Court 1971 (WA), O 26A r 4

Result:

Application dismissed

Category: B

Representation:

Counsel:

Applicant: Mr N D C Dillon
Respondent: Mr P Mendelow

Solicitors:

Applicant: Irdi Legal
Respondent: DibbsBarker

Case(s) referred to in judgment(s):

Hancock Family Memorial Foundation Ltd v Fieldhouse (No 2) [2008] WASC 147
Pendlebury v The Colonial Mutual Life Assurance Society Ltd [1912] HCA 9; (1912) 13 CLR 676

MASTER SANDERSON: This is the applicant's application for pre‑action discovery. It is brought under O 26A r 4 of the Rules of the Supreme Court 1971 (WA). The application is supported by three affidavits. There is an affidavit of the applicant sworn 11 August 2009, an affidavit of Stephen Lawrence James also sworn 11 August 2009 and an affidavit of Lewis Chiat sworn 25 August 2009. The summary of facts which follows is drawn from these three affidavits.
At all material times the applicant was the registered proprietor of a property at 19 Royal Street, East Perth. The property was purchased in 1997 by the applicant and her husband, Stephen. At that time it was a vacant block. In order to help fund the purchase and the construction of a new home on the property, the applicant and her husband obtained a loan from Home Building Society (Home). The amount of the loan was $444,000. It was subject to the terms of Home's standard loan agreement. It was secured by a mortgage over the property.
It was the intention of the applicant and her husband to build a house on the property. Plans were drawn up in 1998 and approvals were granted by the relevant authorities in 1999. A company styled Verdelho Construction was engaged to build the house. However, difficulties arose and Verdelho Constructions withdrew. By the time they withdrew some work on the house had been completed but it was a shell. The applicant and her husband decided that the applicant's husband, who was a carpenter and a builder, would complete the project.
This decision was conveyed to Home who accepted the arrangement. Work on the house continued. The cost of the house exceeded the initial advance. Additional funds were provided by Home from time to time. On one occasion, the variation agreement was entered into between the applicant and Home to secure further advance of funds. But generally the arrangement seems to have been ad hoc and made after discussions with representatives of Home.
By June 2008 the house was 98% complete. At around that time, Home wrote to the applicant indicating they wanted to rewrite the loan facility to formalise arrangements between borrower and lender. Negotiations continued because further funds were needed to actually complete the development. Before any of this could take place, Home Building Society merged with the respondent. That changed the position completely.
In October 2008, the respondent sent to the applicant documentation offering to lend the applicant $1,100,000 to repay the existing loan and to provide funding to complete the building of the house. If the applicant had agreed to this arrangement, she would necessarily have had to pay something in the region of $12,000 in bank fees. She rejected the arrangement. Correspondence passed between the parties. On 2 April 2009, the applicant became aware that the respondent had entered into possession of the property. Although it is not expressly stated in her affidavit, it is implicit that neither the applicant nor her husband received a default notice. Further negotiations took place but failed to resolve the matter.
The property has now been sold. It was sold for $1,600,000. In his affidavit, Mr James says that he contacted the agent that sold the property. It was sold by private treaty rather than auction. Mr James has conducted searches in The West Australian and The Sunday Times. His research indicates that the property was never advertised for sale in either of those two newspapers. There is no evidence that he has checked the internet to see whether the property was marketed online.
During the course of his submissions, counsel for the applicant identified three potential causes of action he says the applicant may have against the respondent. First, it was said that it is possible the property was sacrificed and that by not adequately advertising it the amount received for the property was less than its actual value. In making this submission, counsel was relying upon the decision of the High Court in Pendlebury v The Colonial Mutual Life Assurance Society Ltd [1912] HCA 9; (1912) 13 CLR 676. Counsel was not suggesting there was some duty of care owed by the respondent to the applicant. Rather, it was suggested that by not advertising the property the respondent had not fulfilled their obligations on a mortgagee sale.
Second, it was submitted that there may be a cause of action under the Trade Practices Act 1974 (Cth). In broad terms, it was said that representations had been made by representatives of Home. The applicant and her husband had relied upon those representations. The sale of the property by the respondent was a breach of those representations and the applicant, on that basis, had a cause of action against the respondent.
Finally, it was submitted that as the applicant had never received any default notices the respondent may not have been entitled to take possession of the property and may have breached the terms of the mortgage.
Prior to issuing these proceedings, the applicant's solicitors had corresponded with the respondent's solicitors seeking access to certain documents. Access had been declined. That being so, these proceedings were issued and, by the terms of the notice of originating motion, discovery was sought of the following documents:
(a)All documents upon which the Bank of Queensland ('Bank') relied to take possession of the property at 19 Royal Street, East Perth, Western Australia, ('Property') including all default notices and demands for payment made of the applicant and/or her co‑borrower, Stephen Lawrence James and all documents relied upon as entitling the Bank to offer for sale or to sell the Property.
(b)A copy of the instructions provided in the years 2008 and 2009 by the Bank or its lawyers to any valuer or property agent who provided a valuation or market appraisal of the Property.
(c)A copy of any valuation or market appraisal obtained in 2008 or 2009 by the Bank or its lawyers or agents in relation to the Property including but not limited to the valuation or appraisal obtained on or about 3 February 2009.
(d)A copy of any instructions provided by the Bank or its lawyers in 2008 or 2009 to any real estate agent, including but not limited to LJ Hooker, East Perth, to market the Property for sale.
(e)A copy of any Offer and Acceptance received in 2008 or 2009 by the Bank or its agents in relation to the sale of the Property.
(f)Copies of any advertisements placed on behalf of the Bank (including in any newspapers, property publications or on any internet website) in relation to the marketing of the Property for sale.
(g)Any report or recommendation provided in 2008 or 2009 to the Bank or its agents in relation to the marketing for sale and the sale of the Property.
This matter first came on for hearing on 25 August 2009. At that time I made programming orders by consent. Order 1A of those orders required the respondent to file any affidavit evidence upon which it intended to rely by 15 September 2009. The matter was then listed for hearing on 29 October 2009. On 26 October 2009, without leave, the respondent filed an affidavit of Nathan John Hepple sworn 23 October 2009.
Mr Hepple is a solicitor acting for the respondent. Essentially, his affidavit annexes copies of many of the documents to which the applicant was seeking access in this application. For instance, annexure NJH 5 is a copy of a default notice sent by registered post on 1 December 2008. Annexure NJH 13 is a copy of a valuation of the property provided by Herron Todd White (Western Australia) Pty Ltd. There is no explanation in the affidavit as to why it was filed three days before the hearing of the application.
This borders on the bizarre. After steadfastly refusing to provide any information to the applicant, on the eve of the hearing a document is filed which provides the applicant with virtually everything they seek. Yet still the application is opposed. If that circumstance is bizarre the matter then descended into farce. Counsel for the applicant objected to the filing of the affidavit because it was late. So counsel effectively objected to the provision of most of the documents which were sought in the application. Despite counsel's objection, I decided to admit Mr Hepple's affidavit into evidence.
Given that the matter was fully argued and I was called upon to resolve what was left of the application, it is appropriate if I briefly state the conclusion that I have reached. The principles in relation to applications made under O 26A r 4 were not in dispute. They were recently set out by Le Miere J in Hancock Family Memorial Foundation Ltd v Fieldhouse (No 2) [2008] WASC 147 at [40]. Essentially the applicant needs to establish that she is in a position where she lacks key information which would allow her to decide whether or not to proceed with the action.
In my view, it is clear in this case that from the first the applicant did not lack the key information. Taking each of the three potential causes of action identified by counsel, none required discovery by the respondent. If the applicant alleges that there was inadequate advertising of the property, so that the price received on sale was less than the actual value, then what she must establish is what advertising was undertaken, what advertising would have been proper, and what price would have been received if the property had been properly marketed. Making those enquiries is not dependant upon any documents held by the respondent. In fact, in relation to the marketing, Mr James has already made most of the necessary enquiries - it is only the possibility of internet advertising which remains to be considered. As to the price which could have been obtained after proper marketing, that is expert evidence which the applicant would have to obtain independent of anything held by the respondent.
So far as any claim under s 52 of the Trade Practices Act is concerned, the applicant alleges that certain representations were made to her and her husband by representatives of Home. Only the applicant and her husband would know what representations were made and when. It may be that the files now held by the bank contains some note made by an officer of Home as to the discussions he held with the applicant and her husband. But all that would do, at best, is confirm what the applicant already knows. There is no need for discovery to advance any cause of action.
Finally, there is the question of the default notices. A combination of the mortgage and the statutory framework would indicate what the default notices had to contain, where they had to be served and when action could be taken if the default was not rectified. As I understand the applicant's position, she never received the default notices - presumably the allegation is that they were not properly served. While obtaining discovery of the default notices issued and served may advance the matter, it is the applicant's allegation of breach of the contractual and statutory requirements that will found her cause of action. She needs to gather her own evidence to make a decision as to whether or not to commence proceedings on that ground.
In the end, then, I would dismiss this application. Having reached that conclusion, I must say I find it extremely difficult to understand why the respondent would not provide the information sought when requested to do so and then provide most of it at the last moment. Having virtually conceded the application by filing Mr Hepple's affidavit, the application was then opposed.
A strange state of affairs indeed.