Jones, B, v Australia & New Zealand Banking Group Ltd

[1987] FCA 13

LIMITED DISTRIBUTION

Trade Practl- - mlsleadlng or deceptive conduct -

representations made as to method of loan, available credit and

subsequent disapproval of proposed sale - sale by mortgagee

challenged - application for lnterlm injunction restraining

mortgagee's use of powers, particularly power of sale

Land Law - power of sale under demand mortgage

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Trade Practices Act 1975 s.52

Transfer of Land Act 1893 (W.A.) ss.106, 107, 108

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BARRY FENTON J O N F S and SHIRLEX JOY JONES

and BARRY FENTON JONES and SHIRLEY JOY JONES

AS TRUSTEES OF THE CLIFDEN TRUST

and B.F. JONES & CO. and yULLAH PTY. LTD. . .

,

V.

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED	-
and H.C. and S.P. HALLE!T
No. WA G2 of 1987

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TOOHEY J.

PERTH

12 JANUARY 1987

IN THE FEDERAL COURT	I
OF AUSTRALIA	l
WESTERN AUSTRALIA	i No. WA G2 of 1987

DISTRICT REGISTRY )

GENERAL DIVISION	)
B E T W E E N :
BARRY FENTON JONES and SHIRLEY JOY JONES

First Applicants

and

BARFtY FENTON JONES and SHIRLEP JOY JONES

AS TRUSTEES OF THE CLIFDEN TRUST

Second Applicants

and

B.F. JONES & CO.

Third Applicant

and

YULLAH m. LTD.

Fourth Applicant

and

AUSTRALIA ANTI NEW ZEALAND BANKING

GROUP LIMITED

First Respondent

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and ,

H.C. and S.P. IlALLFT

Second Respondent ,

MINUTE OF ORDER

JUDGE MAKING ORDER: TOOHEY J.

DATE OF ORDER: 12 January 1987

WHERE MADE: Perth

THE COURT ORDERS THAT:

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1. The application is dismissed.

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2. The applicants pay the costs of the flrst respondent and of

I the second respondent to be taxed.

Note: Settlement and entry of orders is dealt

with in Order 36 of the Federal Court Rules.

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LIMITED DISTRIBUTION

IN THE FEDERAL C@URT	)
OF AUSTRALIA	l
WESTERN AUSTRALIA	) No. WA G2 of 1987
DISTRICT REGISTRJ	)

GENERAL	DIVISION	)
B E T W E E N :
BARRY FENTON JONES and SHIRLEY JOY JONES

First Applicants

and

BARRY FENTON JONES and SHIRLEY JOY JONES

AS TRUSTEES OF THE CLIF'DEN TRUST

Second Applicants

and

B.F . JONES & CO.

Third Applicant

and

YULLAH PTY. LTD.

Fourth Applicant

and

AUSTRALIA AND NEW ZEALAND BANKING

GROUP LIMITED

First Respondent

and

H.C. and S.P. HALLET

Second Respondent>

CORAM:	TOOHEY J.
12 January 1987

REASONS FOR JUDGMENT

This application came before the Court as a matter of

urgency on the afternoon of Friday, 9 January. I reserved my

decision over the weekend.

The applicants seek an interim injunction restraining

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the flrst respondent from eiierclslng any of Its powers as

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mortgagee or' a farul at Currlgiri krluwr~ d5 "Warlganul" and In

I	particular from completing a sale	of that land to the second
I	respondent.

No substantive application has yet been filed but an

I	affidavit	sworn	by	Barry	Fenton	Jones,	one	of	the	first
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appllcants, refers to various matters which, it 1 s said, give rise

to clams against the first respondent under 5.52 of the Trade

I Practices Act 1974. The first applicants are the registered

proprietors of "Wanganui" and, as second applicants, are the

trustees of the Clifden Trust. The precise terms of the trust do

not appear in the material before the Court but I assume it to be

a family trust formed for the purpose of farming operations.

"Wanganui" is farmed by the partnership of B.F. Jones & Co. which

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I - is the third applicant. The fourth applicant, Yullah Pty. Ltd., -

seems to have been formed by family and friends of the first

applicants; at any rate the company has been used by them.

I The suggested claims against the first respondent arise

i . from the purchase by the first applicants of a farm at .Brookton

known as "Millroy" for $1.65M. "Wanganui" was already the subject

of a mortgage to the first respondent but a further mortgage of

that land and a mortgage of "Millroy" were executed in favour of

the first respondent to secure a loan made by that respondent in

connection wit11 the purchase of "Millroy". In the light

of Mr. Jones' affidavit, counsel for the applicants alleged three

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instances of misleading or deceptive conduct or conduct likely to

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i	mislead or deceive within	s.52.
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1. The flrst appllcants were persuaded bv the manager of the

Katannlnq branch of the first respondent to borrow

$1.6514 from that respondent in the form of a forelgn currency

loan. The branch manager. Mr. Parker, recommended such a

loan, explaining by hypothetical examples that the interest

rate applicable to offshore loans was considerably below the

prevailing rates for other forms of finance. But. it is

said, as a result of a decline in the value of the Australian dollar relative to certain overseas currencies, the cost of the loan to the first applicants was well in excess of that

contemplated when the loan was made.

2 . decided that it would be necessary to dispose of land

When this situation became apparent, the first applicants “Millroy“. In January 1985 Rural Property Trust offered to buy both farms for $4,000,000. Interpolating, it is by -no

means apparent that there was in fact a firm offer to

purchase but it is clear that Rural Property Trust’s proposal

involved payment of about half of the purchase price in the

form of units in that Trust.

Mr. Jones has deposed that, on discussing the matter with the

first respondent, he was told that the proposal was not

acceptable to the first respondent and further that it did

not have commercial merit, that it would be inadvisable to

exchange trust units f o r first class rural land and that in

the event of either B.F. Jones & . Co. or the Clifden Trust

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requlrlng further flnanclal facilities, they would be

forthcomlnq.

3 . Subsequently "Millroy" was sold for $1,192,000, representing

a capital loss of $458,000. The purchase price was applied

in reduction of the monies then owing to the first respondent

but there was still an outstanding balance of $1,584,985.50

for which the first respondent made written demand. In

exercise of its power of sale under the mortgage over

"Wanganui" (although the exercise of that power is challenged

by the applicants), the first respondent entered into an

agreement to sell "Wanganui" to the second respondent. The

purchase price is $400,000 for the land only; the first

respondent also has a bill of sale over some plant and

machinery on the farm.

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About this time the fourth applicant offered to buy

"Wanganui" from the first respondent for $440,000, of which

$434,00O>ere allocated for land, improvements, plant and

machinery. The fourth applicant's offer was made about the

time of the ssle to the second respondent but, on the

information presently available, it is not possible to say

which was first in time. In any event the first respondent

was not prepared to accept the fourth applicant's offer.

I am unable to see how the second or third of the

matters complained of could give rise to a claim based on 5.52 of

the Trade Practices Act. As to the proposal by Rural Property

Trust, the first respondent's consent to a sale was not required

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thouqh or' course nothlng could be done to jeopardlse Its security. The applicants' complaint 1 s not that they acted on anythlng said by the first respondent at the time but that the flrst respondent

would not permit a sale to Rural Property Trust. Such a refusal

could not glve rlse to a claim under the Trade Practices Act.

Equally, a statement said to have been made on behalf of the first

respondent prior to the offer by the fourth respondent, that the

first respondent was looking for an offer for land, plant and

machinery rather than for land alone could not give rise to a

claim of misleading or deceptive conduct in the circumstances.

Again, the applicants' real complaint is that the first respondent

did not accept the fourth applicant's offer. Any cause of action

arising from such a refusal must lie outside the Trade Practices

m.

I have great difficulty in seeing, 0.n the material

presently available, how statements made by the first respondent

regarding the advantages of a foreign currency' loan constitute

misleading or deceptive conduct when it was the decline.in the

l	value	of	the	Australian	dollar	that	made	such	a loan
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disadvantageous.' -*However one can see an argument that statements .

as to the advantages of a foreign currency loan might be expected

to take into account currency fluctuations. I am therefore

prepared to assume in favour of the applicants that, in respect of

this complaint. there is a serious question to be tried.

The applicants also contend that the first respondent's

power of sale under the mortgage did not arise because of a

failure to allow a period of one month to expire from the demand

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for payment of the halance of rnortqage monies before exerclslng

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Lhe P O W ~ L - ui sdle. The dppl~cdnLs p o m t to the fact that c1.17 of

i I the mortgage r duces only the p rlod of continued default

mentioned in s.106 of the Transfer of Land Act 1893. Demand was

made pursuant to 5.107 of the Act. In my view that argument

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misapprehends the relationship between ss.106. 107 and 108 of the

Act. The mortgage in question is a demand mortgage and the notice

given by the first respondent was not by reason of default (as

contemplated by 5.106) but was a demand for monies payable on

demand (as contemplated by 5.107). In those circumstances no

i period of default is required before the powers conferred on a

i mortgagee by 5.108 arise, other than aperiod fixed by the

mortgage itself. No such period is fixed.

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I	any	event	In	I have	serious	re ervations	whether	this
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argument and the cause of action said to arise from it properly

fall to be determined in the context of the claims made-under s.52

of the Trade Practices Act. There is really no common substratum

of fact. However I do not base my decision on that -aspect of the

matter. I base it on the considerations to which-I have already

referred, coupled with the balance of convenience arising from the -

granting or refusal of an interim injunction.

There have been proceedings in the Supreme Court of

Western Australia since the first respondent issued a writ

on 29 June 1986 claiming the balance of monies due under its

mortgage and also possession of "Wanganui". By that time the

first respondent had entered into the contract of sale with the

second respondent, under which it would seem possession was to be

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9iven on 12 July 1986. The o n l y defence pursued by the flrst

applicants was in relation to the clam for possession, it being

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I	argued that B.F. Jones Ei Co. was In possession pursuant o a lease to it from the second applicants. The proceedings in the Supreme Court began before the Master and contlnued through to the Full
Court. the outcome being favourable to the first respondent. The
stay of execution origlnally granted by the Master on 25 August
1986 expired on 9 January 1987. the day on which this matter came
before this Court.

The first applicants did not, by defence or

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counterclaim, challenge the first respondent's entitlement to

recover monies due under the mortgage or its exercise of its power

of sale. The second respondent has been a purchaser of "Wanganui"

since May 1986 and there was no suggestion that it had acted other

than in good faith and for valuable consideration. In practical

terms the second respondent has been held out of possession .

I	because of the litigation in the Supreme Court which has now- come.
to an end. Although the applicants' difficulties'go back at least
as early as 1984, they made no approach -to this Court. . r - \
until 9 January 1987 and then, it would appear, because the stay
of execution on the judgment in the Supreme Court-was about to
expire. The first respondent's position is that it holds- an
inadequate security, the value of which is further diminishing as
the mortgaqe debt increases. If the applicants can make good a
claim under the Trade Practices Act, they have an entitlement in damages against the first respondent and there is no doubt as to the capacity of that respondent to meet any judgment for damages
against It.

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111 d.11 C;hosr circurusLdnces the balarlcr of convenlence 1 s

stronqly agalnst the granting of an injunctlon, even an interim

injunctlon as suggested by counsel for the applicants.

For all these reasons the application is refused.

I certify that this and the

preceding 7 pages are a true copy of the r asons for

judgment the h rein of

Honourable Mr. Justice Toohey.

Associate

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Dated: 12 January 1987

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i .	Counsel for the applicant:	Mr. P. Clements instructed by
Michael Whyte &-Co.
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Counsel for the first
Mr. K. J . Martin instructed=by .
respondent:
Messrs. Parker & Parker

Counsel for the second

respondent:	Mr. D.H. Solomon instructed by
Phillips Fox

he ring: Date of 9 January 1987