Mahood v NAB and Ballagh
[2016] VCC 1957
•16 December 2016
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION |
Case No. CI-16-03441
| GRAEME MAHOOD | Plaintiff |
| v | |
| NATIONAL AUSTRALIA BANK LIMITED (ACN 004 044 937) and IAN DAVID BALLAGH | First Defendant Second Defendant |
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JUDGE: | HER HONOUR JUDGE MARKS | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 28 November 2016 | |
DATE OF JUDGMENT: | 16 December 2016 | |
CASE MAY BE CITED AS: | Mahood v NAB & Ballagh | |
MEDIUM NEUTRAL CITATION: | [2016] VCC 1957 | |
REASONS FOR JUDGMENT
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Subject: CONTRACTS
Catchwords: Defendants’ summary judgment applications – misleading and deceptive conduct – unlawful interference with contract
Legislation Cited: Section 12DA, Australian Securities and Investments Commission Act 2001
Cases Cited:Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd (2013) VSCA 158; Donaldson v Natural Springs Australia Limited [2015] FCA 498
Judgment: Summary judgement for defendants
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Ms M Rozner | Tribeca Legal |
| For the First Defendant | Mr G Costello | National Australia Bank Ltd |
| For the Second Defendant | Mr B Gillies | Clarke & Barwood |
HER HONOUR:
1 On 26 May 2011 Mr Graham Mahood accompanied Mr Adrian George Allitt to the National Australia Bank (“the NAB”) branch in Colac. Mr Allitt was 88 years old, nearly blind and suffering from dementia. Mr Mahood was a friend of his in his mid-fifties. At that stage Mr Allitt had just over $1.2 million in some nine accounts with the NAB. He asked the bank to transfer $400,000 to Mr Mahood. Mr Rob Cornellison was the business banking manager. He had never met Mr Mahood before. He made a call to the solicitor for Mr Allitt. He made another call to Mr Ian Ballagh who, he was told, held a financial Power of Attorney for Mr Allitt. The NAB refused to transfer the $400,000 to Mr Mahood. Approximately three months later, Mr Allitt was confined to a nursing home and soon after that he died.
2 Mr Mahood is the plaintiff in this proceeding brought against the NAB and Mr Ballagh in which he claims that he has lost the opportunity of receiving $400,000 from Mr Allitt as a result of their actions on 26 May 2011. The defendants have each issued a summons seeking summary judgment on the ground that Mr Mahood’s claim against them has no real prospect of success.
3 For the reasons set out below, I find that Mr Mahood’s claim against each of the defendants has no real prospect of success and will order that there be summary judgment for each of the defendants.
4 The test in relation to summary judgment is summarised by the Court of Appeal in Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd (2013) VSCA 158. At [35] Chief Justice Warren and Justice of Appeal Nettle state that:
“Upon the present state of authority:
“a) the test for summary judgment under s 63 of the Civil Procedure Act 2010 is whether the respondent to the application for summary judgment has a ‘real’ as opposed to a ‘fanciful’ chance of success;
“b) the test is to be applied by reference to its own language and without paraphrase or comparison with the ‘hopeless’ or ‘bound to fail test’ essayed in General Steel;
“c) it should be understood, however, that the test is to some degree a more liberal test than the ‘hopeless’ or ‘bound to fail’ test essayed in General Steel and, therefore, permits of the possibility that there might be cases, yet to be identified, in which it appears that, although the respondent’s case is not hopeless or bound to fail, it does not have a real prospect of success;
“d) at the same time, it must be borne in mind that the power to terminate proceedings summarily should be exercised with caution and thus should not be exercised unless it is clear that there is no real question to be tried; and that is so regardless of whether the application for summary judgment is made on the basis that the pleadings fail to disclose a reasonable cause of action (and the defect cannot be cured by amendment) or on the basis that the action is frivolous or vexatious or an abuse of process or where the application is supported by evidence.”
The proceeding
5 Mr Mahood brought this claim by writ on 4 August 2016. Mr Ballagh filed a defence on 24 August 2016. The NAB filed its defence on 29 September 2016. Both summonses of the defendants were issued on 26 October 2016.
6 Evidence relevant to the applications was contained in the following:
· Mr Ballagh swore an affidavit dated 11 October 2016.
· Mr Philip Andrew Tribe, a solicitor acting on behalf of Mr Mahood, swore an affidavit dated 24 November 2016.
7 Submissions were made both in writing and orally by counsel on behalf of each of the parties.
The issues
8 The writ pleads four causes of action:
(A) Misleading and deceptive conduct – Mr Ballagh.
(B) Misleading and deceptive conduct – the NAB.
(C) Unlawful interference with contract – Mr Ballagh.
(D) Unlawful interference with contract – the NAB.
9 They all rely at first instance on a promise allegedly made by Mr Allitt to Mr Mahood between January 2011 and 26 May 2011 that “he would give [Mr Mahood] $400,000 out of the Allitt Accounts and Mr Mahood agreed to accept that sum from Mr Allitt”. It is pleaded that the promise was made “in recognition of the close personal relationship between them that had existed since Mr Mahood was a small boy”.
At paragraph 9 of the statement of claim, it is pleaded that in order to perform his promise to Mr Mahood on 26 May 2011, Mr Allitt attended the Colac branch of the NAB with Mr Mahood, meeting first with the assistant manager and then with the business banking manager, Mr Cornellison. Mr Allitt advised them that he wanted to withdraw $400,000 from certain of his accounts; he advised them of the amounts he wanted taken from which accounts; and he told them he wanted to give the money to Mr Mahood.
(A) Misleading and deceptive conduct – Mr Ballagh
10 This claim is set out in paragraphs 10 to 16 of the statement of claim.
11 It is alleged that in response to Mr Allitt’s instruction to withdraw $400,000, Mr Cornellison telephoned Mr Ballagh, who told him:
(a) Mr Ballagh had been appointed attorney by Mr Allitt pursuant to a Power of Attorney which gave him control over Mr Allitt’s financial affairs;
(b) he would provide the NAB with a copy of the Power of Attorney that day; and
(c) that the withdrawal of $400,000 to give to Mr Mahood should not take place.
12 (It was also pleaded that Mr Ballagh told Mr Cornellison that the Power of Attorney had come into effect. In the course of submissions, counsel for Mr Mahood said that this was implicit rather than fact having been said.)
13 It is alleged that in purporting to act under the Power of Attorney for Mr Allitt, Mr Ballagh engaged in trade and commerce. (Paragraph 12 of the writ initially pleaded that he engaged in trade and commerce “in acting or purporting to act as financial power of attorney…” (italics added). However, in the course of submissions counsel for Mr Mahood withdrew the allegation that Mr Ballagh was acting as financial power of attorney at the time. I gave leave of the words “in acting or” to be deleted from paragraph 12 of the statement of claim.)
14 The representations are said to be untrue because as at 26 May 2011, Mr Allitt in fact had legal capacity to conduct his own financial affairs, including giving instructions to the NAB, and was not unable to conduct his affairs through reason of illness.[1] Particulars were given that as at 26 May, Mr Allitt was having increasing memory problems consistent with early dementia but, up to at least 27 May, he was mentally capable of making a valid will and making decisions about and conducting his own financial affairs. (In the course of submissions, counsel for Mr Mahood relied on a letter from Dr Nice indicating that up to 27 May 2011, when he last saw him, Mr Allitt had problems of blindness, hypertension and dementia but that Dr Nice believed Mr Allitt was capable of making a will.)[2]
[1]If he could conduct his own financial affairs, the Power of Attorney entered on 7 July 2008 was said not to have come into effect. The Power of Attorney executed by Mr Allitt stated at paragraph 3: “I declare that this Power of Attorney begins on this occasion: of me being unable to attend to my own affairs through reason of illness”.
[2]Exhibit PAT14 to the affidavit of Phillip Andrew Tribe sworn 24 November 2016 (“Tribe affidavit”).
15 In the circumstances, it was pleaded that the representations were misleading and deceptive in breach of s12DA of the Australian Securities and Investments Commission Act 2001 (“ASIC Act”).
16 However, I find that this claim has no real prospect of success:
(a) If the comments alleged to have been made by Mr Ballagh on 26 May 2011 were made, that can be the only “material time” in relation to this aspect of the claim and Mr Ballagh was not engaged in trade and commerce in making those comments or purporting to act under the Power of Attorney. There is no evidence of anything to suggest that in making these comments he was engaged in trade and commerce, as those words are used in the ASIC Act and associated legislation. It was suggested by counsel for Mr Mahood in the course of submissions that the Court should find that in assisting Mr Allitt with his financial affairs that Mr Ballagh was engaged in trade and commerce. There is no evidence to support that, and I reject that submission. The ASIC Act is not applicable.
(b) If, on or before 26 May 2011, Mr Allitt did not have capacity to attend to his own affairs by reason of illness, then the Power of Attorney had come into effect by 26 May 2011. In those circumstances, there was no misrepresentation about him having been appointed attorney by Mr Allitt pursuant to a Power of Attorney which gave him control over Mr Allitt’s affairs.
(c) The alleged loss does not follow from the making of the representations. The only evidence before the Court of any approach to the NAB by Mr Allitt to have $400,000 paid to Mr Mahood is of an approach on 26 May 2011, which is the approach pleaded in the statement of claim. There was nothing in the promise allegedly made to suggest that the gift had to be made on 26 May 2011 or not at all. Just because the NAB did not pay that money across on that day, it does not follow that Mr Mahood “lost the opportunity” of receiving that money. If Mr Allitt had the ability to conduct his own financial affairs on 26 May 2011 (as contended by Mr Mahood) then Mr Allitt could have taken any of a number of steps on that day or afterwards (until he ceased to be able to conduct his own affairs) to try to have that money given to Mr Mahood. Mr Allitt could have spoken to his solicitor and had a legal document prepared to give effect to his promise to give a gift; he could have taken his solicitor and/or Mr Ballagh to the NAB and told them that he wanted to give that gift and ask them in his presence to ensure it happened; and/or he could have mentioned it to Mr Ballagh, including in the presence of his doctor whom he saw on 27 May 2011 with Mr Ballagh, and asked Mr Ballagh to organise the gift be made. There is no evidence that he did any of these things or that he raised with anyone after 26 May 2011 a desire to give money to Mr Mahood.
On the contrary, Mr Ballagh’s evidence is that a couple of days after 26 May:
[Mr Allitt ] mentioned that Graeme Mahood had been up and told him he needed $400,000 because he had been wiped out financially…..I asked [Mr Allitt] if he was going to give it to him, to which he replied, no you can’t save the world….[3]
[3]Paragraph 20 affidavit of Ian Ballagh sworn 11 October 2016 (“Ballagh affidavit”).
Mr Ballagh said that Mr Allitt told him of another visit from Mr Mahood two or three days later, demanding $500,000, which Mr Allitt told Mr Ballagh he had refused. Mr Ballagh then took Mr Allitt to see Mr Allitt’s solicitor and Mr Allitt organised with the NAB that in future the signatures of both the solicitor and Mr Ballagh would be required for the release of any of Mr Allitt’s term deposits.[4]
[4]Paragraph 22 Ballagh affidavit.
The representations, and indeed the failure of the NAB to make the payment on 26 May 2011, were not causative of Mr Mahood’s loss.
(d) Mr Mahood brought a claim against Mr Allitt’s Estate under Part IV of the Administration and Probate Act 1958 claiming, amongst other things, that Mr Allitt had agreed to give him $500,000. Mr Ballagh was Executor of Mr Allitt’s Estate. The claim was settled for $65,000. The Terms of Settlement[5] included a release in which, relevantly, at Clause 3 it was provided that:
[5]Exhibit IDB-1 to Ballagh affidavit (pages 24-26).
“Upon payment of the settlement sum the parties release and forever discharge each other and the defendant both personally and in his representative capacity in the estate of the deceased from all actions, claims and demands which either of them had, and agrees that he will release and discharge the plaintiff from all claims and demands which he or the estate now has or may have hereafter have arising out of or in connection with the estate of the deceased.” [italics added]
Mr Ballagh says that the Terms of Settlement releases him from, amongst other things, the current claim. Mr Mahood says that the Terms of Settlement is only in relation to matters arising out of or in connection with the Estate of Mr Allitt and that this claim, which is brought against Mr Ballagh, does not arise out of or in connection with the Estate of Mr Allitt.
However, this claim does arise in connection with the Estate of Mr Allitt. It was part of the claim that was made in the Part IV proceeding that the gift had been promised by Mr Allitt, and it is specifically recorded in the position paper of Mr Mahood regarding that mediation. To the extent that there is any ambiguity in the phrase “in connection with the Estate of the deceased”, that position paper is one of the background matters I take into account.
(B) Alleged misleading and deceptive conduct – the NAB
17 By paragraphs 17 to 22 of the writ, Mr Mahood pleads that, in response to Mr Allitt’s request to withdraw $400,000, the NAB “had papers to say the Bank could not release any funds from the Allitt accounts despite Mr Allitt’s instruction”.
18 It is pleaded that:
(a) it was untrue because the NAB did not possess any piece of paper or document preventing the withdrawal or the NAB carrying out that instruction;
(b) it was misleading and deceptive in breach of s12DA of the ASIC Act;
(c) the NAB was vicariously liable for the representation made by its employee; and
(c) as a result Mr Mahood suffered loss and damage.
19 In the course of making submissions, counsel for Mr Mahood sought to amend paragraph 17 of the statement of claim to say:
“On 26 May 2011, in response to Mr Allitt’s instruction to withdraw $400,000 from the Allitt Accounts to give to the plaintiff:
(a)Mr Cornellison told Mr Allitt that the NAB had papers to say that the NAB could not release any funds from the Allitt Accounts despite Mr Allitt’s instruction (“the NAB Representation”) and;
(b)the NAB determined that the Power of Attorney prevented the NAB from making the transaction (“the Conduct”.)”
Consequential amendments to paragraphs 18, 19 and 20 were proposed.
20 I will not grant leave for those amendments because, even with them, this cause of action has no real prospect of success and there is no point in the amendments being made:
(a) No loss flows from the alleged representation. Whether the representation was made or not, the representation itself did not cause Mr Mahood to lose the opportunity of receiving $400,000. There is no evidence to suggest that the representation itself, as to the reason for not releasing the funds, or the conduct pleaded that “the NAB had determined that the Power of Attorney prevented the NAB from making the transaction” was causative of any loss to Mr Mahood. For the reasons set out above, in any event the failure to pay on the day of 26 May 2011 was not causative of the loss.[6] I find that there is no real prospect of success that the alleged representation (and conduct)[7] could have caused the loss.
[6]Paragraph 16(c) above.
[7]The Conduct referred to in the proposed amendment set out at paragraph 19 above.
(C) Alleged unlawful interference in contractual relations – the NAB
21 At paragraphs 23 to 29 of the writ, Mr Mahood pleads that on 26 May 2011 Mr Cornellison knew of the existence of the promise between Mr Mahood and Mr Allitt and of Mr Allitt’s alleged desire to transfer $400,000 to Mr Mahood. Mr Cornellison (and hence the NAB) knowingly and intentionally and without justification interfered with the performance of the promise between Mr Allitt and Mr Mahood and with the performance by the NAB of its contractual obligations to Mr Allitt.
22 In the course of oral submissions, counsel for Mr Mahood abandoned the suggestion that Mr Cornellison and the NAB had interfered with the performance of the NAB’s own contractual obligations with Mr Allitt.
23 I find that the remaining cause of action in these paragraphs has no real prospect of success:
(a) There was no contract between Mr Allitt and Mr Mahood with which there could have been interference. At the most, there was a promise to make a gift. That gift was not completed before Mr Allitt’s death. Counsel for Mr Mahood submitted that a gift is a contract, albeit unenforceable. She did not cite any authority for this proposition. However, at least two elements of a contract are missing from a gift (and a promise to make a gift):
o Consideration; and
o Intention to create legal relations.
There is no tort of knowingly and intentionally interfering with a gift or a promise to make a gift.
(b) If there had been a contract between Mr Mahood and Mr Allitt which had been interfered with by the actions of Mr Cornellison and the NAB, the defence of justification would have been applicable.
In Donaldson v Natural Springs Australia Limited [2015] FCA 498 at [206], Beach J stated:
The various elements of the tort of inducing a breach of contract are not in doubt. First, there must be a contract. Second, the defendant must know that such a contract exists. Third, the defendant must know that if one of the contracting parties does or fails to do a particular act, that conduct would be a breach of the contract. Fourth, the defendant must intend to induce or procure that contracting party to breach the contract by doing or failing to do that particular act. Fifth, the breach must cause loss or damage to the plaintiff. Sixth, no defence of justification should be applicable.
Mr Allitt was an 88 year old man – frail, nearly blind, with dementia – and he turned up at the NAB with someone the NAB did not know asking for over a third of his money held with the NAB, $400,000, to be transferred immediately.
Counsel for Mr Mahood referred to part of the NAB’s Code of Practice. Although the sections that she referred to appear more relevant to the situation often encountered when someone with a power of attorney is trying to withdraw money from the customer’s bank account, the guidelines nonetheless show how careful the NAB should be before allowing withdrawal where there is a frail customer and where there may be a power of attorney in place.
It was conceded in the course of submissions by counsel for Mr Mahood that in fact it was appropriate for the NAB to “push the pause button” on 26 May 2011 and not advance that money on that day. It was then submitted, however, that it ought to have made its own further enquiries, including contacting the solicitor for Mr Allitt, the doctor for Mr Allitt and Mr Ballagh, to determine Mr Allitt’s capacity. This is not pleaded; and the “interference” pleaded is of having occurred only on 26 May 2011 rather than any later date. In any event, I do not agree that such enquiries would be required of the NAB in the circumstances, including where there is no evidence that Mr Allitt made any further attempt to withdraw $400,000 from the NAB after 26 May 2011.
Counsel for Mr Mahood referred to a file note made a few weeks after 26 May 2011 by Mr Cornellison which she says needs to be explained. The file note stated relevantly:
“In recent months there have been 2 instances where people have tried to obtain substantial amounts of money from [Mr Allitt] who is now aged in his early 90’s and almost blind…..
These people have been identified as:
- …...
- Graham Mahood whose parents were lifelong friends of [Mr Allitt]. In this instance Mahood called into the [bank branch] on 26/5/11 with [Mr Allitt] seeking a cheque for the amount of $400k. In this instance, the bank released no funds…
I have discussed this situation further with both Ian Ballagh and [the solicitor] as both the above people have persisted in attempting to obtain funds from [Mr Allitt]…”[8]
[8]Exhibit PAT-9 to Tribe affidavit.
Counsel for Mr Mahood submitted that this suggested that Mr Allitt had tried again after 26 May 2011 to give Mr Mahood money. However, I find that the file note does not contain that suggestion. Rather, it suggests that Mr Mahood had tried after 26 May 2011 to obtain funds from Mr Allitt.
(c) For the reasons set out above, the failure to release the money on 26 May 2011 was not causative of Mr Mahood losing the opportunity to receive the money.
(D) Unlawful interference in contractual relations – Mr Ballagh
24 This claim is set out at paragraphs 32 to 35 of the writ.
25 This claim also has no real prospect of success:
(a) There was no contract between Mr Allitt and Mr Mahood to be interfered with, for the reasons already given. There is no tort of knowingly and intentionally interfering with a promise.
(b) If there had been a contract to be interfered with, Mr Ballagh would have been justified in interfering with it in the circumstances. He was a long-term friend of Mr Allitt, assisted him with his daily living and financial affairs and held his financial Power of Attorney. The evidence of Mr Ballagh is that over a period of 10 years he had taken Mr Allitt to doctors’ appointments, dental appointments and CAT scans; organised his pension, hearing aids, wife’s carer’s allowance, insurance claims, healthcare card and pathology tests; filled out tablet dispensers for Mr Allitt and his wife; made sure that household bills were paid and that there was food in the cupboard; checked incoming mail; organised tax returns; and supervised the investment of term deposits for Mr Allitt so they could have regular income.[9] From 2004 Mr Allitt’s eyesight deteriorated and he became legally blind. His wife and Mr Ballagh would write the cheques for bills to be paid and Mr Allitt would sign them.[10]
[9]Ballagh affidavit paragraph 12.
[10]Ballagh affidavit paragraph 10.
Mr Allitt had dementia by 26 May 2011. Counsel for Mr Mahood relied on a letter from his doctor which said that as at 26 May 2011 his doctor was of the view Mr Allitt was able to make a will. Even if it were the case that Mr Allitt had capacity to make a will on 26 May 2011, given all the matters described above, it would have been justifiable for Mr Ballagh to tell the NAB not to immediately release the money.
(c) Mr Ballagh’s actions did not cause Mr Mahood to lose the opportunity of receiving $400,000 from Mr Allitt.[11]
(d) The release contained in the Terms of Settlement is a bar to this claim.
[11]See paragraph 16(c) above.
26 I will give judgment in favour of both defendants and summarily dismiss the claim against them.
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