Martinek v Commonwealth Bank of Australia

[2024] VCC 1737

IN THE COUNTY COURT OF VICTORIA

AT MELBOURNE

COMMERCIAL DIVISION

Revised
Not Restricted
Suitable for Publication

GENERAL LIST

Case No. CI-24-01332

JAMES BARRY MARTINEK and	First Plaintiff
PATRICIA MAREE MARTINEK	Second Plaintiff
v
COMMONWEALTH BANK OF AUSTRALIA	Defendant

---

JUDGE:	HIS HONOUR JUDGE PILLAY
WHERE HELD:	Melbourne
DATE OF HEARING:	21 October 2024, supplementary submissions 23 October 2024
DATE OF RULING:	Ex tempore Ruling 23 October 2024, revised transcript 1 November 2024
CASE MAY BE CITED AS:	Martinek and Anor v Commonwealth Bank of Australia
MEDIUM NEUTRAL CITATION:	[2024] VCC 1737

REASONS FOR RULING
---

Subject:APPLICATION FOR SUMMARY JUDGMENT            

Catchwords:              Summary judgment – strike out proceedings – estoppel – Anshun estoppel – duty of care – significant injury

Legislation Cited:      Civil Procedure Act 2010; Corporations Act 2001, Wrongs Act 1958

Cases Cited:Eriksson v Commonwealth Bank of Australia [2014] NSWSC 50; Foss v Harbottle (1843) 2 Hare 461, 67 ER 189; Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507; Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589; Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541; Perre v Apand Pty Ltd (1999) 198 CLR 180; Doggett v Commonwealth Bank of Australia (2015) 47 VR 302; Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd (2013) 42 VR 27

Ruling:Summary judgment application granted

---

APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr Hopkins (solicitor)	Paladin Lawyers
For the Defendant	Ms K Foley SC with Ms A Gaber	Clayton Utz

HIS HONOUR:

Introduction

1The defendant applies for summary judgment or to strike out the plaintiffs’ pleadings contained in the amended statement of claim (otherwise referred to as the ASOC) dated 21 June 2024. The application is brought on two bases: Rules 22 and 23 of the County Court Rules of General Civil Procedure, and alternatively s62 and s63 of the Civil Procedure Act 2010.

2In his pleading, the plaintiff makes claim that:

(a)   as guarantor and/or beneficiary, he has suffered economic loss by reason of the actions of the defendant (otherwise referred to as the “Bank,” and by that term I mean both Bankwest and CBA); and

(b)   secondly, as an individual he has suffered personal injury sounding in both economic and non-economic loss damages by reason of the actions of the Bank.

3Broadly, those actions of the Bank complained about can be described as a failure to adjust loan facilities which the Bank entered with Martinek Holdings Pty Ltd (defined as “MHPL” hereafter) as trustee for the JB and PM Martinek Family Trust (hereinafter defined as “the Trust”) entered into by the Bank in 2008.  Those loan facilities were secured by guarantees given by the plaintiff, and in addition he was a beneficiary of the Trust.

4As a result of the Bank calling on the guarantees in about 2010 the plaintiff was made bankrupt, and MHPL was forced to sell a number of its holdings and ultimately became deregistered in 2015.

5The defendant attacks the plaintiff’s claims, and seeks to summarily dismiss or strike out the ASOC on the following bases:

The “No Standing” arguments

(a)   First as to the claims as a guarantor and beneficiary.  The defendant submits that the pleadings are an amalgam of claims that are properly the right of the trustee company MHPL which is now deregistered and has no standing;

The “Abuse of Process” arguments

(b)   Even if the plaintiff has standing by separating out his claims from those of MHPL, those claims constitute an abuse of process by reason that they have been litigated or could have been litigated previously in both Queensland proceedings and in two New South Wales proceedings conducted in 2013;

The “Duty of Care” arguments

(c)   The plaintiff cannot properly formulate the duty of care owed to him in his personal injuries action.  I consider issues to do with whether the plaintiff has a “significant injury” in accordance with the Wrongs Act 1958 are of lesser order; they are not a prerequisite to the trial and do not affect the economic loss component of the claim in any event.

The “No Standing” arguments

6The general principle is that a company must take action in respect of a wrong done to it: not its officers.[1]  Here, MHPL entered into the relevant agreements with the Bank that are said to be breached resulting in loss to it.  That is a claim for MHPL to prosecute, and not the plaintiff.  However, MHPL was deregistered on 13 March 2015.[2]  It could not take action unless reinstated to the register of companies.

[1]Foss v Harbottle (1843) 2 Hare 461, 67 ER 189.

[2]Exhibit JPM 1, page 22.

7Further, no provision in the Corporations Act 2001 has been activated to allow Mr Martinek to bring this action on behalf of MHPL: for example, s236 of the Corporations Act.

8To meet this point, the plaintiff made clear in his submissions that he sought to bring claims, not as MHPL, but as guarantor of the various loan instruments MHPL entered and additionally as a beneficiary of the Trust.

9When examined, however, the ASOC displayed significant confusion as to the claims made, who makes them, and in what capacity.  During the course of argument, Mr Hopkins, who appeared for the plaintiff, essentially conceded that significant repleading to separate out the claims of the plaintiff from MHPL needed to occur.  At this stage, however, I record that I accept the defendant’s submission on this point, and that the following paragraphs at least are impugned and need to be repleaded.  These paragraphs are 9, 10, 13, 14, 15, 18, 93, 121, 122, 123, 124, 125, 128, 129, 130, 131, 133, 135, 136, 137, 138, 139, 140, 143 and 145.

10As I have indicated, the plaintiff’s solicitor accepted that repleading was necessary to remedy this defect. However, before turning to that, I now deal with another issue raised by the plaintiff. The plaintiff indicated that he presently has an application before the Victorian Supreme Court listed for 25 October 2024 which will impact on the resolution of this issue as to standing. I do not have great detail of that application before me: neither affidavits nor submissions and simply the originating process. I am told it is an application pursuant to s601AE of the Corporations Act.  While the plaintiff says this Supreme Court application may have some bearing on the matters before me as to standing, I am entirely unclear in what way this will occur, given the absence of material before me.  I therefore put this aside and do not consider it has any bearing on my decision.

The “Abuse of Process” argument

11Turning to the more substantive issue: the “abuse of process” argument.  The defendant submits that even if the plaintiff can formulate his claims as a guarantor and beneficiary, such claims will amount to an abuse of process in this court.  That is so, it is said, because:

(a)   the issues were ventilated in Queensland proceedings where the Bank sued the plaintiff as guarantor, and the Honourable Justice Mullins, as she then was, ruled against the plaintiff;

(b)   the issues should have been ventilated in those Queensland proceedings, it is said;

(c)   the issues were raised in two proceedings in the New South Wales Supreme Court which were ultimately stayed by a failure to pay costs arising in earlier New South Wales proceedings.

12Beginning with the applicable principles in respect of a abuse of process.  Abuse of process is a flexible concept and is broader in application than estoppel.  It arises in any circumstance where the court’s process may be unjustifiably oppressive to a party or bring the administration of justice into disrepute.[3]

[3]Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507, pages 518-519, paragraph [25].

13Here that principle is said to be invoked because the current causes of action overlap with the issues agitated in the Queensland proceeding and the two New South Wales proceedings.  In contrast, the plaintiff submits that because his proposed amended pleading was never before the Queensland Supreme Court, the issues in this current proceeding are being agitated for the first time.  To understand this, something must be said about the chronology of matters.  I set this out in summary form only:

(a)   on 5 May 2008 the Bank offered MHPL a loan facility of $11,490,000 with an expiry of 30 April 2009;

(b)   the loan was secured by guarantees to be given by Mr and Mrs Martinek;

(c)   on 12 and 13 May 2008 the letter of offer was executed and guarantees were provided shortly thereafter;

(d)   relevantly, the expiry of the facility was varied, and ultimately expired on 1 August 2010;

(e)   after the expiry of the facility, the parties attempted negotiations to allow the Martineks time to restructure repayment;

(f)    in about late 2010 the Bank called on the guarantors to repay the loan amount;

(g)   on 6 September 2011 the Bank issued in the Queensland Supreme Court seeking judgment for the debt owing pursuant to the guarantee;

(h)   the Bank brought a summary judgment application which was adjourned a few times;

(i)    on 6 February 2013 the plaintiff, now without lawyers, wrote to the Bank attaching a proposed amended defence and counterclaim (hereinafter referred to as the ADAC).[4]  He indicated that he did not intend to be present when the summary judgment application was to be heard on 11 February 2013 before the Queensland Supreme Court;

(j)    on 11 February 2013 the matter was called on before Mullins J.  The Bank put before her Honour the correspondence of Mr Martinek, including the proposed ADAC;[5]

(k)   Mullins J granted the summary judgment application.

[4]Exhibit JPM 1, pages 334 to 360.

[5]See the affidavit of Mr McRostie at page 363 and the request for an adjournment at page 364.

14Pausing there.  The plaintiff says the proposed ADAC was never considered by the Court.  That is clearly not correct.  As a matter of fact I find that Mullins J clearly considered the proposed amended statement of claim and counterclaim and the correspondence that the plaintiff had sent to the Bank on 6 February 2013.  Mullins J clearly had the correspondence of the plaintiff, including the proposed ADAC and the request for an adjournment contained in the affidavits the Bank filed on the day contained in the affidavit of Ms Hagenson.  Her Honour referred to the affidavit and stated she had read it.  Furthermore, that she read the material cannot be doubted, as she noted that Mr Martinek was overseas.  This was not a matter raised by the Bank’s counsel orally, but it appeared in the affidavit material.  These reasons constitute the basis for my finding that her Honour did consider the proposed ADAC and the issues raised within it.

15Her Honour then gave an oral ruling where she again referred to the material which she considered, before she ultimately concluded:

“There is nothing in the material which suggests there has been any true defence that justifies this matter going to trial.”[6]

[6]Exhibit JPM, pages 366 to 367.

16A question now arises as to whether there is any commonality between the issues in the ASOC before the Victorian County Court and those raised and considered by the Honourable Justice Mullins.  I have read each of the paragraphs which are said to overlap between the ASOC and the Queensland proposed ADAC.  I accept the defendant’s submissions as set out in the table contained at paragraph 20 of the Bank’s submissions.  I find that those specified paragraphs essentially raise the same claims as are before this Court.

17Turning to consider the two New South Wales proceedings.  In the New South Wales proceedings, the plaintiff joined with a Mr Eriksson in bringing claims against the Bank.  In that proceeding, Eriksson was the first plaintiff and Mr and Mrs Martinek were the second plaintiffs.  The second plaintiffs sought to agitate many of the grounds that it now seeks to press in this proceeding.  To understand that finding something must be said about the history of the matter in New South Wales.

18It is useful to simply recite from his Honour Justice Robb’s decision which sets out the relevant history:[7]

“The Bank ... obtained a judgment in the Supreme Court of Queensland against the second plaintiffs for an amount of about $4.7 million on the basis that they were liable to the Bank under a guarantee.  The second plaintiffs did not defend the claim.  The Bank commenced bankruptcy proceedings against the second plaintiffs.  The bankruptcy notice was set aside on 23 April 2013, on the condition that the second plaintiffs commenced proceedings to set aside or stay the Queensland judgment by 3 May 2013.

The second plaintiffs did not institute proceedings in the Supreme Court of Queensland to set aside or stay the judgment.  Instead, on 3 May 2013, the second plaintiffs commenced proceedings in this Court by summons for an injunction against the Bank to prevent it from enforcing the Queensland judgment.

Apparently, the second plaintiffs also sought an order that they file a statement of claim within 28 days, and on 25 June 2013 a solicitor employed by the second plaintiffs’ present solicitor swore an affidavit that attached a draft statement of claim.  The allegations and claims for relief in that draft statement of claim are in substance identical to those contained in the statement of claim in the present proceedings.

On 11 July 2013 Hammerschlag J dismissed the proceedings commenced by the second plaintiffs on 3 May 2013, and the second plaintiffs were ordered to pay the Bank’s costs.  The second plaintiffs say that they did not oppose the making of those orders.  The reasons why, the second plaintiffs say, that they took that course are set out in pars 17 and 18 of their written submissions provided in support of their present application.  The reasons are not entirely straightforward or easy to follow.  It is said that the second plaintiffs agreed to the dismissal of their claim because of reasons connected with steps taken by the first plaintiff, Mr Eriksson, in other related litigation.  The second plaintiffs also say that they “made their intentions known” that they would commence new proceedings substantially in the form of their present statement of claim.”

[7]Eriksson v Commonwealth Bank of Australia [2014] NSWSC 50, paragraphs [7]-[10].

19I have considered the statement of claim which was before the New South Wales Supreme Court against the ASOC which has been filed in this Court.  It essentially raises the same claims that the plaintiff wishes to bring as guarantor and beneficiary.  I accept the summary in the defendant’s submission at paragraph [22] as to which paragraphs overlap.  It can be seen that these are the central and fundamental allegations that the plaintiff wishes to bring as guarantor and beneficiary which he argues have resulted in loss to him.

20The plaintiff submitted that there is an inconsistency in the Bank’s position because in the New South Wales proceedings the Bank had submitted that the “present claim was not raised by way of defence or cross claim in the Queensland proceeding”: see paragraphs [17]-[24] of the plaintiff’s submission.  Even accepting this proposition, it does not assist the plaintiff in this application because what is equally critical is that the New South Wales Supreme Court was an appropriate and competent forum for the issues in the ASOC to be raised.  This must be true and there is no reason why the claims now pressed in the ASOC were not so ventilated.  This principle is encapsulated in the Anshun[8] principle: see particularly the majority’s discussion beginning at page 598 of the “extended principle” which they discussed from Henderson v Henderson.

[8]Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589.

21Considering this matter then, it is obvious to me that the central issues sought to be raised by the plaintiff as a guarantor and beneficiary have been raised squarely in the Queensland proceeding and the two New South Wales proceedings.  No appeals have been lodged in respect of those decisions.  That would have been the proper course.  I would uphold the defendant’s submission that there is an estoppel at work, given the finding of her Honour Mullins J which bars the current claims in the ASOC in respect of claims the plaintiff wishes to make as a guarantor and beneficiary.

22Further and alternatively, if I were wrong about the operation of a bar in estoppel, I find that it was unreasonable of the plaintiff not to plead the matters now raised in the ASOC to allow all the relevant issues to be determined in the one proceeding: see Anshun at page 602.

23Finality of litigation is a fundamental principle and must be given weight in the overall assessment as to whether an abuse of process has occurred.

24Here I consider the plaintiff is engaged in a process which would undermine that principle.  A third jurisdiction is being engaged in considering issues raised and dealt with by superior courts in Queensland and New South Wales.

25Having considered those matters overall, it is clear that no amount of repleading of the plaintiff’s statement of claim to separate out his claim as guarantor and beneficiary from that of the company can address the fundamental reality that his claims could have been or have been dealt with both by the Queensland Supreme Court and were also before the New South Wales Supreme Court or could have been.  The plaintiff could have appealed the decision of her Honour Mullins J, but did not.  Similarly, the New South Wales proceedings have been stayed until the payment of the Bank’s costs in relation to the New South Wales first proceeding.  The appropriate course would have been to simply pay those costs, and those proceedings could have been enlivened.  They were simply discontinued by the Trustee in Bankruptcy, but nothing prevents application being made to rejuvenate those proceedings.  The plaintiff has chosen not to take any of those steps, but rather issued proceedings in a further jurisdiction here.

26It is also relevant to note that these proceedings are issued some 11 years after the decisions in both Queensland and New South Wales.  While it is true that no limitations point has been taken, there is a degree of oppression which simply results from the effluxion of time.[9]

[9]Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541.

27Weighing these matters, I find that the plaintiff’s claims as guarantor and beneficiary have been or ought to have been the subject of litigation previously.  The claims in both Queensland and New South Wales substantially overlap with those before this Court.  The outcome of those proceedings has been that the plaintiff had the opportunity to raise, agitate and progress the claims he now seeks to make in the ASOC, but has chosen not to, either by appearing in the Queensland court or by appealing the decision of the Honourable Mullins J or further by ultimately rejuvenating the New South Wales proceedings.  To now attempt to relitigate those issues, some 11 years after the decisions in those courts, on essentially the same basis, amounts to an abuse of process.

28The test to be applied in respect of granting summary judgment pursuant to s63 of the Civil Procedure Act was not in dispute.[10]  It requires the defendant to demonstrate that there is no real prospect for success in the plaintiff’s claim.  In applying the test I have taken the plaintiff’s claims at their highest and accepted the pleadings as fact.  Here, as I have set out above, the action in respect of the guarantor and beneficiary claims cannot proceed as they are estopped by commonality of issues to the Queensland and New South Wales proceedings or in the sense described in Anshun. I therefore find these claims have no real prospect of success and should be summarily disposed of in accordance with s63(2)(c).

[10]Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd (2013) 42 VR 27.

29I will grant the defendant’s application for summary judgment in respect of the plaintiff’s claims as guarantor and beneficiary.

The “Duty of Care” point

30To the extent that the plaintiff pleads a duty of care which has been breached resulting in personal injury damages, a similar result obtains.  Primarily this is because the proposed ADAC put before the Queensland court made a plea in damages for “personal stress and duress” which substantially overlaps with the ASOC.[11]  The ASOC particularises the personal injury broadly as:

·        Severe distress, severe disappointment and deep depressions;

·        Back injury from 2018;

·        Severe headaches from 2010; and

·        Psychiatric injury involving depression from about 2009, which resulted in medication, treatment by inpatient stay and specialist consultations continuing until today.

It then pleads both loss of earning capacity and loss of future earnings.

[11]Exhibit JPM, page 347.

31I also consider the duty of care is very broadly pleaded, and impermissibly so in my view.  It is clear it is a plea in negligence – this seems apparent from the wording in paragraphs [151]–[152].  However, the supplementary submissions of the plaintiff filed seem to rely on a contractual breach with terms implied into the guarantees that the plaintiff had provided to the Bank: see paragraph [3] of the plaintiff’s supplementary submissions of 23 October 2024.

32If it is an attempt to plead a cause of action in negligence, it is clearly an attempt to recover commercial losses primarily with some resort to personal injuries.  To impose a cause of action in negligence into a commercial relationship runs counter to authority.[12]  However, this is not a decisive factor in my ruling, as, while there may be some confusion in the ASOC and submissions as to how this claim is put, even if it were a novel duty of care I would not accept that this would be sufficient to grant summary judgment.

[12]Perre v Apand Pty Ltd (1999) 198 CLR 180 Gleeson CJ at [120-129].

33I have considered the case of Doggett[13] the plaintiff relies on.  It does not assist on the point just raised as to a novel duty of care in tort.

[13]        Doggett v Commonwealth Bank of Australia (2015) 47 VR 302.

34Secondly, and most importantly, however, the allegations of breach pleaded in this negligence action or contract action are the same as alleged for the claim brought as guarantor and beneficiary and in respect of the duty owed to MHPL.  As set out above, the claims in respect of the guarantor and beneficiary actions are estopped.  What the plaintiff is seeking to do by this plea is to reagitate those claims by simply labelling it a new cause of action – whether that is negligence or contract.

35Third, the plea as to psychological injury was raised in the ADAC before Mullins J.  I have dealt with the effect of the consideration of the matters raised in the ADAC and ruling of Mullins J earlier.  The effect of that is that the ADAC raised issues, including the matter of personal injury sounding in economic and non-economic loss damages.  This can be seen by the plea in the 2013 ADAC as to the causation of “personal stress and duress”.  The ASOC in 2024 puts more specific labels on that condition as “severe stress” and “depression” but importantly notes that such conditions had been treated since 2009 (ASOC[153](iv)), with medication and required specialist treatment since 2010 ([153](x)].  These undoubtedly were the matters covered by the plea of “personal stress and duress” in the 2013 ADAC.  I find that there is a real commonality of issues raised between the 2013 pleading and the ASOC.  Further and alternatively the ADAC presented to the Queensland Supreme Court was the forum in which these matters of personal injury ought to have been raised.  They cannot be raised now for the reasons set out above.

36I will summarily dismiss this aspect of the plaintiff’s claim also in accordance with s63(2)(c) of the Civil Procedure Act.

37Given my ruling overall, I will grant the defendant’s application in respect of summary judgment.

- - -