McCAGH v Rural Bank (a division of Bendigo and Adelaide Bank Ltd)
[2024] WASCA 68
•24 JUNE 2024
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
TITLE OF COURT : THE COURT OF APPEAL (WA)
CITATION: McCAGH -v- RURAL BANK (a division of BENDIGO AND ADELAIDE BANK LTD) [2024] WASCA 68
CORAM: MITCHELL JA
VAUGHAN JA
VANDONGEN JA
HEARD: 17 JUNE 2024
DELIVERED : 24 JUNE 2024
FILE NO/S: CACV 105 of 2022
BETWEEN: DAVID THOMAS McCAGH
First Appellant
DAVID THOMAS McCAGH as executor of the estate of CECIL ROBERT McCAGH
Second Appellant
AND
RURAL BANK (a division of BENDIGO AND ADELAIDE BANK LTD)
First Respondent
MAUREEN McCAGH
Second Respondent
ON APPEAL FROM:
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram: TOTTLE J
Citation: RURAL BANK (A DIVISION OF BENDIGO AND ADELAIDE BANK LTD) -v- McCAGH [2022] WASC 339
File Number : CIV 1855 of 2011
Catchwords:
Banking - Finance facility agreements - Where trial undefended - Whether primary judge erred in failing to consider and determine a number of matters - Whether primary judge erred in failing to accord procedural fairness to self‑represented litigants - Whether primary judge erred in failing to perform or carry out other duties or things - Turns on own facts
Legislation:
Nil
Result:
Appeal dismissed
Category: B
Representation:
Counsel:
| First Appellant | : | N Coburn |
| Second Appellant | : | N Coburn |
| First Respondent | : | M D Cuerden SC & E L Blewett |
| Second Respondent | : | No appearance |
Solicitors:
| First Appellant | : | Niall Coburn Barrister-at-Law |
| Second Appellant | : | Niall Coburn Barrister-at-Law |
| First Respondent | : | Corrs Chambers Westgarth |
| Second Respondent | : | In person |
Case(s) referred to in decision(s):
Aegean Baltic Bank SA v Renzlor Shipping Ltd [2020] EWHC 2851 (Comm)
Dobbs v National Bank of Australasia Ltd [1935] HCA 49; (1935) 53 CLR 643
House v The King [1936] HCA 40; (1936) 55 CLR 499
Mayfair Wealth Partners Pty Ltd v Australian Securities and Investments Commission [2022] FCAFC 170; (2022) 295 FCR 106
Rural Bank (A Division of Bendigo and Adelaide Bank Ltd) v McCagh [2022] WASC 339
Tomasevic v Travaglini [2007] VSC 337; (2007) 17 VR 100
Zerjavic v Chevron Australia Pty Ltd [2020] WASCA 40
JUDGMENT OF THE COURT:
Introduction
This is an appeal against a judgment following an undefended trial in a mortgage recovery action. The first respondent (bank) sued the appellants and the second respondent (collectively 'borrowers') to recover money claimed to be owing under five finance facilities. In addition to the money claims the bank sought vacant possession of land mortgaged as security for the amount owing.
The borrowers did not attend the trial on 9 February 2022 and were not represented at the trial.
At the start of the trial the primary judge (Tottle J) ruled that the trial should proceed in the absence of the borrowers. His Honour gave oral reasons for that ruling. The ruling to proceed with the trial in the absence of the borrowers is not challenged in this appeal. The bank proceeded to adduce evidence in support of its claims by tendering documents and calling an officer of the bank. The bank officer produced and verified Dobbs[1] certificates prepared by him in respect of the amounts owing under the five finance facilities.
[1] Referring to Dobbs v National Bank of Australasia Ltd [1935] HCA 49; (1935) 53 CLR 643.
The primary judge reserved judgment and later published written reasons for decision: Rural Bank (A Division of Bendigo and Adelaide Bank Ltd) v McCagh.[2]
[2] Rural Bank (A Division of Bendigo and Adelaide Bank Ltd) v McCagh [2022] WASC 339 (primary reasons).
The bank's claim succeeded. On 13 October 2022 the primary judge entered judgment against the borrowers in the amount of $10,210,959.83 together with interest thereon and indemnity costs. The primary judge also ordered that the borrowers give vacant possession of the mortgaged land. As the mortgaged land was agricultural land the primary judge extended the time to provide vacant possession until 13 January 2023. Pending the hearing and determination of this appeal enforcement of the judgment was suspended by consent orders made in this court on 12 January 2023.
The appellants' appeal relies on many grounds of appeal. None has merit. The appeal must be dismissed.
Background facts
The primary proceedings were commenced in May 2011. The parties to the primary proceedings comprised the bank as plaintiff and the borrowers as defendants. The bank is the successor in law of Rural Bank Ltd (although it was also known by other names over the years). The borrowers are related and together conducted a farming business.
The appellant's case describes the relevant relationship between the borrowers in terms that were not disputed by the bank. Originally the borrowers consisted of a son (the first appellant) and his parents. On the father's death the first appellant became the executor of the father's estate. The son, in his capacity as executor of the father's estate, is the second appellant. The mother passed away between trial and judgment. The mother is nevertheless joined to the appeal as the second respondent.
The primary judge made a series of detailed factual findings based on the documentary evidence and the uncontradicted testimony of the bank officer. There is no challenge to the factual findings as made by the primary judge. Rather, as will become evident when describing the grounds of appeal, the appeal is based on (1) issues that the primary judge allegedly failed to consider and determine; and (2) duties or things that the primary judge allegedly failed to perform or carry out.
Given the nature of the issues raised by the grounds of appeal, it is not necessary to repeat the whole of the factual findings made by the primary judge. It suffices to incorporate the following matters as described more fully in the primary reasons:
1.Between 2004 and 2007 the borrowers entered into five finance facilities with the bank: [3]. Money was advanced under the finance facilities for purposes associated with the borrowers' farming business: [1].
2.One of the finance facilities was a 'Trading Limit Facility'. This, in substance, was an overdraft account to which interest, fees and charges incurred on each of the 'Term Loan Facilities' were debited. Legal costs incurred in relation to the enforcement of the facilities were also debited to the Trading Limit Facility: [4]. The primary judge made detailed findings as to the formation of the Trading Limit Facility and seven variations to the Trading Limit Facility between 2004 and 2009: [63] - [86].
3.There were also four Term Loan Facilities. The primary judge made detailed findings as to the formation of each Term Loan Facility. So too the primary judge made findings as to variations effected in relation to the Term Loan Facilities: [137] ‑ [141], [149] ‑ [156] (Term Loan Facility 1); [164] ‑ [168], [171] ‑ [172] (Term Loan Facility 2); [180] ‑ [187] (Term Loan Facility 3); [195] ‑ [199], [201] ‑ [202] (Term Loan Facility 4).
4.The facilities had common features and 'Facility Terms' which were described at length by the primary judge: [44] ‑ [46], [49] ‑ [55].
5.The terms of each finance facility were varied by further letters of offer. These followed the same format as the letters establishing the facilities. The borrowers signed the letters of offer in relation to the five finance facilities and returned them to the bank, thus signifying their acceptance of the varied terms: [47] ‑ [48].
6.Four mortgages had been granted by one or all of the borrowers. The bank was entitled to the benefit of the mortgages. The mortgages incorporated terms whereby a failure to pay any secured money when due was an event of default. On the occurrence of an event of default the bank was entitled to possession of the mortgaged land: [56] ‑ [62], [63], [69], [71].
The borrowers admitted the finance facility agreements on which the bank sued and admitted the mortgages on which the bank relied: [5], [21], [30].
The primary judge found that the borrowers did not make a reduction in their indebtedness under the Trading Limit Facility, to $550,000, by 31 December 2009 as the borrowers were required to do: [126] ‑ [127]. The bank served a notice of demand on the borrowers on 10 August 2010. By that notice the bank terminated the Trading Limit Facility and each of the Term Loan Facilities. The bank also required repayment of the amounts owing under the five finance facilities: [128]. A further notice of demand was served on 19 April 2011: [129]. The borrowers did not make any payment to the bank in response to the demands. Nor have the borrowers made any payment to the bank in reduction of their indebtedness under the Trading Limit Facility: [130].
The borrowers also defaulted in relation to Term Loan Facility 1, Term Loan Facility 2, Term Loan Facility 3 and Term Loan Facility 4: [159] - [161], [175] ‑ [177], [190] ‑ [192], [205] ‑ [207].
The primary judge made findings as to the amounts due by the borrowers to the bank under the Trading Limit Facility and the Term Loan Facilities based on the Dobbs certificates tendered by the bank: [136], [163], [179], [194], [209].
Primary reasons
As well as making those factual findings the primary judge described the procedural history to the primary proceedings and the trial: [5], [10] ‑ [42]. It will be necessary to refer to some aspects of that procedural history in addressing the grounds of appeal. It should, however, be observed that the primary judge described the borrowers' principal ground of defence in these terms ([6]):
The principal ground of defence articulated by [the borrowers] was a contention to the effect that the express terms of the Facilities governing interest were void for uncertainty and that by relying on those provisions, [the bank] contravened the statutory prohibitions against misleading or deceptive conduct or unconscionable conduct (or both).
The borrowers' contentions were outlined in more detail later in the primary judge's reasons ([93] ‑ [95]):
As pleaded in the re-amended defence filed on 3 July 2015, [the borrowers'] contentions were to the following effect:
(a)a rate of interest known as the 'variable secured seasonal rate' did not exist as [the bank] did not publish or offer a variable rate of interest to its customers titled 'variable secured seasonal rate of interest';
(b)the 'variable secured seasonal rate' and 'the seasonal account secured basic rate' were varied without notice to [the borrowers];
(c)neither 'variable secured seasonal rate' nor 'the seasonal account secured basic rate' were capable of being determined by [the borrowers] by reference to any document published or produced by [the bank] and 'the seasonal account secured basic rate' was incapable of being determined by [the borrowers] by reference to any formula that was published, produced or made available to [the borrowers]; and
(d)as a consequence of (a) to (c) the provision for interest in the bank's] letters of offer was void for uncertainty, alternatively [the bank's] conduct in respect of interest constituted misleading or deceptive conduct or unconscionable conduct (or both) contrary to the prohibitions against such conduct in the Australian Securities and Investments Commission Act 2001 (Cth).
On the basis of these contentions [the borrowers] contested the amounts [the bank] alleged were owing under the Trading Limit Facility and contested the validity of the demands made by [the bank].
The contentions outlined above about the interest rate in the Trading Limit Facility were repeated in substantially the same terms in respect of each of the other Facilities. (citations omitted)
The primary judge rejected the defence. His Honour concluded that the terms in the five facility agreements providing for the payment of interest were not void for uncertainty: [7], [117] ‑ [125], [146] ‑ [148], [155], [170], [173], [182], [188], [200], [203]. Those findings are not challenged in the appeal. Consequently, it is not necessary to summarise the primary judge's reasons for reaching that conclusion. As mentioned, the primary judge entered judgment against the borrowers in the monetary amount claimed by the bank. The primary judge also ordered that the borrowers give vacant possession of the mortgaged land.
Grounds of appeal
The grounds of appeal are reproduced in full in annexure 'A' to these reasons.
Ground 1 does not assert any error. Nothing more needs to be said about ground 1.
The two primary grounds of appeal are grounds 2 and 3. Relevantly:
1.By ground 2 the appellants allege that the primary judge erred by failing to consider and determine a number of matters. Those matters are particularised in sub‑grounds 2.1 ‑ 2.8 (ground 2.9 was abandoned before the appeal hearing).
2.By ground 3 the appellants allege that the primary judge erred in law by failing in the seven respects particularised in sub‑grounds 3.1 - 3.7.
Grounds 4 and 5 appear under the heading '[m]iscarriage of justice'. In part, so far as they allege that the primary judge failed to consider various matters and apply the law to the facts, grounds 4 and 5 are repetitive of grounds 2 and 3. To the extent that grounds 4 and 5 go further in asserting a miscarriage of justice and serious misconduct on the part of the bank they do not identify error on the part of the primary judge. No separate consideration is required of grounds 4 and 5.
The consequences of the trial being undefended
We have mentioned that the borrowers did not participate in the trial. This was a deliberate choice on the part of the appellants. A trial scheduled to commence on 23 January 2018 was adjourned by consent: [23]. Then, after the appellants had complained about delay in the progress of the action, the trial was relisted to commence on 7 February 2022 (for 10 days). The listing took account of the appellants' limited availability: [27]. Subsequently, by email dated 23 May 2021, the appellants confirmed that the borrowers were available for trial commencing on 7 February 2022: [28]. At a 4 November 2021 directions hearing the commencement date for the trial was put back two days so that the trial would commence on 9 February 2022: [32].
However, by an email sent to the court on 17 December 2021 the appellants said that they were withdrawing from any participation in the trial of the action: [35]. That is what happened - although, by a series of emails over 7 - 9 February 2022, the appellants later pressed for the trial dates to be vacated: [38] - [39]. Eventually, as we have mentioned, at the start of the trial the primary judge ruled that the trial should proceed in the absence of the borrowers: [41].
Order 34 r 2 of the Rules of the Supreme Court 1971 (WA) (RSC) permits the course followed by the primary judge. It provides:
If, when a trial is called on, one party does not appear the judge may proceed with the trial of the action or of any counterclaim in the absence of that party.
It is possible for a party to apply to set aside any judgment given in the absence of the party: O 34 r 3 RSC. However, that is not the way in which the appellants have proceeded. The appellants appeal against the judgment entered by the primary judge. In evaluating the appeal there are a number of practical implications that flow from the borrowers' absence at trial.
In the absence of the borrowers at trial it remained necessary for the bank to prove its claim so far as the legal onus of proof rested on the bank. The bank was, however, able to rely on any admissions made by the borrowers. In addition:
1.The borrowers' absence meant that the court did not have before it any evidence that the borrowers might have been able to adduce to contradict or test the material facts on which the bank relied in support of its claims. This, as will be seen, is an insurmountable difficulty for a number of sub‑grounds which complain of a failure of the primary judge to consider evidentiary material filed by or on behalf of the appellants in the primary proceedings.
2.The evidence of the bank's witness was not contested. In the ordinary course, the evidence not being inherently incredible or implausible, it was to be expected that the evidence would be accepted by the primary judge. On occasions this will not be the case. The court is not bound to accept uncritically every statement made by a witness however inherently improbable in itself or equivocal, lacking in precision or inconsistent with undisputed contemporary documents or other statements by the witness. But there is nothing to suggest that the bank's witness gave evidence of that character.
3.The borrowers' failure to appear and participate in the trial by calling evidence meant that any claims pursued by counterclaim, on which the borrowers bore the legal onus of proof, must necessarily fail. The court can only determine the issues raised by the pleadings on the basis of the evidence before the court. In the absence of any evidence in support of the counterclaims on which the borrowers bore the legal onus of proof those claims could not succeed.
The available grounds for appellate intervention are also circumscribed. As the Full Court of the Federal Court of Australia explained in Mayfair Wealth Partners Pty Ltd v Australian Securities and Investments Commission (where the appellants made a deliberate forensic decision not to appear at trial):[3]
[H]aving not appeared at the hearing which led to [the judgment], it is not apparent how the appellants can establish that the primary judge erred in not making findings or drawing conclusions in [the judgment] which were never put to the primary judge. The fundamental issues which the appellants never confront are that it is not an error to admit evidence to which no objection is taken (subject to a few exceptions where the evidence is prohibited from admission, which is not the case here). It is not an error to make reasonably open findings of fact when no-one argues the finding should not be made based on other potentially contradictory but contestable evidence. It is not an error to not weigh potentially competing characterisations of facts when no argument is made about the characterisation.
[3] Mayfair Wealth Partners Pty Ltd v Australian Securities and Investments Commission [2022] FCAFC 170; (2022) 295 FCR 106 (Mayfair Wealth Partners Pty Ltd) [9]. See also [11] - [15], [31] - [34], [39].
An appellant who does not appear at trial cannot assert error by the primary judge merely because the appellant's absence at trial made it easier for the other party to adduce evidence and prove its case.[4] Nor, in circumstances where an appellant elected not to participate in the trial and for that reason no submissions were made to the primary judge in the terms advanced on appeal, can there be error in the primary judge failing to consider the matters so advanced.[5]
[4] Mayfair Wealth Partners Pty Ltd [13].
[5] Mayfair Wealth Partners Pty Ltd [79].
At the appeal hearing counsel for the appellant sought to distinguish Mayfair Wealth Partners Pty Ltd on the basis that it concerned the admission of an expert report. We accept that some of the observations we have recited were made in the context of grounds of appeal alleging error by admitting into evidence an expert report which, in part or whole, did not comply with s 79 of the Evidence Act 1995 (Cth). However, in our view the observations are of wider application. The passage reproduced at [27] above was prefaced by the Full Court referring to proper recognition of the consequences of the forensic decision not to appear at trial and the importance of the principle of finality of litigation - one aspect of which is that a party is generally bound by its conduct below.[6]
[6] Mayfair Wealth Partners Pty Ltd [9].
In any event, as will be seen, the real difficulty that arises for the appellants' case on appeal is that their election not to participate in the trial had the result that there was no evidence at trial whereby it was incumbent on the primary judge to consider and determine all of the issues raised in the borrowers' defence and counterclaim.
Disposition ground 2 - did the primary judge err by failing to consider and determine matters as particularised in ground 2?
Each of the sub‑grounds to ground 2 allege legal error so far as the primary judge allegedly failed to consider, or alternatively, failed to consider and determine, some matter.
Sub‑grounds 2.1, 2.2, 2.3, 2.4, 2.7 and 2.8 - alleged failure to consider various issues pleaded in the appellants' defence and counterclaim
Sub‑grounds 2.1, 2.2, 2.3, 2.4, 2.7 and 2.8 may be considered together. They each allege that the primary judge failed to consider and determine a pleaded issue. Relevantly, the appellants contend that the primary judge failed to consider and determine:
1.All of the issues in the appellants' re‑amended defence, set‑off and counterclaim dated 3 July 2015 (for convenience we will refer to this as the 'defence and counterclaim') (sub‑ground 2.1).
2.The pleaded application of s 12CB(1) of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act) with regard to alleged unconscionable conduct in providing financial services to the appellants (sub‑ground 2.2).
3.The pleaded application of s 12DA of the ASIC Act with regard to alleged misleading conduct in relation to the five finance facilities (sub‑ground 2.3).
4.The pleaded application of s 12BB of the ASIC Act with regard to alleged misleading representations with respect to future matters (sub‑ground 2.4).
5.The bank's alleged failure to apply for an interest rate subsidy (sub‑ground 2.7).
6.Issues under the 'crop lien' and 'livestock mortgage' as pleaded in the defence and counterclaim (sub‑ground 2.8).
Sub‑ground 2.1 does not rise any higher than the alleged failure to consider and determine the pleaded issues more specifically particularised in sub‑grounds 2.2, 2.3 and 2.4. The primary judge accurately summarised the pleaded issues the subject of sub‑grounds 2.2, 2.3 and 2.4 at [93](d) and [95] of the primary reasons (as reproduced at [16] above).[7] The allegations of unconscionability and misleading conduct were based on the premises said to result in the provision for interest being void for uncertainty. As to the allegation concerning an interest rate subsidy, as raised by sub‑ground 2.7, the appellants relied on alleged representations made to the first appellant in or about February 2009 which were allegedly attributable to the bank.[8] Finally, as to sub‑ground 2.8, the issues under the crop lien and the livestock mortgage concerned a series of alleged representations made to the first appellant by officers of an entity associated with the bank's predecessor in title in or about June 2006 and 22 August 2006.[9]
[7] Defence and counterclaim pars 7.1(d)(ii), 7.2(d)(ii), 7.3(d)(ii), 13.1(d)(ii), 13.2 (d)(ii), 18.1(d)(ii), 18.2(d)(ii), 23.1(d)(ii), 23.2(d)(ii), 29.1(i)(ii), 29.2(d)(ii). See also pars 38, 40, 42, 44, 46.1, 48.2, 48A.2, 48B.2, 48C.2, 48D.2, 49.1, 50, 51.1, 52, 52A.1, 52B, 54.1, 54.2, 55 - 59, 62, 63 - 63B.
[8] Defence and counterclaim pars 64 - 67.
[9] Defence and counterclaim pars 68 - 76.
The appellants' written submissions in support of sub‑grounds 2.1, 2.2, 2.3 and 2.4 allege that the bank engaged in predatory lending or asset-based lending. It is suggested that the primary judge erred in law by failing to consider and determine the bank's claim through this lens. There are two fundamental difficulties with this contention. First, that was never the appellants' pleaded case. In the circumstances of this dispute the necessity for finality in litigation precludes any enlargement of the issues that may be pursued on appeal. It would be antithetical to the interests of justice to permit an enlargement of the issues before the court on appeal where the appellants elected to withdraw from participation in the trial of the action. Second, the contention relied on materials which did not form part of the trial record (including submissions to and the final report of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry[10] and various other reports concerning the banking and financial services industry). It is true that the appellants made an application to adduce additional evidence in the appeal.[11] However, the coram refused that application at the appeal hearing. None of the documents which the appellants sought to introduce as additional evidence on the appeal were relevant to the pleaded issues in the defence and counterclaim.
[10] Which we will refer to as the 'Banking Royal Commission'.
[11] Appellants' application in an appeal dated 6 November 2023 as supported by the affidavit of D T McCagh sworn 6 November 2023.
Having disposed of the false issue based on allegations of predatory lending or asset-based lending, it is plain that sub‑grounds 2.1, 2.2, 2.3 and 2.4 are completely without merit. The pleaded allegations of unconscionability and misleading conduct relied on the matters that the appellants called in aid of their contention that the various interest provisions were void for uncertainty. The primary judge dealt with that contention determining it adversely to the appellants. Those findings are unchallenged in the appeal. Once that position was reached the foundation for the pleaded allegations of unconscionability and misleading conduct fell away. There was nothing further for the primary judge to consider and determine.
In any event, as the bank submitted in the appeal, the borrowers' unconscionability and misleading conduct allegations required some evidence on the part of the borrowers if the borrowers were to succeed. There were pleaded factual allegations in the defence and counterclaim that were not admitted by the bank. The borrowers did not participate in the trial and did not adduce any evidence in support of their pleaded factual allegations.
At the appeal hearing, counsel for the appellants referred to Aegean Baltic Bank SA v Renzlor Shipping Ltd. There Adrian Beltrami QC, sitting as a judge of the High Court of Justice, stated:[12]
The end result is that no evidence has been adduced by the defendants in support of the positive averments which they have pleaded. However, I still need to consider those defences and … must have regard to such evidence as is in fact before the court, which may include evidence supportive of the pleaded defences even if not adduced by the defendants.
[12] Aegean Baltic Bank SA v Renzlor Shipping Ltd [2020] EWHC 2851 (Comm) [30].
It may be accepted, in principle, that if the bank adduced evidence at trial that was supportive of the claims made in the defence and counterclaim, that should have been considered in evaluating whether the bank had proven its claim. However, when asked at the appeal hearing to identify any such evidence, counsel for the appellant candidly accepted that there was nothing of this character in the bank's evidence as adduced at trial.[13]
[13] Appeal ts 31 - 32. See also appeal ts 29 - 30.
The absence of such evidence means that even if - which is not the case - the primary judge erred by failing to consider and determine these matters, the error was not material and cannot sustain a reversal of the judgment.
The same difficulty arises in relation to the pleas in the defence and counterclaim that underlie sub‑grounds 2.7 and 2.8. The borrowers advanced pleaded claims based on alleged representations to the first appellant. At trial there was no evidence to substantiate that the representations were made as pleaded or at all. In the circumstances the primary judge did not err by failing to consider and determine the claims.
Sub‑grounds 2.1, 2.2, 2.3, 2.4, 2.7 and 2.8 fail.
Sub‑ground 2.5 - alleged failure to consider whether excessive interest charged having regard to amount of the loan and the mortgaged assets
In support of sub‑ground 2.5, the appellants' written submissions state:
[D]ue to the excessive interest charged proportionate to the loan and proportionate to the value of the asset used as security, [the primary judge] failed to properly investigate whether the amount claimed by [the bank] was a true reflection of the real debt owed in circumstances where the Trial was not conducted as a contested hearing.[14]
[14] Appellants' submissions par 29.
So stated it can be seen that sub‑ground 2.6 is based on an assumption that the interest charged is 'excessive' because it is disproportionate to the amount of the loan and disproportionate to the value of the assets provided by way of security pursuant to the mortgages. Why that was so was not developed beyond mere assertion. Nor was there any development of why this would, if established, provide the borrowers with a good defence to the bank's claim. There were no pleaded defences in the defence and counterclaim based on the interest charged being excessive due to it being disproportionate to the amount of the loan or the value of the land the subject of the mortgages.
This is sufficient to dismiss sub‑ground 2.5.
It should not, however, be thought that the primary judge failed to consider and determine the amount of the debt owed by the borrowers to the bank. The primary judge made a series of findings (unchallenged in the appeal) as to the debt owed under the Trading Limit Facility and the Term Loan Facilities based on Dobbs certificates tendered by the bank.[15] This determination included the interest component of the debt. The primary judge was satisfied that the bank had proved its case as the amount owed by the borrowers to the bank. His Honour was not obligated to undertake any wider roving 'investigation' into the interest charges relative to the amount of the loan or the value of the assets used as security. Sub‑ground 2.5 also fails for this further reason.
Sub‑ground 2.6 - alleged failure to consider expert report filed by the appellants
[15] Primary reasons [136], [163], [179], [194], [209].
Sub‑ground 2.6 is based on the primary judge's non-consideration of an expert report of a David Neve which was apparently filed in the primary proceedings on behalf of the borrowers on 21 September 2016.
It may be accepted that the primary judge did not consider the expert report. However, the primary judge was not in error in failing to consider the expert report. The primary judge was only required to consider the evidence as adduced at trial. The expert report was not adduced in evidence at trial. There was no duty or obligation on the primary judge to consider potential evidentiary materials which were not before him. To the contrary, the primary judge would have been in error were he, of his own motion, to have sought out and had regard to evidentiary matters which did not form part of the evidence at trial.
Sub‑ground 2.6 fails.
Disposition ground 3 - did the primary judge err by failing to perform or carry out matters as particularised in ground 3?
Ground 3 alleges a miscellany of errors on the part of the primary judge. All are without merit. It is convenient to deal with each sub‑ground individually.
Sub‑ground 3.1 - alleged failure to ensure fair trial by giving due assistance to the appellants as self-represented litigants
Sub‑ground 3.1 is misconceived. The need to accord procedural fairness to a self‑represented litigant, and the principles that have developed in that regard, are well established. At the appeal hearing counsel for the appellants referred to the decision of Bell J in the Supreme Court of Victoria in Tomasevic v Travaglini.[16] It suffices to refer to and adopt without repetition this court's summary of the relevant principles in Zerjavic v Chevron Australia Pty Ltd.[17] But the need to ensure observance with those principles pre-supposes that a self-represented litigant is present at trial. The appellants were not. There was no failure to accord procedural fairness to the appellants as self-represented litigants at trial where, as has been seen, the appellants elected not to participate in the trial. Sub‑ground 3.1 fails.
Sub‑ground 3.2 - alleged failure to provide reasons for judgment
[16] Tomasevic v Travaglini [2007] VSC 337; (2007) 17 VR 100 (esp. at [56], [62], [66] - [67], [85] - [86], [88], [96], [146], [148], [155]).
[17] Zerjavic v Chevron Australia Pty Ltd [2020] WASCA 40 [73] ‑ [76].
The appellants' written submissions clarify that the complaint by sub‑ground 3.2 is that the primary judge failed to provide reasons for:[18]
1.The primary judge's approach in 'ignor[ing] any and all evidence' filed in the court by the appellants.
2.Preferring the bank's evidence over the appellants' evidence (including the expert report filed by the appellants).
[18] Appellants' submissions par 36.
The appellants asserted that the primary judge erred in law by failing to consider the evidence in its entirety. It was submitted that the evidentiary materials as filed by the appellants in the primary proceedings ought to have been admitted as evidence and considered by the primary judge.[19]
[19] Appellants' submissions par 37.
Accordingly, the complaint by ground 3.2 is not that the primary judge's reasons are legally inadequate so far as the primary reasons disclose how the primary judge came to the conclusion that the bank had proved its claim. Rather, it is that the primary judge failed to consider the appellants' evidentiary materials and explain why he did not consider them. So understood, sub‑ground 3.2 rises no further than ground 2.6 and fails for the same reasons as sub‑ground 2.6.
Sub‑ground 3.3 - alleged failure to consider evidence filed by the appellants
Sub‑ground 3.3 fails for the same reasons as sub‑ground 2.6.
Sub‑ground 3.4 - alleged failure to allow the appellants reasonable discovery
In alleging error by failure to allow the borrowers reasonable discovery the appellants say that, despite repeated requests, the primary judge failed to allow the borrowers reasonable discovery of loan application forms and credit assessment forms.[20] Such documents were not relevant to any pleaded issue. There was thus no error on the part of the primary judge in failing to order that the bank give discovery of documents of this kind. Sub‑ground 3.4 fails.
Sub‑ground 3.5 - alleged failure to advise appellants of requirements to ensure that the second respondent was represented in the primary proceedings
[20] Appellants' submissions par 38.
Sub‑ground 3.5 is misconceived on a number of levels. First, the primary judge had no duty to advise the appellants what should be done to ensure that the second respondent was represented in the primary proceedings.[21] Second, to the extent that the second respondent was unrepresented, this was a matter that affected her, not the appellants. It is not something that can ground an appeal at the behest of the appellants. Finally, the alleged shortcoming in the primary judge's actions vis-à-vis the second respondent do not in any way impugn the correctness of the judgment that is the subject of the appeal. Sub‑ground 3.5 fails for each of these three reasons.
Sub‑ground 3.6 - alleged failure to grant appellants' request for court mediation
[21] Zerjavic v Chevron Australia Pty Ltd [75](4).
The appellants assert that the primary judge failed to provide for mediation before trial despite their request for mediation. In this respect the appellants rely on an email sent on the eve of trial - the request for mediation is identified to have been made by an email dated 7 February 2022.[22] The primary judge refers to this email in his reasons. The first appellant then requested that the trial be vacated on the basis that, among other things, he wanted 'to try' mediation before the trial.[23] The appellants submit that, in all the circumstances, it was unreasonable for the matter to go to trial in the absence of mediation.[24]
[22] Appellants' submissions pars 38.1 (fn 54), 40.1.
[23] Primary reasons [38](d).
[24] Appellants' submissions par 40.2.
The primary judge's decision not to order mediation, and instead proceed with a trial that had been listed more than 11 months earlier, was a discretionary decision to which the principles in House v The King[25] apply.
[25] House v The King [1936] HCA 40; (1936) 55 CLR 499, 505.
The appellants did not identify any recognisable species of discretionary error that the primary judge was said to have committed. Perhaps, in suggesting that it was unreasonable for the matter to go to trial in the absence of mediation, the appellants are to be taken to be submitting that the primary judge's actions were unreasonable or plainly unjust. There is no merit in any such suggestion. The request for mediation was very late. It came two days before a trial that had already been once adjourned. The glacial progress of the primary proceedings had afforded the borrowers ample opportunity to seek and obtain orders for mediation well prior to 7 February 2022. The first appellant's 7 February 2022 email presented as little more than a delaying tactic in circumstances where the appellants had made it clear that they had withdrawn from participation in the trial of the action. Case management considerations were a powerful reason not to entertain orders for mediation that would inevitably delay a trial and the fair and just determination of the litigation. In the circumstances it was well open to the primary judge not to accede to the request for mediation. There is no appellable discretionary error as alleged by sub‑ground 3.6.
Even if, contrary to our conclusion, there is discretionary error in terms of sub‑ground 3.6, it does not directly affect the judgment the subject of the appeal. It could not, in our view, amount to material error which would justify this court setting aside the judgment under appeal.
Sub‑ground 3.6 fails.
Sub‑ground 3.7 - alleged failure to consider public interest
It is not clear what is intended by sub‑ground 3.7. The appellants' written submissions state under the heading '[p]ublic interest':[26]
Failing to appreciate the serious compliance and regulatory failures on the part of [the bank] pertaining to public issues for farmers in Western Australia, including [the bank's] obligation as a financier to 'act efficiently, honestly and fairly' to customers (Public Interest) which are at stake in this case, including [the primary judge's] portrayal of a lack of understanding about the serious compliance and regulatory failures apparent in the Credit Assessment Report regarding [the bank's] breaches of the Banking Code of Practice and s 912A of the Corporations Act 2001 (Cth). (original emphasis)
[26] Appellants' submissions par 41.
The appellants go on to allege, among other external and internal compliance failures and failures to meet expected standards in the banking and finance industry, that the bank failed to comply with the Banking Code of Practice in providing the five finance facilities to the borrowers and, moreover, either failed to take into account or ignored the Banking Royal Commission recommendation 1.14 in relation to distressed agricultural loans. The primary judge is similarly said to have failed to consider the requirements under the Banking Code of Practice. Finally there is reference to the serious implications that the judgment will have for the appellants - an outcome that is said not to serve the court, the bank or the interests of justice. The appellants submit that if the decision is allowed to stand it will be strongly against the public interest and Western Australian farmers that have loans with financial institutions.[27]
[27] Appellants' submissions pars 42 - 44.
Such public interest considerations never formed part of the borrowers' pleaded case. Nor are they matters that the primary judge was required to consider and determine in evaluating whether the bank had proved its claim against the borrowers. The primary judge did not err by failing to consider the public interest in the sense in which that concept is developed in the appellants' written submissions in support of sub‑ground 3.7.
Sub‑ground 3.7 fails.
Conclusion and orders
All of the appellants' grounds of appeal fail. The appeal must be dismissed. Paragraph 8 of this court's order made 12 January 2023 suspending the enforcement of the judgment entered in favour of the bank against the borrowers should be discharged. The parties should now be heard on the costs of the appeal.
Annexure 'A' - Ground of Appeal
1.In the decision of the Supreme Court of Western Australia in Rural Bank (A Division of Bendigo and Adelaide Bank Ltd) v McCagh [2022] WASC 339, delivered on 13 October 2022 by Justice Tottle, the Appellant submits that there are the following grounds of appeal.
Error by the Primary Court
2.The Honourable Judge erred in mixed fact and law by failing to consider:
2.1all the issues in Defence, Set-Off and Counterclaim filed by the Appellant.
2.2.the pleaded application of s 12CB(l) of the Australian Securities and Investments Commission Act 2001 (ASIC Act) with regard to the First Respondent's unconscionable conduct in connection to providing financial services to the Appellant.
2.3the pleaded application of s 12DA of the ASIC Act with regard to the First Respondent's misleading or deceptive conduct in relation to the Loan Facilities.
2.4.the pleaded application of s 12BB of the ASIC Act with regard to misleading representations with respect to future matters.
2.5that the excessive interest charged proportionate to the loan and proportionate to the asset used as security so as to investigate whether the amount claimed by the First Respondent was a true reflection of the real debt owed.
2.6the Expert Witness Report filed by the Appellant in 2016.
2.7the First Respondent's failure to apply for the interest rate subsidy.
2.8issues under the Crop Lien and Livestock Mortgage as set out in the Re-Amended Defence, Set-Off and Counterclaim.
2.9the Appellants' request for the Honourable Judge to recuse himself on the basis of demonstrated apprehended bias.[28][28] The appellants notified the court pre-appeal hearing that sub‑ground 2.9 was abandoned.
3The Honourable Judge erred in law by failing to:
3.1sufficiently uphold the judicial duty of a Supreme Court judge to ensure a fair trial by giving due assistance to the Appellant as a self-represented party.
3.2provide reasons for the Judgment.
3.3consider evidence filed in the court by the Appellant throughout the proceedings.
3.4allow the Appellant reasonable discovery.
3.5.adequately advise First Appellant in relation to the court's requirements to ensure the Second Respondent, Maureen McCagh was represented in the proceedings.
3.6.grant the Appellants' request for court mediation; and
3.7consider the Public Interest.
Miscarriage of Justice
4.The Judgment as it stands is a substantial miscarriage of justice which has serious implications for the Appellant, including possession of the farms that have been in the family for over 100 years and bankruptcy of the Appellant. These outcomes serve neither the Court nor the First Respondent, nor the interests of justice, especially on the basis of inflated and contested calculations of interest, the First Respondent's compliance failures and no proper consideration of the Re‑Amended Defence, Set-Off and Counterclaim.
5.The Honourable Judge failed to consider the Appellants' case and failed to apply the relevant law to the facts in light of serious allegations of misconduct against the First Respondent and in the context of the systemic issues reported by the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
HQ
Associate to the Honourable Justice Vaughan
24 JUNE 2024
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