McKinnon & Anor v Commonwealth Bank

[2003] HCATrans 388

[2003] HCATrans 388

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Melbourne  No M115 of 2001

B e t w e e n -

DONALD NEIL McKINNON and JEANETTE BEVERLY DAWN McKINNON

Applicants

and

COMMONWEALTH BANK OF AUSTRALIA

Respondent

Application for special leave to appeal

GLEESON CJ
GUMMOW J

TRANSCRIPT OF PROCEEDINGS

AT MELBOURNE ON FRIDAY, 3 OCTOBER 2003, AT 11.59 AM

Copyright in the High Court of Australia

MRS J.B.D. McKINNON appeared in person.

MS M.B. LOUGHNAN:   May it please the Court, I appear for the respondent.  (instructed by Ryne Bridges)

GLEESON CJ:   Is Mrs McKinnon here?

MS LOUGHNAN:   She is present in Court, your Honour.

GLEESON CJ:   Yes, Mrs McKinnon.

MRS McKINNON:   Your Honour…..

GLEESON CJ:   Yes, you go ahead, in front of the microphone if you do not mind, Mrs McKinnon, because this is being recorded.

MRS McKINNON:   Your Honour, when we appeared before the Court on 20 June this year the matter was adjourned because two of the Judges had Commonwealth Bank shares.  We were instructed that we would have the opportunity this morning to object and to ask the Judges individually if they had Commonwealth Bank shares this morning.  So I would like to commence by being able to do that, if that is okay.

GLEESON CJ:   You want to know if I own any shares in the Commonwealth Bank?

MRS McKINNON:   Yes, your Honour.

GLEESON CJ:   The answer is no.

MRS McKINNON:   And also do you have any shares in any other bank, your Honour, because ‑ ‑ ‑

GLEESON CJ:   Look, you have asked your question and I have answered it.  You go ahead with your submission.

MRS McKINNON:   And the other Judges, your Honour, may I ask ‑ ‑ ‑

GUMMOW J:   I do not own any shares in the Commonwealth Bank.

GLEESON CJ:   Go ahead with your argument.

MRS McKINNON:   Your Honour, there is also a notice of motion before the Court that we would like dealt with before the appeal is heard.

GUMMOW J:   That is some attempt to initiate a new proceeding.

MRS McKINNON:   Your Honour, we feel they are questions that are pertinent to our appeal and that we do have the right to have the Court order on those questions.

GUMMOW J:   I am afraid you do not.

GLEESON CJ:   The orders are not intelligible, Mrs McKinnon.  How can we make an order that the Magna Carta is still in full force and effect?  What is that supposed to mean?

MRS McKINNON:   Your Honour, I guess it is a matter for the Court to decide whether it is enforceable or it is not enforceable.

GLEESON CJ:   The motion is refused.  Go ahead with your argument.

MRS McKINNON:   Your Honour, I will commence our oral argument with what we consider one of the main issues in this appeal application and that is the denial of our common rights to have our case heard by a judge and jury.  Under the Magna Carta Act, the Imperials Acts Application Act 1980 – it is still relevant in Victoria – it is clear all persons shall be judged by their peers and none will be disseised of their property until this is done.  It is also our understanding that judgment for possession of property cannot be given by anyone but a judge.  Master Evans made this decision in 1998 without our case being heard.

In October 1999 Justice Warren gave us permission to have our case heard.  We wanted this heard by a jury.  On 8 November 2000 we applied to do this under the Supreme Court Rule 47.02.  We were told that the application should have been made at the time of our notice of appearance which was in 1997.  We did not need to have a notice of appearance at that new hearing as it was our action and not the Bank’s.

The Bank convinced the court that it would be too complicated for a jury to understand.  The Magna Carta has no restrictions on whether a case is complicated or not, but rather to have the right to be judged by your peers.  This assertion by the Bank was incorrect anyway as I have represented myself and my husband for four years through all the courts, including weeks at the trial.  I have no legal training and my husband is a farmer/shearer.

Our case would be relevant and easily understood by most people whether they have taken out loans or not.  They would have absolutely no trouble understanding the facts of this case.  As I am not legally trained, I speak in ordinary‑day terms and Ms Loughnan has been restrained on several occasions, and particularly at the trial, not to get legally carried away as it would have put me out of my depth and disadvantaged our case.  So in this instance the trial was and would have been kept at a level of the layman’s understanding and this can be verified easily by reading any or part of the trial transcript.

If leave is granted, this argument will be used to argue for a jury at a new trial.  It is also important to note that the trial was heard on the question of facts, not law.  The Bank claimed it would be too complicated to understand company law but failed to demonstrate anywhere this would be applicable anyway.

I refer to the application book page 77.  I am sorry, your Honour, I will withdraw that.  I am not sure where that was.  All the pleadings were simply based on how most people would expect their bank to conduct their accounts and how they would rightfully expect their local bank manager to conduct their affairs.

It should be remembered the loan and overdraft that has caused this situation was only $50,000, a very minimal amount to borrow by most people’s standards and considering the security the Bank held.  The Bank in their reply to summary of argument on page 79 of the application book says that “Magna Carta does not embody current law.  It is not binding on the legislatures of Australia” and they quote the case, Essenberg v The Queen.  Well, it is still current under the Imperial Act of Victoria.  We do not agree and I do not think the Bank has proved otherwise that the Magna Carta is not still law in Victoria.

GUMMOW J:   Well, this Court so held.

MRS McKINNON:   That it is law?

GUMMOW J:   It is a basic matter of legal understanding.

MRS McKINNON:   That it is law?

GUMMOW J:   The Court of Appeal was correct in what it said about the Magna Carta.

MRS McKINNON:   That it is standing.

GUMMOW J:   That it is not part of the law that binds Australian legislatures in the exercise of their power under the Constitution of the Commonwealth or the Constitution of the respective States.

MRS McKINNON:   I believe it was Justice Ormiston on 10 February 2000 that stated to the court that the banks had seen to the Magna Carta.  It is very obvious that the Commonwealth Bank are loath to be judged by a jury of ordinary Australians.

The next issue is of very relevant importance as the Bank’s credibility is very much in question as far as we are concerned.  It concerns the contract of sale for the property at 224 Barkly Street, Ararat.  The Bank has not proved this property has been sold.  The Bank has failed to produce a signed contract of sale.  In the Bank’s discovered documents I found a duly signed contract for 20 Carey Street, a duly signed contract for 313/315 Barkly Street, but failed to discover a contract that was signed by both parties for 224 Barkly Street.

In October 1999 Justice Warren was told by the Bank that all the properties had been sold and it was on this claim that she ordered we could only be awarded cash and not to get the properties back.  The Bank has consistently sworn in all hearings that this is correct.  The Bank alleges they sold the property to a Mrs Beryl Joan Reading.  We still believe this woman does not exist.  We did find her name on the electoral roll in June 2001 but it was not there to our knowledge up till then.  It has not been traceable through the Reading family tree and I have been informed by people who did this that there is no such person.  I had this verified by Mr Peter Reading.  Mr Thomas at the trial, the estate agent who sold the property to her, also had difficulty knowing who she was.

We made application to have the court to order the Bank to produce this contract.  The application was heard by Master Evans.  The Bank failed to produce it.  His words were, “Mrs McKinnon, I cannot make the Bank produce what they very obviously have not got”, but he said “if they suddenly produce one at the trial then you’ve got them”. 

The Bank obviously realises now any contract produced by them will have to have been forged.  The Bank states they cannot get a copy.  The Bank had no trouble subpoenaing my father’s solicitors, Grano & McCarthy in Ararat, to get his complete file.  They had no trouble subpoenaing Grano & McCarthy to get my stepmother’s complete file.  They mistakenly thought that Grano & McCarthy were our accountants and solicitors.  In fact we have never had any contact with them, other than acting for my parents in the sale of the shop.  We have never had any business with Grano & McCarthy at all.

It stands to reason that if the Bank can subpoena files that are irrelevant to the case and with whom they have had no dealings with, then it should have been a very simple matter to also subpoena the contract duly signed for Mrs Reading’s file at Tivey & Holland, solicitors in Ararat, who are only a few doors up in the same street from Grano & McCarthy.

It is also very odd the Bank did not have Mrs Reading as a witness at the trial knowing our ongoing allegations in this matter.  She could have personally given evidence to prove one way or the other if the Bank had sold the property.  It is our belief the Bank did not want to risk her being cross‑examined by us under oath.  We subpoenaed Mrs Reading, but the server was unsuccessful in contacting her and, as the trial had started before we were ready, our witnesses had not been organised as we should have had the opportunity to do. 

I have a letter dated 15 June 2000 from Mr Thomson, the Bank’s solicitor, stating all documents relating to the contract of sale have been discovered.  The original documents were, but are no longer, in our possession.  I have a copy of the letter if the Court wishes.  Justice Warren did not ask to see the original contract of the sale for this property, but she did say on the transcript that she would expect the properties to be sold to legitimate purchasers and in the absence of fraud.  It follows that setting the default judgment aside with respect to possession is futile and inappropriate.  Justice Warren said that.

We have looked at the property as it comes off and on the market over the last three years and it is obviously very neglected.  It was on the market over two years ago with Elders, agent, for around $70,000.  It was then withdrawn from sale.  I was told by the estate agent, Gary Todd, it was withdrawn by Mrs Reading.  It has recently been back on the market for $180,000 and appears to have been sold in the last month. 

I have spoken to Mrs Reading by phone recently and she told me she has never had the property in Elders and had not withdrawn it and furthermore, she was aware the property had now been sold and settled about two weeks prior to our conversation.  She told me she had not seen a contract and did not know who had bought it other than a local builder she thought.  I believe the Bank has set up a buyer to look like all the properties have been sold so they could then proceed with bankruptcy to get the rest of the shortfall they allege we owe.

In 1998 Master Evans allowed the Bank to not only take our properties, but also ordered we pay an additional $197,000.  I believe the Bank never thought we would have the chance for discovery so were not concerned about the contract for this property.

The next important point is failure by the Bank to discover all their documents.  We think that the Bank manuals should have been discovered in their entirety, both the State Bank Victoria and the CBA.  We got 70 pages from the 14 volumes we know exist in the State Bank Victoria manuals alone.

It is not good enough for the Bank to just discover what they thought were relevant.  The Bank’s discovery was obviously not complete as it was only after much force they discovered any of the manuals, either SBC or the CBA.  Mr Logan admitted at the trial he would have used both manuals.  The Bank states in their summary of argument at page 76 of the application book, paragraph 5 that Justice Byrne was correct in not vacating the trial date because the manuals were not produced in their entirety.  The Bank states they produced all relevant parts.  We do not know what other parts could have been relevant as we have not seen them.

It became obvious in the trial that the procedures of how bank’s records are kept would have been very relevant to our case.  In the transcript Mr Logan admitted that he had no notes, no records, diaries, telephone conversations and thought any records would have gone to archives.  The Bank did not, or could not produce any when asked to do so by Justice Byrne.  These diaries were vital in the period of September 1991 to March 1992 particularly.  On the other hand, the accountant, Mr Freeland, from the same Bank, gave evidence that it was common practice to have a bonfire out the back of the Bank and just burn the records.

It is not the point of whether the manuals were relevant or not.  If any of the manuals were discoverable then they should have all been.  There is provision for certain documents to remain confidential and these were not included in the discovery in January 2000.  I refer to a case of Quade v Commonwealth Bank.  This was heard in the High Court and very clearly states that the one and only reason the Court granted a new trial was the fact the Bank did not abide by the discovery rules and did not discover the manuals, whether they were relevant or not is not the point.

I refer to a letter from the Bank dated 28 February 2001, only four months before the trial but over 12 months since we supposedly had full discovery of all the documents.  Discovery is not confined to relevant documents, page 38 of the application book, “pre‑trial discovery . . . Rules 29.03, 29.07, 29.08, and 29.11” and in this letter from Mr Thomson it says circulars instructions are not discoverable as your lending took place with the State Bank Victoria.  This has since been proven to be incorrect and the Bank has, under force, discovered some parts and withheld others.  The fact is the Bank did not give us full discovery in January 2000.  Mr Logan admitted in the trial he used both the Banks’ guidelines, both the CBA and the SBV, to assess our loan application.

I now refer to the Bank’s summary of argument where they reply to grounds 2 and 3.  The Bank states we abandoned the appeal to the extent of the Victorian Constitution and fractional reserve banking.  We did not abandon any of our amended defence and counter claim at all.  The Bank convinced the court that they should be in charge of what was and what was not to be included in our defence, often stating things were bad in law but not explaining why.  This ended up with Ms Loughnan putting black texta through most of our pleadings and with nothing we could do about it.  At the end of the day it might as well have been the Bank’s defence and counter claim and not ours. 

The fractional reserve banking is still relevant to us.  Although we have been stopped using it, we certainly have not abandoned it.  We have included reference to a case known as the Jerome Daly Case in America whereby the judge ruled the bank could not create something out of nothing and the judgment was overturned.

The Victorian Constitution is still in issue and is one that we have asked the Court to decide on today in our notice of motion.  Due to the fact that I have not been well over the last two years, and particularly 12 months, I have not complied with the information on this issue as detailed as will be done if leave is granted for an appeal.  I have the information, but need time to put it together and find it difficult at the moment.

We have supplied the original Act of 1870 which has only been signed by Mr Winneke and not the Queen, which is not correct to make it legal.  The trial went ahead before we were prepared, having had the appeal heard on the same day and being concerned about the bankruptcy notice the Bank had given us about two weeks before that, we had to deal with that.  We had not signed a certificate of readiness for the trial, nor had the Bank met our request to discover all the manuals.

This concludes our oral argument, your Honour, but I ask the Court to grant us leave to appeal after consideration of all the facts before the Court.  I would just like to add that it is important to appreciate that we have lived with this case daily for 12 years, causing enormous stress on our family and particularly to my health and mental state.  The Bank is removed from this situation, having no first-hand insight or knowledge relying on the Bank manager and other staff that were employed at the SBV at that time.

We ask the Judge to consider our case.  I am not legally trained, but I have presented the case to the best of my ability.  We also ask the Court to recognise how important it is that we do get our chance to have the appeal heard.  The Bank has sold all our properties and the consequences of the appeal not being granted would be that the Bank would immediately commence to act on their judgment.  We could not afford to pay the debt

claimed and bankruptcy would be the only option.  On both our farms we have private lenders so they would have to be sold.

We have worked very hard to keep the farms going, under enormous stress, both emotionally and financially.  The Bank had the opportunity to regain the alleged debt for the three properties they chose to take for security and have not done so successfully selling them under a fire‑sale situation.  All the Bank has done for the last 10 years is make our lives as difficult as possible.  We have five children aged 26 to 7 years old who have suffered enormously over the 11 years.

If the appeal is not allowed, your Honour, to go ahead, well then all our efforts over these last 11 years will have been fruitless.  The Bank realise themselves how important this case is, that we win or they would not have put a stay on the proceedings without the court putting a stay.  The Bank, on their own undertaking, agreed to put a stay on the proceedings because it demonstrates to them the importance of having the appeal heard and the consequences if our case does not get over the line.  Thank you, your Honour.

GLEESON CJ:   We do not need to hear you, Ms Loughman.

This is an application for special leave to appeal against a decision of the Court of Appeal of the Supreme Court of Victoria refusing an extension of time for leave to appeal from a decision of Justice Byrne.

The substantial ground on which the Court of Appeal decided the matter was that there was no reasonable prospect of success of an appeal from the decision of Justice Byrne.  No error on the part of the Court of Appeal has been shown and there are insufficient prospects of success of appeal to warrant a grant of special leave.  The application is refused with costs.

We will adjourn for a short time to reconstitute.

AT 12.20 PM THE MATTER WAS CONCLUDED