National Australia Bank Limited v Bedford
[1992] TASSC 118
•30 September 1992
Serial No B41/1992
List “B”
CITATION: National Australia Bank Limited v Bedford [1992] TASSC 118; B41/1992
PARTIES: NATIONAL AUSTRALIA BANK LIMITED
v
BEDFORD, R A
BONE, M E
TITLE OF COURT: SUPREME COURT OF TASMANIA
JURISDICTION: ORIGINAL
FILE NOS: 443/1991
DELIVERED: 30 September 1992
HEARING DATES: 21 September 1992
JUDGMENT OF: Cox J
CATCHWORDS:
Practice—Application for summary judgment—Some evidence to support counter—claim—Judgment on claim but execution stayed on terms until counter—claim heard.
REPRESENTATION:
Counsel:
Plaintiff: R E Sugden
Defendant: S C Chopping
Solicitors:
Plaintiff: Finlay Watchorn
Defendant: Steven Chopping
Judgment category classification:
Court Computer Code:
Judgment ID Number: B41/1992
Number of paragraphs: 10
Serial No B41/1992
List "B"
File No 443/1991
NATIONAL AUSTRALIA BANK LIMITED v R A BEDFORD & M E BONE
REASONS FOR JUDGMENT COX J
30 September 1992
The plaintiff bank seeks summary judgment against the defendants in respect of the balance of loans made by the plaintiff to the defendants alleged to be still outstanding. The defendants in their defence admitted all of the plaintiff‘s statements of claim save for par18 which pleaded that:
"Since service of the demand, the sum that then became due and payable has increased due to further non–payment of interest, service fees and other charges."
and par32 which pleaded that:
"The Defendants have not paid any money to the Plaintiff since the service of either demand and the amounts by which both accounts were in debit on the 31st of January 1991 have continued to increase by virtue of further debits of interest, service fees and other costs and charges."
Those paragraphs have been proved by the affidavit in support of the application. The defendants however, pleaded a counter–claim and sought to set off any monies due thereunder. The counter–claim was in the following terms:
"33 The said loans were secured by a charge on the interest of the Defendants in a property situated at Bagdad.
34 It was an implied term of the said loans that in the event that the Plaintiff exercised any power of sale it would sell the properties for a realistic market value.
35 In breach of the said implied term the Plaintiff sold the property for a price below the realistic market value.
36 As a consequence of the said breach the Defendants suffered damages (particulars to be supplied) and the Defendants seek to set off and or counter–claim damages."
The remedy of summary judgment is confined to clear cases and as O15, r3 makes clear, if the defendant satisfies the judge with respect to the claim or the part of the claim to which the application relates that there is an issue or question in dispute that ought to be tried, he should be given leave to defend and afforded his day in court. The defendants have filed an affidavit in support of the genuineness of their set off and counter–claim. In it the second named defendant deposes that she verily believes that the sum of $38,000 realised by the plaintiff on the sale of the property over which it had security was "unreasonable" and that had the property been sold in about June 1990 for the market price then available, (it appears it was not sold until about November 1990 and the contract completed in December 1990) the proceeds of sale would have covered any monies then outstanding.
She annexed a valuation of the property from a registered valuer. He expressed the opinion in early April 1990 that the value of the property was $50,000 but observed that the government valuation as at 1 July 1989 was $42,000. In June 1990, the defendants entered into a contract with a Mr and Mrs Clark to sell the land for $60,000 but the contract was conditional on the sale of the Clarks’ property within ninety days and upon the Brighton Council permitting the purchasers to occupy the temporary dwelling on the property for a certain time and permitting its conversion into a permanent residence. The contract was never completed but no evidence was tendered to explain why. The second named defendant further deposed:
"8 Details of a replacement purchaser for the said property in approximately a sum of $60,000.00 were made known to the Plaintiff at about the 5th of June 1990 in the event that the contract with Mr and Mrs Clark was unable to proceed.
9 I have been informed and verily believe that the Plaintiff made no approach to the potential Purchaser advised to them."
I infer from these assertions that there was another prospective buyer for the property at a price of $60,000 if the Clark contract did not proceed and the plaintiff was made aware by the defendants of the identity of that person but did not approach him when the contract with the Clarks fell through. How ready, willing or able such a buyer was when the bank was so advised, or when the Clark deal fell through, is not clear, but the evidence would certainly seem to suggest that in June 1900 there were two prospective purchasers seeking to buy the property for $60,000 and a registered valuer had two months earlier considered it was worth $50,000. Prima facie, a sale at $38,000 about the end of 1990 evidences a sale at under value.
Mere evidence of a sale at a price below market value is insufficient to establish any breach of a mortgagee‘s obligations when exercising the power of sale he has under the mortgage. For the defendant to succeed in their counter–claim, if it is based on such a breach, they would have to establish on the balance of probabilities that the plaintiff bank had wilfully or recklessly sacrificed their interests. If the bank took reasonable precautions to obtain a proper price they must fail even if the price was below market value and even if by waiting or by taking some other action a better price could have been obtained (Expo International Pty Ltd v Chant (1979) 2 NSWLR 820).
The defendants must establish an absence of good faith in the bank (Dimmick v Pearce Investments Pty Ltd (1980) 43 FLR 235; Pendlebury v CML Assurance Society Ltd (1912) 13 CLR 676; Kennedy v De Trafford (1897) AC 180; Davis v Taylor (1948) 48 NSWSR 524). The counter–claim does not advert to these matters, it merely asserts an applied term of the loans that the property would be sold for a realistic market value. Sundry particulars of the counter–claim were sought, but none as to how that term was said to arise. My decision on this summons must not be dictated by any short comings in the pleadings. If there is any basis for satisfaction that there is an issue which ought to be tried, I should not deny the defendants their right to have it tried.
I infer that the defendants do seek to rely on a breach of the plaintiff’s obligation as a mortgagee. Armed with some evidence of a sale at under value they feel justified in asserting such a breach, but clearly to establish it they will require much more material and much of this material (if it exists) may only be discoverable by utilizing the processes of discovery and interrogation available in a civil suit.
I think it is clear from the plaintiff‘s affidavit material that there is no defence to the claim as such and that it should have judgment, but in the circumstances I propose to exercise my powers under O15, r3(2) to stay execution until after the trial of the counter–claim. It was put to me that even if the counter–claim succeeded and the defendants did establish that the plaintiff should have procured a price of $60,000, there would still have been a short fall of $4,420.22 on 19 December 1990 when the sale was completed and that on the evidence this would have grown to $5,926.04 by 30 June 1992 through the accumulation of interest and charges with a daily rate thereafter of $2.40. The defendants’ affidavit claims that there would not have been a short fall. I accept the evidence of the plaintiff‘s deponent who has made the calculations and I think there should be no stay in respect of the sum of $4,420.22, but if the defendants’ prove their contention that $60,000 should have been procured and the last mentioned sum had been identified as the balance then owing, it may well be that the defendants would have been able to discharge that debt and incurred no further costs, charges or expenses and should be given the opportunity to argue that the court, in the exercise of an equitable jurisdiction, should not award the plaintiff any additional sum.
I order that judgment be entered for the plaintiff against the defendants on the claim in the sum of $33,814.96, together with interest from 30 June 1992 to the date hereof at the rate of $11.85 per diem but order, subject to the conditions hereafter set forth, that execution on the judgment, save as to the sum of $4,420.22, be stayed until after the trial of the counter–claim. The conditions are:
1 That the defendants deliver an amended counter–claim within fourteen days.
2 That they pursue the counter–claim with due expedition and to that end abide by such time table as may be set by the court upon application by the plaintiff.
0
3
0