National Australia Bank Limited v Cameron & Anor

[2007] VSC 202

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

PRACTICE COURT

No. 7707 of 2003

NATIONAL AUSTRALIA BANK LIMITED (ABN 12 004 044 937)	Plaintiff
v.
CAMERON	Defendant
and
GRAEME BLOOM	Third Party

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JUDGE:	OSBORN J
WHERE HELD:	Melbourne
DATE OF HEARING:	5 June 2007
DATE OF JUDGMENT:	5 June 2007
CASE MAY BE CITED AS:	National Australia Bank Limited v Cameron
MEDIUM NEUTRAL CITATION:	[2007] VSC 202

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Appeal from Master – Claim on guarantee – Application for further discovery – documents in issue referred to in discovered documents –antecedent and collateral documents going to principal debtor’s creditworthiness at time of guarantee – materiality established beyond mere reference in disputed documents

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr M Biviano	Dibbs Abbott  Stillman
For the Defendant	Mr A P Dickenson	B.J Fennelly & Associates
For the Third Party	Mr S Willoughby	Ebsworth & Ebsworth

HIS HONOUR:

1. In this matter the plaintiff sues for moneys due under a guarantee.  The defendant asserts that she is entitled to avoid the guarantee on the basis of unconscionable conduct, misleading and deceptive conduct and on other equitable bases.  As I understand it, at the heart of the defendant's case, it is said that the guarantee was obtained at a time when the bank was or should have been aware that the principal debtor would not be able to pay the principal debt, and that this occurred in circumstances where the defendant was not aware of information in this regard which was in the bank's knowledge. 

1. The application before me is one seeking to appeal orders of Master Kings made on 7 May 2007 with respect to further discovery.  The notice of appeal identifies some twelve documents, but the appeal has been pursued with respect to some only. 

1. The underlying background to the appeal is that the principal debtor made application on a form headed "National Online Business Application" prior to the giving of the guarantee.  That form has been discovered and that form in turn refers to provision of a general manual, GNA 912, GNA 916 and GNA 918.  The documents now in issue are referred to in GNA 916 and GNA 918.  As counsel for the bank has submitted, the procedures described in the manual relate to processing National online business applications and to approval of such applications.  It is further submitted by the bank that the online business application does not in itself form the subject of any pleading in the matter.  It seems to me, however, that in so far as that application may be said to have necessarily involved an incidental assessment of the creditworthiness of the principal debtor, then it is possible the documentation relating to the online business application is relevant to the matters in issue between the parties, and it is, of course, presumably on this basis that discovery has been given of the online business application itself. 

1. It is submitted on behalf of the defendant that there is authority that where a document is referred to in a discovered document, it is itself prima facie relevant.[1]  It seems to me that that principle must be applied with some caution in the context of the interlocking business documents of a corporation such as the bank.  Otherwise, discovery could cascade through background and policy documents almost endlessly.  Nevertheless, reference to a document in a discovered document may materially inform a judgment in accordance with the principle stated by the High Court in Mulley v Manifold[2] as to whether a document would in itself or would lead to a train of enquiry which would either advance a party's own case or damage that of his or her adversary. 

   [1]Ormerod Grierson & Co v St Georges Ironworks Ltd (1906) 95 LT 694 cited with approval by Menhennit J in Beecham Group Ltd v Bristol-Myers Co [1979] VR 273 at 279.

   [2] (1959) 103 CLR 341 at 345 per Menzies J.

1. In the present case I have come to the view that the core documents now pursued should be the subject of further discovery. 

1. Document 3 constitutes the National Online Business Folder, which, it would appear from the relevant portion of the general manual, was regarded at the time as a document essentially necessary to be provided to the customer.  It seems to me that it is fairly regarded as potentially relevant to an understanding of what the online application involved. 

1. Document 6 relates to warning indicator definitions.  It is referred to in the manual at paragraph 918, and the reference follows the statement:  "If customer is not considered creditworthy, application for this service must be declined."  It seems to me that it is potentially relevant to the defendant's case that the principal debtor was not creditworthy at the relevant date of the guarantee and or for some time prior to that. 

1. Document 7 is the PC Lending Systems Manual, which relates to limit establishment, and it seems to me that it is potentially relevant for the same reasons.

1. Document 8 is the Credit Policy Manual, and it seems to me that it is relevant for like reasons and, in particular, the question of whether the bank assessed and established the creditworthiness of the principal debtor at the time of the online business application, which, it seems to me, is a collateral and antecedent fact relevant to the defendant's case.

1. Documents 10, 11 and 12 go to the procedure of limit establishment and approval of the relevant online account, and it seems to me that they are also material to the defendant's case for like reasons.

1. Accordingly, I propose to make orders with respect to the documents I have identified and to dismiss the appeal with respect to the documents otherwise referred to in the notice of appeal.  I will hear counsel as to the question of costs.

(Discussion ensued.)

HIS HONOUR: 

1. In respect of costs, it seems to me that the order by the Master that the defendant bear the costs of the third party of the directions hearings on 30 March 2007 should not be disturbed and that accordingly the defendant should pay the costs of the third party on the appeal.  In respect of the plaintiff, it seems to me that it is true that the defendant has only been partially successful in terms of the original ambit of relief sought.  Nevertheless, she has been substantially and significantly successful before me today and, doing the best I can, I will award the defendant 50% of her costs of the application for further discovery before Master Kings and I will award her her costs of the appeal to me.

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