National Australia Bank Ltd v Latin American Social and Sporting Club Incorporated
[2000] VSC 450
•2 November 2000
| SUPREME COURT OF VICTORIA | |
| PRACTICE COURT | Not Restricted |
No. 5034 of 2000
| NATIONAL AUSTRALIA BANK LIMITED | Plaintiff |
| v. | |
| LATIN AMERICAN SOCIAL AND SPORTING CLUB INCORPORATED AND OTHERS | Defendants |
---
JUDGE: | BEACH, J. | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 24 OCTOBER 2000 | |
DATE OF JUDGMENT: | 2 NOVEMBER 2000 | |
CASE MAY BE CITED AS: | NATIONAL AUSTRALIA BANK LTD. v. LATIN AMERICAN SOCIAL AND SPORTING CLUB INC. & ORS. | |
MEDIUM NEUTRAL CITATION: | [2000] VSC 450 | |
---
CATCHWORDS: Appeals from orders of Master of the Court dismissing application for dismissal or stay of proceedings and granting application to defendant to amend defence by withdrawing admissions – Appeals dismissed.
---
APPEARANCES: | Counsel | Solicitors |
For the Plaintiff | Mr. A. Schlicht | Russell Kennedy |
| For the First and Second Defendants | Mr. J.L. Evans | Antonio Caamano |
HIS HONOUR:
These are appeals from orders made by a Master of the Court whereby the Master
(a)dismissed an application by the first and second defendants that the proceeding be dismissed or permanently stayed; and
(b)gave leave to the first defendant to withdraw admissions made by it in paragraphs 6, 7, 12(c) and (d) of the defence dated 19 July 2000.
Due to error on the part of the defendants' solicitor, the appeal in relation to the dismissal application was originally made by the first defendant only. In the circumstances I considered it appropriate to extend the time within which the second defendant could also appeal in respect of the dismissal order.
The appeal by the plaintiff in respect of the orders concerning the first defendant's defence was also out of time, again as a result of error on the part of the plaintiff's solicitor. Having regard to the circumstances surrounding the matter I considered that it was also appropriate to extend the time for appealing against that order.
It is convenient to deal first with the appeal of the first and second defendants.
The first and second defendants' application to dismiss or permanently stay the plaintiff's proceeding is based upon the principle enunciated by the High Court in Anshun, (see Port of Melbourne Authority v. Anshun Pty. Ltd.[1]), namely, that a plaintiff is estopped from raising a cause of action in a proceeding taken against a party where that plaintiff has unreasonably refrained from raising the cause of action in an earlier action between the parties which was so closely connected with the subject matter of that action that it was to be expected that it would raise it in that action.
[1](1981) 147 C.L.R.
In determining whether the principle applies in this case it is necessary to have regard first to the factual basis of each action.
The first defendant Latin American Social and Sporting Club Incorporated (the Club) is as its name suggests a sporting and social club for Latin American members of the community.
On about 20 May 1987 it became the registered proprietor of an allotment of land at the corner of Dandenong/Frankston and Boundary Roads, Carrum (the land). To acquire the land the Club borrowed monies from Westpac Banking Corporation, repayment of which was secured by registration of a mortgage over the land.
On 25 May 1992 the second defendant the Latin American Social and Sporting Co-operative Limited (the Co-op) was incorporated.
Two days previously, and at the Annual General Meeting of the Club, it was resolved to dissolve the Club, form the Co-op and transfer all the assets owned by the Club to the Co-op.
In mid 1992 Westpac served demands on the Club under the Westpac mortgage and threatened to sell the land if the Club did not repay the monies owing under the mortgage.
In August 1992 the Club and the Co-op made application to the plaintiff for banking and finance facilities in the amount of $290,000.
By letter of 31 August 1992 to the Co-op the plaintiff approved the application.
There were terms of the loan agreement as follows:
" (a) NAB would advance the sum of $290,000 to the Co-op;
(b)part of the monies advanced would discharge the Westpac mortgage;
(c)the land would be given as security by way of mortgage to NAB for the loan;
(d)the Club and the Co-op would take all necessary steps to ensure that the Co-op was or became the registered proprietor of the land;
(e)the Co-op would execute a mortgage in favour of the NAB over the land as security for the monies advanced;
(f)NAB would register the mortgage over the land and the Club and the Co-op would do all things necessary to effect the registration of the mortgage."
On 16 October 1992 the plaintiff advanced the monies pursuant to the loan, paid out the Westpac mortgage and paid the balance of the loan to a creditor of the Club.
The Co-op executed a mortgage in favour of the plaintiff and the repayment of the loan was guaranteed by seven of its members who executed a guarantee in respect of it on 8 October 1992.
In due course the plaintiff endeavoured to register its mortgage over the land.
Initially the plaintiff acted in the belief that the Club had simply changed its name to that of the Co-op.
However, the Land Titles Office refused to register the mortgage to the plaintiff on the ground that the Club and the Co-op were separate entities with the mortgagor being the Co-op and the registered proprietor being the Club.
Thereafter the Club executed two transfers of the land to the Co-op.
However, the Land Titles Office refused to register either transfer because of what it perceived to be defects in the form of the transfers.
In due course repayments due under the loan fell into arrears. As a consequence the plaintiff called up the loan.
The loan was not repaid by the Co-op and on 21 April 1997 the plaintiff instituted a proceeding in this Court against the seven guarantors seeking repayment of the outstanding loan and interest which by then had ballooned out to $319,510.02.
The first, fourth, fifth, sixth and seventh defendants to that claim then joined the Club and the Co-op as third parties to the proceeding seeking an order that the Co-op pay all money owing by it to the bank.
Subsequently those five defendants made application to join the Club and the Co-op as defendants to the proceeding.
The plaintiff opposed the five defendants' application and it was dismissed.
The plaintiff's proceeding against the guarantors came before Balmford, J. on 26 July 1999.
At the trial the guarantors based their defence on the principles enunciated by the High Court in Amadio's case. (See Commercial Bank of Australia Ltd. v. Amadio[2]).
[2](1983) 151 C.L.R. 447
Following a trial which occupied 14 sitting days, on 5 October 1999 Balmford, J. found in favour of the guarantors and entered judgment in their favour.
On 18 October 1999 her Honour ordered that the plaintiff pay the guarantors costs of the proceeding on an indemnity basis and ordered that the plaintiff pay the costs of the Club and the Co-op on a party-party basis.
On 3 March 2000 the plaintiff requested the Club and the Co-op to provide a further transfer of the land in registrable form.
By letters of 3 and 14 March 2000 respectively the solicitors for the Club and the Co-op refused to provide such a transfer.
On 12 April 2000 the plaintiff filed the present proceeding in the Court.
By its statement of claim the plaintiff seeks the following relief.
"A.An order that the Club and the Co-op do all things necessary to provide a transfer of land in registrable form to NAB.
B. An order by the Court that there be a sale of the land.
C. An appointment by the Court of a receiver to sell the land.
D.The sum of $343,445.37 together with accrued interest from 22 July 1999.
E. Costs.
F. Interest.
G. Such other orders as the Court sees fit."
In its statement of claim the plaintiff relies upon a number of causes of action against the Club and the Co-op not the least of them being breach of the loan agreement in that they have failed to comply with their obligations under it to provide a transfer in registrable form and estoppel in that by their conduct the Club and the Co-op are estopped from denying that the land was transferred from the Club to the Co-op.
From a practical point of view I find this a most extraordinary situation.
Here is the plaintiff having advanced to the Co-op the sum of $290,000, now holding the duplicate certificate of title to the land, a mortgage executed by the Co-op over the land and two defective transfers of land executed by the Club and the Co-op, yet unable to regularise the situation by having Westpac's original mortgage discharged, the transfer from the Club to the Co-op registered and its mortgage registered.
Not unexpectedly it has registered a caveat over the land.
One asks rhetorically – what is going to happen if the Co-op or for that matter the Club ever wish to sell the land?
The answer surely is – more litigation.
In my opinion there is simply no sound basis upon which the first and second defendants can rely upon an Anshun type defence.
Until the plaintiff received the letters of 3 and 14 March 2000 from the solicitors for the Club and the Co-op, they did not have any cause of action against the first and second defendants of the nature of the causes of action now relied upon. Up to that point of time the Club and the Co-op had not refused to sign an appropriate transfer nor given any indication that they would not do so.
It was only after judgment was entered in their favour in the earlier proceeding that they refused to do so.
But even if the plaintiff did have a cause of action against the first and second defendants at the time it instituted its proceeding against the guarantors, in my opinion the plaintiff did not act unreasonably in not taking action against the first and second defendants at that time or for that matter when they were later joined as third parties to the action brought by the plaintiff against the guarantors.
There are no common issues between the guarantee proceedings and this proceeding. This proceeding concerns the enforceability of an unregistered mortgage whereas the earlier proceeding related to the guarantee.
Further the Club and the Co-op were not defendants in the earlier proceeding.
In my opinion the Master made no error in the matter. The appeal by the first and second defendants from the order made by him on 6 October 2000 is dismissed.
As to the appeal by the plaintiff from the order of the Master, in my opinion the Master made no error in respect of that aspect of the proceeding either.
It is clear that the admissions made by the first defendant in paragraphs 6, 7, 12(c) and (d) of its defence were made in error by its solicitor – that much is clear from the draft defence prepared by the first defendant's counsel which was tendered to me during the course of the hearing.
Whilst it is difficult to see on what sensible basis the matters pleaded in the paragraphs in question are denied, that in my opinion is not to the point.
The error in making the admissions was that of the first defendant's solicitor and the first defendant should not be bound by them.
The plaintiff's appeal is dismissed.
In the circumstances I make no orders concerning the costs of the appeal.
---
0
0
0