Ocker Records v NAB

[2002] NSWCA 105

CITATION:	Ocker Records v NAB [2002] NSWCA 105
FILE NUMBER(S):	CA 40510/01
HEARING DATE(S):	15 April 2002
JUDGMENT DATE:	15 April 2002
PARTIES :	Ocker Records Australia Pty Ltd v National Australia Bank Limited
JUDGMENT OF:	Handley JA at 1; Stein JA at 29; Davies AJA at 30

LOWER COURT JURISDICTION :	District Court
LOWER COURT FILE NUMBER(S) :	DC 9252/00
LOWER COURT JUDICIAL OFFICER :	Ainslie-Wallace DCJ

COUNSEL:	Appellant - R W Tregenza Respondent - L S Einstein
SOLICITORS:	Appellant - Maurice May & Co Respondent - Dibbs Barker Gosling
CATCHWORDS:	CONTRACT - BILL FACILITY - BILL OF EXCHANGE - WAIVER - CONDITION PRECEDENT
CASES CITED:	Leotta v Public Transport Commission of New South Wales (1976) 50 ALJR 666
DECISION:	Appeal dismissed with costs

IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

40510/01
DC 9252/00

HANDLEY JA
STEIN JA
DAVIES AJA

Monday 15 April 2002

OCKER RECORDS AUSTRALIA PTY LIMITED v NATIONAL AUSTRALIA BANK LIMITED

CONTRACT – BILL FACILITY – BILL OF EXCHANGE – WAIVER – CONDITION PRECEDENT

The Bank granted the appellant a bill facility for $50,000 for a fixed term, expiring on 28 February 1988. The contract made provision for the plaintiff to access that facility by drawing bills of exchange on the Bank. A bill for $50,000 with a maturity date of 19 August 1987 was drawn on 20 February 1987.

Clause 7 of the facility required the appellant to pay the Bank the face value of a bill on the maturity date. The facility enabled the customer to obtain a new bill to replace a maturing bill with a maturity date within the period of the facility. Clause 6 of the facility required the replacement bill to be delivered to the Bank on the business day prior to the maturity date of the maturing bill. The plaintiff was also bound to pay the Bank the discount on the maturing bill and certain expenses before the Bank was obliged to accept a replacement bill. The appellant had the funds to meet the discount and the expenses but did not deliver a replacement bill to the bank on 18 August 1987.

The appellant sued the Bank for breach of the bill facility. The Bank’s defence at the trial was that Clause 6 had not been complied with. This had not been pleaded but the Bank raised it without objection. The appellant relied on waiver as an answer to this defence. The trial Judge upheld the defence based on Clause 6 and rejected the waiver argument.

HELD: (1) There was no waiver because there was no evidence of any conversation or written communication from the Bank which informed the appellant that it need not comply with Clause 6. (2) In the light of the way the trial was conducted, it was too late for the appellant to raise any point based on the technical position under the pleadings. Leotta v Public Transport Commission of New South Wales (1976) 50 ALJR 666 applied.

ORDER

Appeal dismissed with costs.

IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

40510/01
DC 9252/00

HANDLEY JA
STEIN JA
DAVIES AJA

Monday 15 April 2002

OCKER RECORDS AUSTRALIA PTY LIMITED v NATIONAL AUSTRALIA BANK LIMITED

Judgment

1 HANDLEY JA: This is an appeal by Ocker Records Australia Pty Limited from a judgment entered for the defendant in the District Court by Ainslie-Wallace DCJ. The events giving rise to the litigation occurred between February and August 1987. The plaintiff did not commence proceedings until 1992 when a statement of claim was filed in the Supreme Court. In due course the proceedings were remitted to the District Court for trial.

2 The plaintiff pleaded two causes of action. The first was wrongful refusal by the Bank to allow it to draw on credit funds in its account. That claim is no longer pressed. The second claim was for breach of contract.

3 It was pleaded in an inartistic and inappropriate fashion but nevertheless the plaintiff ’s case sufficiently emerged. The statement of claim pleaded that on 19 February 1987, pursuant to a contract of that date, the Bank lent the plaintiff the sum of $50,000 for a fixed term, expiring on 28 February 1988, and that when the plaintiff was not in breach of that contract, the defendant purported to call in the loan as if it was.

4 The contract relied upon was not a contract for loan but was a bill facility expiring on 28 February 1988, which made provision for the plaintiff to access that facility by drawing bills of exchange on the Bank. The plaintiff acted under that facility on 20 February and drew a bill of exchange for $50,000 with a maturity date of 19 August.

5 The plaintiff was bound by clause 7 of the facility to pay the Bank the face value of a bill on its maturity date but the facility enabled a maturing bill to be replaced by a new bill with a maturity date within the period of the facility.

6 Clause 6, which was of particular importance in this case, provided:

“Within the availability period and subject to the provisions of this letter upon the maturity of each bill drawn and accepted pursuant to this letter the drawer may draw a replacement bill having a face value equal to the face value of the maturing bill which shall be accepted by the Bank. Such replacement bill shall be delivered to the Bank on the business day prior to the maturity date of the maturing bill”.

7 The plaintiff was also bound to pay the bank the discount on the maturing bill and certain expenses before the Bank was obligated to accept a replacement bill. There is no dispute that the Bank was in possession of sufficient funds to entitle the plaintiff to have the Bank accept a bill with the face value of the maturing bill.

8 The defendant pleaded various defences but elected to contest the plaintiff ’s action on the ground that the condition precedent in clause 6 had not been complied with, and the Bank’s obligation to accept a replacement bill to meet the maturing bill had never come into existence.

9 The strict position under the pleading rules in the District Court - and similar rules exist in the Supreme Court - is that by DCR Pt 9 r 7 an allegation of the performance of the conditions precedent for any contractual obligation is implied in any pleading which need not contain an express averment to that effect. A defendant who wishes to contest the performance of some condition precedent to the accrual of a contractual obligation is bound to plead that matter specifically in its defence.

10 The Bank did not do that but at a relatively early stage in the trial before lunch on the second day the point had clearly emerged and became the subject of extensive discussion in the transcript which is recorded for us in the black book. The trial Judge said that the plaintiff had based its case on the written contract alone and that in view of the attitude taken by the Bank the plaintiff might wish to amend its pleadings.

11 No application was made on behalf of the plaintiff for the defendant to be required to amend its pleadings, nor was any objection taken that the defence raised by counsel for the Bank was outside the scope of its statement of defence as filed.

12 In the end, as I have said, counsel appearing for the plaintiff, who did not appear in this Court on the appeal, elected to stand on the existing pleadings and did not seek any amendment.

13 The plaintiff did not prove that it delivered to the Bank on 18 August 1987, the business day prior to the maturity of the current bill, a new bill with the face value of the maturing bill with a request that the Bank accept it and to use its discounted proceeds to retire the maturing bill.

14 The non-performance of the condition precedent, in other words, emerges clearly from the evidence in the trial. The counsel appearing for the plaintiff sought to meet this case by relying upon waiver.

15 As I have said, the defence was outside the Bank’s pleadings and the plaintiff did not amend its statement of claim or plead waiver in a reply but non-performance of the condition precedent in clause 6 and the plaintiff ’s attempted answer based on waiver were litigated and the trial Judge was bound, if asked, to allow any necessary amendments, and to consider and deal with the issues that had been litigated. This Court cannot now enforce the strict position under the pleadings. This was decided by the High Court in Leotta vPublic Transport Commission of New South Wales (1976) 50 ALJR 666 and is well-established law.

16 The trial Judge upheld the defence based on clause 6 of the bill facility and rejected the plaintiff ’s argument that clause 6 was a condition wholly for the benefit of the Bank which had been waived by it. Her Honour held that clause 6 was not a condition of that nature but was a condition precedent to the Bank’s obligation to accept a new bill. The attempted answer based on waiver therefore failed and she entered a judgment for the Bank.

17 The plaintiff has appealed and Mr Tregenza, who unfortunately only came into the brief a few days ago, has appeared for the appellant to support the appeal. He sought to rely on a number of grounds as an answer to the non-performance of the condition precedent in clause 6. He indicated that he proposed to rely on the fact that the bill facility agreement had been varied by a contract, which was partly oral and express and partly implied, which dispensed with the need for the plaintiff to comply with clause 6. He also wished to rely upon an estoppel, but it was never clear whether this was a legal estoppel based on a representation of existing fact, or a promissory estoppel.

18 He wished to maintain the answer of waiver but sought to rely upon a waiver based on the conduct of the Bank between February and August 1987 which led the plaintiff to believe that it was not required on 18 August 1987 to present a bill of exchange for acceptance by the Bank. He also wished to rely on the absence of an appropriate pleading by the Bank.

19 The Court ruled that the cases of contractual variation and estoppel were not available to the appellant because they were outside the notice of appeal and outside the pleadings, and that it was too late for the plaintiff to rely upon matters of that nature which might have been answered by evidence from the Bank at the trial.

20 I have already held that it is too late after judgment to raise any point based on the technical position under the pleadings in the light of the way the trial was conducted.

21 That leaves for consideration the question of waiver. The evidence of this is scanty and in my judgment it could not dispense the plaintiff from performance of the condition precedent. Mr Correy, who appears to have been the individual controlling the affairs of the plaintiff, in good time made known to Mr Janda, an officer of the Bank, that the plaintiff wished to roll over the maturing bill. Mr Correy assumed that this conversation would be sufficient because he said “I just expected them with conversation to roll it over once more once the interest was paid” (sic). However there was no evidence of any conversation or written communication from the Bank which informed him that he need not comply with clause 6 of the facility agreement.

22 The Bank may have acted ruthlessly in the way it approached the performance of its obligations, but beyond receiving the request for a rollover some days before the due date there is no evidence that it said or did anything which could have led Mr Correy to believe, if he had thought about it, that the plaintiff was not bound to comply with clause 6.

23 Mr Tregenza relied on paragraph 44 of the affidavit of Mr Correy of 27 February 1998 in which he said, referring to a date after 5 August 1987:

“Shortly after I had a meeting with Murray Walsh and Bob Janda and I was informed that on the date of the rollover the defendant would call in the commercial bill and convert it to an overdraft with penalty interest applying”.

24 The Bank were entitled to take that attitude unless the commercial bill was met at maturity, either from credit funds available from the customer’s account, or by a new bill accepted in accordance with the bill facility agreement. Mr Tregenza submitted that clause 44 indicated that the Bank had repudiated its obligations under the bill facility and that this anticipatory breach had dispensed the plaintiff from complying with the condition precedent in clause 6.

25 The trial was not conducted on that basis and counsel appearing for the plaintiff did not attempt to rely upon anticipatory breach as an answer to the Bank’s case based on clause 6.

26 Mr Correy’s oral evidence did not deal with this question in any way and referred only to meetings after the bill had matured when it was too late to activate the bill facility agreement.

27 Mr Tregenza did not attempt to pursue the argument raised below that clause 6 was a condition for the benefit of the Bank, but if I have misunderstood his submissions it will be sufficient for me to say that I respectfully agree with the reasons given by the trial Judge for rejecting that submission.

28 In the result the challenges to the judgment of the trial Judge fail and I would propose that the appeal be dismissed with costs.

29 STEIN JA: I agree.

30 DAVIES AJA: I agree.

31 HANDLEY JA: The order of the Court is appeal dismissed with costs.

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