Pattison v Westpac Banking Corporation

[1994] QCA 443

IN THE COURT OF APPEAL	[1994] QCA 443
SUPREME COURT OF QUEENSLAND

Appeal No. 271 of 1993.

Brisbane

[Westpac v. Pattison & Anor.]

Before	Pincus J.A. Davies J.A. Ambrose J.
BETWEEN:

THOMAS EDGAR PATTISON

(First Plaintiff) First Respondent

AND:

KERRY ANN PATTISON

(Second Plaintiff) Second Respondent

AND:

PELHAM PASTORAL COMPANY PTY LTD

(Third Plaintiff) Third Respondent

AND:  WESTPAC BANKING CORPORATION
(A.R.B.N. 007-457-141)

(Defendant) Appellant

REASONS FOR JUDGMENT - PINCUS J.A.

Judgment delivered 13/09/1994

I have read the reasons for judgment of Ambrose J and agree with his Honour's conclusions.

The problem is the familiar one of determining whether to grant or refuse an interlocutory injunction restraining a sale by a mortgagee, on the ground that the mortgagor has a cause of action against the mortgagee, relating to the mortgage. Were it not for the general rule, applicable in such cases, that the money sworn by the mortgagee to be due must be paid into court (Inglis v. Commonwealth Trading Bank of Australia (1972) 126 C.L.R. 161), the court would decide them by first considering whether there is a serious question to be tried and then looking at the balance of convenience. But the rule as to payment in creates a substantial additional obstacle; often the plaintiff can neither pay in nor in any other way preserve the mortgagee from harm, so that imposing a condition as to payment in may be equivalent to refusing the injunction sought. Here, the respondent plaintiffs are unable to offer to pay in.

There is now a considerable amount of authority bearing upon the problem of defining the circumstances in which payment in will be dispensed with, particularly where the mortgagor alleges misleading conduct. It has been suggested that where the relief sought includes an order setting the mortgage aside, the Inglis rule may not apply; but that can hardly be so, for it is simple enough for a mortgagor to include such a claim in the pleading. A more convincing justification for refusing to impose the condition is that the Court regards the mortgagor's claim against the mortgagee as especially promising and likely to lead, if the matter goes to trial, to judgment having the effect of preventing the proposed mortgagee's sale.

For the reasons Ambrose J has given, so far from the mortgagors' prospects of success based on alteration of the mortgage document being especially good, they seem slim. The character of the documents in the record is such as to make it improbable that it would be held that the mortgagee made the alteration alleged after signature and even more improbable that, if the mortgagee did so, the result did not accord with the intention of the parties. It should be added that the mortgagors' case depends in part upon acceptance of a legal proposition of a doubtful character, namely that even if the mortgagee altered the mortgage honestly, to correct a mistake or omission in it, the mortgage is avoided; see Armor Coatings (Marketing) Pty Ltd v. General Credits (Finance) Pty Ltd (1978) 17 S.A.S.R. 259, especially per Bray CJ at 274 et seq. The consequence of applying such a rule would be particularly odd in the present case, where there is no suggestion that the alleged alteration was concealed; indeed, it seems likely that the difference between the typing of the allegedly altered part and that of the rest of the mortgage document (which difference is obvious) prompted the making of the allegation in question.

The only other aspect of the case I shall discuss is the allegation that one of the holdings, Pelham, was mortgaged subject to an oral agreement or condition. The statement of claim says, in effect, in para. 11(d), that it was agreed that enough money would be lent to enable certain creditors to be paid out and to enable the plaintiffs to carry on until Victoria Vale Station was sold. The agreement was said to have been made with B J Lowe, an employee of the appellant bank. Lowe gave evidence of a different conversation; according to him, he merely agreed to apply to the bank's regional office for approval of the proposal, which he intended to recommend.

At the relevant time the local authority had advertised all five holdings, including Pelham, for sale for arrears of rates; it appears to be common ground that the appellant bank promised to and did pay the rates.

As the learned primary judge points out, in an affidavit by the respondent T E Pattison answering Lowe's affidavit, Pattison seems to accept that he was told that an application would have to be made to regional office for approval. The affidavit goes on to say that the deponent expected the approval would be a formality, but Pattison does not suggest that he was told approval had been granted.

On this aspect of the case, I agree with the learned primary judge that there was shown to be a serious question to be tried, despite the apparent weakness in the respondent's case, just mentioned. But if effect were given to that conclusion, it could only justify an injunction restraining a sale of Pelham itself and would not be relevant to the sale of the other four holdings. It was not argued that we should, if of opinion that the case regarding Pelham is the only serious question, enjoin the sale of that block only. But even if that had been contended, I would not favour granting relief with respect to Pelham. The reasons are two. The first is that the respondents' case of misleading conduct regarding the mortgage from Pelham has not such strength as to justify departing from the general rule laid down or reaffirmed in the Inglis case. Secondly, all five blocks are run as one aggregation and it would be impractical to exclude one of them from the sale.

I agree with the orders proposed by Ambrose J.

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND Appeal No. 271 of 1993

Brisbane

Before Pincus J.A. Davies J.A. Ambrose J.

[Pattison & Ors v. Westpac]

BETWEEN:

THOMAS EDGAR PATTISON

(First Plaintiff) First

Respondent

AND:

KERRY ANN PATTISON

(Second Plaintiff) Second

Respondent

AND:

PELHAM PASTORAL COMPANY PTY LTD

(Third Plaintiff) Third

Respondent

AND:

WESTPAC BANKING CORPORATION

(Defendant) Appellant

REASONS FOR JUDGMENT - DAVIES J.A.

Judgment delivered 13/09/1994

I agree that the appeal should be allowed and the injunction granted on 16 December 1993 dissolved. I also agree with Pincus J.A. and Ambrose J. that the respondents' prospects of success on the main point sought to be argued, a material alteration in the mortgage document after execution, appear to be slight for the reasons which they give. I also think that they are slight in respect of the separate argument with respect to the property Pelham; and I agree with Pincus J.A., for the reasons which he gives, that the balance of convenience would, in any event, be against a separate sale of Pelham.

The real argument in this case appears to be about who will sell. Both the mortgagors and the mortgagee are anxious to sell. Indeed the mortgagors cannot properly maintain the properties, let alone carry on the grazing business on them, because of shortage of funds. Without those funds, which they have no real prospect of getting, the properties will deteriorate further. It is therefore in the interests of both parties that the properties be sold, preferably together, as soon as possible. The respondents appear to have insufficient funds to market the properties adequately.

In my opinion, for the reasons given by Ambrose J., including the respondents' poor prospects of success in the action, the balance of convenience is in favour of dissolving the injunction.

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

Appeal No. 271 of 1993

Brisbane
[Westpac Banking Corp v. Pattison & Ors]

BETWEEN:

THOMAS EDGAR PATTISON	First
(First Plaintiff)	Respondent

- and -

KERRY ANN PATTISON	Second
(Second Plaintiff)	Respondent

- and -

PELHAM PASTORAL COMPANY PTY LTD

(A.C.N. 009-827-150)	Third
(Third Plaintiff)	Respondent

AND:

WESTPAC BANKING CORPORATION

(A.R.B.N. 007-457-141)

(Defendant) Appellant

Pincus J.A. Davies J.A. Ambrose J.

Judgment delivered : 13/09/1994

Separate reasons for judgment of each member of the Court; all concurring as to the orders to be made.

APPEAL ALLOWED. INTERLOCUTORY INJUNCTION GRANTED TO THE MORTGAGORS ON 16 DECEMBER 1993 IS DISSOLVED. FURTHER WRITTEN SUBMISSIONS ON COSTS TO BE RECEIVED WITHIN SEVEN DAYS

CATCHWORDS: INJUNCTION - mortgage - power of sale - misleading and deceptive conduct alleged - injunction given on assumption that matter would proceed to trial promptly - change in balance of convenience - delay constitutes "new fact" - whether respondents should pay sum sworn to be owing to mortgagee into court.

Adam P. Brown Male Fashions Pty Ltd v. Philip
Morris Inc. (1981) 148 CLR 170
Inglis v. Commonwealth Trading Bank of
Australia (1992) 126 CLR 161

Counsel:	Mr R V Hanson Q.C. with him Mr J Sheahan for the appellant. Mr A J H Morris Q.C. with him Mr A M Musgrave for the respondents.
Solicitors:	Feez Ruthning for the appellant Barrett Wherry for the respondents.

Hearing Date: 16 August 1994
IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

Appeal No. 271 of 1993

Brisbane

Before: Davies JA Pincus JA Ambrose J.

[Westpac Banking Corp v. Pattison & Ors]

BETWEEN:

THOMAS EDGAR PATTISON	First
(First Plaintiff)	Respondent

- and -

KERRY ANN PATTISON	Second
(Second Plaintiff)	Respondent

- and -

PELHAM PASTORAL COMPANY PTY LTD

(A.C.N. 009-827-150)	Third
(Third Plaintiff)	Respondent

AND:

WESTPAC BANKING CORPORATION

(A.R.B.N. 007-457-141)

(Defendant) Appellant

REASONS FOR JUDGMENT - AMBROSE J.

Judgment Delivered: 13/09/1994

This is an appeal by a mortgagee against an interlocutory order enjoining it from exercising its power of sale under mortgages over properties given as security for moneys lent to the mortgagors.

The mortgagors hold five separate pastoral holdings which are worked together as a cattle property. Those pastoral holdings are named -

Victoria Vale
Bora Creek
Dumas
Agantra
Pelham

By writ issued 16 February 1993, the mortgagors took proceedings against the mortgagee claiming, inter alia, damages under the Trade Practices Act 1974 in respect of misleading or deceptive conduct on the part of the mortgagee in relation to mortgage No. L128507M.

It is only with respect to Pelham Pastoral Holding that relief is sought pursuant to s.87 of the Trade Practices Act. The basis of the relief sought is that the mortgagee made representations to Pelham that it would provide carry on finance to the mortgagor which amounted to misleading and deceptive conduct.

On 16 December 1993 the mortgagors sought, and were granted, an interlocutory injunction restraining the mortgagee from exercising or attempting to exercise any of its rights under its mortgage No. L128507M or its other mortgage until further order. Although in its express terms the injunction was not interlocutory, it is clear from the whole of the material and from the way the matters were argued that it was intended to operate only until the trial of the action or until further order.

Although nothing appears in the statement of claim delivered on behalf of the mortgagors on 23 February 1993, it emerged upon the mortgagors' claim for an interlocutory injunction that Mr Pattison, the first respondent and one of the mortgagors asserts that in fact the mortgage document which he and his wife the second respondent signed as mortgagors in favour of the mortgagee was altered after they had signed it. It is asserted by him that the pastoral holding "Victoria Vale" was not included in the memorandum of mortgage executed by the first respondent/mortgagor on 12 September 1989 and also by the second respondent as debtor on that date.

In the course of the reasons given for granting the injunction, the learned trial judge said:

"I have to weigh the considerations involved and I think the balance favours the maintenance of the status quo until the validity of the mortgage can be determined. I recognise that in making this order in view of my finding as to the risk that the security may not be sufficient to secure the whole of the indebtedness and that interest is accruing on a daily basis, the respondent is placed at risk, but upon the assumption that the matter will proceed to trial within a relatively short time, I think that the balance favours making the order and exercising my discretion so as to dispense with the usual condition requiring the moneys to be paid into court."

Upon appeal, it was contended on behalf of the mortgagee that in granting the interlocutory injunction the judge made it clear in his reasons that he proceeded upon the assumption that the matter would proceed to trial promptly.

Directions were given for the speedy completion of interlocutory steps. We were informed that those steps have not been taken and that at the present time it is impossible to forecast with any confidence when the action may come on for trial.

On behalf of the mortgagee as appellant, it is contended that upon the material the prospects for the mortgagors' success in the case mounted against the mortgagee are so slender that on the balance of convenience, the injunction against the exercise of powers of sale ought not to have been granted and that in any event ought now be discharged.

The mortgagee points to the delay that has occurred in the mortgagors' completing the necessary interlocutory steps before the matter can be listed for trial - approximately 9 months have already passed - to support its contention that this Court ought discharge the injunction because the basis upon which it was granted - that the matter would proceed to trial within a relatively short time - has not occurred and therefore whatever the balance of convenience may have dictated at the time the order was made, the balance now, in any event, supports a discharge of the order. Although in most cases an application to discharge an injunction on the ground that new facts cause the maintenance of that injunction to be unjust will be brought before a chamber judge, in the circumstances of this case we permitted material to be filed so that we could consider the mortgagors' delay in pursuing the action when we were considering the appeal against the exercise of discretion initially.

The material discloses that in September 1993 the mortgagors were indebted to the mortgagee in a sum exceeding $1.33 million.

The mortgagee on 1 October 1993 demanded from the third respondent under its mortgages moneys outstanding in the sum of $1.33 million. Other demands were made upon the mortgagors in September and October 1993 for moneys secured under mortgage but it is unnecessary to go into details of those demands.

The moneys demanded were not paid and on 1 November 1993 the mortgagee gave notice of exercise of power of sale under the mortgages pursuant to s.84 of the Property Law Act 1974.

Upon receipt of that notice, the mortgagors on 13 December 1993 applied for an injunction restraining the exercise of power of sale. It was on 16 December 1993 that the order granting an injunction was made. On 24 December 1993 the mortgagee gave notice of appeal.

More than 8 months have passed since the interlocutory injunction was granted expressly on the ground that the trial between mortgagors and mortgagee would commence "within a relatively short time".

We were informed by counsel for the mortgagee that the mortgagors have failed to comply in a timely manner with directions given for the trial. Counsel for the mortgagors did not contend to the contrary. It seems clear that at this stage it is not possible to predict when the matter will be ready for trial, although counsel for the mortgagors indicated that it was possible that it might be ready by October 1994.

There can be little doubt upon the material that the

condition of the mortgaged properties is deteriorating.
Indeed, the mortgagors contend that it is deteriorating
because of the refusal by the mortgagee to advance further
"carry on" finance. On the material, the mortgagors have
endeavoured to sell the property, the subject of the
mortgages, over the last couple of years, without success.

What is clear therefore upon the material is that both mortgagors and mortgagee of a group of pastoral holdings known as "Victoria Vale" wish to sell the property. As far as the mortgagors are concerned, it would seem therefore that the only result of the interlocutory injunction which they obtained against the mortgagee exercising its power of sale, is to prevent the mortgagee from selling while the mortgagors endeavour to do so. Of course, under the terms of the mortgage any such sale could only be effected with the consent of the mortgagee and presumably in the ordinary course the mortgagee would only consent upon arrangement that it be paid the full amount of its secured debt from the proceeds before the mortgagors had any recourse to the proceeds.

This Court has had the opportunity of examining the manner in which the mortgages were typed. It has also had the opportunity of examining the content of various other documents executed contemporaneously with preparation of the mortgage. It is undesirable to analyse in detail those documents upon this appeal. It suffices to say that in my view on the material placed before the learned trial judge, the contention of the male mortgagor that the mortgage document was altered after he had executed it by inserting the property "Victoria Vale", which had not been included when he signed it, does not seem to be a strong point. Indeed, it seems inconsistent with the contents of documents prepared contemporaneously.

In the course of his judgment, the learned trial judge

observed:

"It seems to me there is a serious issue to be tried and although the authorities are somewhat divided, the prospects of the Applicants successfully attacking the securities cannot be dismissed. It is obvious that to condition any interlocutory relief on the payment of the money owing would be to deny the Applicants the right to challenge the mortgage's validity."

With reference to the content of the memorandum of mortgage and other contemporaneous documents, his Honour observed:

"The Respondent drew my attention to various aspects of the material, including the other two documents I have referred to earlier in which a similar difference in the typing of the land descriptions appears. These matters, together with others to which my attention was drawn, might tend to weaken the prospects of the Applicant's claim in this regard."

We have considered the evidence given by the first plaintiff as mortgagor against the background of the documents to which the learned trial judge referred and the matters which seem to have persuaded him that the prospects of the mortgagors' succeeding upon the matter so lately raised in opposition to the mortgagee's claim "cannot be dismissed."

It may seldom be possible to deny categorically that a party has any prospect of succeeding upon an issue to be tried. On the other hand, of course, upon applications of this sort, courts must weigh up the prospects of a party seeking an injunction succeeding upon trial.

It is my view that upon the material so far assembled and placed before the court the prospect of the mortgagors' succeeding upon the issue of the mortgagee altering the mortgage after it had been executed by the mortgagors is significantly less than the prospect of success of the mortgagee on that issue.

The fact of the matter is that the longer the mortgaged land remains unsold the less will be the prospects of either the mortgagors or the mortgagee benefiting from its ultimate sale. It seems that during the last eight months at least the secured property has inevitably deteriorated because the mortgagors have not had the funds to keep and maintain it as it ought be. This can only result in its market value being reduced, whatever may be the general state of the market at the time when it is ultimately sold.

I have the view that when the interlocutory injunction was granted, the balance of convenience then favoured declining to enjoin the mortgagee's power of sale. The weakness of the mortgagors' case and the fact that they had been attempting unsuccessfully to sell the property, heavily burdened by debt, for some years strongly argue against the grant of an injunction. On the facts that now appear, 9 months have passed since the granting of the injunction and there is still no prospect of a trial, the mortgage debt exceeds the probable value of the pastoral holdings and interest payable under the mortgages (if valid) accrues at the rate of between $15,000 and $18,000 per month, the balance of convenience now strongly comes down on the side of dissolving the interlocutory injunction. The delay in having the matters in dispute in the mortgagors' action, which seems on the evidence to be largely due to the mortgagors' failure to comply with orders and directions of the Court directed to achieving a trial of the issues within a relatively short time, constitutes a "new fact" which renders the enforcement of the order made on 16 December 1993 unjust, see Adam P Brown Male Fashions Pty Ltd v. Philip Morris Inc (1981) 148 CLR 170 at 177-178. This is an additional matter which may be relied upon by the mortgagee to have the injunction dissolved.

The dissolution of the injunction will have no effect upon the ability of the mortgagors to effect a sale of the mortgaged properties with the consent of the mortgagee.

The appeal is allowed. The interlocutory injunction granted to the mortgagors on 16 December 1993 is dissolved.

Further written submissions on costs to be received within seven days.