Picos v Commonwealth Bank of Australia
[2015] ACTSC 56
•13 March 2015
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | Picos v Commonwealth Bank of Australia |
Citation: | [2015] ACTSC 56 |
Hearing Date(s): | 3 February 2015 |
DecisionDate: | 13 March 2015 |
Before: | Mossop M |
Decision: | See [61] |
Category: | Interlocutory application |
Catchwords: | PRACTICE AND PROCEDURE – Application for summary judgment, alternatively that the statement of claim be struck out – whether claim is embarrassing or discloses a reasonable cause of action – turns on own facts |
Legislation Cited: | Court Procedure Rules 2006 (ACT) |
Cases Cited: | Galovac Pty Ltd v Australian Capital Territory [2010] ACTSC 132 Mann v Cahill (1999) 149 FLR 298 |
Parties: | Connie Louise Picos (Plaintiff) Commonwealth Bank of Australia (Defendant) |
Representation: | Counsel: Self-represented (Plaintiff) Mr R J Arthur (Defendant) |
| Solicitors: Self-represented (Plaintiff) Bradley Allen Love Lawyers as agent for Gadens Lawyers (Defendant) | |
File Number(s): | SC 187 of 2014 |
Introduction
These proceedings were commenced by originating claim on 12 May 2014. A defence was filed on 3 June 2014 and a reply on 6 June 2014. By application dated 22 July 2014 the defendant seeks the following orders:
1.Pursuant to rule 1147 of the Court Procedures Rules 2006 (ACT), judgment for the defendant against the plaintiff for the plaintiff’s claim for relief.
2.Further or in the alternative, pursuant to rule 425 of the Court Procedures Rules 2006 (ACT), the plaintiff’s statement of claim dated 12 May 2014 be struck out.
3.The plaintiff to pay the defendant’s costs of this application.
4.Any other orders that the Court considers appropriate.
The grounds for the application are set out as follows:
1.the plaintiff’s statement of claim is frivolous and vexatious;
2.there is a good defence to the claim;
3.the plaintiff’s statement of claim discloses no reasonable cause of action, has a tendency to prejudice, embarrass and delay any fair trial of the proceedings, is, scandalous, unnecessary and is otherwise an abuse of process of the Court.
By application in proceeding dated 28 July 2014 the plaintiff sought the following orders:
1.Gadens Lawyers be added as a defendant.
2.Relief claimed by the plaintiff be amended to $15 billion.
3.The plaintiff’s correct title is “Miss”.
4.The affidavit of Emma Colantonio marked 23 July 2014 be struck out.
5.The affidavit of Debbie Flaherty be struck out.
Alternatively to 5,
6.The alleged bank statements from the plaintiff’s loan account dated after 20 September 2012, filed by the defendant, be struck out.
7.The alleged bank statements from the plaintiff’s streamline account with the defendant for the period 1 July 2012 to 31 December 2012 be struck out.
On 8 August 2014 Refshauge J adjourned the applications to be heard on 3 February 2015. The proceedings were subsequently re-docketed to me and the applications listed before me on that day.
At the commencement of the hearing before me on that date the plaintiff sought, and I granted, leave to amend the her application by adding:
8.That there be summary judgment for the plaintiff or, alternatively, that the defence be struck out and judgment for the plaintiff on the basis that the defence dated 2 June 2014 does not disclose a reasonable defence.
The plaintiff’s amended application in proceedings was subsequently filed on 9 February 2015.
I also determined that it was appropriate to first hear the defendant’s application and then, in the light of my decision on it, to consider, if necessary, the plaintiff’s amended application. I proceeded in that manner because the outcome of the defendant’s application would influence whether and to what extent the plaintiff’s application remained relevant.
The defendant read the affidavit of Debbie Flaherty affirmed 22 July 2014. I did not permit an affidavit of Daniel John Morphites affirmed 29 January 2015 to be read because it was served late and Mr Morphites was not available for cross-examination. The plaintiff relied upon her affidavit of 12 January 2015 and her affidavit of 2 February 2015, which was headed “Statement of Damage”. Both parties made written and oral submissions.
Background facts
In early 2006 the plaintiff entered into a loan transaction, secured by a mortgage to the defendant, in order to allow the plaintiff to purchase from her father some vacant land on Basil Drive, Forest Ridge, Queensland (the Property). The plaintiff’s father acted as a guarantor of the loan. In 2011 the plaintiff referred a dispute relating to that loan and mortgage to the Financial Ombudsman Service (FOS). A recommendation to resolve the dispute was made by the FOS in 2012. Both the plaintiff and the defendant communicated acceptance of the FOS’s recommendation.
The recommendation was to the effect that there had been unconscionable elements in the defendant’s conduct and that the transaction should effectively be set aside. The plaintiff had sought to be returned to her status quo ante and the recommendation was that the plaintiff surrender the Property to the defendant and the defendant would pay the plaintiff the sum of $20,574. That sum was calculated by reference to the plaintiff’s net out-of-pocket expenses, having regard to repayments made in relation to the loan, amounts not paid towards the purchase of the Property and amounts redrawn from the loan account.
The amount was in fact credited to one of the plaintiff’s accounts with the defendant. The plaintiff also signed a document indicating that she surrendered the Property to the defendant. The defendant subsequently took possession of the Property and sold it. Because the surrender document was not a formal transfer of title for the purposes of the Land Title Act 1994 (Qld), the defendant proceeded by treating the plaintiff as in default under the mortgage and exercising its power of sale even though the plaintiff had written to the defendant surrendering the Property to the defendant pursuant to the FOS recommendation.
The statement of claim
The claim can be divided into 4 sections:
(a)Opening paragraphs ([1]-[2]);
(b)“General Facts” ([3]-[30]);
(c)“Additional General Damages” ([31]-[33])
(d)“Additional Causes of action” ([34A]-[34F]).
Opening paragraphs: The opening paragraphs identify that the plaintiff makes “a liquidated demand” and identifies that demand as being $500 million as well as interest up to the day of judgment.
“General facts”: This section incorporates 27 paragraphs describing various circumstances of the plaintiff’s life from July 2007, when she was aged 20. Included here are facts relating to the entry into the loan with the defendant, the FOS recommendation and its implementation. A significantly abbreviated summary of the matters pleaded is as follows.
Paragraphs 3 to 5 plead that between July and December 2007 the plaintiff and other people purportedly acting on her behalf made credit applications to the defendant and possibly other entities.
Paragraph 6 states that between June 2007 January 2008 plaintiff saved money with the intention of purchasing a house and was studying business and law. She alleges she was the victim of domestic violence and other abuse.
Paragraphs 7 to 11 describe the circumstances in which the plaintiff came to own the Property. It was property which her father had owned. It was transferred to her at her father’s instigation after a loan of $60,000 was arranged in her name, secured by a mortgage over the Property, a mortgage over another property owned by her father and a personal guarantee from her father. The claim alleges that her father told her the Property was worth $150,000 whereas he had purchased it for $37,000 in May 2007 and it was later valued at $45,000.
Paragraph 12 records that the defendant direct-debited payments from the plaintiff’s bank account.
Paragraph 13 pleads that they plaintiff asked her father to take the Property back and “made contact with the [defendant] and protested.”
Paragraphs 14-23 record personal matters occurring in the plaintiff’s life:
(a)moving out of the family home to live with her boyfriend ([14]);
(b)her mother suffering a stroke and cancer ([14]);
(c)her diagnosis with anxiety ([15]);
(d)becoming engaged to her boyfriend and then in separating from him ([14], [16], [17]);
(e)being sexually assaulted ([15]);
(f)her mother dying ([16]);
(g)advice received from her ex-boyfriend concerning the mortgage to the defendant and enquiries made about the possibility of legal action against the defendant ([17]);
(h)the making of a complaint to the FSO ([18]);
(i)participation in the Financial Services Institute of Australasia Young Finance Professionals Committee ([19]);
(j)being involuntarily held in an acute psychiatric ward in March 2012 ([20]);
(k)being sexually assaulted in about March 2012 ([20]);
(l)that at the end of June 2012 she had made repayments on the mortgage to the defendant of approximately $52,430 ([21]).
(m)that in July 2012 she moved out of share accommodation and into a leased studio in Potts Point in Sydney ([22]);
(n)that in August 2012 she was involuntarily held in an acute psychiatric ward of a hospital ([23]); and
(o)the circumstances of her employment at that time, including allegations that a particular employee of the company for whom she then worked “had inflicted grievous bodily harm on [her] and attempt[ed] to murder [her]… paid [her] $45,000 per annum and directed [her] to make him tuna sandwiches five days per week” and her resignation from that employment ([23]).
Paragraph 24 then refers to the recommendation made by the FSO on 27 August 2012. The pleading is in the following terms:
On 27 August 2012, the [FSO] purported to release a Recommendation for the matter of the Mortgage to the respondent. Essentially, the [FSO] recommended that I “surrender” the Real Property to the [defendant] and that the [defendant] refund some of my actual repayments to me, amounting to $20,030. I indicated to the [defendant] and the [FSO] that I accepted the Recommendation however, I was not capable of consenting to or accepting the Recommendation as, at the time, I was suffering from psychiatric injury, grievous bodily harm and financial abuse. Both the [defendant] and the FSO knew that I was suffering from psychiatric injury at this time as I indicated that this was so via written email…
There is then at [25] a description of a contract with an entity referred to as “Tauro Capital” and an allegation that the plaintiff did not get paid what she was owed by that entity. She then alleges that the respondent paid the amount of $20,030 into her account in September 2012 and instructed Gadens Law Firm to sell the Property. Gadens then issued her with several default notices when she never defaulted and she protested. She then pleads that she did not receive any income except for $500 from any source until January 2013.
In January 2013 she was again involuntarily hospitalised ([25]) and in February 2013 she “fled to Perth” ([26]).
In [27] she pleads that she commenced a part-time position with HealthEngine Pty Ltd in Perth on 27 June 2013 and makes allegations that the company and a named director or employee of the company “inflicted physical injury, psychiatric injury and grievous bodily harm on [her]” and “attempted to murder [her]”. She further pleads that on 4 August 2013 she created the entity, Female Fund, to be “capitalised at $1 billion”, being a for-profit investment entity for females in Australia.
Also in [27] she pleads that on 20 August 2013 she resigned from HealthEngine Pty Ltd, demanded around $108,000 and commenced proceedings in the Federal Court and “before WorkCover WA”. She pleads “the substantive Federal Court proceedings under the Fair Work Act, with around $127.5 million damages, have concluded”.
Paragraph 28 pleads that in November 2013 the plaintiff met with the Western Australian government and “received permission to use the words Female Fund is “Assisted by the WA State Government” on the basis of the Female Fund being capitalised at $1 billion”.
Paragraph 29 pleads that she met a business banker from the defendant who, in order to facilitate a financial product for her, requested her tax return, which she did not produce because she had suffered a significant financial loss due to “the financial abuse by Tauro Capital” and that she was unable to obtain finance.
Paragraph 30 pleads that she returned to Sydney in December 2013 and sought a business loan from the defendant for $100,000 but “all separate applications for personal finance and credit card limit increases were declined”.
“Additional General Damages”: Paragraphs 31-33 are as follows:
Additional General Damages
31.Connie Picos claims $499,000,000 (four hundred and ninety nine million dollars) for economic loss and damage caused to Connie Picos and her associated entities, including Female Fund and Lion Advisory, by the respondent from 2007, in 2008 and continuing to May 2014 and in the future.
32.Connie Picos claims $800,000 (eight hundred thousand dollars) for homelessness, loss of home and obstruction of home ownership by the [defendant].
33.Connie Picos claims $200,000 (two hundred thousand dollars) for non-economic loss, including emotional distress, embarrassment, personal injury and “hurt feelings”, commencing in 2007 and continuing.
I note that one of the aspects of the claim sought to be amended by the plaintiff’s amended application in proceedings filed 9 February 2015 is the scope of the claim for damages. The plaintiff proposes to claim damages of $15 billion. The basis for that claim is set out in the plaintiff’s affidavit of 2 February 2015. That makes it clear that the plaintiff wishes to claim damages for future losses likely to be incurred by her. She proposes to claim $15 billion, calculated on the basis that it represents a 5% impairment of her economic interests which would otherwise be capable of producing more than $300 billion in her expected lifetime.
“Additional causes of action”: Paragraph 34 is as follows:
Additional Causes of action
34.Based on the General Facts above and otherwise further particularised below Connie Picos claims:
A.Unconscionable conduct, unconscionable dealing and unconscionable contract by the respondent, in particular, for example, in relation to the Mortgage to the respondent and in relation to the [Property].
B.Negligence, as set out in the General Facts above, and:
(i) The respondent owed Connie Picos a duty of care in relation to the Mortgage to the [defendant] to ensure that Connie Picos freely entered into the transaction and, separately, a duty to ensure that Connie Picos understood the transaction; the [defendant] breached its duty of care by proceeding with the transaction when Connie Picos did not receive independent legal advice and the [defendant] did not otherwise ensure that Connie Picos is understood the Mortgage to the [defendant]; the [defendant] also did not ensure that Connie Picos freely entered into the transaction; and the breach of the duties by the [defendant] caused Connie Picos damage, as set out under the heading Additional General Damages above and including homeless, obstruction of home ownership, economic loss, emotional distress, personal injury and “hurt feelings”.
(ii) The [defendant] continued to owe Connie Picos a duty of care in relation to the Mortgage to the [defendant] in 2012 to ensure that Connie Picos was not subject to financial abuse and to ensure that Connie Picos could not alter or legally affect the Mortgage to the [defendant] due to, for example, psychiatric injury or financial abuse; the [defendant] breached the duty when the [defendant] accepted the Recommendation from the [FSO] and from Connie Picos and otherwise altered and legally affected the Mortgage to the respondent in the face of evidence that Connie Picos was suffering from psychiatric injury and was subject to financial abuse, including external financial abuse; and the breach of the duty by the [defendant] caused Connie Picos damage as set out under the Additional General Damages above and including economic loss and distress.
C.Breach of contract:
(i) the [defendant], primarily, breached the Mortgage to the [defendant] contract in 2012 when the respondent took the [Property] from Connie Picos, issued default notices in the name of Connie Picos and sold the [Property]; and
(ii) the [defendant] breached the Mortgage to the [defendant] contract from day 1 of the contract by failing to act in good faith (inherent term of the contract) and breaching trust and confidence between Connie Picos and the [defendant]. I became a customer of the respondent in kindergarten when the respondent opened a bank account in my name, with my parent’s permission, after visiting my primary school and handing out “piggy banks” and advertising “dollar-mite savings accounts”.
D.Breach of statutory duties and statute:
(i) National Credit Code, section 71 Changes by agreement (criminal penalty), the [defendant] breached in 2012.
(ii) National Credit Code, section 88 Requirements to be met before credit provider can enforce credit contract etc, the [defendant] breached in 2012.
E.Equitable relief, as entitled.
F.Other relief, including further breach of [statute], contract and other relief as entitled, based on the above facts.
In her written and oral submissions the plaintiff explained that she relied upon four matters that she alleges were unconscionable:
(a)the mortgage between the plaintiff and the defendant;
(b)the FOS Recommendation between the plaintiff, the defendant and the FOS;
(c)the “surrender” of the Property by the plaintiff; and
(d)the sale of the Property by the defendant.
The defence
The defence, filed by the defendant on 3 June 2014, does not traverse the facts set out in the statement of claim. Instead, it alleges in answer to the whole of the claim that by reason of the acceptance of the FOS recommendation, the defendant is released from any further liability in respect of the matters resolved by the recommendation and that the plaintiff is estopped from raising the same matters that were resolved by the recommendation ([1](a)(iv)). It also denies that the plaintiff is entitled to have judgment for $500 million or any relief against the defendant ([1](b)). Finally, it says that the plaintiff’s statement of claim discloses no reasonable cause of action, has a tendency to prejudice, embarrass and delay any fair trial of the proceedings, is frivolous, scandalous, unnecessary and vexatious and is otherwise and abuse of process of the Court ([1](c)).
Because the defence fails to deny, not admit or join issue with the facts pleaded by the plaintiff they are taken to be admitted: see r 447 of the Court Procedure Rules 2006 (ACT).
The reply
The plaintiff filed a reply on 6 June 2014. In some respects the reply goes beyond matters appropriate to raise by way of reply. The plaintiff denies that the complaint to the FOS was in relation to the subject matter of the proceedings and says that the complaint to the FOS related to undue influence in relation to the transfer of the Property to the plaintiff ([1]).
She denies that she accepted the FOS recommendation and that it was in resolution of the matters the subject of these proceedings ([2](a)-(b)).
She alleges that the recommendation purported to resolve a matter of undue influence between the “vendor” and the plaintiff which was distinct from the matter of the mortgage contract between the plaintiff and the defendant ([2](c)).
She alleges that the requirement stated in the FOS recommendation that she surrender the property was “illegal”, “in breach of the contract between the plaintiff and the defendant”, could not be accepted or acted upon and was outside the terms of reference of the FOS ([2](d)).
She says that the recommendation made by the FOS that, “The [plaintiff] has no liability to the [defendant] for the outstanding loan balance owed under loan account [number]” was not accepted by the defendant or was not complied with by the defendant because it instructed Gadens Lawyers to issue the plaintiff with notices of default alleging liability under the loan account ([2](e)).
In reply to the defendant’s pleading that it paid the plaintiff $20,574 the plaintiff says that the defendant did not comply with the recommendation that it paid compensation of $20,574 to the plaintiff. In particular she says at [3](a),
… the defendant held funds on deposit for the plaintiff in September 2012 including funds in a ‘savings account’ and funds in the ‘loan account’ as a redraw facility. The defendant deposited the plaintiff’s funds from her loan account and redraw facility into her savings account in September 2012. This ‘account swap’ did not constitute the payment of “compensation” to the plaintiff. The funds were the funds of the plaintiff and the plaintiff was able to access her funds from either account at all times.
She denies that the defendant is released from liability in relation to the matters raised in the FOS dispute ([4]). She denies that she is estopped in any way in these proceedings and pleads that the FOS recommendation was not binding on the plaintiff and the defendant, was not accepted by the plaintiff or consented to and was breached by the defendant ([5]).
She also alleges breaches of the National Credit Code, sections 71 and 88, makes allegations of breaches of the Australian Consumer Law arising out of the fact that the defendant represented the mortgage as a “home loan” and “investment home loan” ([6]).
She pleads various facts in relation to the defendant’s claim in [1](c) of the defence that the proceedings are frivolous and vexatious etc: [7].
Consideration
The defendant has sought summary judgment under r 1147. In relation to applications for summary judgment by a defendant the principles to be applied are usefully summarised by Jagot J in Galovac Pty Ltd v Australian Capital Territory [2010] ACTSC 132 at [5]. While for the purposes of such an application it is appropriate to assume that the facts pleaded are true, in the present case the position is even clearer because the defendant has admitted the facts pleaded by the plaintiff. If all the facts set out in the plaintiff’s claim are true then it could not be said that the plaintiff’s claim for some equitable relief was unarguable. In particular, she claims that she was suffering from “psychiatric injury” at the time that she accepted the FOS recommendation and that both the FOS and the defendant knew that at the time.
So far as the defendant’s claim of an estoppel is concerned, while the defendant may ultimately be found to have a good defence to the plaintiff’s cause of action because of the implementation of the FOS recommendation, in the somewhat unusual circumstances where the agreement between the parties arising out of the FOS recommendation has not been recorded in any formal documentation, such as a deed of settlement, it cannot be said that the plaintiff’s claim is hopeless or unarguable.
While there could be a basis for summary judgment on some other aspects of the claim, that is hampered by the fact that the claim made is embarrassingly pleaded and hence it is difficult to be sufficiently confident of the claim being made in order to be able to determine that summary judgment should be given for the defendant.
The alternative application by the defendant was that the statement of claim be struck out under r 425. In my view the whole of the statement of claim should be struck out under r 425(a) and (b) because it either fails to disclose a cause of action or because it is embarrassing.
The sense in which the pleading fails to disclose a cause of action is that, looking solely at what is pleaded, it fails to include all the elements of a cause of action: White Industries Australia Ltd v Federal Commissioner of Taxation (2007) 160 FCR 298 at [47]; Spencer v Commonwealth (2010) 241 CLR 118 at [23].
The various ways in which a pleading may be embarrassing were outlined by Johnson J in McGuirk v The University of New South Wales [2009] NSWSC 1424 at [30]-[35]. In Szanto v Bainton [2011] NSWSC 985 Ward J summarised the position as follows (at [107]):
What is meant by an embarrassing pleading in the context of an application such as the present relates, in essence, to whether the pleading can serve the function of a pleading under the Rules - namely, in succinct fashion, to put the defendant properly on notice of the real substance of the claim made against it and to know what case it is that the defendant has to meet. Thus a pleading is embarrassing if it is unintelligible, ambiguous, or so imprecise in its identification of material factual allegations as to deprive the opposing party of proper notice of the real substance of the claim or defence (Gunns Ltd v Marr [2005] VSC 251 at [14]-[15]) or if it contains inconsistent, confusing or irrelevant allegations (Shelton v National Roads & Motorists Assn Ltd [2004] FCA 1393; (2004) 51 ACSR 278; at [18]).
My conclusion that the statement of claim should be struck out arises collectively from the following features of the statement of claim.
(a) The structure of the pleading is embarrassing
The Statement of Claim makes a liquidated demand for $500 million when the claim is clearly not a liquidated claim.
Having pleaded “General facts” it then pleads “Additional general damages” when no damages were previously identified. It is not clear what the damages are “additional” to.
The “Additional General Damages” pleadings are not tied to any particular cause of action. The heading “Additional Causes of Action” suggests that a cause of action has already been identified when it has not.
These features mean that it is very hard to understand what is being claimed upon which cause of action. It is at best ambiguous and at worst not intelligible. It is therefore embarrassing.
While the plaintiff did explain in her written submissions the relationships between the paragraphs of the claim in a manner that was more intelligible and made more sense as a structured pleading, that greater clarity is not reflected in the pleading and is not an appropriate substitute for clarity in the pleading itself.
(b) No pleaded causal link.
The pleading does not plead a causal link between the claims for damages in [31]-[33] and the facts earlier pleaded or the causes of action later pleaded. Therefore, the defendant is left with a $500 million dollar claim but no identification of the causal link between the facts pleaded and the damage. It is certainly not obvious how dealings with the defendant over a $60,000 loan could cause such significant damage as is pleaded by the plaintiff. The causal link is not only significant in understanding how the claims based on various causes of action are put but also in determining whether other facts pleaded have any relevance. Many of the pleaded facts in paragraphs [3]-[30] may not be material facts but it is not possible to determine that conclusively because the causal link alleged between those facts and the relief claimed has not been identified.
Because the relevant causal link is not pleaded, the pleadings do not disclose a reasonable cause of action. Alternatively because they are ambiguous or confusing, they are embarrassing within the meaning of r 425.
(c) Losses to other entities
The claim for $499 million in [31] of the statement of claim appears to claim damages incurred by “Female Fund” and “Lion Advisory”. If these entities are separate legal entities then there is no pleading which would give the plaintiff an entitlement to claim damages incurred by them. If they are not then the reference to them is confusing. If losses to those entities are claimed to cause loss to the plaintiff then the alleged causal mechanism needs to be identified. As a result, the pleading is, at best, embarrassing.
(d) Non specific claims for relief
Claims for relief in [34E] and [34F] in the statement of claim are both embarrassing as they do not identify the relief sought and instead seek any relief to which the plaintiff might be entitled. Particularly in the light of the other defects in the statement of claim it is unfair to the defendant to have to work out what entitlements to relief might be being claimed in these paragraphs.
Conclusion and orders
The statement of claim will be struck out under r 425. It is appropriate that the plaintiff have another opportunity to attempt to plead her claim in a manner that complies with the rules. In my view this approach reflects the caution that must be exercised with litigants in person attempting to plead a case: Mann v Cahill (1999) 149 FLR 298 at [6].
The plaintiff’s amended application in proceedings filed 9 February 2015 will be adjourned to enable it to be disposed of in the light of these reasons.
The orders of the Court therefore are:
1. The statement of claim dated 12 May 2014 is struck out.
2. The defendant’s application in proceedings dated 22 July 2014 is otherwise dismissed.
3. The plaintiff is directed to file and serve any further statement of claim by 3 April 2015.
4. The proceedings are adjourned to 20 March 2015 at 9.30am for any argument in relation to the costs of the defendant’s application, the making of orders in relation to the plaintiff’s application dated 28 July 2014 and for the making of further directions.
| I certify that the preceding sixty-one [61] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Master Mossop. Associate: Date: 13 March 2015 |
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