Poulos v Commonwealth Bank of Australia Ltd

[2019] NSWCA 241

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation:	Poulos v Commonwealth Bank of Australia Ltd [2019] NSWCA 241
Hearing dates:	25 September 2019
Date of orders:	04 October 2019
Decision date:	04 October 2019
Before:	Payne JA; Brereton JA
Decision:	(1)   Summons dismissed; (2)   Applicant pay the Respondent’s costs.
Catchwords:	CIVIL PROCEDURE – Court of Appeal – application for leave to appeal – where proceedings dismissed under Uniform Civil Procedure Rules 2005 (NSW) r 13.4 – summons dismissed   JUDGMENTS – setting aside for fraud – summary dismissal – where relitigation an abuse of process
Legislation Cited:	Uniform Civil Procedure Rules 2005 (NSW), r 13.4
Cases Cited:	AB v State of NSW [2014] NSWCA 243 Arthur JS Hall & Co v Simons [2002] 1 AC 615 Blair v Curran (1939) 62 CLR 464; [1939] HCA 23 Brewer v Brewer (1953) 88 CLR 1; [1953] HCA 19 Clone Pty Ltd v Players Pty Ltd (2018) 92 ALJR 399; [2018] HCA 12 Coffey v Secretary, Department of Social Security (1999) 86 FCR 434; [1999] FCA 375 Commonwealth Bank of Australia v Hacide Pty Ltd, (Supreme Court (NSW), Sully J, 28 November 1989, unrep) Donnelly v Australia and New Zealand Banking Corp [2015] NSWCA 233 Hacide v Commonwealth Bank of Australia (Court of Appeal (NSW), Samuels, Priestley and Clarke JJA, 1 August 1991, unrep); [1991] NSWCA 134 Henderson v Henderson (1843) 3 Hare 100; 67 ER 313 Macatangay v New South Wales (No 2) [2009] NSWCA 272 O'Shane v Harbour Radio Pty Ltd (2013) 85 NSWLR 698; [2013] NSWCA 315 Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589; [1981] HCA 45 Poulos v Elliott [2019] NSWSC 423 Reichel v Magrath (1889) 14 App Cas 665 Sea Culture International v Scoles (1991) 32 FCR 275 Spalla v St George Motor Finance Ltd (No 6) [2004] FCA 1699 State of New South Wales v Williams [2014] NSWCA 177 Tomlinson v Ramsey Foods Processing Pty Limited (2015) 256 CLR 507; [2015] HCA 28 UBS AG v Tyne (2018) 92 ALJR 968; [2018] HCA 45 Walton v Gardiner (1993) 177 CLR 378; [1993] HCA 77 Wentworth v Rogers (No 5) (1986) 6 NSWLR 534
Category:	Principal judgment
Parties:	Patricia Poulos (Applicant) Commonwealth Bank of Australia Ltd (Respondent)
Representation:	Counsel: Applicant (Self-represented) F Roughley (Respondent)   Solicitors: Applicant (Self-represented) Gadens (Respondent)
File Number(s):	2019/00226568
Publication restriction:	Nil
Decision under appeal	Court or tribunal: Supreme Court of New South Wales Jurisdiction: Equity Citation: [2019] NSWSC 423 Date of Decision: 12 April 2019 Before: Kunc J File Number(s): 2019/00010906

Judgment

1. THE COURT: Almost 30 years ago, the Commonwealth Bank of Australia (CBA) obtained a judgment for possession of a property in South Cronulla owned by Hacide Pty Ltd (Hacide), [1] a company controlled by the present applicant Mrs Patricia Poulos and her husband Mr John Poulos, who were also defendants in those proceedings. An appeal to this Court from that judgment was dismissed. [2] In January 2018, Mrs Poulos commenced new proceedings in the Equity Division, against Mr JD Elliott as first defendant and CBA as second defendant. On 12 April 2019, Kunc J summarily dismissed those proceedings as against CBA. Mrs Poulos seeks leave to appeal to this Court from that dismissal.

   1. Commonwealth Bank of Australia v Hacide Pty Ltd, (Supreme Court (NSW), Sully J, 28 November 1989, unrep).

   2. Hacide v Commonwealth Bank of Australia (Court of Appeal (NSW), Samuels, Priestley and Clarke JJA, 1 August 1991, unrep); [1991] NSWCA 134.

Background

2. In 1989, Hacide was registered as the proprietor of an estate in fee simple in a property at South Cronulla (Number 52). The applicant, her husband Mr John Poulos and their two children, Colin Poulos and Kathryn-Anne Poulos, resided in Number 52. Two mortgages were registered on the Certificate of Title for Number 52. The relevant mortgage, pursuant to which CBA claimed possession, was granted to CBA by Hacide and was registered on 8 May 1986.

3. Sully J found that, in response to an application by Hacide dated 1 May 1985, for “accommodation … from time to time by way of overdraft, accepting, endorsing or discounting bills of exchange drawn by the applicant or in the applicant's favour or other accommodation approved by the Bank from time to time”, CBA provided accommodation to Hacide by way of a bill discount facility, which was “rolled-over” on maturity. That “rolled-over” facility allegedly matured in May 1986 and was not thereafter “rolled-over” further. Hacide was debited in the books of CBA with the face value of the “rolled-over” bill, and with various charges, costs and fees associated with the “rolling-over” of the original bill. The debt remained outstanding (save for an amount of $10,000 paid in February 1987) at the time of the trial before Sully J. CBA, having unsuccessfully demanded repayment of the outstanding debit balance, brought proceedings against Hacide claiming possession of the subject property. The occupiers of Number 52 – Mr Poulos, Mrs Poulos and their two children – were joined as additional defendants on their own applications.

4. Before Sully J, the Poulos interests conceded that the case made in chief by CBA established a prima facie entitlement to the relief claimed, but sought to meet that prima facie case by contending:

1. that CBA had been guilty of fraud in connection with the subject mortgage;

2. that CBA and the defendants had never been ad idem as to the purpose of the subject mortgage; and

3. that Number 52 was trust property, and Hacide in its dealing with the property was in breach of trust, of which CBA had knowledge, with the consequence that it was precluded from enforcing the mortgage.

5. Sully J rejected each of those defences, and gave judgment for possession.

6. In the earlier appeal (which was dismissed in 1991), Priestley JA, with whom Samuels and Clarke JJA agreed, recorded that Sully J’s findings based on credibility, and “the indisputable fact” that CBA had made $360,000 available, in accordance with Mrs Poulos’ directions, on the security of Number 52, had the effect that in the appeal her counsel was constrained to agree that CBA was entitled to possession of the Certificate of Title to Number 52 at least as security for an equitable mortgage for the amount advanced, so that the argument was confined to the narrow question whether CBA, although entitled to a mortgage of the land in equity, was not entitled to remain registered as mortgagee, because the registered document had not been filled in by the authority of the mortgagor. [3] However, his Honour described in detail the facts about which there “was or can be no serious dispute”, and made detailed findings of fact relevant to the commercial background and financial dealings between parties which included not only Hacide, but also Zeus Industries Pty Ltd (Zeus) (another company controlled by Mr and Mrs Poulos), the Australian and New Zealand Banking Group Limited (ANZ), Elders Finance and Investment Ltd (Elders), and another property owned by Hacide in Caringbah. His Honour’s judgment is the principal source for the following summary of the background against which Mrs Poulos’ complaints arose.

   3. Hacide v Commonwealth Bank of Australia (Court of Appeal (NSW), Samuels, Priestley and Clarke JJA, 1 August 1991, unrep); [1991] NSWCA 134 at 10-11.

7. In 1984, a group of companies of which Mrs Poulos was the principal, and which included Zeus and Hacide, held a substantial property portfolio. Prior to 1984, at least some of the properties secured a number of liabilities. In particular, Number 52 secured two liabilities: a first mortgage to Finance Corporation of Australia Ltd (FCA), and a second mortgage to ANZ. ANZ also held a mortgage over another property at Miranda, securing indebtedness of Mr and Mrs Poulos, and the total indebtedness was secured against both properties; it amounted to some $700,000. Mrs Poulos sought to refinance the various liabilities, with a single lender, for which she sought a loan facility of $1.5 million. The first choice of lender was Elders, from which she sought a loan of $1.5 million, to be secured over a portfolio of ten properties, which did not include Number 52. Some sort of arrangement with Elders had been made in early 1984, which Mrs Poulos expected to settle by May 1984, but this did not materialise.

8. In about August 1984, Mrs Poulos approached CBA’s Caringbah branch to explore an alternative source of finance; she had also contacted finance brokers to see if they could source a similar facility. In the course of discussions with CBA, it was suggested that Zeus might open an overdraft account with CBA’s Caringbah branch, to be secured by deposit of a title deed in respect of a property owned by Hacide; presumably, this was in order to re-establish a banking connection with that branch.

9. In October 1984, CBA’s Corporate Banking Division decided that it would not provide the $1.5 million facility for which Mrs Poulos had applied, although this was not communicated to the Caringbah branch, which was the point of contact with Mrs Poulos, until 5 November 1984. CBA’s reasons for declining the business included that the security offered, which included Number 52, was inadequate. However, in the meantime, Zeus had opened an overdraft account with the Caringbah branch, secured by deposit of the title deed to Hacide’s Caringbah property.

10. On or about 30 November 1984, Morgoode Dunn Australia Ltd, mortgage brokers, wrote on behalf of Hacide and Mr and Mrs Poulos to CBA seeking a loan of $550,000 by way of fixed rate bills on the security of a registered first mortgage over Number 52. This application was approved, subject to valuation, and the essential details of CBA’s offer were set out in a letter dated 6 December 1984 from the Caringbah Branch to Hacide – including that the security for the loan was to be No 52.

11. On 19 December 1984, at a time when settlement with Elders appeared imminent, Mrs Poulos discussed the bill facility with officers of the Caringbah branch, and also a request for short term accommodation of $38,500. In circumstances where Hacide’s Caringbah property was intended to form part of the security offered to Elders, and CBA was proposing to advance in excess of $500,000 on the security of Number 52, CBA agreed to provide the short term accommodation requested, on the basis that it would attend the settlement with Elders and hand over the certificate of title to the Caringbah property, in return for discharge of the short term accommodation. As Priestley JA observed:[4]

That is, on that day [19 December 1984], it was in the contemplation of both the Bank and the appellant that at the conclusion of the Elders settlement, Elders would be holding the Certificate of Title to the Caringbah property as security, and the Bank the Certificate of Title to No 52.

4. Hacide v Commonwealth Bank of Australia (Court of Appeal (NSW), Samuels, Priestley and Clarke JJA, 1 August 1991, unrep); [1991] NSWCA 134 at 5.

12. However, the valuation of Number 52 proved insufficient to support an advance of $550,000, and the approval was reduced to $364,000 gross ($330,000 net).

13. In preparation for settlement of the Elders refinance on 3 May 1985, the loans officer at Caringbah branch, Mr Wilson, completed and dated a number of documents which had been signed by Mrs Poulos on behalf of Hacide, including an authority and direction to CBA to pay the proceeds of the bill discount facility by crediting an amount sufficient to clear Zeus’s overdraft and paying any remaining proceeds to PA Somerset and Co (the solicitors then acting for the Poulos interests), upon receipt of discharges of the two registered mortgages over No 52 and the certificate of title for No 52, and also to release the certificate of title for Caringbah to PA Somerset and Co. As Priestley JA observed, the amount to be supplied by CBA was not on its own sufficient to discharge the mortgages over No 52, and authority and direction must have been prepared in the belief that the proceeds of the facility would be used in connection with a simultaneous transaction or transactions, in the course of which Zeus’s overdraft with CBA would be cleared, the certificate of title (to Caringbah) which had been lodged as security in respect of that overdraft would be released to the Poulos’ solicitor, the mortgages over Number 52 would be discharged, and the certificate of title to Number 52 then handed to CBA. [5]

    5. Hacide v Commonwealth Bank of Australia (Court of Appeal (NSW), Samuels, Priestley and Clarke JJA, 1 August 1991, unrep); [1991] NSWCA 134 at 8.

14. His Honour explained:[6]

All these things happened at the settlement with Elders on 3 May 1985. Also, at the settlement on 3 May 1985, a representative of the Bank attended and handed three cheques to Mr Fordyce [of PA Somerset & Co] totalling $245,000.

6. Hacide v Commonwealth Bank of Australia (Court of Appeal (NSW), Samuels, Priestley and Clarke JJA, 1 August 1991, unrep); [1991] NSWCA 134 at 8.

15. In respect of the 3 May 1985 settlement, his Honour, drawing on post-settlement letters written by Mr Fordyce to Mrs Poulos on 3 May and 6 May 1985, and on Bank documents including the settlement instructions, said:[7]

The $245,000 from the Bank was used in three cheques: one in favour of Finance Corporation of Australia Ltd for $84,027.13; this must have been towards the discharge of that company’s first mortgage over No 52: one in favour of Custom Credit Holdings Ltd, mortgagee of another property, for $42,651.70 and one in favour of [Mr and Mrs Poulos] for $118,321.17. Cheques to be provided by Elders included one for $731,756.91 in favour of [Mr and Mrs Poulos], one for $270,000 in favour of Westpac, one for $176,744.29 in favour of Zeus and one for $17,245.71 in favour of [Mr and Mrs Poulos].

7. Hacide v Commonwealth Bank of Australia (Court of Appeal (NSW), Samuels, Priestley and Clarke JJA, 1 August 1991, unrep); [1991] NSWCA 134 at 9.

16. In his letter to Mrs Poulos of 6 May 1985, Mr Fordyce also reported that, on settlement:

1. The ten certificates of title were delivered to Laurence and Laurence (the solicitors for Elders). As Priestley JA observed, this was part of the arrangement by which Elders advanced money to the Poulos interests, to be secured by mortgages of the ten properties.

2. Land tax as assessed up to and including the 1985 land tax years was paid.

3. The certificate of title for Number 52 was delivered to CBA “in respect of its security”, adding that although CBA attended the settlement, he did not believe that Laurence and Laurence were aware of the mortgage advance CBA was making to assist the transaction. In this respect, Priestley JA observed:[8]

Inferences from facts to 6 May 1985. The inferences from the materials, including Mr Fordyce’s letter, bearing upon the settlement of the Elders’ transaction are that the requirement of Elders as mortgagee concerning Land Tax was met, that the Commonwealth Bank released the certificate of title to the Caringbah property, that the certificate of title to No 52 was handed to Mr Fordyce by the then mortgagee upon receipt of moneys to discharge that mortgage and then handed by Mr Fordyce to the Commonwealth Bank in exchange for bank cheques from that Bank handed over on the security of the certificate of title. The inference is also available that Mr Fordyce had no instructions to make known to Laurence and Laurence that Elders were not obtaining security over all of the properties owned by the [Poulos] interests. Mr Fordyce’s observation that he did not think Laurence and Laurence were aware that the Bank was making a mortgage advance is no doubt connected with the fact that the cheque for $731,756.91 made payable by Elders to [Mr and Mrs Poulos] must have been used to discharge the second mortgage over No 52 to the Australia and New Zealand Banking Group Ltd, which as at 12 March 1985 had been claiming the amount secured by (inter alia) that mortgage was $714,266.91 (AB970). As the Bank came away from the settlement with the Certificate of Title to No 52, both the first and second mortgagees must have been paid out at the settlement. Discharges of the mortgages were registered on 23 May 1985 (Exhibit A, AB640).

8. Hacide v Commonwealth Bank of Australia (Court of Appeal (NSW), Samuels, Priestley and Clarke JJA, 1 August 1991, unrep); [1991] NSWCA 134 at 10.

17. His Honour continued:[9]

More directly relevant to the issues litigated at the trial and in the appeal, is the inference already mentioned, that Mr [Wilson] on 1 May was somehow in possession of all the details necessary for preparation of the steps to be taken by the Bank at the settlement on 3 May. This settlement was of fundamental importance for the [Poulos] interests. It would effect the refinancing that Mrs [Poulos] had been wanting, in one form or another, for a year. One element of it was to be the deposit to the account of her husband and herself of a substantial sum, as it turned out, $135,545. In the way the settlement was done, the provision by the Bank of the moneys pursuant to the Bill Discount Facility was an essential factor. Without it, the settlement could not have taken place. When the Certificate of Title for No 52 was delivered to the Bank “in respect of its security”, that can only have been done by Mr Fordyce on behalf of the [Poulos] interests.

9. Hacide v Commonwealth Bank of Australia (Court of Appeal (NSW), Samuels, Priestley and Clarke JJA, 1 August 1991, unrep); [1991] NSWCA 134 at 10.

18. Before Sully J, Mrs Poulos had denied that she had ever dealt with Morgoode Dunn, or authorised them to seek a loan of $550,000; that Hacide had ever applied to CBA for any bill discount facility or for any other type of loan; that Number 52 had ever been offered as security for any loan; and that she was aware of any bill discount facility claimed by CBA to be on foot until after she received a written demand from CBA dated 2 February 1987. These denials were rejected by Sully J, who found that “there is overwhelming evidence to the contrary and I accept it”. In rejecting the evidence of Mrs Poulos, Sully J did not make a finding that she was deliberately untruthful. Rather, his Honour found that “on a significant aspect of the case her evidence is, for whatever reason, demonstrably unreliable”.

19. In the Court of Appeal, Priestley JA concluded:[10]

When the documents concerning the Zeus overdraft were looked at in complete isolation from those concerning Hacide’s $360,000 they were difficult to understand. Some of the difficulties lent some transitory plausibility to the appellant’s contentions. So too did the sparseness of the evidence concerning the signing of the Bill of 7 May 1985. However, when the sequence of events was looked at in order of occurrence and the relationship of the various transactions considered, any possibility of accepting the appellant’s contention disappeared. I have earlier given my reasons for thinking that at the interview of 19 December 1984 between Mr Byrne, Mr [Wilson] and Mrs [Poulos] both the Bank and Mrs [Poulos] were contemplating that at the conclusion of the Elders settlement, Elders would be holding the Certificate of Title to the Caringbah property as security, and the Bank the Certificate of Title to No 52. I have also indicated my reasons for thinking that this position remained the same when Mrs [Poulos] spoke to Mr Byrne towards the end of March 1985, just before going overseas. That is, at the time the documents executed in blank were delivered to the Bank, the mortgage the Bank was going to need in order to take part in the Elders settlement was a mortgage of No 52, not the Caringbah property. This in itself is enough to defeat the point sought to be made for the appellant in the appeal.

Further, however, the things done by the Bank leading up to the Elders settlement were not only consistent with this view of what the Bank was to do in connection with Mrs [Poulos]’s arrangements, but inconsistent with the point now put forward on her behalf which is itself inconsistent with what was actually done at the settlement.

Although, as I have earlier remarked, the absence of evidence concerning the way in which Mr [Wilson] obtained his knowledge of what was to happen at the settlement on 3 May 1985 is a little strange, as is the similar dearth of evidence concerning the actual circumstances of the signing of the Bill dated 7 May 1985, nevertheless, Mr [Wilson] did get accurate instructions from somewhere and they can only have originated with either Mr Fordyce acting for the {Poulos] interests, or Mrs [Poulos]. The settlement as organised by Mr Fordyce could not have gone forward without the Bank doing what it did. All the Bank’s documentation surrounding the settlement of 3 May 1985 is consistent with the Bank having in its possession a Bill signed for Hacide and inconsistent with its not having possession of such a Bill.

When the course of events following the Elders settlement is scrutinised, it likewise is only consistent with the Bank’s having a Bill at the time of the settlement and having dealt with the $360,000 on the strength of the Bill and of getting the Certificate of Title to No 52. Mrs [Poulos] did not contest that the Bank had the necessary blank forms for completing a mortgage in registrable form of No 52; once her contention that those forms were only to be used in regard to the Caringbah property is rejected, the only plausible use for them that remains is for bringing into existence a registrable mortgage of No 52.

On the evidence, the actions of the [Poulos] interests from the time of the Elders settlement at least until the filing of the cross claim in 1988 are consistent with what the Bank has asserted is the correct position and inconsistent with Mrs [Poulos]’s very late raising of the contentions that Hacide never had a Bill Discount Facility and had never obtained any advance from the Bank on the security of No 52.

10. Hacide v Commonwealth Bank of Australia (Court of Appeal (NSW), Samuels, Priestley and Clarke JJA, 1 August 1991, unrep); [1991] NSWCA 134 at 11-12.

Judgment of the primary judge

20. In January 2019, the applicant commenced new proceedings, seeking, relevantly:

2. IMPEACHMENT OF JUDGMENT OF SULLY J. on the grounds of fraud.

ORDERS to set aside the Judgment of Sully J. of 28 November 1989.

Relief sought: (i) Reinstatement of the Plaintiff in the property from which the Plaintiff was evicted at 52 Taloombie Street, South Cronulla and (ii) transfer of Certificate of Title to Plaintiff, costs, and any, or other orders Court deems fit.

21. Relief was also sought against Mr Elliott, the first defendant. CBA filed a motion seeking summary dismissal of the proceedings as against it. Mrs Poulos countered with motions for leave to amend her statement of claim, and for summary judgment. All three motions were heard and determined by Kunc J on 12 April 2019. [11] His Honour said that the real question was whether Mrs Poulos was able to demonstrate any basis on which it could be said that the judgment of Sully J had been obtained by fraud. [12] The test applied by his Honour was derived from Wentworth v Rogers (No 5). [13]

    11. Poulos v Elliott [2019] NSWSC 423.

    12. Judgment at [21].

    13. (1986) 6 NSWLR 534; see Judgment at [21]–[23].

22. Mrs Poulos was invited to identify what “new evidence” she relied on in addressing that question, and identified six documents as forming the basis of her contention that Sully J’s judgment had been obtained by fraud. [14] His Honour discussed each of those documents, [15] and concluded that Mrs Poulos had failed to demonstrate any proper basis to seek to have the judgement of Sully J set aside for fraud. [16] His Honour therefore summarily dismissed the proceedings as against CBA as an abuse of process. [17] Mrs Poulos’ motions for leave to amend and for summary judgment were dismissed, and costs were awarded against her on the indemnity basis. [18] His Honour made the following orders:

1. The proceedings as against the second defendant are dismissed.

2. The plaintiff's notice of motion filed 19 February 2019 is dismissed.

3. The plaintiff's notice of motion filed 2 April 2019 is dismissed.

4. The plaintiff is to pay the second defendant's costs of the proceedings (including for the avoidance of doubt, its costs of the notices of motion referred to in orders 2 and 3 and of the second defendant's notice of motion filed 15 March 2019) on the indemnity basis.

5. The statement of claim as against the first defendant is listed for further directions before the Registrar on 30 April 2019.

6. Direct that Exhibit 2P be returned to the plaintiff and that the Court book remain with the papers.

14. Judgment at [24].

15. Judgment at [25]–[32].

16. Judgment at [34].

17. Judgment at [34].

18. Judgment at [36]–[39].

23. Whilst the primary judge found that the first defendant (Mr Elliott) had not properly been served, no dispositive orders were made by his Honour in the case of the first defendant. The only order made in relation to the case against first defendant was to stand the proceedings over for directions before the Registrar.

Application for leave to appeal

24. Leave to appeal is required because the decision of a judge exercising the power in Uniform Civil Procedure Rules 2005 (NSW) r 13.4 to dismiss proceedings summarily is interlocutory for the purposes of determining whether an appeal lies by right or requires leave, even though the effect of that decision is to dismiss a party’s proceedings. [19] That said, it is a grave step to deny a litigant a final hearing, and despite the legal interlocutory nature of a summary dismissal, it has a practically final effect. For that reason, if arguable error were demonstrated, there would often be a good case for leave to appeal in such a case, even in the absence of any question of principle or of public importance.

    19. Macatangay v New South Wales (No 2) [2009] NSWCA 272 at [10]–[13]; AB v State of New South Wales [2014] NSWCA 243 at [10]; Donnelly v Australia and New Zealand Banking Corp [2015] NSWCA 233 at [6].

25. The summons seeking leave to appeal contained numerous overlapping grounds. Ms F Roughley, who appeared for CBA, conveniently grouped those grounds of appeal into three questions which provide an appropriate structure for examination of the applicant’s claim, although we consider them in a different sequence:

1. Did the primary judge err in concluding that, absent some “new discovery of something material”, the applicant was precluded by the principles of res judicata and abuse of process from seeking to impugn judgments delivered almost thirty years ago in separate proceedings involving the applicant and CBA: Grounds 1 (“Reliance”), 2 (“Vexatious”), 6 (“Res Judicata”) of the Applicant’s Summary of Argument?

2. Did the primary judge err in concluding that the applicant had not tendered evidence of some “new discovery of something material” or “fresh facts” which might provide a reason for setting aside the earlier judgments on the basis that they had been obtained by fraud: Grounds 8 (“Fresh Evidence”), 9 (“Fraud”), 10 (“Bias”)?

3. Did the primary judge err in determining, consequent upon the conclusions reached in respect of the above, to refuse the applicant leave to amend and to dismiss the proceedings thereby requiring no defence from CBA: Grounds 3 (“Leave to Amend”), 4 (“No defence”)?

26. Ms Roughley’s categorisation omits Ground 5 (“Service”). As we have said, the primary judge observed that the first defendant, Mr JD Elliott, had not been served. Ground 5 appears to dispute that conclusion. However, as has been noted, no substantive orders were made by the primary judge about the case against Mr Elliott, and it is unnecessary on this application for leave to appeal from the orders of the primary judge to say any more about that matter.

27. The applicant filed two sets of written submissions, which we have taken into account. The second set of submissions comprised 30 pages of detailed factual submissions, essentially analysing and contesting factual findings made by Sully J and Priestley JA in the earlier proceedings.

Consideration

Impugning the judgment for alleged fraud

28. As the primary judge rightly observed, the real question for determination was whether Mrs Poulos was able to demonstrate any basis on which it could be said that the judgment of Sully J had been obtained by fraud. [20]  In this respect, his Honour referred to the principles stated in Wentworth v Rogers (No 5). [21] The applicant’s submissions do not cavil with those principles as providing the correct legal framework for consideration of the case. Of them, the second is of greatest present relevance:

Secondly, it must be shown, by the party asserting that a judgment was procured by fraud, that there has been a new discovery of something material, in the sense that fresh facts have been found which, by themselves or in combination with previously known facts, would provide a reason for setting aside the judgment: see Lord Selborne LC in Boswell v Coaks (No 2) (1894) 6 R 167 at 170, 174; 86 LT 365 at 366, 368; Cabassi v Vila (1940) 64 CLR 130 at 147; McDonald v McDonald (1965) 113 CLR 529 at 533; Everett v Ribbands (1946) 175 LT 143 at 145, 146; Birch v Birch [1902] P 130 at 136, 137-138; Ronald v Harper [1913] VLR 311 at 318. This rule has an ancient lineage: see, eg, Shedden v Patrick (1854) 1 Macq 535 at 615, 622; Halsbury's Laws of England, 4th ed, vol 26, par 560 at 285. It is based upon a number of grounds. There is a public interest in finality of litigation. Parties ought not, by proceeding to impugn a judgment, to be permitted to relitigate matters which were the subject of the earlier proceedings which gave rise to the judgment. Especially should they not be so permitted, if they move on nothing more than the evidence upon which they have previously failed. If they have evidence of fraud which may taint a judgment of the courts, they should not collude in such a consequence by refraining from raising their objection at the trial, thereby keeping the complaint in reserve. It is their responsibility to ensure that the taint of fraud is avoided and the integrity of the court's process preserved.

20. Judgment at [21].

21. (1986) 6 NSWLR 534 at 538–539; see Judgment at [22].

29. Other relevant principles, as stated by Kirby P, include that it must be shown by admissible evidence that the successful party was responsible for the fraud which taints the judgment under challenge; that the burden of particularising allegations of fraud and establishing those allegations “by the strict proof which such a charge requires” is born by the applicant; [22] that it is for the applicant to demonstrate that “the new facts are so evidenced and so material that it is reasonably probable that the action will succeed”,[23] and that a high threshold is required having regard to the public interest in finality of public litigation and in “upholding judgments duly entered at the termination of proceedings in the courts”. [24] On an application for summary disposal, a defendant undertakes to show that, having regard to those principles, the claim is doomed to fail.

    22. Wentworth v Rogers (No 5) (1986) 6 NSWLR 534 at 538.

    23. (1986) 6 NSWLR 534 at 539.

    24. (1986) 6 NSWLR 534 at 539.

30. In her original summary of argument and draft Notice of Appeal, the applicant contended that the primary judge failed to permit her to present her case in a meaningful manner such as to give rise to an apprehension of bias. In large part, elaboration of this contention was addressed to the case against Mr Elliott, which as has been explained does not call for comment by this Court. In any event, the primary judge invited the applicant to identify all of the material relied upon to constitute “fresh facts” of the kind required by Wentworth v Rogers to impugn an earlier decision for fraud. [25] She identified six. The primary judge proceeded to review each of the six documents so identified by the applicant. [26] In a context in which the real issue was whether the applicant was able to demonstrate any basis on which it could be said that the judgment had been obtained by fraud, and where as described by his Honour, “The statement of claim and the proposed amended statement of claim are not easy to follow”, that was a practical way fairly to deal with the real issue while focussing the argument on it. The applicant did not identify any issue or argument which she was unfairly precluded from advancing before his Honour.

    25. Judgment at [21].

    26. Judgment at [24], [25]–[33].

31. In relation to three of the six documents so identified as constituting “a new discovery of something material, in the sense that fresh facts have been found which, by themselves or in combination with previously known facts, would provide a reason for setting aside the judgment”, the applicant “readily accepted that they were documents that were available to and known to her at the time of the hearing before Sully J”,[27] and they may be set to one side as not remotely constituting a new discovery of something material, or fresh facts. The remaining three documents relied on were:

1. a discharge of mortgage by ANZ to Hacide in respect of Number 52, bearing the date 15 August 1984 and registered, by CBA, on 23 May 1985 (the Number 52 ANZ discharge);

2. a discharge of mortgage by ANZ to Mr and Mrs Poulos in respect of Caringbah, also bearing the date 15 August 1984 and registered on 23 May 1985; and

3. a letter dated 3 May 1993 from Lincoln Smith & Company, Solicitors to the Professional Standards Department of the Law Society of New South Wales headed "re Mrs P Poulos", said to evidence that a loan had been made at the direction of Elders Landsworth Finance Limited to Glenwood Investments Pty Limited in Hong Kong. 

   27. Judgment at [25].

32. Mrs Poulos contends that these documents support inferences that a mortgage over Number 52 by Hacide to ANZ had been discharged months before the settlement on 3 May 1985 when CBA obtained its mortgage over that property; that no funds were advanced by CBA to ANZ to obtain that discharge; and that CBA had therefore somehow, illegally or improperly, obtained the certificate of title to Number 52, well before the 3 May 1985 settlement.

33. Before Sully J, it had been Mrs Poulos’ case that she never intended nor agreed that Number 52 was to be security for any obligation (whether to Elders or to ANZ), and that CBA had obtained the title as security by some fraudulent or improper means. [28] Sully J rejected Mrs Poulos’ denial of conversations that she had agreed that Number 52 would secure an advance by CBA. In essence, Mrs Poulos contends that had these three documents – but in particular the Number 52 ANZ discharge – been available, the result would have been otherwise. At least implicitly, the underlying theory must be that had it appeared that CBA had covertly procured the certificate of title to Number 52 before the 3 May 1984 settlement, Mrs Poulos’ evidence that she never intended it to be available to CBA as security would probably have been accepted.

    28. In fairness to Mrs Poulos, it should be acknowledged that the mortgage documentation reasonably attracted suspicion in circumstances that Mr Wilson had changed the name of the mortgagee by deleting from the typed “Commonwealth Trading Bank of Australia” the word “Trading”, by striking it through and placing on the alteration initials which intentionally resembled, but were not, those of Mr and Mrs Poulos.

34. Mrs Poulos was right to focus on the Number 52 ANZ discharge: the central proposition is that the Number 52 ANZ mortgage had been discharged, presumably by CBA, and the certificate of title for Number 52 provided to CBA, months before the 3 May 1985 settlement. The other two documents are, at best, merely corroboratory or confirmatory in nature.

35. The primary judge dealt with these documents as follows:

27 The next document was a discharge of mortgage where the mortgagee was the Australian and New Zealand Banking Group Limited and the mortgagor was Hacide. The mortgaged property was No 52. While dated 15 August 1984, it is clear on the face of that document that it was registered by the Bank on 23 May 1985. Mrs Poulos suggested that the difference between the date of the discharge of mortgage (15 August 1984) and the date of its registration (23 May 1985) was a cause for suspicion as to the circumstances in which the Bank obtained the Certificate of Title for No 52. Mrs Poulos submitted that the discharge of mortgage would demonstrate, or would give rise to an inference that, the Bank in fact had the Certificate of Title for No 52 well before the date on which funds were allegedly advanced by the Bank against the security of No 52.

28 Taking Mrs Poulos' proposition at face value, I am unable to see how the Court could be satisfied to the very high standard that would be necessary for the discharge of mortgage to establish that for which Mrs Poulos contended or that, even if it did, that it was an indicium of fraud.

29 Furthermore, Ms Roughley drew the Court's attention to this passage in the judgment of Priestley JA in the CA Judgment (at 10), "As the Bank came away from the settlement with the Certificate of Title to No 52, both the first and second mortgagees must have been paid out at the settlement. Discharges of the mortgages were registered on 23 May 1985 (Exhibit A, AB640)”. There is no doubt that the discharge of mortgage related to No 52 and I accept Ms Roughley's submission that the Court should infer, as I do, from what appears in Priestley JA's judgment that the discharge of mortgage on which Mrs Poulos now relies was before both Sully J and the Court of Appeal. For this reason that document cannot meet the description of being a "new discovery of … fresh facts".

30 The next document relied upon by Mrs Poulos was another discharge of mortgage for another property also dated 15 August 1984 where the mortgagee was the Australian and New Zealand Banking Group Limited and Mr and Mrs Poulos are described as the mortgagors. It is clear from the discharge of mortgage that has been provided to the Court that it also was registered on 23 May 1985, although lodged by Mr and Mrs Poulos' own solicitors rather than by the Bank. Mrs Poulos was unable to offer any explanation that I was able to follow as to how this second discharge of mortgage would demonstrate even the beginning of a case that the Bank had obtained the order for possession of No 52 by fraud.

31 The final document is a letter dated 3 May 1993 from Lincoln Smith & Company, Solicitors to the Professional Standards Department of the Law Society of New South Wales. It is headed, "re Mrs P Poulos" and I infer that it is a response to what would now be referred to as a professional standards complaint by Mrs Poulos. Mrs Poulos said that the letter demonstrated that a loan had been made at the direction of Elders Landsworth Finance Limited to Glenwood Investments Pty Limited in Hong Kong. Again, I am unable to understand why that fact opens the door to the case of fraud that she wishes to make in the present proceedings.

32 The letter does indeed demonstrate what she asserts because it says in terms "on my instructions, and it was found by the Court as a fact in the proceedings, the loan was made to Glenwood Investments Pty Limited in Hong Kong at the direction of Elders Landsworth Finance Limited in Sydney. No documents were prepared to the contrary." I am unable to see how it sheds any light on the position of the Bank. It may say something about the case which Mrs Poulos wishes to bring against the first defendant, but I am not concerned with that today.

33 The Court therefore finds that none of the documents which Mrs Poulos has identified as being the documents upon which she would rely to evidence a "new discovery of … fresh facts" to make out a case of fraud in fact answered that description.

36. As is apparent from the passage extracted above, his Honour inferred that the Number 52 ANZ discharge was before both Sully J and the Court of Appeal, and for that reason could not meet the description of being a "new discovery of … fresh facts". Mrs Poulos submitted that his Honour was wrong to draw that inference.

36. The inference was founded on the following statement in the judgment of Priestley JA: [29]

As the Bank came away from the settlement with the Certificate of Title to No 52, both the first and second mortgagees must have been paid out at the settlement. Discharges of the mortgages were registered on 23 May 1985 (Exhibit A, AB640).

29. Hacide v Commonwealth Bank of Australia (Court of Appeal (NSW), Samuels, Priestley and Clarke JJA, 1 August 1991, unrep); [1991] NSWCA 134 at 10.

38. That passage in Priestley JA’s judgment is presaged by the following introduction to his Honour’s discussion of the 3 May settlement:[30]

Evidence about the mechanics of preparing for the settlement, in particular who spoke or wrote to whom fixing the quite numerous payout figures that would be needed, and how the provision of the cheques was organised, is, with the exception of the evidence about what was done by Mr [Wilson], almost entirely lacking. Inferences about what must have happened can be drawn however from documentary evidence of what happened at the settlement.

30. Hacide v Commonwealth Bank of Australia (Court of Appeal (NSW), Samuels, Priestley and Clarke JJA, 1 August 1991, unrep); [1991] NSWCA 134 at 9.

39. It is clear that his Honour, in the statement “the first and second mortgagees must have been paid out at the settlement”, was drawing an inference from the fact that the mortgages had been discharged, rather than relying on direct evidence to that effect. The reference to exhibit A is by no means necessarily to the discharge dealings; it is more likely to have been a reference to the certificate of title, on which the registration date of the discharges would have been recorded. The proposition that the Number 52 ANZ discharge was not in evidence before Sully J was not shown to be unarguable, and on a summary dismissal application, governed by the well-known General Steels principles, an inference to the contrary ought not have been drawn. In that respect, his Honour erred.

40. But it does not follow that his Honour’s ultimate conclusion, that Mrs Poulos had failed to demonstrate any proper basis for seeking to have the Sully J Judgment set aside as having been procured by fraud, is vitiated. New facts of themselves are insufficient; the applicant must demonstrate that “the new facts are so evidenced and so material that it is reasonably probable that the action will succeed”. [31] Mrs Poulos’ contention depends on the proposition that CBA had received the Number 52 ANZ Discharge and Certificate of Title in or about August 1984, being the date engrossed in typewriting on the dealing. This is not at all probable.

    31. (1986) 6 NSWLR 534 at 539.

41. First, in conveyancing transactions, documents are prepared in anticipation of, not following, settlement. While it may be best practice for documents to be dated at settlement, they are sometimes dated in anticipation of settlement. In any event, they take effect from when they are delivered upon settlement, not from the date that appears on them. Thus it does not necessarily follow from the date the document bears that the Number 52 ANZ Mortgage was discharged on that date.

42. Secondly, that it was not discharged on that date is confirmed by the fact that, as recorded by Priestley JA, ANZ was as at 12 March 1985 still claiming the amount secured by (inter alia) the Number 52 mortgage was $714,266.91. That could not have been so had it already been discharged.

43. Thirdly, the Certificate of Title would not in any event have been held by ANZ, the second mortgagee, but by the first mortgagee FCA, which was not discharged until settlement on 3 May, when it was paid $84,027.13. So CBA could not have procured the certificate of title from ANZ.

44. Fourthly, whereas (as Priestley JA thought) the cheque for $731,756.91 made payable by Elders to Mr and Mrs Poulos at the 3 May 1985 settlement must have been used to discharge the ANZ No 52 Mortgage, Mrs Poulos was unable to suggest how or from what source it was discharged, save to suggest that it must have been discharged by CBA, in order to procure the title. However, given that the ANZ Mortgage ranked behind the FCA mortgage, that CBA had taken a conservative approach to its lending decisions in respect of Mrs Poulos, and that its valuation of the property was $520,000, the notion that it would unilaterally expend some $700,000 to procure a position as second mortgagee after FCA is fanciful.

45. For those reasons, the Number 52 ANZ Discharge, had it been before Sully J, would not have affected the rejection of the evidence of Mrs Poulos to the effect that she had never authorised any application to CBA for a bill discount facility and that Number 52 had never been offered as security for any loan. Accepting for present purposes that it could not at this stage of the proceedings be concluded that the Number 52 ANZ Discharge was not a “fresh fact”, nonetheless its availability would have made no difference to the outcome of the proceedings before Sully J.

46. In her original summary of argument, the applicant also referred to twenty documents comprising Exhibit P2, and in particular one of them, being a “Discharge of Mortgage of Lensworth”, as providing fresh evidence of fraud. However, the submissions made in relation to that document are directed to the first defendant, and even if correct would not implicate CBA as being responsible for any fraud tainting the judgment. Even if the “Discharge of Mortgage of Lensworth” amounts to a “new discovery of … fresh facts”, and even if it were capable of establishing fraud as against the first defendant, it provides no basis for impugning the judgment in favour of CBA.

47. CBA thus demonstrated that there was no reasonable prospect that Mrs Poulos would be able to discharge the burden of establishing the allegations by the strict proof which such a charge requires, and having regard to the high threshold applicable on account of the public interest in finality, because, to the extent that she could arguably point to any “new facts” at all, they were not such as would have affected the outcome. His Honour was therefore right to conclude that Mrs Poulos had failed to point to any proper basis for having the judgment of Sully J set aside as having been procured by fraud.

Abuse of process

48. Once it is determined that the judgment of Sully J is not amenable to being impugned for fraud, it is a complete answer to the applicant’s case that her claims have previously been litigated and adjudicated upon and may not be the subject of fresh proceedings. The primary judge’s conclusion that, in the absence of a triable case of fraud, principles of abuse of process preclude the applicant’s contentions was plainly correct.

49. An attempt to relitigate an issue resolved in earlier proceedings in a court of competent jurisdiction may, depending on the facts, involve an abuse of process, even in the absence of an estoppel or res judicata. [32] In Reichel v Magrath, Lord Halsbury LC put this on the basis that “It would be a scandal to the administration of justice if, the same question having been disposed of by one case, the litigant were to be permitted by changing the form of the proceedings to set up the same case again”. [33] In Walton v Gardiner, Mason CJ, Deane and Dawson JJ said that proceedings should be stayed as an abuse of process “if, notwithstanding that the circumstances do not give rise to an estoppel, their continuance would be unjustifiably vexatious and oppressive for the reason that it is sought to litigate anew a case which has already been disposed of by earlier proceedings”. [34] In Arthur JS Hall & Co v Simons,[35] Lord Hoffman identified the policies that underlie the doctrine as being, first, that a defendant should not be troubled twice for the same reason, and secondly, that there is “a general public interest in the same issue not being litigated over again”.

    32. Reichel v Magrath (1889) 14 App Cas 665 at 668; Sea Culture International v Scoles (1991) 32 FCR 275 at 279; Walton v Gardiner (1993) 177 CLR 378 at 393; [1993] HCA 77; Coffey v Secretary, Department of Social Security (1999) 86 FCR 434; [1999] FCA 375 at [25]; Spalla v St George Motor Finance Ltd (No 6) [2004] FCA 1699 at [66]–[67]; O'Shane v Harbour Radio Pty Ltd (2013) 85 NSWLR 698; [2013] NSWCA 315 at [99]–[105]; State of New South Wales v Williams [2014] NSWCA 177 at [49].

    33. (1889) 14 App Cas 665 at 668.

    34. (1993) 177 CLR 378 at 393; [1993] HCA 77.

    35. [2002] 1 AC 615 at 701.

50. Not only does a judicial decision finally resolve and close all those matters which are essential, or legally indispensable, to the conclusion,[36] but further, the parties will not be permitted to re-open the same subject of litigation in respect of matter which could have been but was not brought forward in the proceedings, and the estoppel extends not only to the points upon which the Court was actually required to adjudicate but “to every point which properly belonged to the subject matter of the litigation and which the parties, exercising reasonable diligence, might have brought forward at the time”. [37]

    36. Blair v Curran (1939) 62 CLR 464 at 532; [1939] HCA 23; Brewer v Brewer (1953) 88 CLR 1 at 15–16; [1953] HCA 19.

    37. Henderson v Henderson (1843) 3 Hare 100 at 115; 67 ER 313 at 319; Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 at 598; [1981] HCA 45.

51. In Tomlinson v Ramsey Foods Processing Pty Limited,[38] French CJ, Bell, Gageler and Keane JJ said (footnotes omitted):

[20] An exercise of judicial power, it has been held, involves "as a general rule, a decision settling for the future, as between defined persons or classes of persons, a question as to the existence of a right or obligation, so that an exercise of the power creates a new charter by reference to which that question is in future to be decided as between those persons or classes of persons". The rendering of a final judgment in that way "quells" the controversy between those persons. The rights and obligations in controversy, as between those persons, cease to have an independent existence: they "merge" in that final judgment. That merger has long been treated in Australia as equating to "res judicata" in the strict sense.

[21] Estoppel in relation to judicial determinations is of a different nature. It is a common law doctrine informed, in its relevant application, by similar considerations of finality and fairness. Yet its operation is not confined to an exercise of judicial power; it also operates in the context of a final judgment having been rendered in other adversarial proceedings. It operates in such a context as estoppel operates in other contexts: as a rule of law, to preclude the assertion of a right or obligation or the raising of an issue of fact or law.

[22] Three forms of estoppel have now been recognised by the common law of Australia as having the potential to result from the rendering of a final judgment in an adversarial proceeding. The first is sometimes referred to as ‘cause of action estoppel’. Estoppel in that form operates to preclude assertion in a subsequent proceeding of a claim to a right or obligation which was asserted in the proceeding and which was determined by the judgment. It is largely redundant where the final judgment was rendered in the exercise of judicial power, and where res judicata in the strict sense therefore applies to result in the merger of the right or obligation in the judgment. The second form of estoppel is almost always now referred to as "issue estoppel". Estoppel in that form operates to preclude the raising in a subsequent proceeding of an ultimate issue of fact or law which was necessarily resolved as a step in reaching the determination made in the judgment. The classic expression of the primary consequence of its operation is that a ’‘judicial determination directly involving an issue of fact or of law disposes once for all of the issue, so that it cannot afterwards be raised between the same parties or their privies’. The third form of estoppel is now most often referred to as ‘Anshun estoppel’, although it is still sometimes referred to as the "extended principle" in Henderson v Henderson. That third form of estoppel is an extension of the first and of the second. Estoppel in that extended form operates to preclude the assertion of a claim, or the raising of an issue of fact or law, if that claim or issue was so connected with the subject matter of the first proceeding as to have made it unreasonable in the context of that first proceeding for the claim not to have been made or the issue not to have been raised in that proceeding. The extended form has been treated in Australia as a ‘true estoppel’ and not as a form of res judicata in the strict sense. Considerations similar to those which underpin this form of estoppel may support a preclusive abuse of process argument.

38. (2015) 256 CLR 507; [2015] HCA 28.

52. In UBS AG v Tyne,[39] Kiefel CJ, Bell and Keane JJ said:

[45] The courts must be astute to protect litigants and the system of justice itself against abuse of process. It is to hark back to a time before this Court's decisions in Aon and Tomlinson and the enactment of s 37M of the FCA to expect that the courts will indulge parties who engage in tactical manoeuvring that impedes the ‘just, quick and efficient’ resolution of litigation. To insist, for example, on ‘inexcusable delay’ as a precondition of the exercise of the power to stay proceedings as an abuse of process is to fail to appreciate that any substantial delay is apt to occasion an increase in the cost of justice and a decrease in the quality of justice. And other litigants are left in the queue awaiting justice. Further, there is no reason why the courts should tolerate attempts to manipulate other parties and the courts themselves by the deployment, by a single directing mind and will, of different legal entities under common control for such a purpose. The concern is as to whether the processes of the court are being abused. Given that this is the central concern, the circumstance that the abuse is effected by the use of multiple entities orchestrated by a single mind and will is no reason to tolerate it.

39. (2018) 92 ALJR 968; [2018] HCA 45.

53. The applicant was a party to proceedings with CBA determined almost 30 years ago. The claims which she now seeks to raise are closely connected to the issues that were then in dispute, and the factual substratum relevant to the determination of those earlier proceedings. The applicant’s submissions in this Court seek to dispute and qualify many of those factual findings, made almost 30 years ago. That this is so is made clear by consideration of the detailed facts recorded by Priestley JA in the earlier appeal, which are to some extent summarised above, and fortified by the circumstance that at the core of the applicant’s present claim is that the judgments made 30 years ago would have been different had additional evidentiary material been available. This attempt to re-litigate findings of fact made almost 30 years ago is a quintessential demonstration of the “need for a strict approach to finality” explained by the High Court in Clone Pty Ltd v Players Pty Ltd (in liq). [40]

    40. (2018) 92 ALJR 399; [2018] HCA 12 at [52]–[55], [69]–[70].

Orders made by the primary judge

54. Having concluded that the judgment of Sully J was not amenable to being impugned for fraud, and that the applicant’s proceedings were otherwise an abuse of process, the primary judge’s decision to summarily dismiss the proceedings, was plainly correct. It would only have perpetuated the abuse to permit the applicant leave to amend her statement of claim. There was no occasion for CBA to be required to file a defence or to give discovery in proceedings which were not maintainable: Grounds 3 (Leave to Amend), and 7 (Discovery).

Conclusion and Costs

55. No arguable operative error has been demonstrated. Leave to appeal should be refused.

56. In that event, CBA sought its costs, on the ordinary basis, although noting that an indemnity order had been made in the proceedings below. There is no reason why costs should not follow the event.

57. The orders of the Court are therefore that the:

1. Summons be dismissed;

2. Applicant pay the Respondent’s costs.

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Endnotes

Decision last updated: 04 October 2019