RTS Super Pty Ltd v Bagshaw
[2019] WASC 81
•14 MARCH 2019
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: RTS SUPER PTY LTD -v- BAGSHAW [2019] WASC 81
CORAM: ACTING MASTER WHITBY
HEARD: 26 FEBRUARY 2019
DELIVERED : 14 MARCH 2019
FILE NO/S: CIV 2358 of 2018
BETWEEN: RTS SUPER PTY LTD
Plaintiff
AND
HILLAND STANFORD BAGSHAW
First Defendant
JENNIFER MARGARET BAGSHAW
Second Defendant
Catchwords:
Summary judgment - Prima facie right to summary judgment - Default on mortgage - Unconscionable conduct - Special disadvantage - Monetary sum - Indemnity Costs
Legislation:
Australian Securities Investments Commission Act 2001 (Cth)
Banking Act 1951 (Cth)
Corporations Act 2001 (Cth)
Evidence Act 1906 (WA)
Rules of the Supreme Court 1971 (WA)
Supreme Court Act 1935 (WA)
Transfer of Land Act 1893 (WA)
Result:
Application for summary judgment granted
Category: B
Representation:
Counsel:
| Plaintiff | : | Mr M W Mistilis |
| First Defendant | : | Mr L K Thurston-Moon |
| Second Defendant | : | Mr L K Thurston-Moon |
Solicitors:
| Plaintiff | : | Hotchkin Hanley |
| First Defendant | : | Cullen Macleod Lawyers |
| Second Defendant | : | Cullen Macleod Lawyers |
Case(s) referred to in decision(s):
Ansearch Ltd v Wavtech Pty Ltd [2006] WASC 184
Blomley v Ryan (1956) 99 CLR 362
Commercial Bank of Australia Ltd v Amadio [1983] HCA 14
Commonwealth Bank of Australia v Jackson (1992) v convr 54‑447
Field Camp Services Pty Ltd v Site Accommodation Pty Ltd [No 2] [2012] WASCA 27
Sutton Investments Pty Ltd v Realistic Investments Pty Ltd [2017] WASCA 14
Westwind Air Charter Pty Ltd v Hawker de Havilland Ltd [1990] 3WAR 71
ACTING MASTER WHITBY:
This is the plaintiff's application for summary judgment. The plaintiff seeks the following orders:
1.Vacant possession of the following properties situated in the State of Western Australia be delivered to the plaintiff within 28 days:
(a)Lot 3 on Diagram 28265, being the whole of the land comprised in Certificate of Title Volume 1598 Folio 887;
(b)Lot 101 on deposited Plan 301597, being the whole of the land comprised in Certificate of Title Volume 391 Folio 100A;
(c)Lot 1280 on deposited Plan 109813 and Lot 1959 on deposited Plan 125470, being the whole of the land comprised in Certificate of Title Volume 1508 Folio 602; and
(d)Lot 3675 on deposited Plan 131679, being the whole of the land comprised in Certificate of Title Volume 2046 Folio 953,
[(collectively the Lots)]
pursuant to clause 144(b) and further alternatively 144(r) of the mortgage dated 25 March 2014 granted by the defendants to the plaintiff;
2.Costs on an indemnity basis pursuant to clause 70(a), further or alternatively 74, and further or alternatively 80 of the Mortgage.
In support of its application, the plaintiff relies on the following evidence:
(a)affidavit of Raymond Thomas Stack sworn 30 November 2018 (Stack November affidavit); and
(b)affidavit of Raymond Thomas Stack sworn 25 February 2019 (Stack February affidavit).
Background
The defendants are the registered proprietors of the Lots.
The plaintiff alleges that:
(a)the plaintiff advanced $500,000 (Principal Sum) to the defendants in two tranches (on each of 8 April 2014 and 16 April 2014) pursuant to a letter of offer executed by the parties on 25 March 2014;[1]
[1] Stack November affidavit 'RTS 4'.
(b)the Principal Sum advance is shown in the plaintiff's loan account statement taken from its accounting books and records;[2]
[2] Stack November affidavit 'RTS 12'.
(c)pursuant to a mortgage registered with Landgate on 8 April 2014 (No M602921) between the defendants as mortgagor, and the plaintiff as mortgagee (Mortgage), and Memorandum of Common Provisions registered with Landgate (No J282731) (Memorandum) (collectively the Mortgage Documents), the defendants mortgaged the Lots as security for repayment of the Principal Sum and all moneys which become payable under the Mortgage Documents;
(d)pursuant to a document signed by the defendants on 11 August 2016 (Acknowledgement), the plaintiff advanced an additional $25,000 (Additional Sum) to the defendants. The advance is shown in the plaintiff's account statement;[3]
(e)repayment of the Additional Sum is secured by the mortgage and added to the Principal Sum;
(f)pursuant to the Acknowledgement, the defendants acknowledged their total debt to the plaintiff is $525,000 (Total Principal Sum) plus outstanding interest and costs;
(g)in breach of their obligations under the Mortgage Documents, the defendants have failed to pay to the plaintiff, on or before 8 January 2018, or at any time, the interest they were obliged to pay to the plaintiff on the Total Principal Sum, between 1 April 2016 and 1 January 2018, totalling $239,517.34 (Outstanding Interest);
(h)in breach of the Mortgage Documents, the defendants failed to repay to the plaintiff the Principal Sum on 1 May 2015 as required by the Mortgage Documents;[4]
(i)each of the breaches of payment of Outstanding Interest and payment of Principal Sum constitute events of default under the Mortgage Documents;[5] and
(j)the plaintiff is entitled to seize and take possession of the Lots pursuant to the Mortgage Document.[6]
Prima facie right to summary judgment
[3] Stack November affidavit 'RTS 12'.
[4] cl 39 of the Memorandum and item (c) of the schedule to the Mortgage.
[5] cl 137(a) and cl 137(b) of the Memorandum.
[6] Stack November affidavit par 18 – 21; cl 144(b) of the Memorandum.
The plaintiff's application must be supported by an affidavit verifying the facts on which the claim is based: Rules of the Supreme Court (WA) O 14 r 2(1) (RSC). The affidavit must state that, inter alia, in the deponent's belief there is no defence to the claim: RSC O 14 r 2(1).
As a general principle, an applicant for summary judgment who complies with the requirement of RSC O 14 r 2 establishes a prima facie right to summary judgment.[7]
[7] Westwind Air Charter Pty Ltd v Hawker de Havilland Ltd [1990] 3WAR 71, 74 (Murray J).
If the plaintiff establishes a prima facie right to summary judgment, the burden then shifts to the defendant to satisfy the court why judgment should not be entered against it.[8]
[8] Westwind [74]; Field Camp Services Pty Ltd v Site Accommodation Pty Ltd [No 2] [2012] WASCA 27 [4] (Reasons of the court).
If, after argument, there remains real uncertainty as to the plaintiff's right to judgment without further investigation of the facts, summary judgment must be refused.[9]
[9] Ansearch Ltd v Wavtech Pty Ltd [2006] WASC 184 [28] (Newnes M).
The Court of Appeal recently summarised the rules to be applied on an application for summary judgment in Sutton Investments Pty Ltd v Realistic Investments Pty Ltd:[10]
The principles to be applied on an application for summary judgment are well‑established. Summary judgment will be granted only when there is no real question to be tried. The power to order summary judgment is one that should be exercised with great care: Fancourt v Mercantile Credits Ltd [1983] HCA 25; (1983) 154 CLR 87, 99. It is only in the clearest of cases, when there is a high degree of certainty about the ultimate outcome of the proceedings if it went to trial, that summary judgment ought properly be granted: Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552 [57].
[10] Sutton Investments Pty Ltd v Realistic Investments Pty Ltd [2017] WASCA 14 [24] (Judgment of the Court).
In that case the Court of Appeal overturned an order for summary judgment after identifying an argument either way, and thus concluded:[11]
A summary judgment application is not the occasion to resolve which argument is to be accepted, particularly where not all of the relevant facts have been agreed. Nothing in these reasons should be taken to anticipate the outcome of the present proceedings. For present purposes it is sufficient to conclude that this is not one of those very clear cases where the court is able to make a certain and concluded determination that the respondent would succeed. Summary judgment should not have been entered for the respondents.
Does the plaintiff have a prima facie right to summary judgment?
[11] Sutton Investments Pty Ltd v Realistic Investments Pty Ltd [33].
The defendants submit that the plaintiff does not have a prima facie right to summary judgment because it has failed to establish:
(a)the monetary advances to the defendant;
(b)the default under the Mortgage Documents; and
(c)any amount owed under the Mortgage Documents.
Failure to establish advance
Mr Stack deposes that:
(a)On or about 8 April 2014, the Plaintiff advanced the sum of $500,000 … to the Defendants.[12]
(b)Prior to or about 11 August 2016, the Defendants requested the Plaintiff advance an additional amount of $25,000 … to the defendants. Attached to this my affidavit:
a.As an attachment marked 'RTS8', is a copy of a document entitled 'Acknowledgment'; and
b.As an attachment marked 'RTS9', is a copy of an authority to deposit, both dated 11 August 2016 and signed by the defendants;[13]
(c)On or about 15 August 2016, the Plaintiff advanced the Additional Principal Sum to the Defendants.[14]
[12] Stack November affidavit par 11.
[13] Stack November affidavit par 12.
[14] Stack November affidavit par 13.
Counsel for the defendants objects to the evidence of Mr Stack as outlined in the preceding paragraph on the grounds that it is hearsay evidence and does not fall within the exemption for bankers books in s 90 and s 91 of the Evidence Act 1906 (WA) (Evidence Act).
In response, Counsel for the plaintiff submits that:
(a)the plaintiff is not a bank pursuant to the definition of a bank in s 3 of the Evidence Act and s 5 of the Banking Act1959 (Cth) and therefore the reference to an exemption for bankers books in the Evidence Act is not application to the plaintiff;
(b)Mr Stack deposes to the plaintiff's loan account statement (Loan Account Statement) showing the balance of the defendants' account with the plaintiff as at 1 November 2018;[15]
(c)the Loan Account Statement is a record kept by the plaintiff pursuant to its statutory obligations under s 286 of the Corporations Act 2001 (Cth) (Corporations Act);[16]
(d)pursuant to s 1305 of the Corporations Act, which provides that:
(1)A book kept by a body corporate under a requirement of this Act is admissible in evidence in any proceeding and is prima facie evidence of any matter stated or recorded in the book.
the Loan Account Statement is admissible and is prima facie evidence of the matters stated therein, that is that the advances were made and the running balance of the account.
[15] Stack November affidavit par 16 and 'RTS 12'.
[16] Stack November affidavit par 16.
I accept that Loan Account Statement is admissible in evidence by virtue of s 286 and s 1305 of the Corporations Act and is prima facie evidence of the matters stated therein, relevantly in this case the advance of $525,000 to the defendants by the plaintiff.
Failure to establish default
Mr Stack deposes that the defendants are in default of the Mortgage.[17]
[17] Stack November affidavit par 14 and 17.
Counsel for the defendants object to admission of this evidence of default from Mr Stack on the grounds that it is hearsay and does not fall within an exemption pursuant to s 90 and s 91 of the Evidence Act.
I do not accept the submissions of counsel for the defendants in relation to this evidence.
I am satisfied that Mr Stack's evidence that the defendants are in default of the mortgage is prima facie evidence of the defendants' default. Therefore, the evidentiary onus falls on the defendant to prove that they have an arguable defence to the allegation of default.
Failure to establish amount owing
The defendants submit that the Loan Account Statement is inadmissible as it is hearsay evidence of Mr Stack.
I have indicated, earlier in my reasons, that I am satisfied, pursuant to s 286 and s 1305 of the Corporations Act, the Loan Account Statement is prima facie evidence of the amount owing by the defendants to the plaintiff.
Is there a serious question to be tried?
I am satisfied that the plaintiff has established a prima facie case for judgment against the defendants.
Counsel for the defendants submits that there is a serious question to be tried because the plaintiff:
(a)engaged in unconscionable conduct;
(b)failed to provide a financial product with reasonable care and skill; and
(c)failed to provide a financial product which was fit for purpose.
Unconscionable conduct
Counsel for the defendants submits, and I accept, that the elements of unconscionability are:
(a)the weaker party suffers from some special disadvantage that prevents them from protecting their own interest;
(b)the stronger party knows of, or should know of, the special disadvantage; and
(c)the stronger party takes unfair advantage of the weaker party.[18]
[18] Commercial Bank of Australia Ltd v Amadio [1983] HCA 14.
Counsel for the defendants submits that, when the defendants entered into the Mortgage with the plaintiff, the defendants were under a special disadvantage because:
(a)the defendants were in desperate financial need, in particular:
(1)their Avis business was no longer making a profit;[19]
(2)the National Australia Bank (NAB) was about to foreclose on their family farm;[20]
(3)they had failed in their endeavours to obtain financing.[21]
(b)the defendants were elderly, being 76 and 69 at the time the Mortgage was entered into;[22]
(c)the defendants had limited education;[23]
(d)the defendants were under great emotional distress as they were about to lose the family farm and had no way of supporting themselves if they did not receive the required finance;[24]
(e)in contrast, the plaintiff was highly experienced in arranging mortgages being in the business of providing financial products and services; and
(f)the plaintiff's financial position was far superior to that of the defendant.
[19] Affidavit of Hilland Stanford Bagshaw sworn 25 January 2019 par 15 – 18, 30 (Bagshaw affidavit).
[20] Bagshaw affidavit par 30 – 32.
[21] Bagshaw affidavit par 33 – 39.
[22] Bagshaw affidavit par 3, 8.
[23] Bagshaw affidavit par 6, 7.
[24] Bagshaw affidavit par 10 – 13, 37 and 38.
Counsel for the defendants submits that the plaintiff was aware, or wilfully ignorant of, the special disadvantage suffered by the defendants because:
(a)a director of the plaintiff had previously met the defendants;[25]
(b)a related entity of the plaintiff had previously provided the defendants with financial services;[26]
(c)a related entity of the plaintiff entered into another mortgage agreement with the defendants in the amount of $1.8 million on the same day that the mortgage was entered into with the plaintiff;[27]
(d)the plaintiff was aware, or should have been aware, of the limited earning capacity of the defendants;[28]
(e)the plaintiff was aware of the large amount of debt over the Lots;[29] and
(f)the plaintiff knew that the defendants needed to refinance their existing mortgage with NAB.[30]
[25] Bagshaw affidavit par 23.
[26] Bagshaw affidavit par 19 – 24.
[27] Bagshaw affidavit par 46.
[28] Bagshaw affidavit par 19 – 24, 39 – 47.
[29] Bagshaw affidavit par 39 – 47.
[30] Bagshaw affidavit par 39 – 47.
The defendants submit that the plaintiff took advantage of the defendants special disadvantage by:
(a)knowing the Mortgage was the only hope which the defendants had of retaining the family farm and supporting themselves;
(b)proposing a mortgage with repayment terms which the plaintiff knew, or ought to have known, that the defendants were incapable of repaying; and
(c)proposing that the interest rate of the mortgage would be 17%, and then changing the interest rate to 22%.[31]
[31] Defendants' Submissions in Opposition to the Plaintiff's Application for Summary Judgment dated 18 February 2019 par 42.
The plaintiff submits that the defendants were not in a position of special disadvantage for the following reasons:
(1)the defendants had received a loan of $1.8 million (Related Loan) from Stacks Managed Investments Limited (Stacks Finance) - an entity related to the plaintiff;[32]
[32] Bagshaw affidavit par 46.
(2)the plaintiff was entitled to access information provided by the defendants to Stacks Finance as part of the defendants' application for the Related Loan by virtue of the privacy declaration signed by the defendants (Application Information)[33]:
[33] Stacks February affidavit par 6 – 10 and Annexure 'RTS 14'.
(3)by virtue of reviewing the Application Information, the plaintiff was aware that:
(i)the defendants had a legal advisor, Richard Payne of Richard Payne & Associates Commercial Solicitors;
(ii)on 3 April 2014, Mr Payne sent Stacks Finance an email which read as follows:
•I have known and acted for the Bagshaws for at least 10 years;
…
•… Sandy has had the Avis franchise for 30 years…
My major concern is for my client to pay out NAB and Landmark by 8 April 2014. I suggest that Sandy simply draw the $1.8M facility to pay NAB and only draw a small portion of the other facility to pay the $90,000 to landmark and settlement expenses and then not draw the balance of the funds until Stacks is comfortable with the position.
(2)the defendants had obtained independent accounting advice from certified practising accountants, as demonstrated by the letter from M L Coleman and Associates, the defendants' accountant, to Stacks Finance indicating the ability of the defendants to service the Related Loan to Stacks Finance;[34] and
(3)the defendants each signed a Loan Repayment Ability Declaration addressed to Stacks Finance which contained, inter alia, representations that each of the defendants' gross income was $550,000 per annum and that they were each not aware of any factors which may result in the decrease of income or the increase of expenditure.[35]
[34] Stack February affidavit Annexure 'RTS 18'.
[35] Stacks February Affidavit Annexures 'RTS 16' and 'RTS 17'.
In Blomley v Ryan Kitto J held that:[36]
A transaction will be unconscientious within the meaning of the relevant equitable principles only if the party seeking to enforce the transaction has taken unfair advantage of his own superior bargaining power, or of the position of disadvantage in which the other party was placed. The principle of equity applies "wherever one party to a transaction is at a special disadvantage in dealing with the other party because illness, ignorance, inexperience, impaired faculties, financial need or other circumstances affect his ability to conserve his own interests, and the other party unconscientiously takes advantage of the opportunity thus placed in his hands".
[36] Blomley v Ryan (1956) 99 CLR 362, 415.
In Commercial Bank v Amadio,[37] his Honour Mason J said:
I qualify the word 'disadvantage' by the adjective 'special' in order to disavow any suggestion that the principle applies whenever there is some difference in bargaining power of the parties and in order to emphasize that the disabling condition or circumstance is one which seriously affects the ability of the innocent party to make a judgment as to his own best interests, when the other party knows or ought to have known of the existence of that condition or circumstance and its effect on the innocent party.
[37] Commercial Bank v Amadio, [462] per Mason J.
It is my view that, even if the defendants were to prove all of the facts and matters deposed to in the Bagshaw Affidavit, those facts do not and could not give rise to a finding that the defendants were in a position of special disadvantage as compared to the plaintiff and therefore, cannot support a defence based upon unconscionable conduct.
I, therefore, find that there is no real question to be tried in relation to whether the plaintiff acted unconscionably and/or breached any warranty that is alleged to have been owed by the defendants.
Monetary sum must be pleaded
The defendants submit that the plaintiff cannot obtain summary judgment for possession of the Lots in the absence of a specified monetary sum that is owed by the defendants to the plaintiff.
Counsel for the plaintiff relied upon the following in support of his submission that the plaintiff is entitled to possession of the Lots without having to specify a monetary sum:
(a)Section 111 of the Transfer of Land Act (1893) WA (TLA):
Subject to the provisions of section 112A the mortgagee or annuitant or his transferees upon default in payment of the principal sum or interest or annuity or any part thereof respectively at the time mentioned in the mortgage or charge may enter into possession of the mortgaged or charged land by receiving the rents and profits thereof and may distrain upon the occupier or tenant of the land under the power to distrain hereinafter contained or may bring an action of ejectment to recover the land either before or after entering into the receipt of the rents and profits thereof or making any distress and either before or after any sale of such land shall be effected under the power of sale aforesaid in the same manner in which he or they might have brought such action if the mortgage money or annuity had been secured to him or them by an assurance of the legal estate in the land mortgaged or charged; and any mortgagee or his transferees shall be entitled to foreclose the right of the mortgagor or his transferees to redeem the mortgaged land in manner hereinafter provided
(b)Clauses 144(b) and 144(r) of the Mortgage Documents:
If a default occurs the LENDER may do any one of more of the following, in addition to any other rights given by law or by the AGREEMENTS:
…
b.seize and take possession of the SECURITIES or withdraw and re-enter as many times as the LENDER desires;
…
r.do anything with the SECURITIES or corporate DEBTORS which it could lawfully do if it owned them outright.
(c)Commonwealth Bank of Australia v Jackson[38] (considering s 78 of the Transfer of Land Act1958 (Vic) which is in essentially the same terms as s 111 of the TLA):
The circumstances being as they have been proved, that is to say default having been made in the way I have indicated, and no demand being necessary under the mortgages as a prerequisite to the mortgagee's entitlement to possession, s 78 of the Transfer of Land Act made the mortgagee's task a comparatively simple one. It merely needed to allege in the statement of claim and prove upon an application for summary judgment the execution of the mortgages, the advances, default by the failure of the mortgagors to pay anything under the mortgages, and that the defendants as mortgagors were in possession. As it is, the appellant has chosen to allege in the statements of claim also that the moneys were payable on demand, and has chosen further to allege that demands were made on such and such a date and not met.
[38] Commonwealth Bank of Australia v Jackson (1992) V ConvR 54‑447 [2] – [3]
I accept that the submissions of counsel for the plaintiff and find that the plaintiff is entitled to possession of the Lots pursuant to s 111 of the TLA and cl 144(b) and cl 144(r) of the Memorandum, irrespective of whether there is a specified monetary sum sought in the prayer for relief.
Contravention of the ASIC Act
The defendant alleges that the plaintiff contravened s 12CA of the Australian Securities and Investment Commission Act 2001 (Cth) (ASIC Act) which provides:
(1)A person must not, in trade or commerce, engage in conduct in relation to financial services if the conduct is unconscionable within the meaning of the unwritten law, from time to time, of the States and Territories.
The plaintiff's alleged contravention occurred by reason of the fact that there was a special disadvantage between the plaintiff and the defendants and the plaintiff took advantage of that fact.
The plaintiff submits that the ASIC Act does not apply as the plaintiff is not a provider of financial services pursuant to s 12BAB of the ASIC Act. Therefore, those provisions have no relevance to this application.
I accept counsel for the plaintiff's submissions. I, therefore, find that the plaintiff has not acted in contravention of the ASIC Act.
Indemnity Costs
Counsel for the plaintiff submits that the plaintiff is entitled to an order for indemnity costs pursuant to:
(a)Clauses 80(c) and/or (g) of the Memorandum:
The DEBT will include all legal costs & disbursements which the LENDER incurs through its own legal representatives, on an indemnity basis, in relation to:
…
(c)in any way in relation to the advance of the PRINCIPAL not covered by (a) and (b) above;
…
(g)proceedings to enforce the AGREEMENTS;
(b)Clause 74(a) and/or 74(b) of the Memorandum:
The DEBT includes:
(a)any expenses and losses which the LENDER incurs if a DEBTOR does anything which it has agreed not to do or does not do anything it has agreed to do;
(b)any expenses and losses which the LENDER incurs if the LENDER exercises any of its rights and powers under the AGREEMENTS;
(c)Clause 70(a) of the Memorandum:
The DEBT will include all costs and expenses incurred by the LENDER (including its own legal expenses and including other parties legal expenses which it must pay pursuant to adverse costs orders or agreements) in consequence of or occasioned by:
(a)Any default under any of the AGREEMENTS by any of the DEBTORS;…
(d)Section 37 of the Supreme Court Act 1935 (WA);
(e)Order 66 rule 9(2) RSC; and
(f)the inherent jurisdiction of the Supreme Court.
I am satisfied that the contractual provisions of the Memorandum identified by Counsel for the plaintiff give rise to an entitlement to indemnity costs.
However, I will give the defendants an opportunity to be heard in relation to costs orders.
Summary
In all of the circumstances, I find that the defendants have not demonstrated that there is any real issue that should be tried or investigated at trial.
I, therefore, find that summary judgment should be entered on the terms as set out in the chamber summons.
I will hear the parties as to costs.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
EP
Associate to Acting Principal Registrar Whitby14 MARCH 2019
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