Shields, I.J.M. v Australia & New Zealand Banking Group

[1993] FCA 497

JUDGFRENT No. - ,e.k?2~a.0.01 !2%?,.

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1 No. NG 694 of 1992

GENE= DIVISION i

BETWEEN :	ISAAC JOHN M?LCKAY SHIELDS and JBNNIFER MARGARET SHIELDS
Applicant
AND:	AUSTRALIA AND NEW ZEALAND W I N G GROUP
Respondent

CORAM:	WILCOX J
PLACE :	SYDNEY
DATE :	20 JULY 1993

WILCOX J: This this Court on

8 February 1993. Although a number of matters have been mentioned, the essence of the application is a claim by the applicants that the orders were made without their consent. The orders were made by Morling J pursuant to short

whereby the applicants, Isaac John MacKay Shields and Jennifer

minutes signed by counsel for the parties and handed to his Honour on the basis that the parties consented to them being made.	The case arises out of a mortgage transaction. Mr the Central Coast of New South Wales. They mortgaged this	and Mrs Shields are the owners of a property at Kincumber on
property to the National Mutual Royal Bank Limited, by a mortgage in registrable form dated 6 February 1990. There is no issue about the making of the mortgage, that is to say in any formal sense, except that Mr and Mrs Shields claim that they were not made aware of the terms of a Memorandum of terms and conditions deposited by the mortgagee in the Registrar- General's Department, and picked up by reference in the schedule to the mortgage document. I inquired from Mr Shields what particular terms of the Memorandum were contrary to the transaction as he understood it. I was not given any clear answer on that matter.
The more substantial matter, in relation to the making of the mortgage, is a claim by Mr and Mrs Shields that they were assured at that time by a representative of the bank that the bank would not dispossess them of their property. They say that he indicated that some arrangement would be worked out if there was a default. There is nothing in the mortgage document dealing with that matter. The allegation is made. There has been no trial concerning it, so I make no
comment as to its accuracy. -
The mortgage was subsequently assigned to the first respondent in this proceeding, Australia and New Zealand Banking Group Limited. This took place on 13 November 1991, apparently in the context of the whole of the property of the National Mutual Royal Bank vesting in the ANZ bank.
On or about 16 January 1992, the ANZ Bank served notice of demand on Mr and Mrs Shields requiring payment of the moneys due under the mortgage. The mortgage provided for the moneys due under it to be payable on demand. The demand was not met. Mr and Mrs Shields were unable to pay the money.
On 21 September 1992, Mr and Mrs Shields instituted the present proceeding, naming as respondents the ANZ Bank and two individuals I gather that these people were employees of either the National Mutual Royal Bank or the A N Z Bank at relevant times.
On 7 October 1992, the A N Z Bank filed a Cross-claim and on 28 October an amended Cross-claim. The amended Cross- claim sought, amongst other relief, an order for possession of the property and an order for repayment of the amount claimed to be owing under the mortgage; namely, $110,277.82 together with interest on that sum from 16 January 1992.
The matter was before the Court on a number of occasions between the end of October and 22 December. There
were problems about the form of the Statement of Claim. One, -
perhaps two, versions of the Statement of Claim were struck out. The most recent order to that effect before 22 December was an order made by Morling J on 19 December.
The matter came before the Court again on 22 December. At that time, counsel for the bank sought leave to enter judgment on the amended Cross-claim, that is to say to obtain orders for possession of the land and payment of the debt. Although Mr and Mrs Shields had filed a document, apparently drafted by themselves, that purported to be a Defence to the amended Cross-claim, it contains nothing that could amount in law to a defence to that claim. After argument, Mr and Mrs Shields being represented on that occasion by counsel, his Honour granted leave. However, he was conscious of the fact that Mr and Mrs Shields wished to pursue their claim for damages for misleading conduct in relation to the statement allegedly made at the time that the mortgage was entered into. He indicated his readiness to hear that claim expeditiously. After discussion, it was decided that 8 February 1993 would be a suitable date. In order to protect the position of Mr and Mrs Shields until that time, his Honour made an order staying the enforcement of the orders he had made on the Cross-claim until that day.
A further amended Application and amended Statement of Claim were filed on 4 January. On 29 January Davies J made an order concerning the filing and service of the bank's affidavits. This order required that the affidavits be filed -
and served by 5 pm on 2 February; with the exception of any affidavit of a Mr Davies, which was to be filed and served by 5 pm on 3 February 1993. In fact, Mr Davies' affidavit was filed on 4 February. On 5 February, which was a Friday, two affidavits, those of Mr Davies and Mr Manwaring, were served upon Mr and Mrs Shields at their home.
On that same day, Mr Shields attended a conference with counsel in counsel's chambers in Sydney. Mrs Shields did not accompany her husband. During the course of that conference, there was discussion regarding a possible settlement of the matter. The evidence does not disclose the full content of the conference but it is apparent that the terms of a possible settlement were discussed. After leaving the conference, Mr Shields telephoned his wife from Central station, no doubt in order to advise her when he would be home. He indicated that he had agreed to a settlement. She was upset about this.
Mr Shields went home on Friday evening. He spent the weekend at home with his wife. Mr Shields claims that the matter was not "really discussed" over the weekend because he was in a state of shock. I have considerable difficulty in accepting that evidence. The case was obviously one of fundamental importance to both Mr and Mrs Shields. I cannot believe that it was not discussed between them or that
Mr Shields did not tell his wife the nature of the settlement discussed with counsel on Friday.
On the Monday morning, 8 February, both Mr and Mrs Shields came to Sydney. They went to counsel's chambers and were present during a short conference with counsel and his instructing solicitor. They were shown a handwritten document entitled in this matter and headed "Short Minutes of Orders". The document was in a form suitable to be handed to the judge
in order to enable him to make consent orders. Mrs Shields said in evidence that she read the document. There was only one aspect of it which she says she did not fully understand.
The document firstly provides for an order th~at the amended Application be dismissed; secondly, that the applicants pay the first, second and third respondentsf costs of the Application and amended Application, including any reserved costs.
The document then provides for judgment for the cross-claimant against the cross-respondents in the sum of $139,829.37, this being the amount said to be due in respect of the mortgage debt. Paragraph 4 provides for entry of judgment for possession in favour of the cross-claimant, that is the bank.
Paragraph 5 provides that the judgments in paras. 3 and 4 - that is to say, the money judgment, and the judgment for possession - are to be stayed until 8 August 1993,
conditional upon the cross-respondents complying with certain
covenants of the mortgage. These are identified by reference -
to the covenant numbers in the filed Memorandum. It is this aspect of the terms which Mrs Shields says that she did not understand because she did not have access to the Memorandum. I gather that these covenants deal with matters such as keeping the house insured, paying rates, etc.
Paragraph 6 goes on to provide for the cross- claimant to have leave to issue a writ of possession on 9 August 1993 or on the date of any revocation of the stay provided by para 5. Paragraph 7 reserves liberty to apply.
As I have indicated, Mrs Shields said in evidence that she understood the nature of the transaction, except that she did not understand what were the particular covenants being referred to in para 5.

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M r Shields said in evidence that he did not

understand the terms of the settlement. He told me that he had only three years school education; he grew up in a remote part of the country.

I accept that Mr Shields does have trouble in reading; and, in particular, that he has trouble reading handwritten material. The short minutes are handwritten.

What I cannot accept is that Mr Shields would have allowed his

not understand. Although Mr Shields may lack the usual formal

lawyers to assent to a settlement the nature of which he did

education, he is obviously an intelligent person. He is not -

immature. He has had business experience. He is a person who knows how to say what he thinks about a matter; as he has demonstrated today. No doubt it is true, as Mrs Shields put to me, that under stress M r Shields can become indecisive. He may have had trouble deciding whether or not this settlement was a desirable one. If so, I can understand his dilemma. The effect of the proposed settlement was that the application for damages would be dismissed, so any hope that Mr Shields may have entertained of recovering damages, and thus alleviating the financial position of the family, would be lost. On the other hand, the settlement would ensure that the family was left in possession of the house for six months from that day. Mr Shields has today denigrated the importance of that concession, saying that some time would have been allowed in any event. Perhaps that is so, but there was no guarantee of six months. But whether or not the settlement was a desirable one, and whether or not Mr Shields had trouble in deciding what to do, it is to me quite incredible that he did not understand the nature of the proposed agreement. I think that Mrs Shields would have appreciated her husband's lack of understanding, if her husband really did not understand the proposed terms, and that she would have made sure that they were explained to him. Moreover, I think that Mr Shields would have asked for the matter to be explained. There was no problem, so far as I can see, in his saying to his barrister

wanted it to be explained to him, or that he wanted the short	and solicitor that he did not understand the deal and that he
minutes to be read to him. If time was a problem, it would	-

have been possible for counsel to request the judge to list the matter at a later time, so as to ensure adequate time for consultation. But none of this was pursued by Mr Shields. Quite frankly, I cannot believe his evidence on this subject.

So far as Mrs Shields is concerned, she says that she did understand, apart from the problem about para 5 to which I have referred. She was unhappy about the settlement. Her evidence is that she said to the barrister and solicitor, "Is there something else that can be done?", and that the barrister replied, "No, that's it, it's all been worked out, that's it. " Mrs Shields did not pursue the matter. She admits that she did not indicate that she did not agree with the proposed settlement, she allowed the matter to go ahead. Both Mr and Mrs Shields attended court with their barrister and solicitor. They observed the short minutes being handed to the judge and orders being made.

It seems to me that this is a case where litigants have had to make a difficult decision, as to whether or not to agree with particular proposed terms of settlement. It is obvious from Mrs Shield's evidence, which I accept, that she was unhappy about the settlement. She would have liked to have fought on. That is why she asked about the possibility of some further action being taken. But she accepted the

However reluctantly, I think that she in fact gave her consent assurance of her barrister that there was no real alternative. to the orders being made.

As I observed during the course of discussion with Mr Shields today, it is commonplace for parties who compromise a case to be unenthusiastic about the terms to which they are forced to agree. It is in the nature of compromise that people get less than they once hoped to achieve. But the question whether a party consents does not depend on whether that party is delighted to have a particular result; or even feels satisfied about it. The question is whether the party in fact agreed to the particular terms; however reluctantly and however it may have disappointed the party's initial hopes. When I ask myself whether I am satisfied that Mr and Mrs Shields did not agree on the day, the answer must be in the negative.

I should say that the resolution of this motion has been complicated by the fact that Mr and Mrs Shields have objected to any evidence being given about communications between themselves and their lawyers. To some extent this objection was waived during the course of their evidence. This occurred after I pointed out that, without some evidence as to what transpired on 5 February and 8 February, there would be no basis for finding that they did not consent to the settlement. Mr and Mrs Shield then each gave evidence setting out their versions of what passed between themselves and the barrister and solicitor. But when the question arose as to the calling of the barrister and solicitor, both of whom I gather had been served with a subpoena to attend court by the -

solicitors for the bank, Mrs Shields pressed an objection to their giving evidence, citing legal professional privilege. It is, I think, strongly arguable that, by giving their own version of the discussion, Mr and Mrs Shields waived the right to make this objection. But I was unwilling to override Mrs Shields' objection and so indicated to counsel for the bank. As a result he did not call either witness. In the circumstances, no inference can be drawn against the bank from the fact that the barrister and solicitor have not given evidence.

I should say that during discussion of this matter and before she indicated her final attitude, I spelt out to Mrs Shields, as carefully as I could, the significance of her decision. I pointed out that it would be difficult to accede to the case which she and her husband were seeking to make if I was deprived of the evidence which the bank wished to call on the issue of consent. Nonetheless, Mrs Shields pressed her objection.

Putting aside this difficulty, and having regard only to the evidence actually adduced, the matter comes down to this: Mr Shields' evidence that he did not understand or assent to the settlement cannot be accepted; Mrs Shields admits that she did understand the settlement in respect of peripheral. Although she was unhappy about the settlement, she all matters of any significance, para 5 being quite allowed it to proceed. Having regard to those matters, I have --

to conclude that this is not a case where judgment was entered without consent. Consequently, the motion must be dismissed. I order that the notice of motion dated 4 June 1993 be dismissed with costs.

I certify that this and the preceding ten (10) pages are a true copy of the Reasons for Judgment

of the Honourable Justice Wilcox.

p ' b

Associate:	//L'@&'
Dated:	20 July 1993

APPEARANCES

Applicants in person:

Counsel for the Respondent:	G Blake
Solicitors for the Respondent:	Norton Smith & CO
Dates of hearing:	20 July 1993