Smith & Anor v Town and Country Bank

[1999] HCATrans 370

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Perth  No P2 of 1998

B e t w e e n -

JAMES GARNETT SMITH and ELIZABETH ANNE SMITH

Applicants

and

TOWN AND COUNTRY BANK

First Respondent

TOWN AND COUNTRY NO 9 TERMINATING BUILDING SOCIETY

Second Respondent

KEVIN WILLIAM WORNES, MADELEINE CHRISTINA WORNES, RUSSELL KEVIN WORNES and MAURICE LEONARD WORNES

Third Respondents

NATIONAL AUSTRALIA BANK

Fourth Respondent

Application for special leave to appeal

GAUDRON J
GUMMOW J

TRANSCRIPT OF PROCEEDINGS

AT PERTH ON THURSDAY, 21 OCTOBER 1999, AT 9.47 AM

Copyright in the High Court of Australia

__________________

GAUDRON J:   You appear for yourself and your husband, I take it?

MRS E.A. SMITH:   I do, your Honour.

MR M.K. BENTER:   May it please your Honours, I appear for the fourth respondent.  (instructed by Jackson McDonald)

MR G.H. MURPHY:   May it please your Honours, I appear for the first respondent.  (instructed by McCusker & Harmer)

GAUDRON J:   I hold a certificate from the Deputy Registrar who certifies that the second respondent named in these proceedings is Town and Country No 9 Terminating Building Society, that no appearance has been entered for the abovenamed second respondent which no longer exists.  She also certifies that the third respondents in these proceedings are K.W. Wornes, M.C. Wornes, R.K. Wornes and M.L. Wornes, known as the Wornes family, and that no appearance has been entered for the third respondents and that they have not appeared in any proceedings before the lower courts or played any part in those proceedings.  Yes, Mrs Smith.

MRS SMITH:   Your Honours, this basically falls into two main parts.  One is the issues to do with ourselves being unrepresented.  The reason why we seek the special leave to have those issues aired is that there is no – I have found going through the proceedings in the lower court that there is no clear precedent clarifying the law and the discretions available to courts and the rights of unrepresented litigants.  I also

believe it is an issue which is of very great importance at the present moment because there are so many unrepresented litigants seeking to press their claims through the various courts.

GAUDRON J:   How do you say that bears on these proceedings?

MRS SMITH:   Because I have named it as a ground of the appeal.

GAUDRON J:   Yes, but you must assert some failure in judicial process or some error of law in regard to what actually happened.  What do you say that error was?

MRS SMITH:   I say that the Supreme Court Rules – the fact that there are Supreme Court Rules implies that they are capable of implementation but the adversarial system assumes two adversaries qualified to implement the rules.  The rules are not capable of implementation by unqualified litigants and until after the judgment is handed down, really I had no really clear picture of the legal issues involved or how the rules would be applied.  I respectfully submit that that is a failure of the court to administer its jurisdiction of providing justice to people who seek to access justice through its procedures.

Basically the International Covenant of Civil and Political Rights is not written into law yet, so there is no - as far as I know, apart from it being persuasive, there is no legally binding reason for the court to be in a position of having to provide by law – by a particular Act, I should say, a fair system.  But my submission is based upon the simple fact that I have to access the court through the rules and I cannot, and that means that they are impossible to apply and therefore I do not know if the question is whether they are unconstitutional or whether they are ultra vires or what they are, but they are certainly impossible to implement for a litigant in person.

The other thing is the legal issues to be decided are not clear as an unrepresented litigant goes through the courts.  My submission there is there are many discretions available to judges and masters whereby they can oversee the procedure and the passage through the court of an application or a defence by a litigant in person.  One such instance of that is another case in which we are involved, Smith v McCusker and Another, Full Court Matter No 153 of 1997, which is before the Supreme Court at the moment.  In that their Honours made an order that one judge would oversee the conduct of the proceedings in terms of seeing that all the documents were in order and seeing that the matter was in a well‑prepared state before it went before the Full Court.

To that end his Honour Justice Templeman set aside a day to make out a list of the questions that the Supreme Court would want answered in order to address the questions as to whether the statement of claim could stand.  That is just one example of a discretion exercised and I ‑ ‑ ‑

GAUDRON J:   But, Mrs Smith, one can understand the argument you make about the rules, but to obtain special leave to appeal in this Court you have to point to some definite error on the part of the Full Court.  It is not sufficient really to make an argument about the rules.

MRS SMITH:   In the substantive issues, do you mean, as a result of that?

GAUDRON J:   Well, some error of law or some failure ‑ ‑ ‑

MRS SMITH:   That was the part as to do with being unrepresented.  The other part of my submission is that the findings of the court were in error in many ways.  Basically the argument is – the case that we put up was that it was an unfair bargain.  We borrowed money from Town and Country Building Society under great stress.  I refer you to Blomley v Ryan, page 384, where our circumstances were very similar where we were incapable of knowing or understanding the contract.  That was known to the respondent.  I refer you to application book page 18, 3 where Mr Leighton, the man who altered the figures – just above 3:

I spent a long time questioning them so that I could segregate in my own mind what expenditure should be classified as revenue expenditure and what was capital expenditure.  I doubt that they have or ever had the capacity or training to make such distinctions.”

So they understood that we did not understand the contract and the terms of it.  My husband was lacking in education and that is also an issue in Blomley v Ryan.  My husband could barely read and it was he who mortgaged his land, so his ability to understand the contract is crucial.  In Blomley v Ryan the effects of intoxication are mentioned but I liken that to the effects of extreme worry and fear of the unknown of the future.  We were being sued by many creditors.  We were about to be sold up.  We were under extreme stress from having legal aid to take action against the R & I Bank.

GUMMOW J:   Part of the problem, Mrs Smith, really was what happened later, was it not:  the bad farming season that followed?

MRS SMITH:   I beg your pardon?

GUMMOW J:   Part of the problem really was what happened later, namely, the bad farming season.  That is what pushed things over the edge, was it not?

MRS SMITH:   What I am really saying, your Honour, is that this is a loan which probably – in fact indeed – we should not have been induced into taking out for the simple reason that we had a lot of assets before we did and, had we not been deceived into thinking that it was viable, we would not have done that.  I refer you to application book page 19, 3:

The net result is that repayments would now represent 75% of budget surplus (previously 65%) –

The contract that was presented to us showed the budget surplus at 65 per cent.  At 4:

on face value the applicant has a less than even money chance of success.

These things were not revealed to us.  Further down at 6:

“This proposal is particularly weak and in the normal course would be declined.

However, in the very next line they say:

I understand that the Smiths were introduced to us by Dick Old who made a plea on their behalf.  Therefore, for reasons of possible political advantage, approval of the loan is recommended.

This was concealed from us until 1996, but it is clear that that is the sole reason for the loan, because in the normal course ‑ ‑ ‑

GUMMOW J:   But you needed to refinance, did you not, Mrs Smith?

MRS SMITH:   No, not really.  We needed to be helped and we did not actually go to Town and Country looking for a loan.  We went to the Minister for Agriculture asking him to activate a section of the Rural Adjustment Scheme Act to enable us to access money and to hold our debts in abeyance until the case against the R & I Bank was over, but unknown to us he got in touch with the Chairman of Town and Country and they offered us the loan and, because we were in such a shocking situation, we fell for it.  But we were not – they did not disclose to us that the sole reason for it was political advantage and that it was non‑viable and we were unable to completely understand it ourselves.  My application form was so full of errors that Bob Leighton completely rewrote it.

GUMMOW J:   What do you say would have happened if you had not refinanced this way?  What would have happened to you?
‘
MRS SMITH:   I think we probably would have sold up by the R & I Bank or we would have perhaps sold some assets ourselves, but we would have had assets left over.  We would have had net assets of somewhere in the vicinity of $150,000 or $180,000, according to Town and Country’s own valuations of our assets.  So I think that is what would have happened, because the R & I Bank had already told us that they were thinking of taking action against us and that was part of the reason why our minds were – why we were vulnerable to an offer like this when no other bank would lend us money which we had stopped even applying for years ago.  I think that - in answer to your Honour’s question, I think that many of these facts and the implication ‑ ‑ ‑

GAUDRON J:   If I could interrupt you there, they are factual matters which might well be relevant in a trial process but your appeal was ultimately struck out for want of prosecution.

MRS SMITH:   Yes.

GAUDRON J:   That is the order that you are seeking to appeal, so you have to demonstrate an error in that process.

MRS SMITH:   Yes, your Honour.  With respect, your Honour, I believe that his Honour the Chief Justice was in error in saying that I had done nothing since the filing of the notice of the appeal.  I had in fact attended several sessions with the registrar and the index had been settled and the books were about to be printed and I really do not know why his Honour said that nothing had been done, because that simply was not the case and it was on the record in the court what had been done. 

GAUDRON J:   But was time not granted to you and still nothing happened?  You had been given leave, had you not, to file some amended grounds of appeal, is that right?  The 12-week period had expired on 18 July, that is right.

MRS SMITH:   Yes.

GAUDRON J:   Then the application was made against you.  On 3 October you made an application for extension of time, is that not right?

MRS SMITH:   I think so, your Honour.  The reason for the long delay at that time is that I had been ordered by my doctor to take two months rest, and that was presented to the Supreme Court in an affidavit.  Also the other reason for the fact that I had not done exactly – you know, had not completed it earlier than that was that I had gone to – I had not known what to do when I got discovery of the documents that showed fraud and I asked the staff at the court and they sent me to the chief executive officer, I think he was called, Mr Campbell, and he said to ask the judge.  Now, it was simply lack of – it was simple ignorance really of the procedure.  It was not lack of prosecution.

I really thought that you had to apply for an extension of time and then, once that was granted, you filed the things.  I would have filed them – and yet I have noted that some people file things, apply for an extension and then have it dealt with on the day.  But I did not know that that is how it could be done, so it looked on the day as if I had done nothing but in fact I had done a great deal.  I had spent a lot of time.  The opposing solicitors had attended to settle the index as well.  So there was actually a lot of work done and it was an error to say that there has been no step.  He says on the face of it no step has been taken in this appeal other than a filing of the notice of appeal, but that fails to take into account all the things that had been done, and my illness - and the wrong advice that I got from the court officer.

The other thing is the fourth respondent – the sale of the – do I need to go into those issues?

GAUDRON J:   If you wish, you should.

MRS SMITH:   The fourth respondent – first of all, sale of the property.  I do not believe that the court weighed up properly the contract of sale and the terms on which the property was sold.  I refer your Honours to the contract of sale in the documents I have lodged there.  That is this one, the last page – the second-last page actually at point c/:

THE PURCHASERS ARE AWARE THAT THIS CONTRACT IS SUBJECT TO THE SPECIAL CONDITIONS IN THE ATTACHED ANNEXURE MARKED “A”.

The last page is the annexure marked A.  In this in point 3:

The Vendor does not warrant that it has title and the Purchaser –

and then it describes what is to happen if any interest prior to the interests of the vendor is lodged on the title and then what is to happen about the rights of the parties as to rescission of the contract should there be any problem with the title.  Then at the bottom it says:

The Purchaser accepts the Vendor’s title –

My argument there is that this is ‑ ‑ ‑

GUMMOW J:   The Full Court dealt with this at pages 126 and following of the application book.  It dealt with the principles of law which I think are pretty well settled.

MRS SMITH:   With respect, your Honour, the submission I have is Bahr v Nicolay at page 653:

However, the title of a purchaser who not only has notice of an antecedent unregistered interest but who purchases on terms that he will be bound by the unregistered interest is subject to that interest.

So I submit that not enough weight was given to that aspect of the law.

As to the fourth respondent, the fourth respondent also received notice and I refer your Honours to this document here, EAS1 it is labelled.

GAUDRON J:   We have that document.

MRS SMITH:   This is a list of signatures of all the various banks to whom we gave notice.  I did not reproduce it all because it was too long, but it is plain from the letter that accompanies this that the question was title to the property.  My argument there is that – the bottom signature there is Sharon Parry, an employee, and therefore I submit an agent, of the National Bank, who acknowledged receipt of the notice.  I refer you to Assets Company Limited v Mere Roihi, page 210.  In the letter accompanying this, there were further details about the unconscionable contract.  About two‑thirds of the way down on page 210:

Fraud by persons from whom he claims does not affect him unless knowledge of it is brought home to him or his agents…..But if it be shewn that his suspicions were aroused, and that he abstained from making inquiries for fear of learning the truth, the case is very different, and fraud may be properly ascribed to him.

My submission is that the court did not give enough weight to that aspect of the law either because the signature is an acknowledgment of the notice of fraud and acknowledgment that the – and therefore it can be assumed that his suspicions were aroused and that it falls within this precedent.  Also the fourth respondent – none of the parties who registered the transfer of the title disclosed to the Registrar of Titles on the one hand that they had signed a contract saying there was – no title was warranted, and on the other hand that notice had been received by the mortgagee, the fourth respondent, of fraud affecting the title.

Really what I am saying is that I do not believe that the Supreme Court paid enough – gave enough weight to these issues and I do not believe that it gave us enough help to prepare to present these issues.  I believe it does have within its discretions ability to make the process through the courts a lot easier than we had it.  This matter being a final dismissal of an action was – I do not believe also was given enough weight or time to really assess the issues.  It was dealt with on a busy motions day very quickly and the fact that the Supreme Court is now virtually the court of last resort, I believe it should have been given far more time and far more weight should have been given to these other aspects of the law.

GAUDRON J:   Thank you, Mrs Smith.  We need not trouble you, Mr Murphy and Mr Benter.

We understand the submissions put forward by Mrs Smith but the arguments that are advanced fail, in our view, to demonstrate a sufficiently arguable case for the grant of special leave.  Accordingly, the application is refused.

The Court will now adjourn to reconstitute.

AT 10.15 AM THE MATTER WAS CONCLUDED