Tunbridge and Tunbridge and Ors
[2017] FCWA 150
•3 NOVEMBER 2017
JURISDICTION : FAMILY COURT OF WESTERN AUSTRALIA
ACT: FAMILY LAW ACT 1975
LOCATION: PERTH
CITATION: TUNBRIDGE and TUNBRIDGE & ORS [2017] FCWA 150
CORAM: WALTERS J
HEARD: 21 & 22 APRIL 2015
DELIVERED : 3 NOVEMBER 2017
FILE NO/S: PTW 5653 of 2006
BETWEEN: MS TUNBRIDGE
Applicant
AND
MR TUNBRIDGE
First RespondentAND
VERNON TUNBRIDGE
Second RespondentAND
COMPANY A
Third RespondentAND
COMPANY B
Fourth Respondent
Catchwords:
FAMILY LAW – PROPERTY – Preliminary issues – Where spouses refinanced loans – Where loans were secured by first registered mortgage over former matrimonial home – Where registered mortgage securing loans was mistakenly discharged – Where funds to discharge the loans were mistakenly paid to husband's business and promptly dissipated – Where former matrimonial home has since been sold – Whether obligation to repay loans was extinguished upon discharge of mortgage – Held that discharge of mortgage did not extinguish loans
FAMILY LAW – PROPERTY – PROPRIETARY REMEDY – Where fourth respondent seeks an equitable interest in sale proceeds of former matrimonial home – Where this claim arises in a subsidiary sense only – Where claim previously considered [in the Supreme Court of Western Australia] – Where argument lacks merit
FAMILY LAW – PROPERTY – LIMITATION DEFENCE – Where wife argues that limitation period for fourth respondent to bring claim has expired – Where Limitation Act 1935 (WA) is applicable – Consideration of meaning and effect of ss 38(1) and 44 of Limitation Act 1935 (WA) – Where claim was to enforce a loan agreement – Whether loans were repayable on demand – Whether spouses acknowledged debt or promised to repay debt and restarted limitation period – Where limitation defence failed
FAMILY LAW – PROPERTY – ESTOPPEL – EQUITABLE ESTOPPEL – Consideration of form of estoppel discussed by High Court in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 – Where spouses argue that fourth respondent is estopped from enforcing repayment of loans – Where no relevant representation was established – Where there was no representation that was, or could fairly have been relied upon – Time for determining when detriment has been established – Detriment assessed at point where alleged representor seeks to resile from alleged representation – Consideration of whether any reliance on any representation resulted in detriment to person relying on representation – Where no detriment established
Legislation:
Family Law Act 1975 (Cth)
Limitation Act 1935 (WA)
Limitation Act 2005 (WA)
Transfer of Land Act 1983 (WA)
Category: Not Reportable
Representation:
Counsel:
Applicant: Mr D Ryan SC with Ms W Gillan
First Respondent : Self-Represented Litigant
Second Respondent : Mr G Grassa
Third Respondent : Mr G Grassa
Fourth Respondent : Mr J Giles and Mr P van de Zanden
Solicitors:
Applicant: Calverley Johnston
First Respondent : Self-Represented Litigant
Second Respondent : GG Legal
Third Respondent : GG Legal
Fourth Respondent : Hotchkin Hanly
Case(s) referred to in judgment(s):
Avco Financial Services Ltd v Commonwealth Bank of Australia (1989) 17 NSWLR 679
Giacci v Giacci Holdings Pty Ltd [2010] WASCA 233
Giumelli v Giumelli (1999) 196 CLR 101
Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641
Herridge & Handerson [2011] FamCAFC 156
Industrial Acceptance Corporation Ltd v Tarulli [1974] WAR 125
Monie v the Commonwealth (2005) 63 NSWLR 729
Netglory Pty Ltd v Caratti [2013] WASC 364
Re F – Litigants in Person Guidelines (2001) FLC 93-072
Riches v Hogben [1985] 2 Qd R 292
Rollings & Rollings [2009] FamCAFC 87
Saxena & Saxena (2006) FLC 93-268
Sidhu v Van Dyke [2014] HCA 19; (2014) 251 CLR 505
Spencer v Hemmerde [1922] 2 AC 507
State Bank of New South Wales v Berowra Waters Holdings Pty Ltd (1986) 4 NSWLR 398
Thompson v Palmer (1933) 49 CLR 507
Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387
WORDS IN SQUARE BRACKETS REPLACE WORDS USED IN THE ORIGINAL JUDGMENT - PARTIES’ NAMES AND IDENTIFYING DETAILS HAVE BEEN CHANGED
Introduction
1On 14 November 2003, [Mr Tunbridge] ("the husband") and [Ms Tunbridge], now [Ms W] ("the wife") entered into a loan agreement with [Company B] ("[Company B]"), a home loan lender, whereby Company B agreed to make certain advances to them ("the loan agreement"). The total amount borrowed was $644,000 ("the total advance").
2In order to secure the total advance, the husband and the wife (jointly, "the spouses") provided a first registered mortgage over their property [in Suburb A] ("[Property A]"). I shall refer to this mortgage as "[the PA mortgage]".
3In February 2005, [Bank A] offered [Company A] – an entity associated with the husband and his brother, [Vernon] – facilities totalling $1.65 million. One of the purposes of the Bank A facilities was to refinance the PA mortgage ("the refinancing"). In order to facilitate the refinancing, the spouses signed a "Discharge Intention Form" ("DIF") directed to Company B or its agent and relating to the PA mortgage.
4The refinancing occurred in March 2005. Due to a mistake made by those then acting for Company B, its agent handed to Bank A the discharge for the PA mortgage – but did not receive the amount provided by Bank A to pay out the total advance. Instead, the relevant moneys were paid to Company A. Thus, Company B lost its security over Property A, but the total advance (or so much of it as was then outstanding) was not paid out.
5The husband well knew, within a very short time, that a mistake had been made, but the wife may not have found out about it until 2009 or thereabouts. The husband's knowledge of the mistake did not prevent him and Vernon causing Company A to promptly disburse, for its own purposes, the moneys mistakenly paid to it.
6Having effectively disposed of the moneys mistakenly paid to it, the husband and Vernon caused Company A to continue to make periodic payments to Company B – apparently under the loan agreement.
7It was not until September 2013, over eight years later, that Company B became aware of the mistake – although some members of its staff may have been aware at an earlier stage.
8By May 2014, the spouses had missed a number of repayments due under the loan agreement. Company B then issued a default notice. In mid-June 2014, the entire balance due under the loan agreement became owing.
9In the same year (2014), Company B instituted proceedings against the spouses in the Supreme Court of Western Australia, to secure payment of all moneys then owing under the loan agreement. Shortly afterwards, the Supreme Court proceedings were or were effectively transferred to this Court.
10On 17 February 2015, I made orders that Company B's claims against the spouses, as set out in its amended writ of summons dated 17 June 2014, be determined as preliminary issues in the property proceedings between the spouses. The property proceedings had been instituted in this Court in March 2008.
11The preliminary issues were heard on 21 and 22 April 2015. At the conclusion of the hearing, I reserved my decision.
Abbreviations and other terms used
12In these Reasons, and unless otherwise indicated:
(a) all statements of fact comprise findings of fact;
(b)I have referred to all affidavits filed by or on behalf of the parties as being "sworn", even if they were affirmed by their deponents (and I note that, in a slightly different context, s 5 of the Interpretation Act 1984 (WA) provides, among other things, that "to swear" includes "to affirm");
(c)where necessary, I have referred to the Family Law Act 1975 (Cth) as the "FLA";
(d)I have referred to the Limitation Act 2005 (WA) as "the 2005 Act" and the Limitation Act 1935 (WA) as "the 1935 Act"; and
(e)I have referred to the Transfer of Land Act 1893 (WA) as "the TLA".
General observations
13At the conclusion of the hearing on the preliminary issues ("the trial"), I had hoped to publish orders very quickly. That has not come to pass.
14I am well aware of the delay between the hearing of the preliminary issue and the delivery of these Reasons. In Rollings & Rollings [2009] FamCAFC 87, the Full Court said at [67]:
The authorities … establish that if there is a delay between the conclusion of the hearing and judgment, presumably with contemporaneity of reasons, the delay is not in itself a ground of appeal and it is not … a denial of a fair trial and/or a miscarriage of justice. However the delay does mean that on appeal there has to be greater scrutiny of the findings made by the trial judge. As Giles JA said in Monie v the Commonwealth (2005) 63 NSWLR 729 at [3]: "extensive delay may cause an appellate court to take a more stringent approach in determining whether error has been demonstrated in the trial judge's findings or whether the trial judge's reasons are adequate".
15Similarly, the Full Court in Herridge & Handerson [2011] FamCAFC 156 said that the "real issue" may be –
… whether material findings of fact made by the trial Judge, and/or conclusions reached by him in reliance upon them, could be unsafe by virtue of the time which elapsed between the conclusion of the evidence and the delivery of judgment. That in turn is more referable to a consideration of contested findings or conclusions, and the evidence upon which they were, or could be based, or its absence. If those challenges were made out, the fact that the trial Judge's delay in delivery of judgment may have caused, or contributed to his error(s) is irrelevant. If they are not, it is difficult to see how his delay could change anything.
16Their Honours added at [22]-[23]:
If … findings of fact made by the trial Judge were not reasonably open to him, it does not matter whether that occurred because of the time his Honour took to deliver his judgment or for some other reason. That is also the case if such findings are shown to have been "unsafe"... If it is demonstrated that his Honour's discretion was exercised in reliance upon material errors of fact, appellate intervention is likely to be enlivened. …
What we have said ought not be misconstrued, however. It is regrettable that judgment was not delivered more expeditiously than it was in this case. In a case where impressions of parties and witnesses clearly assumed considerable significance, a delay of eight months had the potential to diminish the clarity of the trial Judge's recollection of their evidence, and his assessment of its reliability. We shall subject the trial Judge's judgment to closer than usual scrutiny …
17In the main, the trial focused on questions of law, as opposed to factual disputes. Factual matters were largely (but not entirely) agreed.
18I apologise for the delay in both the making of the orders and the publication of the reasons for judgment. This delay comes about as a result of a number of factors, the most significant of which is that I have experienced some personal difficulties – including in relation to my health.
19It is important to note that the delay is not the fault of the parties or their legal advisers, who have taken appropriate steps to inquire as to the progress of the judgment.
20My recollection of the evidence has not been significantly affected by the delay for at least two reasons: firstly, I made full notes of all relevant evidence and submissions during the trial; and secondly, a transcript of the evidence and submissions has been obtained.
Background
21The husband was born in 1956, and the wife in 1961. They married [in] 1983, having commenced cohabitation approximately three years before that date. There are four children of the marriage, all of whom are over the age of 18 years.
22The husband is [a stockbroker]. The wife has worked in paid employment sporadically, but her primary and predominant role involved caring for the children. Her paid employment was principally "sales based" (to use her words).
23In 1983, the spouses purchased Property A for about $63,000. The purchase was funded utilising a combination of their savings and a loan from [Bank B] (of approximately $40,000).
24In the late 1980s, Property A was renovated at a cost of approximately $72,000. The renovations were funded by an extension of the loan with [Bank B].
25In approximately 1989, the husband and his brother, Vernon Tunbridge (to whom I have referred as Vernon), also a stockbroker, established a business together: Company A, (which, as appears above, I have described as Company A). The brothers were directors of Company A, and each held shares in it.
26In or about September 2003, the spouses applied for finance from Company B. The application was for a total loan of $644,000 (described above as the total advance).
27Following an incident on 8 November 2003 (after which the parties appear to have lived separately and apart under the one roof), the spouses finally separated on 15 April 2004.
28On 14 November 2003, the spouses entered into a Split Line of Credit Loan Agreement with Company B (described above as the loan agreement). The loan agreement provided that Company B would advance to the spouses the following:
(a)a standard variable rate loan in the sum of $634,000 ("home loan facility"); and
(b)a line of credit facility in the sum of $10,000 ("credit facility").
29I shall refer to the home loan facility and the credit facility (jointly) as "the Facilities".
30The Facilities were secured by way of a first mortgage registered over Property A (described above as the PA mortgage).
31Vernon and his wife, [Donna] (together,"VADT"), also entered into a Split Line of Credit Loan Agreement with Company B. Their agreement provided that Company B would advance VADT the following:
(a) a standard variable loan in the sum of $806,000; and
(b) a line of credit facility in the sum of $10,000.
32VADT's loan facilities were secured by way of a first mortgage registered over their family home [in Suburb B] ("[Property B]").
33On 24 November 2003, Company B advanced $634,000 to the spouses. On the same date, Company B advanced $806,000 to VADT.
34The husband left Property A at the time of final separation on 15 April 2004. The spouses were divorced on 16 March 2007.
35On 24 February 2005, Bank A wrote to Company A, offering a lending facility totalling $1,650,000. Company A accepted this offer. The purpose of the refinancing was to put the proposed facility in place. As part of the refinancing, Bank A was to take security over Property A and Property B.
36On 2 March 2005, the spouses provided the signed DIF to Company B. On or about that date, VADT also provided a signed discharge of mortgage intention form to Company B.
37Settlement occurred on 15 March 2005 ("the refinancing settlement"). At the refinancing settlement, Company B's agents provided Bank A with discharges of both the PA mortgage and its mortgage over Property B.
38At the refinancing settlement, and in return for the signed mortgage discharge relating to Property B, Company B received approximately $823,300 from VADT via Bank A – in repayment of all moneys then owed by VADT to Company B. However, due to administrative errors, Company B handed over a discharge of the PA mortgage without receiving any moneys from the spouses (via Bank A). Put another way, the spouses' debt to Company B at that time – being $637,358.59 in respect of the home loan facility and $12,866.18 in respect of the credit facility (in other words, a total of approximately $650,225 in respect of the Facilities) – remained owing. This was clearly a mistake on Company B's part. As described below, the moneys provided by Bank A which should have been used to repay the Facilities were in fact paid to Company A. I propose to call the botched refinancing settlement "the mistake".
39On 16 March 2005, Bank A lodged the mortgage discharges (relating to Property A and Property B) which had been provided by Company B. It also registered its own mortgages over both properties.
40After the refinancing settlement, Bank A deposited the funds it had agreed to provide (as part of the refinancing) into a bank account belonging to Company A. As a result of the mistake, the money so deposited included the funds that should have been provided to Company B to repay the Facilities. According to the husband, these moneys were likely used by Company A in relation to "investments". As will become apparent, I do not accept his evidence in this regard.
41The mistake is described in Company B's written outline of opening submissions dated 20 April 2015 ("BOS") as follows:
13.A mistake was made by those then acting for [Company B]. Contrary to [Company B's] intention (and its instructions to its then Brisbane solicitors), the Perth agent for the solicitors who attended [the refinancing settlement] on behalf of [Company B] handed over to [Bank A] the discharge of [the PA mortgage] and the [VADT] discharge, without receiving repayment from [the spouses]. The agent received only $818,119.96 from [VADT] (the money was paid by [Bank A] at [VADT's] direction), being the total amount required to pay out [the mortgage over VADT's property]… The balance of the [Bank A] loan was paid as directed to a [Company A] account.
14.The effect of the mistake was that [Company B] lost its security. It is not now contended that, estoppel aside, those events led to the debt owed by [the spouses] being discharged. That is for good reason. The discharge of mortgage in its terms only discharges the security interest, expressly leaving the debt owing and recoverable. To the same effect, clause 6.07(b) of the memorandum of provisions incorporated into [the PA mortgage] expressly provides that the discharge of the mortgage does not affect [the spouses'] liability for the moneys owed to [Company B].
42In her written submissions filed prior to the hearing of preliminary issues ("WOS"), the wife suggests at [14] and [17] that Company B did not, or did not properly, explain how the mistake occurred. I disagree. Although the precise cause of the mistake is of interest, and although other, more colourful, terms spring to mind, the characterisation of the relevant events as comprising a mistake remains unchanged. The wife concedes at [17.1] that "all parties intended and accepted that discharge of (the PA mortgage) was only to occur on full repayment of (the Facilities) from funds from [Bank A]" and that the discharge of the PA mortgage was "a matter 'in addition' to the discharge of (the Facilities)".
43The wife correctly observes at [17.6] that Company B's Brisbane solicitors "were specifically advised of the refinancing as the reason for the discharge (of the PA mortgage)". She again correctly observes, at [17.7], that, notwithstanding their instructions, Company B's Brisbane solicitors "started to refer only to (VADT's) settlement". At [17.8], the wife says:
… [The] mistaken focus only on [VADT] continued into the instructions to [Company B's solicitors' Perth agents] as to what had to be provided for the discharges and certificates of title… The only substantive cheque required in favour of [effectively, Company B] was one for $818,119.96, which related only to [VADT's] loan and mortgage…
44Careful perusal of the documents attached to the affidavit of [Catherine Potter] sworn 17 March 2015 ("[the Potter affidavit]"), however, reveals further subtleties associated with the mistake. Company B's Brisbane solicitors began referring to the spouses and VADT jointly in certain correspondence, without clear differentiation between the two couples. This, combined with staff absences at inconvenient times, lead to confusion, miscommunication and, ultimately, the mistake: see, for example, the Potter affidavit at pp 257 to 268 (where separate communications relating to the spouses and VADT ultimately merge).
45Of course, Company B never suggested that the spouses (or either of them), or VADT for that matter, were/was responsible for the mistake. Company B always accepted that the mistake was primarily and predominantly made by its servants and/or agents. Company B also accepted that the wife may not have known about the mistake until 2009 or thereabouts.
46The husband's state of knowledge was very different. As I have indicated elsewhere in these Reasons, I am more than satisfied that he was aware of the mistake from the outset (or, perhaps more accurately, from the moment he became aware that moneys that should have been paid to Company B or its agent at settlement had in fact been paid to Company A).
47From July 2005, Company B continued to send loan statements on a regular basis to each of the spouses at Property A, in relation to the amount still owing pursuant to the Facilities.
48Interest accrued on the Facilities on a monthly basis. Repayments were made by the husband, or came out of a Company A account (as had been the arrangement prior to March 2005). They were sometimes late, but a complete failure to pay did not take place until 2013.
49The wife commenced proceedings in this Court on 11 October 2006, when she filed an application for divorce. Following the granting of a divorce order, the wife filed an application for property settlement on 15 March 2008.
50On 7 August 2013, the spouses failed to make payments to Company B (in respect of the Facilities) totalling $4,137.73.
51According to Company B, it became aware in or about September 2013 that the PA mortgage had been discharged – but that the Facilities previously secured by it were still outstanding.
52On each of 7 January 2014, 7 February 2014 and 7 March 2014, the spouses again failed to make the payments due to Company B in respect of the Facilities.
53On 10 February 2014, Property A was the subject of a mortgagee sale, conducted by Bank A. On that date, [Bank C], which had acquired Bank A, entered into a contract to sell Property A for $1,250,000.
54On 24 March 2014, Company B was joined as the fourth respondent in the Family Court proceedings.
55On each of 7 April 2014 and 7 May 2014, the spouses again failed to make the payments due to Company B in respect of the Facilities.
56On 9 May 2014, Company B commenced proceedings against the spouses in the Supreme Court of Western Australia.
57On 14 May 2014, the spouses transferred Property A to the new purchasers. The wife received $623,638 from the sale. Company B, on the other hand, received nothing from the sale of Property A.
58On 15 May 2014, Company B served a Notice of Default on the wife. The following day, Company B served a similar notice on the husband.
59[In] 2014, the Supreme Court dismissed Company B's application for –
(a)an interlocutory injunction to restrain the wife from disposing of (or dealing with) the net proceeds of sale of Property A – other than to deposit them into an interest-bearing account; and
(b)in the alternative, a freezing order to restrain the wife from dealing with or diminishing the value of her assets up to the value of $620,000.
60On 7 June 2014, the spouses again failed to make the monthly payment due to Company B in respect of the Facilities.
61In accordance with the Notices of Default (and the spouses having failed to make relevant payments), the entire balance due under the loan agreement became owing on 16 June 2014.
62On 7 December 2014, Company B received a payment of $4,054 from the husband. This was the last repayment made. As at 20 April 2015, the amounts owing from the spouses to Company B were:
(a) $778,279 in respect of the home loan facility; and
(b) $11,764 in respect of the credit facility.
The husband was unrepresented
63Given that the husband was unrepresented (despite having been represented at earlier stages of the litigation process), I was very conscious of the obligation upon the Court to provide a fair trial – for all parties. I am aware of the guidelines regarding the manner in which a judicial officer should deal with unrepresented litigants, and the associated discussion contained in Re: F – Litigants in Person Guidelines (2001) FLC 93-072 at [209] to [253]. I applied those guidelines during the course of the proceedings, and am comfortable that the trial was fair. In summary:
(a)procedural fairness was afforded to all parties;
(b)the "mechanics" of the trial, and the right of the husband to cross-examine witnesses, were explained to him;
(c)other relevant procedures were explained to the husband as they arose;
(d)I explained to the husband that he had the right to object to inadmissible evidence, and explained to him – in very broad terms – the types of evidence that might be considered inadmissible;
(e)where appropriate, I attempted to clarify the substance of the husband's submissions; and
(f)where appropriate, I took other steps as authorised by the Full Court in Re: F – Litigants in Person Guidelines (supra) at [253]: see Guideline #9 in that paragraph.
64In Saxena & Saxena (2006) FLC 93-268, Coleman J emphasised that the type of guidelines set out in the previous paragraph are "no more than the name implies" and that they "derive from the broader considerations of natural justice, implicit in which is the recognition that for a litigant in person to be afforded natural justice and procedural fairness, that litigant must have some appreciation of just what is going on". His Honour added that the Court must be concerned with "the spirit rather than the strict letter of the guidelines".
65In the present case, the husband participated comfortably in the trial process. I have no doubt that he fully understood "what was going on" at all times.
Conduct of the trial
66Company B relied upon the documents referred to in its papers for the judge filed 17 April 2015. Those documents are as follows:
(a)amended writ of summons (with indorsed statement of claim), dated 17 June 2014;
(b)defence of first named defendant (the husband), dated 20 March 2015;
(c)reply to the defence of the first named defendant (the husband), dated 7 April 2015;
(d)defence of second named defendant (the wife), dated 29 July 2014;
(e)amended reply to the defence of the second named defendant (the wife), dated 10 March 2015 (although I note that this document was handed up in Court on 21 April 2015, being the first day of trial);
(f)affidavit of [Ms Ronald], sworn 16 January 2015;
(g)affidavit of [Ms Charles], sworn 19 January 2015;
(h)affidavit of [Mr Kennedy], sworn 17 March 2015;
(i)the Potter affidavit; and
(j)BOS.
67Neither the wife nor the husband sought to cross-examine Company B's witnesses.
68The wife relied upon the documents outlined in her papers for the judge filed 16 April 2015. They were as follows:
(a) defence of the second named defendant (the wife), dated 29 July 2014;
(b) her affidavit sworn 21 February 2014;
(c) her affidavit sworn 8 April 2015; and
(d) WOS.
69There was limited cross-examination of the wife.
70The husband did not file papers for the judge, but relied upon the following documents:
(a) defence of the first named defendant (the husband) dated 20 March 2015;
(b) his affidavit sworn 26 June 2014; and
(c) his financial statement sworn 16 February 2015.
71The husband was cross-examined. It was a memorable cross examination.
72The second and third respondents did not seek to rely on any documents. Although represented, they played no role in these proceedings; nor were they required to. The orders of 17 February 2015 clearly indicate that they were not to be involved in the hearing of the preliminary issues. Paragraph 1 of those orders provides:
[[Company B's]] claims against [the spouses] made in the amended writ of summons dated 17 June 2014 be determined as preliminary issues at the hearing on 21 and 22 April 2015.
73Mr Ryan SC, with Ms Gillan, appeared for the wife. The husband appeared in person. Mr Grassa appeared for Vernon and Company A. Mr Giles, with Mr Van Der Zanden, appeared for Company B.
Orders sought
74Company B sought the following orders:
(a)Judgment against the spouses for the amount owed by them under the loan agreement made on 14 November 2013, as it stood at 21 April 2015.
(b)A declaration that the moneys the wife received from the sale of Property A on or about 14 May 2014, and the traceable proceeds of that sale, are the subject of an equitable charge in favour of Company B securing payment of the sum referred to in (a) above.
(c)The husband and the wife pay Company B's costs.
75The wife sought the following:
(a) Company B's claim be dismissed.
(b) Company B's pay the wife's costs.
76The husband did not particularise any orders that he sought, but it was clear that he opposes Company B's claims.
The parties' positions at trial
77The case put forward by Company B is summarised above and is ostensibly simple. Company B is a home loan lender and dealt with the spouses in this capacity. It entered into the loan agreement with the spouses. The Facilities were secured by first registered mortgage over Property A, which was then the spouses' matrimonial home.
78About 15 months later, Bank A and the spouses agreed that the Company B debt would be refinanced. The refinancing was to include moneys owed by VADT. It was understood that Bank A was going to advance sufficient moneys to repay the Company B loan facilities provided to each of the Tunbridge brothers and their wives, and also provide some further moneys to Company A.
79In the course of preparing for the refinancing settlement, the mistake occurred. It is common ground that the mistake was primarily and predominantly the result of internal administrative errors on the part of Company B or its servants or agents, and that, as a consequence, Company B did not collect all the relevant funds from Bank A. Although the PA Mortgage was discharged, the loans associated with and secured by it (the Facilities) remained unpaid, and the moneys intended for the purpose of paying out the Facilities and discharging the PA mortgage were provided to Company A. These moneys were subsequently, and speedily, dissipated.
80Company B says the mistake does not alter its rights to sue the spouses on the covenants associated with the loan agreement: Company B lent money, it has not been repaid, and it now seeks repayment.
81Company B also accepted that the wife may not have known about the mistake until 2009 or thereabouts.
82It appears to be common ground that correspondence from Company B addressed to the wife at Property A contained statements of the amount outstanding in respect of the Facilities. According to the wife, however, she did not open the correspondence: she simply forwarded it to the husband.
83Company B says it only became aware of the mistake in 2013 – almost nine years after the refinancing.
84The wife's response to Company B's claims falls under a number of headings. The first relates to what is termed "the proprietary remedy". I shall refer to it as "the proprietary argument". I consider it to be the least contentious of the arguments raised by the parties.
The proprietary argument
85At trial, Company B sought the following:
A declaration that the moneys [the wife] received on or about 14 May 2014 from the sale of [[Property A]], and the traceable proceeds, are the subject of an equitable charge in favour of [[Company B]] securing payment of the judgment sum.
86Put another way, Company B claims to have a proprietary interest in Property A and the proceeds received from its sale.
87Company B's arguments in support of the declaration have been aired previously (albeit in support of different relief). They were advanced in the Supreme Court proceedings ("[the 2014 SC judgment]").
88In this Court, the proprietary argument was presented in a rather lacklustre fashion. BOS describe it as arising in a subsidiary sense only.
89The proprietary argument was carefully considered by Le Miere J in the 2014 SC judgment.
90I am not prepared to find fault with his Honour's reasoning. Nothing further was advanced to me during these proceedings that would suggest such an argument has a greater chance of success in this Court. In any event, and put simply, I am not sitting on appeal from Le Miere J.
91Although the spouses promised that the loans would be secured by the PA mortgage, when that mortgage was discharged the obligation and interest created by the PA mortgage fell away. A proper and commercial construction of the loan agreement supports this.
92I am not satisfied that the discharge of the PA mortgage, albeit mistaken, and without any payment of the loan, preserved or maintained any interest or obligation once held by Company B in Property A. The fact of the matter is that the PA mortgage was discharged, but the Facilities remained outstanding without any security at all. Company B officers ultimately became aware of this position, but appeared to be content to take no further steps in relation to obtaining further or replacement security for so long as loan repayments continued to be made.
93Upon registration of the discharge of the PA mortgage, Property A ceased to be charged with the moneys secured by the PA mortgage: TLA s 123. This is so even where registration of the discharge occurs through mistake or inadvertence on the part of the registered mortgagee: State Bank ofNew South Wales v Berowra Waters Holdings Pty Ltd (1986) 4 NSWLR 398.
94In the circumstances, I am not satisfied that the proprietary argument has merit. That being the case, the application for declaratory relief based upon it will be dismissed.
The Limitation Act 1935 (WA) defence
95It was argued that Company B cannot claim outstanding moneys at all, due to the lapse of time since the cause of action accrued. However, the wife and Company B cannot agree as to when the cause of action arose. It follows that they cannot agree as to the time within which Company B had to make its claim to recover the moneys outstanding pursuant to the Facilities.
96The Limitation Act 2005 (WA) repealed the Limitation Act 1935 (WA) with effect from 15 November 2005. The 2005 Act introduced new accrual rules and limitation periods, but these only apply to causes of action which accrued on or after 15 November 2005: see the 2005 Act, s 4.
97It is common ground that the 1935 Act is applicable in the circumstances of this case, but there is no agreement as to which sections of the 1935 Act cover Company B's claims.
Position of each party
98The wife argues that the limitation period for the Facilities is six years under either s 38(1)(c)(i) or (v) of the 1935 Act. Section 38 is as follows (emphasis added):
Limitation of time for commencing other actions and suits
1.Subject to the preceding sections of this Act and as hereinafter provided, actions, suits, or other proceedings as herein set out shall and may be commenced within the time herein expressed after the cause of such actions, suits, or other proceedings respectively: —
(a)…
(b)…
(c)(i) Actions of debt upon any award where the submission is not by specialty;
(ii) Actions of account or for not accounting, and suits for such accounts, as concern for the trade of merchandise between merchant and merchant, their factors and servants;
…
(v) All other actions founded on any simply contract, including a contract implied in law;
(vi) …
(vii) All other actions in the nature of actions on the case:
6 years.
(d)Actions of debt for rent upon a covenant in an indenture of demise:
12 years.
(e)(i) Subject to sections 4 and 32, and to paragraph (d) of this subsection, actions of covenant or of debt upon any bond or other specialty; and
(ii) actions in the nature of debt or scire facias upon any recognisance:
20 years.
Provided that, subject to the first proviso to section 34, no arrears of interest in respect of any sum of money, whether payable under a covenant or otherwise, or any damages in respect of such arrears, shall be recovered by any action, suit, or other proceeding, but within 6 years next after the same respectively became due, or next after an acknowledgment of the same in writing has been given to the person entitled thereto, or his agent, signed by the person chargeable or his agent duly authorised.
2.In actions or suits falling within paragraphs (ii) and (iii) of subsection (1)(c) no claim in respect of a matter which arose more than 6 years before the commencement of such action or suit shall be free from the restriction imposed by such subsection by reason only of some other matter of claim comprised in the same account having arisen within 6 years before the commencement of such action or suit.
3.In this section the word actions means such actions as are in the nature of actions at common law, but in reference to this section contained in the succeeding sections of this Act, the word "action" shall be construed as including "actions" or "actions and suits" or "actions, suits, and other proceedings" where any of such meanings is necessary in order to give a complete reference to the matters set out in subsection (1).
4.This section shall not apply to any action, suit, or other proceeding the time for commencing which is limited by the preceding sections of this Act.
99The wife says the action by Company B is either an action for debt or an action on a simple contract.
100She also argues:
(a)The Facilities were at all times repayable to Company B on demand. As such, the cause of action accrued from the date of the loan agreement and they are now statute barred, because the six year limitation period has expired.
(b)Neither the home loan facility nor the credit facility was for a fixed term with a fixed repayment date. Instead, each facility was repayable in full at any time from the date of the provision of the funds, at the election of Company B.
101Perhaps counter-intuitively, a loan "on demand" does not require any demand at all. It refers, instead, to a simple advance of money which becomes owing immediately upon advance. The borrower is required to be ready and willing to return the money from the date of the advance: no demand is required unless it is expressly stated otherwise.
102The parties disagreed as to whether the loans comprising the Facilities were –
(a) on demand; or
(b) for a set period of time.
103The relevant terms of the Facilities can be summarised as follows:
Home loan
(a)Monthly repayments of interest or of principal and interest had to be made on the same day each month (being the day corresponding to the settlement date).
(b)The Standard Variable loan was to be interest only for 5 years, during which the monthly repayments were to be equal to interest on the loan for that month (calculated on the daily balance of the amount outstanding).
(c)Thereafter, principal and interest were to be calculated by dividing the total amount estimated to be payable under the loan agreement (including interest for the whole of the term) by the number of repayments remaining in the term.
(d)The loan term was a maximum of 30 years, but early repayments were allowed.
(e)An establishment fee was partially waived on the setting up of the facility. If the loan was repaid within the first 5 years, a further portion of the loan establishment fee would become payable.
Credit facility
(f)Monthly repayments of interest were to be made on the first business day of each calendar month.
(g)Each repayment was to be equal to interest on the facility for the month ending on the last day of the month prior to each repayment date.
General Terms and Conditions Booklet Version FM03 dated August 2003
(h)These terms and conditions were incorporated into the loan agreement.
(i)While the variable rate applied, the borrowers could make additional payments at any time without penalty.
(j)Events comprising default included –
(i)the borrowers failing to pay any person (including Company B) any payment by the due date; and
(ii)the borrowers (or one of them) becoming bankrupt.
(k)At any time after a default, Company B could –
(l)make demand and require the immediate payment of instalments outstanding under the loan agreement; and/or
(m)call up the loan and require payment of the entire balance owing under the loan agreement.
104Company B argues that:
(a)the Facilities were not "on demand" loans: they had terms of 30 years – although the spouses could, subject to the payment of certain fees and costs, repay the Facilities earlier; and
(b)the possibility of early repayment of the loans comprising the Facilities did not make them repayable on demand. In this regard, it is important to recognise that the spouses were to pay the debts by monthly instalments.
105Company B also argues that –
(a)section 38(1)(e) of the 1935 Act (see above) should apply – because the PA mortgage incorporated a covenant to repay the Facilities and, thus, became a "deemed deed" under TLA ss 85 or 113; and
(b)as a "deemed deed", the PA mortgage had a limitation period of 20 years, which limitation period is yet to expire.
106The wife's response was to the effect that the action is not a "specialty". Instead, it is a "simple contract".
107In the alternative, Company B maintains that if a six year limitation period does apply, then the parties acknowledged that the debts associated with the Facilities remained outstanding by making ongoing repayments. It says that such acts of acknowledgment had the effect of restarting the limitation time. It argues that the last repayment was made by the spouses in late 2014 and, on that basis, a six year limitation period has not yet expired.
108In addition, Company B argues that the spouses acknowledged the debt associated with the Facilities in writing – by way of the DIF dated 2 March 2005, and in a letter dated 28 August 2008. This argument is developed and expanded by reference to s 44 of the 1935 Act (which is said to support the proposition that part payment constitutes acknowledgment of the primary debt).
Section 44 of the 1935 Act
109Section 44 of the 1935 Act is as follows:
Effect of acknowledgment, etc., preserved except in certain cases
1.Except as expressly provided in this Act, nothing in section 38 contained shall take away or lessen the effect of any acknowledgment or promise, or of any acknowledgment by part payment or satisfaction on account of principal or interest due, and except as aforesaid any such acknowledgment or promise shall have the same effect as if this Act had not been passed.
2.No indorsement or memorandum of any part payment or satisfaction written or made upon any bill of exchange, cheque, or promissory note by or on behalf of the person to whom such part payment or satisfaction is made, shall be deemed sufficient proof of such payment or satisfaction to take the case out of the operation of section 38(1).
3.In actions in the nature of actions founded upon simple contract, no acknowledgment or promise by words shall be deemed sufficient evidence of any new or continuing contract whereby to take any case out of the operation of section 38, or to deprive any party of the benefit thereof, unless such acknowledgment or promise is made or contained by or in some writing signed by the party chargeable, or by his agent duly authorised; and where there are 2 or more joint contractors, or executors or administrators of any contractor, no such joint contractor, executor or administrator shall lose the benefit of section 38 so as to be chargeable in respect or by reason only of any written acknowledgment or promise made and signed by any other or others of them: Provided that nothing herein contained shall alter or take away or lessen the effect of any payment of any principal or interest made by any person.
4.In actions of debt for rent upon an indenture of demise, in actions of covenant or debt upon any bond or other specialty, and in actions of debt or scire facias upon any recognisance, if any acknowledgment has been made either by some writing signed by the party chargeable or his agent duly authorised, or by part payment or satisfaction, the person entitled to such action may commence his action for the money remaining unpaid, and so acknowledged within the time prescribed by section 38 after such acknowledgment, or in case the person entitled to such action at the time of such acknowledgment is under disability as aforesaid, or the party making such acknowledgment is then beyond the seas, then within the prescribed time after such disability has ceased or such party has returned from beyond the seas (as the case may be).
5.Where there are 2 or more co‑contractors or co‑debtors, whether bound or liable jointly only or jointly and severally, or executors or administrators of any contractor, no such co‑contractor or co‑debtor, executor, or administrator shall lose the benefit of section 38 so as to be chargeable in respect or by reason only of payment of any principal, interest, or other money by any other or others of them.
110At trial, Company B, while acknowledging that part payment by one joint debtor is not part payment on behalf of the other joint debtor, says the husband was acting as the agent of the wife when he acted in accordance with the loan agreement after the discharge of the PA mortgage.
Discussion
111As a convenient starting point, it is helpful to determine the exact nature of the loan agreement. This will identify which provisions of the 1935 Act apply. The core issue is whether the loan agreement was a simple contract or a document in the nature of a deed (and called a speciality).
The nature of the loan agreement
112Company B has pleaded its action as a debt recovery action.
113The PA Mortgage was mistakenly discharged in March 2005. Company B's claim as pleaded was not an action instituted by a mortgagee to recover principal and interest or for money charged upon land. Such actions under the 1935 Act are governed by ss 32 and 34. Instead, it was a simple debt recovery action by an entity to which money was allegedly owed under a loan agreement. At the time of the filing of the Statement of Claim, there was no suggestion that the claim was characterised as an action to enforce a deed. I find this is as it should be.
114Company B argues that a personal covenant was created by the debts represented by the Facilities by virtue of the terms of the PA mortgage registered pursuant to the provisions of the TLA. This personal covenant survives as a charge over Property A, despite the discharge of the PA mortgage. Although I am satisfied that the PA mortgage secured the obligations of the spouses to Company B arising under the loan agreement, the pertinent question here is whether any such personal covenant was in fact created by the PA mortgage and, if so, whether it continues as an obligation despite the withdrawal of the security. If the answer to this is yes, then ss 32 and 34 of the 1935 Act may have application.
115The Potter affidavit, particularly at p 43, draws attention to the fact that the spouses acknowledged in the loan agreement that the PA mortgage extended to and secured any and all moneys due under the loan agreement. This, by itself, does not create a personal covenant which exceeds the lifetime of a mortgage.
116I find that the PA mortgage contained no such personal covenant. It did not create or recreate the original debt (comprising the Facilities). I accept the submissions of the wife that:
[[The PA Mortgage]] here contained no such personal covenant:
•the front page of [[the PA mortgage]] shows that it only secured the contemplated loan agreement (via the reference to "the Schedule").
•the Schedule only refers to the loan agreement to be executed.
•the definition of "Debt" likewise picks up an obligation that is external to [[the PA mortgage]] itself.
•the general memorandum [of provisions No.] I43913 cl 2.01 provided only that "the Debt" had to be paid; and
•on a proper construction, there was no personal covenant in [[the PA mortgage]] that could take effect as a covenant in a deed.
117In my opinion, the effect of the discharge of the PA mortgage was that Company B lost its security. That is all it lost. The debt (qua the Facilities) under the loan agreement was still owing, and continued to be recoverable as a simple debt. Clause 6.07(b) of the Memorandum of Provisions incorporated into the PA mortgage expressly provided that the discharge of mortgage does not affect the spouses' liability for the moneys owed to Company B. The moneys were owed by virtue of the loan agreement (which was ongoing), and not by virtue of the PA mortgage (which merely secured the loan).
118I find that Company B's action is a claim to enforce a loan agreement. In the circumstances, this comprises an action on a simple contract. The relevant limitation period is six years.
The limitation period – loan repayable on demand?
119Given that the limitation period is six years, it is crucial to determine when exactly the cause of action accrued. This will identify the date from which any time limit commenced to run.
120The wife argues that the usual principle is that a loan repayable on demand creates an immediate debt for which no actual demand is necessary as a precursor to bringing an action. In support of this proposition, she quotes Edelman J in Netglory Pty Ltd v Caratti [2013] WASC 364 ("Netglory") – where his Honour discussed principles relating to limitation periods for contractual debts. Edelman J said at [275] (footnotes omitted):
The following principles apply in relation to limitation periods for contractual debts.
1.If a contract provides for a time for repayment or a condition which will trigger an obligation to repay, then the cause of action will accrue upon the expiration of the time period or the happening of the condition.
2.If no time for repayment is provided and no condition specified which will trigger the obligation to repay, then the loan will generally be repayable on demand. In such a case, unless the parties have expressly or impliedly agreed that no enforceable debt will arise without an actual demand, the agreement will generally be construed to create an immediate debt and time will run from the date of the loan.
3.If a contract provides that the principal sum becomes repayable upon default in the payment of any instalment then the time period for the whole debt will run from the first default in relation to any instalment, including instalments of interest.
121The wife argues that the second principle applies, and that if the debt (qua the Facilities) accrued on 14 November 2003 (being the date of the loan agreement) then the six year period would have expired in late 2009. In my opinion, there is a very significant degree of commercial unreality in this interpretation. For example, if regular repayments were made for six years and subsequently there occurred a default, then, subject to any arguments as to acknowledgment, Company B would be out of time to pursue any default after November 2009.
122Company B points to the fact that the Facilities had a term of 30 years. The spouses had an obligation to repay the total advance (plus interest) on a monthly basis over the 30 year period. The fact that the spouses had the ability to repay the debt early did not, by that fact alone, make the Facilities repayable on demand. It argues, similarly, that it could accelerate the loans following a breach but it chose not to exercise that power until 2014. The loan agreement – particularly the General Terms and Conditions – lends itself to a construction that there was a discretion as to what action may be taken in the event of a breach.
123After the discharge of the PA mortgage in 2005, monthly repayments continued to be made under the loan agreement. However, by May 2014, six instalments due under the home loan facility had not been paid. These were not the first occasions on which the spouses had defaulted in the payment of instalments. The Potter affidavit at CMP-7 and CMP-8 shows that defaults also occurred on 2 February 2004, 2 April 2004, 3 March 2005, 5 February 2007 and 5 March 2007. There was also a credit facility default on 2 February 2005. On these occasions, no default notices appear to have been issued. The instalments were eventually paid, together with relevant default expenses. These defaults took place some 10 years before Company B issued the Notices of Default (which were served on the spouses on 15 and 16 May 2014).
124The General Terms and Conditions forming part of the loan agreement provide that the spouses were to pay all payments and credit fees and charges as specified in the loan agreement. The conditions also specified a default rate on the basis that, if any amount due is not paid by the due date, the spouses must pay default interest on the relevant amount until it has been paid. Default fees were payable.
125The default provisions set out that –
… if any one or more of the following occur, we may decide an event of default has occurred. You must ensure no event of default occurs.
126A number of default events are specified. These include a failure to comply with any term or condition of the loan agreement.
127The rights of Company B on default were:
At any time after default occurs, we can take any of the following action after giving any notice required by law.
(a)demand and require immediate payment of any money due under the loan agreement.
(b)call up the loan and require payment of the entire balance owing under the loan agreement.
(c)exercise any right, power or privilege conferred by any law, the loan agreement or any security.
We can take action even if we do not do so promptly after the default occurs.
We can exercise these rights with or without taking possession of any mortgaged property. If the lender holds more than one security, it can enforce any of the securities first or all of them at the same time.
128It was not seriously disputed that consumer credit legislation does not apply in the present circumstances. Although Company B did not admit the inapplicability of the legislation, it made no attempt to argue to the contrary. Given the absence of argument in relation to the subject, and the positions adopted by the parties at trial, I am satisfied that I should proceed on the basis that the legislation does not apply.
129The wife argues that the General Terms and Conditions show that, on the occurrence of any default, the loan became repayable on demand. She says that, at the very latest, the Facilities became repayable on demand after the removal of the PA mortgage in March 2005. This would lead to the time limit expiring in March 2011.
130I do not understand this argument. The spouses themselves arranged the refinancing, and requested that the PA mortgage be discharged to enable it to occur. In those circumstances, the removal of the PA mortgage cannot sensibly amount to a default event sufficient to trigger immediate repayment.
131The discharge of the PA mortgage did not relieve the spouses of the obligation to service the Facilities, just as it did not somehow demonstrate that the spouses were in default of their obligation to service the Facilities. Indeed, they did continue to service the Facilities, and hence there was no immediate default. The discharge of the PA mortgage, mistaken or otherwise, did not change that position.
132There is some conflicting evidence about when Company B became aware of the mistake. It appears that some of its employees may have known about it shortly after the refinancing settlement: see, for example, annexure CMP-22 to the Potter affidavit, at pp 296-300. It also appears, however, that the mistake did not come to the attention of Company B management until the spouses failed to pay a monthly instalment due on 7 August 2013. It was only at or about that time that Company B management understood that the PA mortgage had been discharged without the payment of the moneys it secured.
133I am far from satisfied that the loan agreement documented a loan repayable "on demand". In my opinion, the first of the principles set out by Edelman J in Netglory at [275] more accurately describes the intention of the parties to the agreement (and commercial reality) than the other two principles – although I accept that the manner in which his Honour has stated the three principles leads to the possibility (or, perhaps, probability) of significant overlap among the three. [This was pointed out by Le Miere J in the 2014 SC judgment]
134This is not a simple loan of moneys where nothing at all is said as to repayment. The authorities are clear that in such a situation, the borrower must be prepared to repay the moneys instantly if required. The cause of action accrues upon the making of the loan.
135This is clearly a more complex arrangement: a commercial transaction, in the ordinary course of business, between a lending body and its customer. The date by which repayment of the Facilities was to be made was specified. There is also explicit provision for monthly repayments on a set date. The General Terms and Conditions set out that action can be taken in the event of a default.
136I am satisfied that the loan agreement provides a time for repayment and specifies conditions which will trigger an obligation to repay. One of those conditions is that the principal sum becomes repayable upon default in the payment of an instalment. I am also satisfied, however, that the parties to the loan agreement expressly (or, alternatively, impliedly) agreed that no obligation to immediately repay the principal sum would arise without a demand having first been made for the payment of the principal sum. This is a necessary concomitant of the parties commercial arrangement, which was adhered to when the first defaults occurred. Company B was content for the arrears to be brought up to date and the spouses were content to bring the arrears up to date. None of the parties wished to trigger the more draconian consequences of a comparatively minor default. As is usual and uncontroversial in commercial arrangements between lending bodies and their customers, a business-like interpretation of stringent default provisions often involves flexibility on the part of the lending body. Because not every default will trigger a demand for the immediate repayment of the principal sum (and, incidentally, the commencement of the relevant limitation period), sound commercial and business practice dictates that a clear demand for the repayment of the principal sum should be made.
137That is not to say that the obligation to pay the principal sum does not arise upon the occurrence of a relevant default. It is for this reason, it seems to me, that Edelman J referred to an "enforceable" debt in the second of the three principles in Netglory at [275]. Put another way, principles #1 and #2 qualify and inform the operation of each other and of principle #3.
195Although Mr Ryan has emphasised the intention of both the spouses and Company B at the time of the refinancing and the refinancing settlement, and the "plan" to give effect to that intention, such matters were never in dispute. The mistake supervened to thwart that intention, and to defeat the plan. As I have found, the husband, Vernon and Company A were aware from the outset (or very shortly after the refinancing settlement) that the mistake had been made. For example, Bank A wrote to the directors of Company A on 15 March 2005 referring to its original refinance offer (dated 24 February 2005) and confirming the distribution of funds purportedly in accordance with that offer. Due to the mistake, the "available balance" is shown to be a figure in excess of $816,000: see the Potter affidavit at p 283. I note that Bank A's letter concludes as follows:
We trust this is in accordance with your wishes. If you have any queries about your loan or need information about our wide range of services, please [contact [Bank A]].
196Clearly, the arrangements reflected in the letter were not in accordance with the spouses' wishes, or the wishes of Company A (and Company B, for that matter). Instead of contacting Bank A immediately, as the husband (at least) should have done, the husband, Vernon and Company A proceeded to divest themselves of the windfall funds eagerly and with alacrity: see, for example, exhibit W2. In my opinion, if the conduct of Company B leading up to, at the time of and immediately after the mistake is to be examined to ascertain whether some form of representation (by conduct or otherwise) occurred, then so also should the conduct of the other protagonists be examined. Such examination is relevant for the purpose of considering whether a representation of any sort was made and, similarly, whether any reliance was ever placed on the representation if it was indeed made.
197Mr Ryan conceded (saying "there's no two ways about it") that the letter dated 15 March 2005 from Bank A to the directors of Company A was an indication (a "graphic communication") to them that the mistake had occurred, and that they had received "a lot more money than they ever should have, had the mortgage discharge been accompanied by a discharge of the home loan for (the spouses)". As Mr Ryan said, the husband and Vernon "obviously thought they had won the lottery".
198I am satisfied, on the whole of the evidence, that no representation (in any relevant sense) was made by Company B – and certainly no representation that would be sufficient to give rise to estoppel of any nature and however described. I am also satisfied that, even if some form of representation could be considered to have been made, the spouses (namely, the wife through her agent, the husband, and the husband himself), Vernon and Company A placed no reliance upon it. Put simply, a mistake was made and they did not hesitate to take advantage of it.
199In my opinion, the fact that certain personnel within Company B may have known of the mistake shortly after it occurred does not assist the wife's case. The reality is that the mistake involved failures and oversights by a number of people, both within and outside Company B. As is so often the case with mistakes and accidents, the mistake in this case cannot be identified as pertaining to a single event or action or inaction. Instead, it comprised a series or sequence of unfortunate and unintended events, actions or failures to act. It began shortly before the refinancing settlement and continued until relatively shortly after the refinancing settlement, and its ramifications were felt long after that. It could have been avoided or remedied at a number of points in time (including, of course, when the husband and Vernon, as the directors of Company A, learned of it), but it was not. Perhaps this was as a result of negligence on the part of Company B and/or its servants and agents; perhaps it was not. I am unable to make a clear finding of negligence. On the other hand, that it was not remedied after it was discovered by the husband and Vernon, as the directors of Company A, is deplorable.
200Mr Giles submitted, and I accept, that the wife's evidence to the effect that she did not read any of the significant documents prior to, at the time of and shortly after the mistake (and relied entirely or almost entirely on what the husband told her) is fatal to her estoppel defence. This is so because there was no relevant representation:
[Company B] never spoke to the wife. It actually never acted in a way which gave rise to a perception or understanding on her part. She knew no more and no less than what the husband told her.
201Mr Giles made no attempt to suggest that Company B was not primarily and predominantly responsible for the mistake. He argued, however, that others had a role to play as well. For example, the wife placed her trust in the husband and took no independent steps to ensure that those parts of the refinancing settlement and its aftermath that most concerned her (namely, the payout of the debts secured by the PA mortgage) were properly carried out. This was an error on her part.
202The husband's behaviour upon learning of the mistake and his (and Vernon's and Company A's) "lottery win" as a consequence of it has already been discussed. The husband could have acted in an honest and responsible manner (and notified Company B of the mistake), but he did not. There can be no doubt, and I find, that he well knew –
(a)that the mistake had been made;
(b)that the liabilities formerly secured by the PA mortgage had not been paid out (as he and every other relevant party had intended);
(c)that those liabilities remained owing to Company B; and
(d)that he, Vernon and Company A had received a very significant amount of money which they had not anticipated and to which they were not entitled.
203Mr Giles submitted, and I accept, that the outcome of the case cannot turn on an assessment of "who has taken less care for their respective positions or who has made the worst mistake". I accept, as well, that "the question is one of obligations and rights at law… and in equity".
204The thrust of Mr Giles' submission was that Company B made no representation (whether by conduct or otherwise) to either the husband or the wife, there was no reliance and there was "the opposite of detriment" – particularly from the point of view of the husband, Vernon and Company A. I accept Mr Giles' argument. To the extent that the wife sought to rely upon the DIF as amounting to some form of representation, I reject her argument in that regard. The form contained no relevant representation or, perhaps, implied promise – but even if it did, I am satisfied that she paid no attention to it.
205I would add that the DIF cannot fairly be interpreted as giving rise to representations on Company B's part that it would obtain funds from Bank A to pay out the liabilities secured by the PA mortgage – but even if it could be so interpreted, and once again, the wife paid no attention to it. Similarly, I do not accept Mr Ryan's submission that the DIF should properly be interpreted as Company B's accepting a mandate or a "job" to manage the refinancing settlement on behalf of the spouses, or otherwise in the manner suggested by Mr Ryan.
206In relation to the various criteria or considerations appearing in WOS at [45] and [46], Mr Giles submitted, and I accept that –
(a)the wife did not consciously assume that the debtor/creditor relationship would be terminated;
(b)Company B did not induce such an assumption by the DIF or its conduct;
(c)any belief that the wife may have had and acted upon was not induced by Company B;
(d)the evidence does not support a conclusion that Company B knew that the wife was making any form of assumption, and that it intended she should do so;
(e)the evidence does not support a conclusion that the wife suffered detriment in any real sense (and, certainly, the husband experienced "the opposite of detriment") because, among other things, her liability in relation to the Bank A refinancing funds has been removed;
(f)the onus was on the spouses to establish relevant detriment, and they have not done so;
(g)after the mistake, Company B continued its commercial relationship with the spouses on the basis that it was still owed the moneys formerly secured by the PA mortgage;
(h)that the moneys formerly secured by the PA mortgage had been repaid was not "the agreed or assumed state of facts" between the wife and Company B – indeed, the opposite is the case;
(i)Company B knew nothing of the wife's state of mind and whether she was relying or minded to rely on some form of assumption to the effect that the moneys formerly secured by the PA mortgage would be repaid, although the fact that those moneys were not repaid was certainly the result of a mistake for which Company B was primarily or predominantly responsible; and
(j)any assumption to the effect that the moneys formerly secured by the PA mortgage would be or had been repaid as a result of the refinancing settlement was neither intended to, nor did in fact, "govern the parties' legal relations", because Company B continued to treat the moneys as owing and unpaid.
207In all the circumstances, I am satisfied that the evidence falls well short of demonstrating detriment (to the spouses or either of them) if Company B is permitted to depart from the purported assumption.
208I am also satisfied that the evidence falls well short of demonstrating that there was any relevant representation on Company B's part, much less a representation that was or could fairly have been relied upon by the spouses or either of them.
Conclusion
209I am satisfied that the spouses' cases are without merit. I am also satisfied that Company B is entitled to the relief it seeks. I propose to make orders accordingly, although I shall hear counsel regarding the precise form of those orders.
210In relation to costs, I propose to make the following orders:
Costs
Company B have leave to apply for costs in the following manner:
1.In the event that [Company B] proposes to seek costs from the husband and/or the wife, [Company B] must – within 28 days – file and serve a minute of orders sought as to costs, together with any written submissions it wishes to make ("costs application").
2.If –
(a)a costs application is made; and
(b)the husband wishes to oppose the costs application,
the husband must – within 28 days of service on him of the costs application – file and serve a minute of orders sought as to costs together with any written submissions that he wishes to make ("husband's costs response").
3.If –
(a)a costs application is made; and
(b)the wife wishes to oppose the costs application,
the wife must – within 28 days of service on her of the costs application – file and serve a minute of orders sought as to costs together with any written submissions that she wishes to make ("wife's costs response").
4.The written submissions forming part of –
(a)the costs application;
(b)the husband's costs response; and
(c)the wife's costs response,
must not exceed a maximum of 10 pages in each case.
5.In the event that any party seeks to make oral submissions with respect to costs, that party must – within 14 days of service on [Company B] of the last of the husband's costs response or the wife's costs response to be filed and served pursuant to paras 2 or 3 above – write to the Court requesting that the matter be listed for a special appointment and setting out:
(a)the available dates for the parties to appear; and
(b)the likely length of the special appointment.
6.Prior to writing to the Court to request the said special appointment, all parties must confer with respect to availability and the likely length of the said special appointment.
7.In the event that –
(a)none of the parties seeks to make oral submissions with respect to costs; or
(b)neither the husband nor the wife elects to file a costs response; or
(c)neither the husband nor the wife comply strictly with paras 2 and 3 above,
any costs application be thereafter determined on the papers.
I certify that the preceding [210] paragraphs are a true copy of the reasons for
judgment delivered by this Honourable Court
Associate
3 November 2017
______________________________________
1 J W Carter, LexisNexis, Carter on Contract (at 3 November 2017) [07-000].
2 J W Carter, LexisNexis, Carter on Contract (at 3 November 2017) [07-010].
3 LexisNexis, Halsbury's Laws of Australia, 190 Estoppel, 'Relationship between equitable estoppel and other estoppels' [190-310] (as at 3 November 2017).
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