Westpac Banking Corporation v Palaniappan
[2014] WASC 475
•16 DECEMBER 2014
WESTPAC BANKING CORPORATION -v- PALANIAPPAN [2014] WASC 475
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2014] WASC 475 | |
| Case No: | CIV:1307/2014 | 6 NOVEMBER 2014 | |
| Coram: | MASTER SANDERSON | 16/12/14 | |
| 7 | Judgment Part: | 1 of 1 | |
| Result: | Extension of time granted Judgment entered for plaintiff | ||
| B | |||
| PDF Version |
| Parties: | WESTPAC BANKING CORPORATION KASI PALANIAPPAN |
Catchwords: | Practice and procedure Application for extension of time to bring summary judgment application No explanation for delay Strength of plaintiff's case Turns on own facts |
Legislation: | Australian Securities and Investments Commission Act 2001 (Cth) Competition and Consumer Act 2010 (Cth) Corporations Act 2001 (Cth) Rules of the Supreme Court 1971 (WA), O 14 r 2 |
Case References: | Oswal v Commonwealth Bank of Australia [2013] WASCA 58 Westpac Banking Corporation v Murray Riverside Pty Ltd [2013] WASC 433 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CIVIL
- Plaintiff
AND
KASI PALANIAPPAN
Defendant
Catchwords:
Practice and procedure - Application for extension of time to bring summary judgment application - No explanation for delay - Strength of plaintiff's case - Turns on own facts
Legislation:
Australian Securities and Investments Commission Act 2001 (Cth)
Competition and Consumer Act 2010 (Cth)
Corporations Act 2001 (Cth)
Rules of the Supreme Court 1971 (WA), O 14 r 2
Result:
Extension of time granted
Judgment entered for plaintiff
Category: B
Representation:
Counsel:
Plaintiff : Mr S K Dharmananda SC & Mr A J Papamatheos
Defendant : Mr S M Davies SC & Mr J M Healy
Solicitors:
Plaintiff : Lavan Legal
Defendant : Cullen Babington Macleod
Case(s) referred to in judgment(s):
Oswal v Commonwealth Bank of Australia [2013] WASCA 58
Westpac Banking Corporation v Murray Riverside Pty Ltd [2013] WASC 433
1 MASTER SANDERSON: This is the plaintiff's application for summary judgment. It is supported by three affidavits filed on behalf of the plaintiff. Two affidavits were sworn by Terry Neil Lovelock, the first on 20 June 2014 and the second on 17 September 2014. The plaintiff also relied on an affidavit of Daniel Paul Butler sworn 30 June 2014. The summary of facts which follows is taken from the statement of claim and these three affidavits.
2 Between 2003 and 2011 St George Bank provided financial accommodation to a company known as Murray Riverside Pty Ltd. Pursuant to a guarantee the defendant guaranteed Murray Riverside's obligations owed at any time and under any agreement with St George Bank. Murray Riverside had loans with St George Bank pursuant to a facility agreement.
3 The plaintiff became the successor at law to St George Bank on 1 March 2010. It is the plaintiff's position that all rights and entitlements of St George Bank including in relation to the guarantee became the rights and entitlements of the plaintiff without the need for any transfer, conveyance or assignment. This was a point of departure between the parties and I will have more to say about this issue later in these reasons.
4 Murray Riverside's obligations under the facility agreement were secured by a first mortgage over certain properties (described as the Estate Properties) and a second mortgage over the Estate Properties. On 28 February 2012 notices of demand were issued to Murray Riverside and the defendant by the plaintiff. Further letters of demand were issued to the defendant on or around 3 April 2012 and 30 May 2012.
5 Murray Riverside and the defendant failed to comply with the notices of demand by their due date or at all. On 3 July 2012 the plaintiff appointed receivers to Murray Riverside. On or around 23 October 2013 the plaintiff commenced Supreme Court proceedings against Murray Riverside in respect of the Estate Properties. At issue in those proceedings was the question of whether caveats lodged by Murray Riverside ought be removed. The matter was heard by Beech J and his Honour ordered removal of the caveats: see Westpac Banking Corporation v Murray Riverside Pty Ltd [2013] WASC 433. In essence his Honour determined there was no serious question to be tried.
6 On or around 12 December 2013 the receivers sold the Estate Properties in partial reduction of the loans. The defendant was given notice of the sale. On 23 January 2014 the plaintiff sent a further notice of demand to the defendant in relation to the shortfall between the sale price of the Estate Properties and the amount guaranteed. As at 17 September 2014 an amount of $16,269,000 remained outstanding.
7 The plaintiff has complied with the requirements of O 14 r 2 of the Rules of the Supreme Court 1971 (WA). The statement of claim has been verified and an officer of the plaintiff has sworn to his belief there is no defence to the claim. The evidentiary burden then shifts to the defendant. However prior to determining whether or not leave to defend ought be granted there is a preliminary question. The application is brought well beyond the 21 day time limit specified in O 14. The appearance in this matter was entered on 14 March 2014. The application for summary judgment was not brought until 20 June 2014. The preliminary question then is whether an extension of time to bring the application ought be granted. The defendant strenuously opposed the granting of any extension.
8 It is not possible to find in the three affidavits filed in support of this application any real explanation for the delay. Perhaps the closest the plaintiff comes to providing an explanation is in par 4 of the affidavit of Mr Butler. It is in the following terms:
I have had a number of conversations with the defendant's solicitors in relation to the Application over the past 3 months. At no time in the course of those discussions have the defendant's solicitors identified any prejudice the defendant would be said to suffer by reason of the grant of leave in respect of this application [4].
9 With respect that is no explanation. Although there is a large amount of money involved in this case at least from the plaintiff's point of view it is not a complex matter. The plaintiff relies on the documentation. It is not the case where evidence from witnesses has to be collected and collated leading to delay. It is difficult to see how when the statement of claim was drawn, the plaintiff's solicitors did not have in their possession all of the information they needed to bring a summary judgment application.
10 In the end counsel relied upon the strength of the plaintiff's case to justify leave being granted. He submitted the defendant's position was entirely without merit and allowing the matter to proceed through to trial would be pointless. He submitted this fact and this alone was sufficient to justify the grant of an extension of time.
11 It is convenient at this point to consider the merits of the defendant's defence. It has two aspects. First, it says the plaintiff has not properly pleaded a claim against the defendant. This argument relies on what the defendant alleges is a deficiency in the statement of claim.
12 By par 2 of the statement of claim the plaintiff pleads Murray Riverside entered into a written loan agreement 'with St George Bank - a division of the plaintiff (hereafter, also the plaintiff) as lender'. The same plea is made with respect to the guarantee. It is the defendant's position he never entered into any arrangement with the plaintiff. He entered into an arrangement with St George Bank. It was said the plea was deficient and therefore the claim could not be made out.
13 In my view there is no substance in that argument. It may be there is a technical deficiency in the statement of claim and it could have been pleaded in a clearer fashion. But someone of the defendant's sophistication knows precisely the case that is being put against him. The present plaintiff is the successor in title to St George Bank. It is entitled to all the rights enjoyed by St George Bank. No purpose would be served in having a summary judgment application go off on the basis of any technical flaw in the pleading.
14 The second argument has to do with claims the defendant maintains he has against the plaintiff. These fall into two categories. First, what might be called derivative claims. The defendant maintains the receivers did not act in conformity with their duties in disposing of Murray Riverside's assets. This argument faces considerable difficulties given the fact Beech J found in the caveat proceedings there was no serious question to be tried. But for the moment it can be accepted the defendant has a case to put against the plaintiff.
15 The second aspect of the defendant's claims might broadly be characterised under the rubric unconscionable conduct. The defendant says the plaintiff has acted in the provision of financial services in such a way the defendant has a right of action either under the Competition and Consumer Act 2010 (Cth), the Corporations Act 2001 (Cth) or the Australian Securities and Investments Commission Act 2001 (Cth) (the ASIC Act). For present purposes I need not detail with precision these claims. Suffice it to say it can be assumed the defendant does have such a right of action.
16 The defendant has filed an amended defence counterclaim and set-off. These rights of action are quite properly pleaded as the counterclaim and set-off. The plaintiff says irrespective of whether the defendant's counterclaim and set-off has any merit it cannot be pursued unless and until the amount owing under the guarantee is paid. In making this submission the plaintiff is relying on the guarantee itself. Clause 9 of the guarantee is in the following terms:
As long as any of the guaranteed money remains unpaid, you may not, without our consent:
(a) reduce your liability under this guarantee and indemnity by claiming that you or the customer or any other person has a right of set-off or counterclaim against us.
17 What this clause does is effectively postpones the rights of a party who claims to have a set-off. Such clauses have been the subject of a number of decisions. The leading decision is that of Oswal v Commonwealth Bank of Australia [2013] WASCA 58. Pullin JA noted the starting point was the terms of the contractual arrangement between the parties. In determining just what that arrangement was the normal principles of contractual interpretation apply. But if the consequence of the term was to postpone the rights of a party to agitate an alleged set-off the clause would be effective. His Honour said:
The expression 'without set-off' excludes all form of set-off, no matter what jurisprudential basis might exist for the set-off. Thus it excludes statutory set-off and equitable set-off. It excludes all of the four kinds of equitable set-off that the authors of Meagher, Gummow and Lehane's Equity: Doctrines and Remedies (4th ed, 2002) have detected [54].
18 That being the state of the law it is difficult to see how any claim the defendant may have can answer the plaintiff's claim for summary judgment. Counsel for the defendant submitted that because the defendant was relying on statute - the Corporations Act, the Competition and Consumer Act and the ASIC Act - the contract could not stand in the way of these matters being raised. But that is exactly what Pullin JA said was the effect of the clause. He specifically referred to 'statutory set-off'. I see no basis upon which any claim the defendant may have can stand in the way of the plaintiff obtaining judgment.
19 That leads back to the question of whether or not leave to bring this claim ought be granted. The one factor in the plaintiff's favour is the strength of its case. Against that there is no explanation for the delay. Furthermore the defendant has incurred the costs of drawing a defence and an amended defence counterclaim and set-off giving discovery and otherwise taking steps in the proceedings he probably would not have taken had the summary judgment application been brought within time.
20 Nonetheless it seems to me the interests of justice are best served by disposing of a case such as this at the earliest opportunity. In my view there is no defence on the merits and to allow the matter to proceed through to trial would be in no one's interests. It is appropriate to make an order in favour of the defendant to cover the costs he has incurred as a consequence of the delay in bringing the application. But I am satisfied in the circumstances the extension of time ought be granted due to the strength of the plaintiff's case.
21 For these reasons there will be judgment for the plaintiff. I will hear the parties as to the precise form of orders and as to costs.
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