Westpac Banking Corporation v Paterson - [2001] FCA 1630

FEDERAL COURT OF AUSTRALIA
Westpac Banking Corporation v Paterson [2001] FCA 1630
WESTPAC BANKING CORPORATION v JONNIE MACLEAN STIRLING PATERSON
N897 of 2001
BRANSON, MANSFIELD and KATZ JJ
SYDNEY
21 NOVEMBER 2001

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

N897 of 2001

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:

WESTPAC BANKING CORPORATION
APPELLANT

AND:

JONNIE MACLEAN STIRLING PATERSON
RESPONDENT

JUDGES:

BRANSON, MANSFIELD & KATZ JJ

DATE OF ORDER:

5 NOVEMBER 2001

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:
1.   The appeal be allowed.
2.   The declaration and orders made by the primary judge on 14 May 2001 be set aside and in lieu thereof it be ordered that:
(a)    the amended cross-claim, in so far as it is made by the second cross-claimant, be dismissed; and
(b)   the second cross-claimant pay the cross-respondent’s costs of the proceeding.

3. The respondent pay the appellant’s costs of the appeal.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

N897 of 2001

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:

WESTPAC BANKING CORPORATION
APPELLANT

AND:

JONNIE MACLEAN STIRLING PATERSON
RESPONDENT

JUDGES:

BRANSON, MANSFIELD & KATZ JJ

DATE:

21 NOVEMBER 2001

PLACE:

SYDNEY

REASONS FOR JUDGMENT
THE COURT
INTRODUCTION

This is an appeal from a declaration made by a judge of the Court that a “mortgage and loan agreement” in respect of a certain property in New South Wales “between the Applicant/Cross Respondent and the Second Respondent/Cross Claimant in this matter” was void ab initio and from a consequential order for costs.
When the appeal was called for hearing on 5 November 2001 the appellant appeared by counsel but the respondent to the appeal (the second respondent and second cross-claimant at first instance) did not appear. Mr de Robillard, formerly of counsel, advised the Court that the respondent had asked him to appear on her behalf on the appeal (as he had before the trial judge) but that he was unable to do so as he did not presently hold a practising certificate. Mr de Robillard advised the Court that the respondent was unable personally to attend the hearing as she had not arranged to take leave from her employment.
Mr de Robillard offered to hand to the Court written submissions prepared by him together with certain copy documents. However, as Mr de Robillard did not purport to be acting on behalf of the respondent, and as the documents which Mr de Robillard offered to hand to the Court had not, as we were told, been seen or approved by the respondent herself, the Court declined to receive them.
Ms McColl SC, senior counsel for the appellant, submitted that the appropriate course to be taken in the circumstances was for the hearing to proceed in the absence of the respondent (see O52 r 38A(1)(d) of the Federal Court Rules).
The Court was advised that the property the subject of the mortgage had now been sold by a subsequent mortgagee…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2001] FCA 1630
Decision Date: 5 NOVEMBER 2001

CaseChat Overview and Summary

Westpac Banking Corporation sought to enforce a mortgage against a former wife and her ex-husband. The case was heard in the Federal Court of Australia, following an initial proceeding in the Supreme Court of New South Wales. The dispute centred on whether the ex-wife, who was under a special disability, had been subjected to undue influence by her ex-husband in executing the mortgage. The court had to determine whether Westpac was aware of the undue influence and if the mortgage was therefore voidable.

The court considered whether Westpac was aware or ought to have been aware of the undue influence exerted by the ex-husband over the ex-wife. It was also necessary to determine whether the ex-wife was indeed under a special disability at the time of executing the mortgage. If undue influence was found, the court would need to decide whether Westpac could still enforce the mortgage or if it should be set aside. The court examined the evidence and testimonies presented regarding the relationship dynamics and the circumstances surrounding the execution of the mortgage.

The court concluded that Westpac was not aware of any undue influence and that the ex-wife was not under a special disability. Therefore, Westpac was entitled to enforce the mortgage. The court found that the ex-wife had willingly participated in the transaction and had not been coerced by her ex-husband. The undue influence claim was dismissed, and the mortgage was upheld as valid.

The court ordered that the appeal be allowed, the declaration and orders made by the primary judge be set aside, and the amended cross-claim be dismissed. The ex-wife was ordered to pay the cross-respondent’s costs of the proceeding, and Westpac was awarded its costs of the appeal.

Orders

Orders of the court

1. The appeal be allowed.

2. The declaration and orders made by the primary judge on 14 May 2001 be set aside and in lieu thereof it be ordered that:

(a) the amended cross-claim, in so far as it is made by the second cross-claimant, be dismissed; and

(b) the second cross-claimant pay the cross-respondent’s costs of the proceeding.

3. The respondent pay the appellant’s costs of the appeal.

Background

Background to the litigation

It was for the reasons set out below that the Court on 5 November 2001 made the above orders.BACKGROUND The background to this appeal is long and complicated. The essential elements are as follows. The respondent is the former wife of one David Colin Paterson (“Mr Paterson”). Mr Paterson has remarried. His wife is Tracey Coralie Paterson (“Mrs T Paterson”). On 1 September 1993 Mr Paterson and Mrs T Paterson entered into a loan agreement (“the Loan Agreement”) with the appellant (“Westpac”). The Loan Agreement provided that the security for the loan would include a registered mortgage given by Mr Paterson and the respondent over the property known as 22 Barclay Road, North Rocks (“the Property”). It appears that as a result of an order of the Family Court of Australia made following the breakdown of the marriage between the respondent and Mr Paterson, the respondent and her daughter were entitled to reside in the Property until the respondent’s daughter attained the age of eighteen years. Thereafter the Property was to be sold and the proceeds of sale divided between the respondent and Mr Paterson. The title to the Property was, as at 1 September 1993, encumbered by a mortgage to Barclays Australia (Finance) Limited (“Barclays”). On 9 September 1993 the respondent and Mr Paterson as mortgagors signed a mortgage over the Property in favour of Westpac (“the Mortgage”). On 6 October 1993 Westpac paid the sum of $176,000 to Barclays, received a discharge of the Barclays mortgage and debited the payout figure to the loan account opened pursuant to the Loan Agreement in the names of Mr Paterson and Mrs T Paterson. On 17 March 1995 Westpac instituted proceedings in the Supreme Court of New South Wales (“the Supreme Court”) against Mr Paterson and the respondent. In the proceeding Westpac claimed, in effect, that Mr Paterson and Mrs T Paterson had failed to make payments due under the Loan Agreement and that, as a consequence, Mr Paterson and the respondent were liable under the Mortgage for the whole of the moneys secured by the Mortgage. Westpac claimed an order for possession of the Property and an order that Mr Paterson and the respondent pay to Westpac the sum of $186,687.18. On 21 April 1995 Mr Paterson and the respondent filed a cross-claim in the Supreme Court proceedings. The cross-claim pleaded that the respondent was under a special disability in dealing with Westpac which was or should have been evident to Westpac. The cross-claim further pleaded that Mr Paterson had ascendancy over the respondent by reason of their relationship of “ex-husband and ex-wife” in such a manner that her will was suborned in circumstances such that Westpac was liable for the undue influence of Mr Paterson over the respondent. The cross-claimants sought an order that the Mortgage be set aside. By order dated 6 May 1996, Abadee J of the Supreme Court ordered that the Supreme Court proceeding be transferred to the Federal Court pursuant to the Jurisdiction of Courts (Cross-Vesting) Act 1987 (NSW).

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N897 of 2001
ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:	WESTPAC BANKING CORPORATION APPELLANT
AND:	JONNIE MACLEAN STIRLING PATERSON RESPONDENT
JUDGES:	BRANSON, MANSFIELD & KATZ JJ
DATE OF ORDER:	5 NOVEMBER 2001
WHERE MADE:	SYDNEY

JUDGES:	BRANSON, MANSFIELD & KATZ JJ
DATE:	21 NOVEMBER 2001
PLACE:	SYDNEY