JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
TITLE OF COURT : THE FULL COURT (WA)
CITATION : RAYNER & ANOR -v- AUSTRALIA AND NEW ZEALAND BANKING GROUP LTD [2001] WASCA 396
CORAM : MURRAY J
HEARD : 16 OCTOBER 2001
DELIVERED : 7 DECEMBER 2001
FILE NO/S : FUL 203 of 1999
BETWEEN : DAVID KENNETH RAYNER
SUSAN JOY RAYNER
Appellants
AND
AUSTRALIA AND NEW ZEALAND BANKING GROUP LTD
Respondent
Catchwords:
Banks and banking - Mortgage security - Whether unconscionable conduct in obtaining - Whether mortgage should be set aside
Legislation:
Nil
(Page 2)
Result:
Appeal dismissed
Category: B
Representation:
Counsel:
Appellants : In person
Respondent : Mr D J Martino
Solicitors:
Appellants : In person
Respondent : Clark Whyte
Case(s) referred to in judgment(s):
Nil
Case(s) also cited:
AttorneyGeneral (NT) v Kearney & Northern Land Council (1985) 158 CLR 500
Compagnie Financiere et Commerciale du Pacifique v Peruvian Guano Company (1882) 11 QBD 55
Davies v Eli Lilly [1987] 1 All ER 801
Davis v Sagar Pty Ltd, unreported; SCt of WA; Library No 980443; 10 August 1998
Ledger v Natwest Australia Bank Ltd, unreported; SCt of WA; Library No 980061; 16 February 1998
Lyons v Kern Konstructions (Townsville) Pty Ltd (1983) 47 ALR 114
Melbourne Home of Ford Pty Ltd v Trade Practices Commission & Bannerman (1979) 36 FLR 450
Mulley & Marney v Manifold (1959) 103 CLR 341
WA Pines Pty Ltd v Bannerman (1980) 41 FLR 169
(Page 3)
1 MURRAY J: I agree with Anderson J, for the reasons given by him, that the appeal should be dismissed. I have nothing to add.
2 ANDERSON J: This is an appeal from a decision of Master Bredmeyer given on 30 November 1999 ordering that summary judgment be entered in favour of the respondent against Mr and Mrs Rayner.
3 The respondent is the owner of the assets of Town & Country Bank Ltd, which include two mortgages granted to Town & Country Bank Ltd by Mr and Mrs Rayner, registered on 6 May 1992. These mortgages are E875113 (the "first mortgage") and E875114 (the "second mortgage"). The principal sum secured by the first mortgage was $96,210 and the principal sum secured by the second mortgage was $34,000. Pursuant to the terms of the mortgages, Mr and Mrs Rayner agreed to pay these principal sums on demand and Town & Country agreed not to make demand for as long as Mr and Mrs Rayner paid monthly instalments of principal and interest.
4 On 15 August 1999, the respondent started these proceedings by writ. The statement of claim indorsed on the writ pleaded that Mr and Mrs Rayner were in default of their obligation under the mortgages to maintain the monthly payment of instalments; that the respondent had served notices of demand upon them for payment of the principal sum and interest; and that those demands were not met. It was further pleaded that the respondent's rights under the mortgage included a right to realise on the security of the mortgages by entering on and taking possession of the property the subject of the mortgages, namely, the home of Mr and Mrs Rayner at 61 Hawford Way, Willetton. It was pleaded that Mr and Mrs Rayner refused to deliver up possession of the property to the respondent.
5 To this statement of claim a form of defence was filed, the true nature of which is not easy to divine. It was drawn by Mr Rayner and filed on behalf of both Mr and Mrs Rayner on 4 October 1999. It made the following allegations:
"The Defendants say that:
1. The plaintiff obtained the Mortgage Security by way of conduct that breached s 51AB of the Trade Practises [sic] Act 1974 Commonwealth (The Act).
2. That the Defendants would not have granted mortgage security over the property in the absence of the Plaintiffs
(Page 4)
exerting extreme coercion and placing the Defendants under enormous duress.
3. That the Plaintiff has through the entirety of events leading to the execution of the Mortgage securities and throughout the term to date engaged in conduct in breach of s 51AB and s 52 of Trade Practises Act 1974 Commonwealth.
4. That and as a consequence of the Plaintiffs gross negligence and breach of express and implied terms relating to its promotion and conduct in respect to Cash power Visa Accounts represented by the Plaintiff as Mortgage linked and Mortgage Secured Accounts the Defendants have suffered loss and damage in the amount of $145,000.
5. That throughout the term of the Mortgage security the Plaintiff has:
i Breached the provisions of the Consumer Credit Code ('The Code').
ii Breached express and implied terms of the Loan Contract.
iii Negligently failed to serve a valid notice of Default or any valid notice as required pursuant to 'The Code'.
iv Acted in breach of s 52 of the Trade Practises Act 1994 [sic] Commonwealth.
v Acted in Breach of the Fair Trading Act of Western Australia.
6. That the Plaintiffs Action were designed to cause the Defendants loss and distress, sounding in Damages pursuant to;
(Page 5)
6 Upon being served with this defence, the respondent not surprisingly applied for summary judgment. The application, which was filed on 6 October 1999, was heard by Master Bredmeyer on 24 November 1999. Mr Rayner appeared for himself and was also permitted to represent Mrs Rayner. In dismissing the application, Master Bredmeyer held that there was no merit in the matters of defence sought to be advanced by Mr and Mrs Rayner.
7 In the notice of appeal, it is pleaded by Mr Rayner that the Master made "grievous error", was guilty of "bias" and of "prejudice" and denied natural justice to Mr and Mrs Rayner. There is no substance in these complaints and this appeal should be dismissed for the following reasons.
8 There is a history of borrowing on the security of the property in question going back to 1981. On 27 October 1981, a mortgage was granted to the WA Building Society. This was mortgage C241611. In about May 1983, the WA Building Society (and its assets including the mortgage) was taken over by the Town & Country Building Society which was renamed the Town & Country WA Building Society. Some time between 1990 and 1992, it became Town & Country Bank. On 12 April 1985, Mr and Mrs Rayner granted another mortgage to the respondent. In about May 1986, during the subsistence of both mortgages, Mr Rayner needed to borrow some more money for his martial arts school. He approached Town & Country which agreed to provide him with a cash advance within an account styled "Corporate Cash Power Visa Account" ("visa account"). Mr Rayner was told by an officer of Town & Country that advances made from this account would be secured by its existing mortgage, C241611. He made withdrawals and deposits from and to this account until November 1987. According to Mr Rayner's affidavit:
"6. On 13/01/1988 I requested that Mortgage C241611 and all monies secured thereunder be discharged and duly paid all monies outstanding to the Plaintiff [sic Town & Country]".
9 It would appear that this transaction was part of a wider refinancing transaction, because on 13 January 1988 mortgage C241611 to Town & Country and the mortgage to the respondent were discharged, and on the
(Page 6)
same date two new mortgages were registered in favour of Australian Guarantee Corporation Ltd and the respondent.
10 Thus, so far as mortgage security was concerned, Town & Country dropped out of the picture. However, it appears that in stating the amount to discharge its mortgage C241611, Town & Country did not include the debit balance in the visa account. That account therefore was not paid out on the refinancing. By 20 January 1988, the debit balance in that account was $17,585.63. On that date, Town & Country wrote to Mr Rayner (actually to "Fighting Arts International Group Administration" which presumably was the name of his martial arts business) demanding payment of this balance. Mr Rayner deposed that he was shocked to receive this demand. I gather he thought the account had been cleared when the Town & Country mortgage C241611 was discharged. He spoke to officers of Town & Country and was told that that mortgage actually did not extend to secure the advances made in the visa account, and that this was the reason why the debit balance in that account was not included in the sum given to Mr Rayner as the sum required to pay out that mortgage.
11 Mr Rayner took the position that he was a victim of misrepresentation on the part of Town & Country as to the scope of its security and that he was the victim of negligence on its part in failing to perfect its securities. He argued that mortgage C241611 should have secured the visa account advance of $17,585.63 and that advance should have been (and should be regarded as having been) extinguished on discharge of the mortgage.
12 It is possible to have some sympathy for Mr Rayner's reaction to the turn of events. If he really did believe that the refinancing arrangements had cleared away all of his old indebtedness, he would certainly have been unpleasantly surprised to receive the demand from Town & Country. However, in point of law, this does not provide a defence to the demand. The hard fact of the matter is that the uncleared debit balance in the visa account represented money borrowed by Mr Rayner which he had not repaid and which he remained liable to repay. Even if the securities in relation to the visa account were botched, whatever remedy Mr Rayner may have had against Town & Country (and I cannot myself think of any), the remedy did not extend to expunging the debt. Mr Rayner had borrowed the money, it was not repaid, and Town & Country was entitled to recover it.
(Page 7)
13 It is this issue which appears to be at the centre of resistance to the respondent's attempts to enforce the two mortgages pleaded in the statement of claim. Mr Rayner wishes to put forward a case which essentially is that, as he was wronged by Town & Country in 1988 and subsequently, the two mortgages in question should be cancelled. There is no ground on which the court can make such orders.
14 If Town & Country did tell (misrepresent to) Mr Rayner that the debit balance in the visa account would be secured by mortgage C241611 and if (as appears to be the case) this was wrong, no loss, damage or detriment known to the law was occasioned to Mr Rayner thereby. Instead of the debit balance in the account being secured, it was unsecured. That is no detriment to the debtor in the eyes of the law. If, in the refinancing arrangements, Town & Country notified a figure as the amount owing to it which was less than the total amount in fact owing to it, and thereby misled or deceived Mr Rayner, that did not, of itself, relieve Mr Rayner of the obligation to repay the amount actually owed. There is nothing in the Trade Practices Act 1974, the Consumer Credit Code nor the Fair Trading Act 1987 (WA), nor, I might add, in the Australian Securities and Investments Commission Act 1989 (Cth), to the effect that if a bank understates the amount owing to it, that, of itself, binds the bank to accept the lesser amount in full satisfaction of the debt. No case of accord and satisfaction, binding estoppel, settled account, or anything of the kind, is put forward or indicated by the facts deposed to. As I have said, the circumstances deposed to by Mr Rayner provide no defence known to the law to a claim for repayment of the full amount which he had borrowed. Moreover, any cause of action by way of cross-claim that might conceivably arise from the matters complained of by Mr Rayner would be well and truly time-barred.
15 Although it is not clear from the material before the court that the visa account debt is now the subject of one or other of the current mortgages, I think we must take this to be so. I gather that Mr Rayner wishes to allege that he and Mrs Rayner were induced to include the visa account debt in one or other of the current mortgages by unconscionable conduct on the part of officers of Town & Country who dealt with Mr Rayner with respect to recovery of the unsecured visa account debt. He describes that conduct as "harassment", "coercion", "duress", "making all sorts of threats" and the like. However, Mr Rayner's affidavit falls well short of disclosing a prima facie case of unconscionable conduct. Even if all of the facts deposed to by Mr Rayner are accepted as true, all that appears is that Town & Country was seeking payment from Mr Rayner of the visa account debt as, of course, it was entitled to do. A
(Page 8)
creditor who merely uses forceful measures to persuade his debtor either to pay what is due or provide security for the debt is not guilty of unconscionable conduct in the legal sense. Much more would have to be shown.
16 Mr Rayner alleges misleading or deceptive conduct comprising, for the most part, alleged deficiencies in the statements of account rendered from time to time with respect to the current mortgages. This complaint is also made of arrears notices which were received from time to time, one of which is annexed to his affidavit. As an example of the complaints he makes, he says that the total of the arrears stated in one notice is "misleading and deceptive in that, it applies at the time of printing not receipt". The gravamen of this complaint would appear to be that by the time Mr Rayner received the notice, the amount stated to be due would have increased by the daily increment and so was wrong. There are other complaints of the same general character. He also complains that the mortgages were granted upon a "false valuation" of the mortgaged property. As I understand this allegation, it is to the effect that the valuer placed an inflated value on the property so as to enable Town & Country to justify the advance which it made against the security of the property in accordance with its "lending ratio criteria". Once again, even if these allegations are true, they provide no legal basis for a claim that the mortgages granted by Mr and Mrs Rayner are not enforceable.
17 In my opinion, Mr Rayner has failed to demonstrate that Master Bredmeyer was wrong to conclude that no arguable defence has been raised. The appeal must be dismissed and the order for summary judgment and consequential orders must stand.
Motion for discovery
18 Mr Rayner sought an order for what he described in his submissions as "full discovery". The documents, discovery of which is sought, are said to be documents withheld from files which had been made available for inspection by Mr Rayner. Mr Rayner suspects that the bank extracted all documents which might show it in a bad light with respect to the making of these advances. One of the main themes in the affidavit filed in support of the application for discovery is that there was no basis upon which the bank, applying proper lending criteria, would have made these loans to Mr and Mrs Rayner having regard to their financial circumstances. There is also an allegation that the bank is involved in frauds and cover-ups, that affidavits sworn on behalf of the bank are false,
(Page 9)
and that if full discovery is given, documents will come to light which will prove all of this.
19 In my opinion, it is not necessary for this Court to undertake an inquiry into the merits of this application. As an order has been made that final judgment be entered against Mr and Mrs Rayner, the action is at an end and the court has no authority to entertain an application for discovery.
20 EINFELD AJ: I agree with the reasons for judgment of Justice Anderson and the orders he proposes.