Adrian Cecil Bryant v Australia & New Zealand Banking Group Ltd & ors [1995] FCA 755

CATCHWORDS

ESTOPPEL - Former Adjudication - res judicata - "Anshun estoppel" - former proceedings in Supreme Court in which Bank issued summons for possession of farms mortgaged to it by its customer, and customer cross claimed for order discharging the mortgages - cross claim based on alleged misrepresentation by Bank that interest rate to be charged would be at a level lower than that which was in fact charged - by consent in Supreme Court proceedings judgment for possession for Bank and "verdict" for Bank on customer's cross claim - agreement by which customer acknowledged amount of his indebtedness to Bank as part of settlement - customer legally represented throughout Supreme Court proceedings - present proceedings brought by customer alleging a different misrepresentation by Bank that interest rate to be charged would be at a level lower than that which was in fact charged - letter containing alleged misrepresentation in evidence in Supreme Court proceedings - Bank's motion for summary dismissal in relation to relief sought based on alleged misrepresentation as to interest rate to be charged - effect of "verdict" on earlier cross claim - definition of "cause of action" for purpose of principle of res judicata - unreasonableness of customer's failure to raise cause of action based on the further misrepresentation as to interest rates to be charged.

Blair v Curran (1939) 62 CLR 464.

Henderson v Henderson (1843) 3 Hare 100 (67 ER 313).

Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589.

Bryant v Commonwealth Bank of Australia (1995) 130 ALR 129 (FCA/FC).

Chamberlain v Deputy Commissioner of Taxation (1988) 164 CLR 502.

Chamberlain v Commissioner of Taxation (1991) 28 FCR 21 (FC).

Jackson v Goldsmith (1950) 81 CLR 446.

Hoysted v Federal Commissioner of Taxation (1925) 37 CLR 290.

Kinch v Walcott [1929] AC 482.

Serrao v Noel (1885) 15 QBD 549.

Kingston Commodities Pty Ltd v Sydney Futures Exchange Ltd unreported NSW/Clarke J, 15 March 1985.

Trawl Industries of Australia Pty Ltd (in Liq) v Effem Foods Pty Ltd (1992) 36 FCR 406 (Gummow J).

Currabubula Holdings Pty Ltd v MITA Copiers Australia Pty Ltd, unreported, FCA/Burchett J, 5 May 1995.

Wongala Holdings Pty Ltd v Mulinglebar Pty Ltd (1994) NSW ConvR 55 720 (CA).

Bunbury Foods Pty Ltd v National Bank of Australasia Ltd (1983-4) 153 CLR 491.

Bond v Hongkong Bank of Australia Ltd (1991) 25 NSWLR 286 (CA).

ADRIAN CECIL BRYANT v AUSTRALIA & NEW ZEALAND BANKING GROUP LIMITED & ORS (No 3)

No NG 610 of 1994

Lindgren J

Sydney

20 September 1995

IN THE FEDERAL COURT OF AUSTRALIA)

NEW SOUTH WALES DISTRICT REGISTRY) No NG 610 of 1994

GENERAL DIVISION )

BETWEEN:

ADRIAN CECIL BRYANT

Applicant

AND:

AUSTRALIA & NEW ZEALAND BANKING GROUP LIMITED (ACN 005 357 522)

First Respondent

RAYMOND LUMLEY

Second Respondent

JOHN B HAJJE

Third Respondent

CORAM: Lindgren J

PLACE: Sydney

DATE: 20 September 1995

MINUTE OF ORDERS

THE COURT ORDERS THAT:

1. The proceedings be dismissed in relation to the claims for relief referred to in paras 3, 4, 5, 6, 7 and 8 of the second further amended application.

2. Paragraphs 1 to 31 inclusive of the second further amended statement of claim be struck out.

3. The applicant have leave to file, within 28 days from the date of the making of this order, a third further amended
application and a third further amended statement of claim in conformity with the Reasons for Judgment of Lindgren J dated 20 September 1995.

4. The applicant pay the first respondent's costs of the first respondent's motion brought by notice of motion filed on 6 October 1994 not covered by order made on 30 March 1995.

5. The proceeding stand over to Monday 23 October 1995 at 9.30 am for further directions.

NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA)

NEW SOUTH WALES DISTRICT REGISTRY) No NG 610 of 1994

GENERAL DIVISION )

BETWEEN:

ADRIAN CECIL BRYANT

Applicant

AND:

AUSTRALIA & NEW ZEALAND BANKING GROUP LIMITED (ACN 005 357 522)

Respondent

RAYMOND LUMLEY

Second Respondent

JOHN B HAJJE

Third Respondent

CORAM: Lindgren J

PLACE: Sydney

DATE: 20 September 1995

REASONS FOR JUDGMENT (No 3)

NATURE OF PROCEEDINGS:

There is before the Court a motion brought by the first respondent ("the Bank") by notice of motion filed on 6 October 1994 for summary dismissal of the proceedings. I dealt with the Bank's motion as it related to the proceedings as then constituted in Reasons for Judgment dated 14 October 1994. At that time the motion related to the application and statement of claim filed on 12 September 1994. Relevantly, I ordered that the proceedings be dismissed in relation to the relief claimed in certain paragraphs of the application, that the
statement of claim be struck out, that the applicant ("Mr Bryant") have leave to file an amended statement of claim and an amended application in relation to his monetary claims, and that further consideration of the motion in so far as it related to the remaining paragraphs in the application be reserved.

Pursuant to leave, a second further amended application ("the current application") and a second further amended statement of claim ("the current statement of claim") have been filed. The parties have treated the Bank's motion for summary dismissal as referring to the proceedings as constituted by the current application and the current statement of claim.

BACKGROUND:

At all material times Mr Bryant was registered as proprietor of five rural properties in the Glen Innes area, known as "Blair Hill Station", "Furracabad Road", "Belmont", "Jervis" and "Manning Run". On 14 May 1990 he mortgaged them to the Bank by six mortgages in the Bank's standard form (two in respect of Blair Hill Station and one in respect of each of the other properties) as security for a borrowing from it. The borrowing was of a total amount of $2,100,000 and its purpose was to enable a re-financing of an existing indebtedness of Mr Bryant to the Commonwealth Bank of Australia which was secured by first mortgages over the five properties. Two letters of approval from the Bank to Mr Bryant dated 11 May 1990 set out details of the facilities by which the finance of $2,100,000 was to be provided. They referred to an overdraft of $150,000 at an interest rate of 19.5% per annum subject to variation from time to time, a fully drawn advance of $100,000 also at an interest rate of 19.5% per annum subject to variation from time to time, and a fixed rate fully drawn advance of $1,850,000 at a fixed interest rate of 17.4% per annum.

Mr Bryant defaulted. By notice dated 6 May 1993 the Bank demanded payment of $2,743,994.34 (said in the notice to be the amount due as at 4 May 1993) plus interest of $748.53 per day from 6 May 1993 [sic]. On 7 June 1993, the Bank filed a summons for possession in the Common Law Division of the Supreme Court of New South Wales No 12086 of 1993 ("the Supreme Court proceedings"). In paras 1, 2 and 3 respectively of the summons it sought judgment for possession, leave to issue a writ of possession and costs. It was supported by an affidavit which, inter alia, annexed the mortgages.

The mortgages, in the Bank's standard form, included, in clause 1, a covenant by Mr Bryant that he would "on demand in writing pay to the Bank free from all deductions the amount or balance which [should] for the time being be owing or unpaid" by him to the Bank. They provided in clause 11 that if Mr Bryant should default in paying the principal, interest and other money secured or any part thereof "upon demand as aforesaid" the Bank was to be entitled to enter upon and take possession of the mortgaged properties. Clause 15 provided that if there was default for one day after service of such a demand, the Bank was to be entitled to sell the mortgaged properties without any further lapse of time or notice except for a notice under s 57 of the Real Property Act 1900 (NSW) ("RPA notice" and "RPA" respectively) where the default was a "monetary default".

Also annexed to the affidavit were a copy of the Bank's demand dated 6 May 1993 and an Australia Post form of acknowledgment of receipt, on which appeared in manuscript "A C Bryant 7/5/93" and what purported to be a signature of an Australia Post delivery officer. The affidavit deposed to service of the demand on Mr Bryant on 7 May 1993, to his not having complied with the demand and to his indebtedness to the Bank for $2,757,292 as at 26 May 1993 together with interest which, according to the affidavit, was accruing at the rate of $754 per day.

Mr Bryant appeared in the Supreme Court proceedings through solicitors. Indeed, he was legally represented throughout those proceedings. Although the proceedings were commenced by summons and the Bank did not file a statement of claim, Mr Bryant filed a "defence" dated 24 August 1993. The defence was as follows:

"1. In answer to Paragraphs 1, 2 and 3 of the
Summons for Possession filed 7th June, 1993 and supporting Affidavit the Defendant denies the Plaintiff is entitled to possession of the properties more particularly referred to in the schedule thereto or that he is otherwise indebted to the Plaintiff for the reasons hereinafter appearing.

2. The Defendant admits that his signature appears on the relevant Mortgage documents but denies that he is liable or indebted to the Plaintiff either as Mortgagor or Debtor for the reasons hereinafter appearing.

3. The Defendant in answer to the whole of the Plaintiff's claim says as follows:-

(a) He was induced to enter into the Mortgage on the basis of promises made to him by an Officer of the Plaintiff Bank thereby exercising undue influence over the Defendant.

(b) The Plaintiff exercised unfair and unconscionable conduct and the actions of the Plaintiff were in breach of both the Contracts Review Act, 1980 and the Fair Trading Act, 1987.

4. Further, there was no independent legal advice given to the Defendant.

5. The Defendant was not given any legal advice whatsoever.

Particulars

Particulars are as contained in the Affidavits of the Defendant sworn and filed herewith or already in evidence."

Mr Bryant also filed two cross claims! One, dated 24 August 1993, accompanied the defence and sought "an order discharging each of the Mortgages"

" ... upon the grounds set forth herein and the particulars as contained in the Affidavit of the Defendant sworn and filed herewith or already in evidence and upon the further ground that it is just to do so."

There were no other "grounds set forth" in that cross claim. The other cross claim was dated 30 August 1993. It also sought an order discharging the mortgages

"in reliance on the particulars as contained in the Affidavit of the Defendant/Cross-Claimant filed and served herewith and upon the further grounds that it is just to do so."

(I will refer to "cross claim" in the singular as there is no material difference between the two).

Filed with Mr Bryant's defence and cross claim was an affidavit by him sworn 24 August 1993. This alleged that Mr Bryant had been led by Barry Gibson, the Rural Manager of the Inverell Branch of the Bank, to believe that the interest rate which he was to be charged by the Bank was to be less than 14.78% per annum. This was by reason of his having given to Mr Bryant a Bank memo dated 1 December 1989 setting out the interest rates being charged by the Bank on fixed rate commercial bill facilities of certain amounts and periods. The affidavit alleged that he had not had legal or other advice when he had signed the mortgages, that he had signed them at the Bank's premises, that he had not been advised to take them to a solicitor, and that they had not been read out or explained to him. He deposed that he was otherwise not told before signing the mortgages the interest rate which would be applicable. Finally, his affidavit stated that although he was a qualified veterinary surgeon, he was primarily a farmer, that his time was spent mainly in the day to day work of running his farm and that he had no practical knowledge or experience in matters of finance.

Thus, the only substantive matter of complaint raised in Mr Bryant's affidavit sworn 24 August 1993 and, by reference to it, by the defence and cross claims, was that he had been led to believe that the rate of interest would be less than those which he had in fact been charged. His case was that his lack of experience in matters of finance and the circumstances surrounding his execution of the mortgages were such that the Bank's insistence on the higher contractual interest rate was unconscionable and should lead to his being granted relief from the mortgages under the Contracts Review Act 1980 (NSW) and the Fair Trading Act 1987 (NSW).

Further affidavits were filed on behalf of both parties. Those filed for the Bank included evidence from Mr Gibson that initially it had been agreed that part of the funds would be advanced to Mr Bryant by way of a fixed rate commercial bill for $850,000 and a fixed rate fully drawn advance of $1,000,000. Indeed, he said that this was the plan as at 28 February 1990 and there was annexed to his affidavit a letter from the Bank to Mr Bryant of that date referring to an $850,000 fixed rate commercial bill at an interest rate of 16.97% per annum and a $1,000,000 fixed rate fully drawn advance at an interest rate of 16.8% per annum. (It will be noted that these rates exceeded the rate of 14.78% per annum which Mr Bryant was alleging had been mentioned to him by Mr Gibson in late 1989, but were less than the rates of 19.5% and 17.4% mentioned in the two letters dated 11 May 1990 referred to earlier). Mr Gibson said in his affidavit that when it was discovered that Mr Bryant had insufficient funds to pay interest in advance as was required in the case of a fixed rate commercial bill, the arrangement was altered to replace that facility with a fixed rate fully drawn advance which provided for payment of interest in arrears. Annexed to his affidavit was a diary note dated 2 May 1990 to the effect that he called on Mr Bryant at Blair Hill Station on that date when the alteration was agreed upon because, according to the diary note, Mr Bryant was "not in an immediate position to meet interest in advance without exceeding lines approved". In his affidavit in reply, Mr Bryant merely said that he did "not admit" the diary note.

Mr Bryant admitted receiving the two letters of approval from the Bank dated 11 May 1990 and there is no suggestion that he complained at the time to the Bank about the interest rates stated in them.

There was evidence filed by the Bank that the parties had entered into a deed dated 21 February 1992 in which Mr Bryant acknowledged being indebted to the Bank in a sum of $2,342,389.95 on which interest was accruing at the rate of $849.04 per day, that he was unable to service that financial accommodation and was in default, and that the parties had reached an agreement on a course to be followed in lieu of the Bank's taking action under the mortgages. That course of action was set out in the operative provisions of the deed. One provision was that the Bank undertook to lend to Mr Bryant forthwith $18,000 to be paid by him to New York Guaranty Trust Corp NV for and on account of loan application fees, valuation fees and the like associated with an application by Mr Bryant to that Corporation for finance of $2,500,000 to enable him to pay out his debt to the Bank. Another provision in the deed was that if within three months from the date of the deed Mr Bryant had not obtained the funds and/or his debt to the Bank of $2,342,389.95 had not been fully discharged, he would forthwith list the properties for sale by auction. There were other provisions relating to the auction and an acknowledgment by Mr Bryant that if contracts had not been exchanged within 18 days from the date of the auction, the Bank was to be "entitled without further notice to exercise all of its rights, powers and remedies pursuant to its securities ... and at law".

There was affidavit evidence filed on behalf of the Bank that the sum of $18,000 was advanced by the Bank to Mr Bryant but he did not succeed in arranging the finance, yet, in breach of the deed, did not list the properties for auction. Mr Bryant did not, by his own affidavit evidence, put these matters in issue. However, while acknowledging that he had signed the deed dated 21 February 1992, Mr Bryant alleged that it had not been explained to him and that he had not understood the consequences of signing it. He did not depose to any particular matters in the deed which were inconsistent with his understanding of what he was signing or but for which he would not have signed.

There was further affidavit evidence filed in the Supreme Court proceedings generally directed to the issue of the existence of absence of an understanding by Mr Bryant of the original transaction of 14 May 1990 and of the deed dated 21 February 1992. Much of it dealt with such questions as Mr Bryant's experience in financial matters and the extent of his understanding of the transactions. But at the end of the day the only substantive complaint raised remained that relating to the interest rate. He deposed:

" ... had I been aware of the interest rate of 21.5% [I assume that the reference was to the rate which was payable when payment was not made punctually] there would have been no advantage in changing from a Commonwealth Bank Mortgage." (affidavit of Mr Bryant sworn 6 October 1993, para B 4(e))

The Bank moved for summary judgment for possession. In November 1993 the parties negotiated a settlement. This was effectuated by the making of orders by consent on 18 November 1993. By consent the Bank was granted judgment for possession with effect on 18 November 1994, the Court ordered that the Bank have leave to issue a writ of possession and it ordered that there be "verdict for the Plaintiff on the Defendant's Cross Claim".

These orders were made on 18 November 1993 pursuant to a document entitled "short minutes of order" signed by the legal representative for the parties. This document also included paragraph 5 which expressed an agreement between Mr Bryant and the Bank. By this agreement the Bank undertook not, during the period from 18 November 1993 to 7 April 1994, to cause a writ of possession to be issued provided Mr Bryant performed the agreement on his part. The agreement provided for a "programme" for the sale by him of the mortgaged properties and for the enforcement of the judgment by the Bank only if Mr Bryant breached the agreement or if the sum of $2,901,352.74 remained unpaid on 7 April 1994. Paragraph 5 also included sub paras (c), (q) and (r) which were as follows:

"(c)The Defendant acknowledges that as at the 18th November 1993 the principal sum and accrued interest due and owing to the Plaintiff by the Defendant is Two million nine hundred and one thousand three hundred and fifty two dollars and seventy four cents ($2,901,352.74) hereinafter referred to as 'the Principal Sum'.

(d)- (p) .......................................

(q)In consideration of the Plaintiff entering into this agreement with the Defendant, the Defendant does hereby release the Plaintiff from all claims for compensation, damages or other remedy or claim whatsoever and howsoever arising out of the Plaintiff's and Defendant's Banker/Customer relationship, the Mortgages, its security documents, agreements for loans, advances and facilities, the subject of these proceedings

(r)The Defendant hereby acknowledges that he has received the advice of his legal representatives in relation to the Short Minutes of Order No. 1,2,3 and 4 and the provisions of the agreement contained in Paragraph 5 hereof and prior to the making of this agreement he has given his consent to the making of Orders 1,2,3 and 4 and has chosen to enter into this agreement."

Unfortunately, there was further disputation between the parties. I gave an account of this in my earlier Reasons for Judgment dated 14 October 1994. On 27 April 1994 judgment for possession and the orders for leave to issue a writ of possession and for the "verdict" for the Bank on Mr Bryant's cross claim were entered. A writ of possession was issued on 4 May 1994. Between 20 May 1994 and 2 June 1994 the Sheriff delivered possession to the Bank of all mortgaged properties except Blair Hill Station where Mr Bryant resided.

Negotiations led to the making of a yet further agreement between Mr Bryant and the Bank contained in a document entitled "Acknowledgment and Undertaking" dated 6 June 1994. By this agreement Mr Bryant agreed to deliver up possession on 9 June 1994 and the Bank granted him a licence of access for the purpose of removing livestock and personal belongings. Mr Bryant undertook not to prejudice the value and/or sale of any of the mortgaged properties and agreed that the Bank was to be at liberty to remove and sell any personal belongings, chattels and livestock remaining on any of the mortgaged properties after 4 July 1994.

Possession was ultimately obtained from Mr Bryant, apparently
with the assistance of the New South Wales Police, on 9 August 1994. The Bank appointed a manager of the mortgaged properties. The Bank subsequently sold livestock and credited the proceeds off Mr Bryant's indebtedness to it.

As noted earlier, Mr Bryant filed his application and statement of claim in these proceedings on 12 September 1994. On 6 October 1994, the Bank filed its notice of motion seeking summary dismissal. The five properties were listed for auction on 25 and 26 October 1994. Interlocutory proceedings were directed, inter alia, to enabling the due offering of the properties by the Bank at the auction without obstruction by Mr Bryant. The properties have been sold by the Bank.

THE HEARING OF THE BANK'S MOTION FOR SUMMARY DISMISSAL ON 11 OCTOBER 1994 AND SUBSEQUENT EVENTS:

In my earlier Reasons for Judgment I noted that there had been no claim for monetary relief by either the Bank or Mr Bryant in the Supreme Court proceedings and expressed the view that the judgment in those proceedings did not activate the principle of res judicata or "cause of action estoppel" in relation to the money claims of the parties. In relation to the Bank's submission that an "Anshun estoppel" (see Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 ("Anshun")) operated, I expressed the view that it was not incumbent on Mr Bryant to bring a cross claim for damages in the Supreme Court proceedings, any more than that it was incumbent on the Bank to proceed against Mr Bryant in those proceedings on the personal covenant by Mr Bryant in the mortgages. In particular, I said that the fact that Mr Bryant could have advanced a monetary claim at that stage did not, without more, bring the Anshun principle into play, and that a defendant is not obliged to bring a cross claim at the earliest time when he could have done so. I remarked that at the time of the Supreme Court proceedings, the parties could not know what their final financial positions would be, that the only claim of the Bank in those proceedings was for possession, that forensic attention had been focused on that claim and on any defence to it, and that all that needed to be said on the Bank's application for summary dismissal was that it was not clear to me that it was unreasonable for Mr Bryant not to have made claims for monetary relief in the Supreme Court proceedings.

I also observed that the form of Mr Bryant's statement of claim was so defective that it inhibited me in some respects in dealing with the Bank's application for summary dismissal. Indeed, my earlier Reasons for Judgment must be understood generally in the light of the application and statement of claim in relation to which they were given. Paragraphs 1-22 of the application sought declaratory relief. Mr Bryant's prayers for monetary relief were found in paras 23 and 24 which were as follows:

"23 An order that the Respondent be punished for its actions against the Applicant and that the Respondent compensate the Applicant for loss and or damages sustained as a result of the Respondent's misleading, harassment, coercive and unconscionable actions against the Applicant.

24 Unspecified damages in respect of:

a) Loss of Business

b) Loss of professional business reputation

c) Loss of standing in the community

d) Stress and suffering

e) exemplary damages"

The relevant parts of the statement of claim were as follows:

"22 In or about the period between January to May 1990 The Respondent, negligently, unconscionably and falsely made representations to the Applicant that it would provide financial services which would enable the Applicant to make a profit with little or no risk.

23 By these representations the Respondent falsely mislead [sic] and deceived the Applicant into giving to the Respondent mortgages over the properties known as 'Manning Run', 'Jervis', Furracabad Road and 'Belmont' for the purpose of purchasing the property known as 'Blair Hill Station' in order that the Applicant would be able to increase his profitability.

24 By their terms and conditions the said mortgages are misleading, deceptive and unconscionable.

25 Acting on the advice and representations of the Respondent the Applicant conducted the business of grazing livestock on the said properties. As a result of the conduct and representations of the Respondent the Applicant failed to make sufficient profit and was unable to meet the requirements of paying interest and principal under the said mortgages to the Respondent." (emphasis supplied)

As can be seen, the pre-mortgage representations referred to in para 22 were to the effect that the Bank would provide to Mr Bryant financial services which would enable him to make a profit with little or no risk. Notwithstanding the generality of this allegation, it did not seem to be directed to the representation by Mr Gibson alleged in the Supreme Court proceedings that the interest rate to be charged would be less than 14.78% per annum.

In my Reasons for Judgment dated 14 October 1994, I concluded as follows:

"I emphasise that I will reserve consideration of the application for summary dismissal of the proceedings in so far as they relate to the heads of relief which survive my present orders, in the light of any amended statement of claim to be filed."

In the result, relevantly, I dismissed the application in so far as it included certain heads or relief (see below), ordered that the statement of claim be struck out, granted leave to Mr Bryant to file an amended statement of claim and an amended application in relation to monetary relief, directed that these be filed by 18 October 1994, made directions for the filing and serving of affidavits, reserved for further consideration the Bank's motion for summary dismissal in so far as it related to the remaining paragraphs in the application, stood over that motion and reserved costs. The paragraphs of the application in relation to which the proceedings were dismissed were as follows:

Paragraphs 4 and 5 which sought a declaration that the Bank did not have power to sell livestock or to retain the proceeds from the sale of livestock.

Paragraphs 9-14 which sought declarations that the mortgages were void.

Paragraphs 17-22 which sought declarations that the Bank did not have a power of sale under the mortgages.

Paragraph 23 in so far as it sought an order that the Bank "be punished for its actions against the applicant".

On 18 October 1994, Mr Bryant filed an amended application and an amended statement of claim.

On 10 March 1995, the Bank filed a notice of motion seeking an order that the proceedings be dismissed for want of prosecution supported by affidavit. This has not been pursued in view of the developments about to be noted.

On 14 March 1995, Mr Bryant's solicitor in the proceedings filed a notice of ceasing to act as solicitor.

On 24 March 1995, Mr Bryant's present solicitors in the proceedings filed a notice of change of solicitor. On 30 March 1995, when Mr Bryant was represented by different counsel instructed by his new solicitors, various orders were made including an order that Mr Bryant pay the Bank's costs to that date on its motion for summary dismissal brought by the notice of motion filed on 6 October 1994. Mr Bryant's counsel indicated a desire that a further amended statement of claim be filed. He conceded that Mr Bryant should not be permitted to seek relief including monetary relief based on the Bank's pre-mortgage conduct and said that the new pleading would be based on its post mortgage conduct. I directed, by consent, that within 21 days of 30 March 1995, Mr Bryant supply to the Bank a draft of such further amended statement of claim "seeking relief only in respect of post mortgage conduct by the Bank, being relief consistent with my Reasons for Judgment of 14 October 1994." On 19 April 1995 Mr Bryant filed a further amended application and a further amended statement of claim.

On 14 June 1994 I granted Mr Bryant leave to file the current (second further amended) application and the current (second further amended) statement of claim. The parties have treated the current application and the current statement of claim as being the subject of the Bank's motion for summary dismissal.

Mr Bryant's former counsel and former solicitor in these proceedings have, pursuant to leave, been joined as second and third respondents respectively. These Reasons for Judgment do not relate to the claims made against them which are for damages for tortious negligence and breach of contract.

THE CURRENT APPLICATION AND CURRENT STATEMENT OF CLAIM

By the current application, Mr Bryant seeks the following relief:

"1. Damages.

2. Exemplary damages.

3. Damages pursuant to the Trade Practices Act 1974 and/or the Fair Trading Act (NSW) 1987.

4. Such further relief pursuant to the Trade Practices Act 1974 and/or the Fair Trading Act (NSW) 1987 as the Court sees fit.

5. An order that the loan documents referred to in the Statement of Claim be rectified to contain the terms and conditions embodied in the first respondent's ('the bank's') letter of 28 February 1990.

6. A declaration that no power of sale had arisen in favour of the bank as against the applicant pursuant to the Real Property Act (NSW) 1900 by reason of the bank's failure to comply with s 57(2)(b).

7. A declaration that no, or no valid, notice pursuant to the said s 57(2)(b) had been issued by the bank prior to sale of the properties contained in Schedule 'A'.

8. A declaration that, in the circumstances, the agreement entered into by the parties dated 6 June 1994 was unjust within the meaning of the Contracts Review Act.

9. A declaration that the management of the properties by the bank's manager was negligent.

10. A declaration that the bank's action in selling the properties and the livestock was in breach of the bank's duty to the applicant.

11. A declaration that the conduct of the third and fourth respondents was negligent and/or in breach of their contract with the applicant.

12. A declaration that the applicant is entitled to an equitable set-off for his damages against any monetary claim brought by the bank.

13. A declaration that the bank holds the proceeds of sale of the properties and/or livestock on constructive or resulting trust for the applicant.

14. An account as between the applicant as mortgagor and the bank as mortgagee.

15. Costs.

16. Such further or other orders as the Court deems fit."

I turn now to the current statement of claim. Mr Bryant's first complaint arises out of the representation alleged in para 3 "that the interest rates would be limited under the loan". The "particulars" given in para 3 read as follows:

"3.1The applicant asks leave to refer to a letter dated 28 February 1990 from the bank to the applicant as though it were fully set out herein."

It will be recalled that para 5 of the current application seeks rectification of the loan documents to make them conform to the Bank's letter dated 28 February 1990.

I gave an account of the contents of the Bank's letter earlier. It will be recalled that it was annexed to an affidavit filed on behalf of the Bank in the Supreme Court proceedings. It does not say that the interest rates would be "limited". It refers to a proposal of finance of $2,100,000 for Mr Bryant, of which the sum of $1,850,000 was to be made up as follows:

"$850,000 Fixed rate commercial bill - current rate 16.97% pa.

$1,000,000 Fixed rate fully drawn advance - currently 16.8% pa."

Paragraph 4 of the current statement of claim states that the "representation was as to a future state of affairs and made in the course of trade and commerce". This makes clear that the claims for damages and such other relief as the Court sees fit under the Trade Practices Act 1974 (Cth) and the Fair Trading Act 1987 (NSW) in paras 3 and 4 of the current application are founded upon the letter of 28 February 1990. It is pleaded in para 5 that in reliance on this representation, Mr Bryant borrowed from the Bank and executed the mortgages. According to paras 7 and 8, the loan was drawn down on 11 May 1990 and by letters of that date the bank set out the terms of the loan but these were not those which had been agreed upon. This is said to have given rise to the result that the Bank's demand dated 6 May 1993 for payment of $2,743,994.34 was excessive.

The second matter of complaint in the current statement of claim is found in para 20. It is that the Bank placed the properties in the hands of a manager on 9 August 1994 and that by reason of the fact that no notice had been given to Mr Bryant or his advisers, "the appointment of the manager was not pursuant to the mortgages."

Thirdly, Mr Bryant complains that the manager appointed by the Bank was negligent in his management of the properties (para 22).

Mr Bryant's fourth complaint is found in para 24. It is that the Bank was negligent in its sale of Mr Bryant's livestock in that it sold a carefully genetically selected herd as beef cattle for slaughter and sold in a depressed market.

The fifth matter of complaint is that the Bank sold the mortgaged properties at an under value (para 26).

It is complained, sixthly, that at the time of the sale of the mortgaged properties, no power of sale had arisen under the mortgages because the Bank had not caused to be served on Mr Bryant any or any valid RPA notice, or that if one was served, it was "waived by the terms of the consent orders" in the Supreme Court proceedings on 18 November 1993 (para 28). It is pleaded that as a result, the contracts for sale were voidable at the instance of Mr Bryant (para 29). It is not pleaded that Mr Bryant ever purported to avoid them. I presume that the sale or sales of the mortgaged properties have long since been completed and that the proceeds of sale have long since been applied off Mr Bryant's indebtedness to the Bank.

Paragraphs 30 and 31 purport to "wrap up" some of the allegations made earlier. Those paragraphs are as follows:

"30 The bank's reliance at all material times on the terms of the loan as contained in the letters of 11 May 1990 constituted conduct which is unconscionable within the meaning of the Trade Practices Act 1974 and the Fair
Trading Act 1987.

PARTICULARS

30.1The applicant repeats the matters pleaded and particularised in paragraphs 3 to 9.

31 In the premisses [sic], the bank's sale of the properties was in breach of the RPA and in contumelious disregard for the rights of the applicant.

PARTICULARS

31.1The respective resources of the parties were unequal.

31.2The applicant is not well versed in the law of real property.

31.3The bank occupied the properties as mortgagee in possession and owed the applicant concomitant duties as such.

31.4Neither the bank or its legal advisers put before the Court on its motion for restraint of the applicant any evidence of compliance with s 57(2)(b) RPA nor sought to inform the Court that there had been no such compliance.

31.5The bank had, at the time of sale, not obtained or sought any money judgment.

31.6The bank sold both the properties and the livestock without regard to the special value both had to the applicant.

31.7The applicant reserves the right further to particularise this allegation after discovery."

Clearly, para 30 asserts that it was unconscionable for the Bank to rely on the two letters dated 11 May 1990 because of the letter dated 28 February 1990.

Paragraphs 32-40 of the current statement of claim plead the cases against the solicitor and counsel who formerly represented Mr Bryant in these proceedings. These are not of present relevance.

REASONING:

The Bank submits that the proceedings should be dismissed in so far as they seek the relief referred to in paras 3-7 and 8 of the current application. The Bank's motion is for summary dismissal and so it must be very clear, in the face of judicial caution, that there is no issue deserving of a hearing in relation to the relief sought in those paragraphs: Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91 (Dixon J); General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129 (Barwick CJ); Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87 at 93 (Mason, Murphy, Wilson, Deane and Dawson JJ); Webster v Lampard (1993) 177 CLR 598 at 602 (Mason CJ, Deane and Dawson JJ), 618-9 (Toohey J).

1. Paragraphs 3-7 of the current application and the pre-mortgage representation pleaded in para 3 of the current statement of claim that the interest rate under the loan would be "limited".

The Bank submits that Mr Bryant is not entitled to seek relief arising out of this alleged representation because:

(a) he conceded, and the Court directed by consent, that the fresh statement of claim must be limited to relief based upon the Bank's conduct subsequent to the giving of the mortgages, yet the complaint made is about its pre-mortgage conduct;

(b) a "cause of action estoppel" or alternatively an "Anshun" estoppel prevents the raising of the matter;

(c) para 5 (c) of the consent short minutes of orders dated 18 November 1993 in the Supreme Court proceedings included an acknowledgment by Mr Bryant of the amount of his indebtedness to the Bank; and

(d) para 5 (q) of the same document constituted a release by Mr Bryant of the Bank in respect of claims based on the alleged representation.

In response, Mr Bryant submits that the current statement of claim "does not plead a misrepresentation at all" and "is directed at the post-mortgage conduct of the Bank in purporting to alter the terms and conditions of the loan after the mortgages were given and after drawn down." Mr Bryant submits that the pleading of the representation goes to two issues: whether the Bank's demand of 6 May 1993 was in accordance with the terms of the contract as to the amount owing, and if it was not, the consequences which flow from that fact.

Subject to what I say later about paras 6 and 7 of the current application and the issue raised by Mr Bryant as to the effectiveness of the RPA notice, the foundation of the claims for the relief sought in paras 3-7 of the current application is in pre-mortgage conduct of the Bank in relation to the interest rate to be charged in the transaction and so under the mortgages. In paras 3 and 13 of the current statement of claim this is treated as a representation and in para 8 of that document as an agreement. I will refer to it as a "representation". The representation that "the interest rates would be limited under the loan" is relied on,

(a) as constituting pre-transaction misleading or deceptive conduct in trade or commerce by the Bank in contravention of the Trade Practices Act 1974 (Cth) and/or the Fair Trading Act 1987 (NSW);

(b) as constituting the parties' true contractual arrangement as to the interest rates to be charged; and

(c) as constituting the foundation for the allegation of unconscionable conduct made in para 30 of the current statement of claim.

In the Supreme Court proceedings, Mr Bryant founded both his defence and cross claim on the alleged misrepresentation by the Bank through Mr Gibson in late 1989 that the interest rate to be charged would be less than 14.78% per annum (but see later). This allegation was the basis of his denial in para 1 of his "defence" that he was indebted to the Bank as alleged and of his cross claim for an order that the mortgages be discharged.

I find it convenient to deal first with the Bank's submission noted in para (b) earlier that Mr Bryant is not entitled to pursue his claims for relief in paras 3-7 of the current application by reason of the operation of (i) res judicata strictly so called or "cause of action estoppel" as it is sometimes called, or (ii) estoppel of the kind usually associated with Henderson v Henderson (1843) 3 Hare 100 (67 ER 313) and Anshun, again recognised by the High Court in Chamberlain v Deputy Commissioner of Taxation (1988) 164 CLR 502, and held to operate by a Full Court of this Court in Chamberlain v Commissioner of Taxation (1991) 28 FCR 21 (to which I will refer as "Anshun estoppel"). Although the two are distinct, the latter has been referred to as an extension of the former (see, for example, Boles v Esanda Finance Corporation Ltd (1989) 18 NSWLR 666 (CA) at 669 (Samuels JA); Anshun at 598-9 (Gibbs CJ, Mason and Aickin JJ)), and the distinction between them may not be easy to apply in a case where there are no pleadings in the earlier proceedings or where those proceedings are disposed of by consent (both were features of the Supreme Court proceedings here).

(i) Res judicata operates where the existence of the very "cause of action" raised in later proceedings has already been determined as between the same parties in earlier proceedings for a remedy based on it, and that determination has not been set aside: if the cause of action was determined to exist it has merged in the earlier judgment and no longer affords an independent ground on which any further remedy can be granted; if the cause of action was determined not to exist, it cannot again be sued upon by the unsuccessful party or his privies: Blair v Curran (1939) 62 CLR 464 at 531-532 (Dixon J); Jackson v Goldsmith (1950) 81 CLR 446 at 466-468 (Fullagar J); Anshun at 597 (Gibbs CJ, Mason and Aickin JJ); Chamberlain v Deputy Commissioner of Taxation (1988) 164 CLR 502 at 507-508 (Deane, Toohey and Gaudron JJ).

The first necessary element of res judicata is that there be a final decision of a judicial tribunal. Mr Bryant did not submit that the order that there be a "verdict" for the Bank on his cross claim in the Supreme Court proceedings could not activate the principle of res judicata or, for that matter, the Anshun estoppel, and the parties proceeded on the footing that it could (cf Spencer Bower and Turner, The Doctrine of Res Judicata (2nd ed, 1969) at para 32, p 31). I am content to do likewise. Mr Bryant did submit, however, that because that order was made by consent and without any findings following a hearing on the merits, the doctrine cannot operate. This is clearly not the law: Hoysted v Federal Commissioner of Taxation (1925) 37 CLR 290 (PC); Kinch v Walcott [1929] AC 482; Chamberlain v Deputy Commissioner of Taxation (1988) 164 CLR 502 esp at 508 (Deane, Toohey and Gaudron JJ); (and see Spencer Bower and Turner, supra, at paras 41 and 42, pp 37-39 and cases there cited).

The second essential element of res judicata is that the "cause of action" adjudicated upon in the earlier proceeding be identical with that propounded in the later one.

The meaning of the expression "cause of action" in the present context has been the subject of judicial consideration; see, for example, Brunsden v Humphrey (1884) 14 QBD 141; Anshun at 610-613 (Brennan J); Kingston Commodities Pty Ltd v Sydney Futures Exchange Ltd, unreported, NSW/Clarke J, 15 March 1985; Gregg v Duff, unreported NSW/Loveday J, 6 October 1989; Bursill v Rudi's Enterprises Pty Ltd, unreported, NSW/Holland J, 30 December 1989; Boles v Esanda Finance Corporation Ltd (1989) 18 NSWLR 666 (NSW/CA) at 672G-673B (Samuels JA with whom Priestley and Meagher JJA agreed); Onerati v Phillips Constructions Pty Ltd (in Liq) (1989) 16 NSWLR 730 (Giles J); Trawl Industries of Australia Pty Ltd (in Liq) v Effem Foods Pty Ltd (1992) 36 FCR 406 (Gummow J) at 418-422 (affirmed at (1993) 43 FCR 510 (FC)). Different views have been expressed as to whether the expression is directed to the legal right which has been infringed or to all the facts constituting infringement. At least this is clear: it is not open to a party who has sought one remedy on a cause of action in earlier proceedings to re-litigate on the same cause of action, for the purpose of seeking a different remedy, at least if that different remedy could have been sought in the earlier proceedings: Serrao v Noel (1885) 15 QBD 549 (CA); Anshun at 612 (Brennan J); Van Amstel v Country Roads Board [1961] VR 780 (O'Bryan J); Kingston Commodities Pty Ltd v Sydney Futures Exchange Ltd, unreported, NSW/Clarke J, 15 March 1985 at 11-12.

What was the "cause of action" on the basis of which Mr Bryant sought in his cross claim orders discharging the mortgages?

The cross claim in the Supreme Court proceedings did not identify any "right" whether under the general law or statute, by reference to which the order discharging the mortgages was sought. But the reference in Mr Bryant's cross claim to it being "just" that the order be made coupled with the references in his "defence" to promises made to him by a bank officer, "undue influence", "unfair and unconscionable conduct", the Contracts Review Act 1980 (NSW) and the Fair Trading Act 1987 (NSW) make it clear that he sought the order under the general law and those two Acts on the factual basis that he had been induced to enter into the mortgages by Mr Gibson's representation that the rate of interest to be charged would be less than 14.78% per annum.

Mr Bryant's "right" which was allegedly infringed by the alleged misrepresentation by Mr Gibson might be described with varying degrees of generality. For example, it might be described most narrowly as a right not to have it misrepresented to him that the interest rate to be charged would be less than 14.78%. Not so narrowly, it might be described as a right not to have it misrepresented to him that the interest rate to be charged was less than what is proved to be. Yet more broadly, it might be described as a right not to have any misrepresentation made to him as to the effect of the proposed transaction. To date I have referred only to "misrepresentation". The right infringed might, instead, be described as a right to be free of "misleading or deceptive conduct" of the Bank directed towards him of kinds more or less narrowly defined.

In Trawl Industries of Australia Pty Ltd (in Liq) v Effem Foods Pty Ltd, supra, after referring to certain senses in which the expression "cause of action" is used in the present context, Gummow J expressed the view that "for the law of Australia it is most suitable to focus upon the substance of the two proceedings as distinct from their form": (1992) 36 FCR 406 at 418. With respect, this approach is particularly appropriate in the present case in which there were no pleadings in the Supreme Court proceedings and those proceedings were disposed of by consent.

The letter dated 28 February 1990 was put into evidence by the Bank and there is no evidence that Mr Bryant ever asserted that it formed part of any cause of action or ground of relief propounded by him as underlying his cross claim. It was, however, like Mr Gibson's alleged conduct, pre-mortgage conduct of the Bank in the nature of a representation as to the rate of interest to be charged. Moreover, the evidence on Mr Bryant's cross claim, beginning with negotiations between Mr Bryant and Mr Gibson in late 1989, would necessarily have included the letter dated 28 February 1990 as marking a stage on the way to the final structure of the facility provided by the Bank on 11 May 1990.

In my view, the substance of the cross claim is that Mr Bryant was seeking equitable relief and statutory relief from the mortgages based on his having been induced to enter into them by a misrepresentation by the Bank to the effect that the rate of interest to be charged was to be less than the rates specified in the two letters dated 11 May 1990, in circumstances in which, because of lack of understanding of legal and commercial matters that relief should be granted. Whether or not it may be appropriate to describe the "right" relied on by Mr Bryant in the cross claim in wider terms, it is at least appropriate to describe it as an infringement of Mr Bryant's right not to be induced to enter into the transaction with the Bank by a misrepresentation, or misleading or deceptive conduct on the part of the Bank, or in circumstances which made the mortgages "unjust" or in which it was unconscionable for the Bank to insist upon its legal rights under the mortgages, the essence of all of which was an understatement of the interest rate to be charged. The right relied on in the present proceedings falls within that description. The facts constituting the infringement of Mr Bryant's rights are the same in the Supreme Court proceedings and in these proceedings.

It follows from the foregoing that Mr Bryant is seeking to re-agitate in these proceedings the cause of action on which a verdict was given against him in the Supreme Court proceedings. The principle of res judicata prevents him from doing so.

In his cross claim in the Supreme Court proceedings Mr Bryant sought only an order discharging the mortgages: he did not seek rectification of them or damages under the general law or under the Trade Practices Act 1974 (Cth) or the Fair Trading Act 1987 (NSW). However, as noted earlier, res judicata cannot be circumvented by the seeking of a different remedy in the subsequent proceeding from that sought in the earlier one.

(ii) If I had not been of the view that the principle of res judicata prevented Mr Bryant from seeking the relief referred to in paras 3-7 of the current application based on the alleged understatement of the interest rate to be charged, I would have had to consider whether the Anshun estoppel prevented him from doing so.

In their joint judgment in Tanning Research Laboratories Inc v O'Brien (1990) 169 CLR 332, Brennan and Dawson JJ expressed the view (at 346) that a plaintiff who has an unadjudicated cause of action which can be enforced only in fresh proceedings, cannot be precluded from enforcing it merely because he could have done so by cross claiming on it in a forum chosen by the opposite party in proceedings in which that party has sued him. Similarly, the view has been expressed that it would be a rare case in which, on an application for summary dismissal, a positive finding could be made that a failure to bring a cross claim in earlier proceedings was unreasonable (Currabubula Holdings Pty Ltd v MITA Copiers Australia Pty Ltd, unreported, FCA/Burchett J, 5 May 1995). See too Murphy v Abi-Saab, unreported, NSW/CA, 20 July 1995 (in which issue estoppel rather than res judicata or the Anshun estoppel was sought to be invoked).

On the other hand, it is established that a failure to cross claim in earlier proceedings can activate the Anshun estoppel and that the question to be answered on the facts of any particular case is whether that failure was unreasonable: Bryant v Commonwealth Bank of Australia (1995) 130 ALR 129 (FCA/FC).

For the purpose of the Anshun estoppel it is necessary to look at the substance of the issues in the earlier and later cases rather than at their respective forms: Bryant v Commonwealth Bank of Australia, supra, at 139. The salient features of the present case of relevance for present purposes are that Mr Bryant did cross claim in the Supreme Court proceedings; that the cross claim referred to one alleged understatement by the Bank of the interest rate to be charged; that it was inherent in that cross claim that the later alleged understatement of the interest rate to be charged, on which Mr Bryant now wishes to rely, would emerge as part of the evidence on the cross claim; and that the later alleged understatement was in fact before both parties long before the giving of the verdict against Mr Bryant, by reason of the annexing of the Bank's letter dated 28 February 1990 to an affidavit filed for the Bank. In these circumstances, which I regard as "special", and giving full weight to the warning to which I have referred, I think that it is clear beyond question that it was unreasonable for Mr Bryant not to have raised the letter dated 28 February 1990 in the Supreme Court proceedings if he wished to ground a claim for relief upon it. Accordingly, if I should be wrong in the conclusion which I reached earlier on the res judicata principle, in my view the Anshun estoppel prevents Mr Bryant from seeking relief in these proceedings based on the letter dated 28 February 1990.

I proceed now to deal with matters other than the res judicata principle and the Anshun estoppel. There are further reasons why Mr Bryant should not be permitted to claim the relief referred to in paras 3-7 of the current application on the basis of any misrepresentation as to the rates of interest to be charged. Firstly, sub-para 5 (q) of the short minutes dated 18 November 1993 noted earlier, read against the background of the allegations which had been made in the Supreme Court litigation, constituted a release by Mr Bryant of the Bank from "all claims for compensation, damages or other remedy or claim whatsoever and howsoever arising out of", inter alia, the pre-mortgage conduct of the Bank sought to be raised against it in the present proceedings.

Secondly, on no less than three occasions Mr Bryant has acknowledged being indebted to the Bank in amounts of money which, I understand it to be common ground, have been calculated on the basis of the Bank's two letters dated 11 May 1990 rather than on the basis of its earlier letter dated 28 February 1990. He did so firstly in the deed dated 21 February 1992; secondly, in para 5 (c) (quoted earlier in these Reasons for Judgment) of the short minutes of order dated 18 November 1993; and thirdly, in the Acknowledgment and Undertaking dated 6 June 1994. It is true that in para 8 of the current application he seeks a declaration that the agreement contained in the Acknowledgment and Undertaking dated 6 June 1994 was "unjust" within the meaning of the Contracts Review Act, but he seeks no relief in relation to the earlier two contracts and does not seek a setting aside of any of the three of them. He had independent legal advice at least in relation to the agreement contained in para 5 of the short minutes of orders document dated 18 November 1993.

A further reason relates specifically to para 3 of the current application. The current statement of claim does not plead the suffering of any loss or damage as a consequence of the alleged misrepresentation as to the interest rate to be charged. Prima facie, this is a pleading point and leave to amend might be expected to be given. But the current statement of claim is the second further statement of claim. The failure to plead loss or damage at this stage suggests that none can be pleaded. It must be remembered that the original transaction of May 1990 was itself a re-financing. Let it be assumed that but for the representation Mr Bryant would not have borrowed from or mortgaged to the Bank. Perhaps he was already in default with the Commonwealth Bank of Australia and facing a sale by it of the properties. Perhaps Mr Bryant was merely induced by the alleged representation to substitute one bank whose financial accommodation he could not service for another. Of course, this is speculation. Be it as it may, I would not grant leave to amend in this respect for yet a further time.

Finally, it will be recalled that para 30 of the current statement of claim pleads that the Bank's reliance on the terms of the loan as contained in the letters dated 11 May 1990 is unconscionable conduct within the meaning of the Trade Practices Act 1974 (Cth) and the Fair Trading Act 1987 (NSW). Mr Bryant submits that this is post mortgage conduct. Although the making of the demand on 6 May 1993 post-dated the mortgages, it was merely an outworking of the loan transaction. Any unconscionable conduct (I do not imply that in fact there was any) existed in the making of the loan contract and the taking of the mortgages in disconformity with the letter dated 28 February 1990 - matters which I have held above may not be raised by Mr Bryant as the subject matter of complaint in these proceedings.

I have to date treated paras 6 and 7 of the current application as standing or falling with paras 3-5. The alleged misrepresentation as to the interest rate to be charged is, indeed, relevant to the validity of the RPA notice referred to in paras 6 and 7. My holding that Mr Bryant is not entitled to rely on any cause of action founded upon such a misrepresentation signifies that he cannot rely upon it for the purpose of seeking the relief mentioned in paras 6 and 7. However, there is an additional ground on which Mr Bryant relies to attack the RPA notice and, through it, the existence of the Bank's power of sale. This is, that even on the basis that the contractual arrangement between the parties was that stated in the two letters dated 11 May 1990, yet the Bank's demand dated 6 May 1993 did not allow sufficient time for Mr Bryant to meet the demand, and so there was no "default" at the time when the RPA notice was given. I deal with this point later in these Reasons.

Paragraph 8 of the current application and para 18 of the current statement of claim

Paragraph 18 pleads nothing more than that on or about 6 June 1994, Mr Bryant and the Bank entered into the Acknowledgment and Undertaking, yet by para 8 of the current application Mr Bryan seeks a declaration that this agreement was "unjust within the meaning of the Contracts Review Act." No "material facts" (cf Federal Court Rules O 11 r 2 (a)) are pleaded showing "unjustness". Moreover, cl 1 (p) of that agreement was as follows:

"1 BRYANT UNDERTAKES, COVENANTS, ACKNOWLEDGES AND AGREES:

(a) ... (o) ...

(p) That he has received independent legal advice on the contents of this Agreement and he has read same and fully understands the nature and effect of this undertaking and covenant and has freely and voluntarily entered and executed this Acknowledgment and Undertaking."

There has been no suggestion that in fact Mr Bryant did not have legal advice independent of the Bank and of its own legal representatives (I do not imply that the presence of independent legal advice is conclusive against a finding of unjustness).

In the absence of a pleading in this second further amended statement of claim of any material facts whatever in support of the declaration sought in para 8 of the current application, the proceedings should be dismissed in so far as they seek that relief. If it was intended to rely on the alleged misrepresentation as to the interest rate to be charged as showing that the Acknowledgment and Undertaking dated 6 June 1994 was unjust, what I have said earlier in that respect supports the dismissal.

Paragraph 20 of current statement of claim

Paragraph 20 pleads that by reason of the fact that no notice was given to Mr Bryant or his advisers, the placing by the Bank of the properties in the hands of a manager on or about 9 August 1994 was "not pursuant to the mortgages". There is no pleading of any material facts showing that the giving of notice was necessary if an appointment of a manager was to be pursuant to the mortgages. But more importantly, the paragraph is bad in that what it alleges does not constitute, or form part of, any cause of action or any ground or part of any ground of any prayer for relief. The allegation does not form part of Mr Bryant's claim that the Bank is vicariously liable for negligent management by the manager appointed by it, which is a different matter. Paragraph 20 should be struck out.

Paragraph 26 of the current statement of claim

Paragraph 26 pleads that "the properties were sold for an undervalue" in consequence of which Mr Bryant has suffered loss and damage. It gives as "particulars" that at the relevant times, the Bank was in possession of valuations exceeding the sale prices. The allegation seems to be that the Bank sold the properties for less than their true "value" and that their true value was that stated in the valuations. In the absence of a pleading of the duty owed by the Bank, I must assume that Mr Bryant asserts that a mortgagee is under a duty to the mortgagor when exercising its power of sale to sell the mortgaged property for its true "value". In Australia, a mortgagee is not under such an absolute duty to the mortgagor: for a recent listing of the authorities see Tyler, Young and Croft, Fisher & Lightwood's Law of Mortgage (Butterworths, 1995) at para [20.18].

I therefore accept the Bank's submission that para 26 does not reveal a cause of action known to the law, and should be struck out. But it is not the law that a mortgagee exercising its power of sale owes no duty to the mortgagor, although the duty may be only a duty to act in good faith and not to sacrifice the mortgagor's interest. It may be that there are facts which could give rise to a pleading of a cause of action in relation to the Bank's sale of the mortgaged properties. I would allow a re-pleading in this respect.

Paragraphs 27 to 29 of the current statement of claim

By these paragraphs Mr Bryant pleads that when the Bank sold the mortgaged properties at the end of 1994, no power of sale had arisen under the mortgages. Paragraph 27 contains these "particulars" of this allegation:

"PARTICULARS

27.1At no material time prior to the sale of the properties did the Bank cause to be served on the applicant any or any valid notice purporting to be pursuant to s 57 (2) (b) of the Real Property Act 1900 ('an RPA notice').

27.2As the applicant is not now in possession of any such notice or purported notice, further particulars will be provided after discovery."

Paragraph 27.2 is mysterious as a particular of the allegation that no power of sale had arisen. It may be intended to suggest that the only reason why Mr Bryant thinks that an RPA notice was not served is that he is not now in possession of one and that discovery may reveal that a notice was served after all.

There has been filed in these proceedings an affidavit of Terrence Lester Robinson, the solicitor for the Bank, sworn 27 April 1995 annexing an RPA notice bearing date 14 May 1993 and Australia Post evidence of service of it upon Mr Bryant, including a signature which appears to be that of Mr Bryant. It has not been suggested that Mr Bryant did not receive the RPA notice.

Mr Bryant's written submission is that it "may be necessary ... to amend para 27 to allege that no valid power of sale had or has arisen in conformity with the requirements of the Real Property Act 1900 (NSW)". According to the submission, it will be contended that the Bank's demand dated 6 May 1993 under the mortgage (a) was excessive in amount and (b) did not allow a reasonable time for payment (in relation to the latter, Mr Bryant refers to Bunbury Foods Pty Ltd v National Bank of Australasia Ltd (1983-4) 153 CLR 491 at 502-3 (Mason, Murphy, Wilson, Brennan and Dawson JJ)) with the result that there was no default by 14 May 1993 when the RPA notice was given.

I dealt with (a) earlier. In relation to (b) and the question of the existence of the power of sale generally, there are several answers. First, the Bank's demand dated 6 May 1993 was that payment be made "immediately": it did not otherwise limit a time for payment upon expiry of which default would be said to exist.

Secondly, as noted earlier, the form of mortgage provided in cl 15 that one day was the period fixed as the period of time for which default must continue after the service of a demand before the power of sale arose. In the present case, Mr Bryant received the demand on 7 May 1993 and the RPA notice on 14 May 1993 - seven days later.

Thirdly, Bunbury Foods Pty Ltd v National Bank of Australasia Ltd, supra, relied on by Mr Bryant, is authority only for the proposition that under a contract to pay "on demand" the demand must allow only such time as is reasonably necessary for implementing whatever reasonable mechanics of payment may need to be employed to pay the debt, but no more: see Bond v Hongkong Bank of Australia Ltd (1991) 25 NSWLR 286 (CA) at 294-5 (Gleeson CJ with whom Mahoney JA agreed). Mr Bryant does not suggest that the period of seven days was unreasonably short for that limited purpose. It is difficult to see how such a period could be unreasonably short for that purpose which assumes that the debtor has the money available. Notwithstanding the nature of the Bank's motion as one for summary dismissal, it is not enough for Mr Bryant to say that since a question of reasonableness is involved, the issue is not one appropriate to be dealt with by way of summary disposal - an argument which, it may be noted, could apparently be put no matter how small the sum of money or how long the period intervening between the making of the demand and the service of the RPA notice.

Fourthly, by the Acknowledgment and Undertaking dated 6 June 1994, Mr Bryant agreed that the Bank should be entitled to do all things necessary to enable the properties to be prepared for sale and not to do anything which might interfere with or prejudice the Bank's ability to sell. I am of the view that by reason of this and his subsequent standing by and not challenging the existence of the power of sale while the Bank sold the properties Mr Bryant acquiesced in the Bank's exercise of its power of sale, or alternatively, is estopped and precluded from raising it at this time: cf Wongala Holdings Pty Ltd v Mulinglebar Pty Ltd (1994) NSW ConvR 55 720.

In my opinion, in this state of affairs, no triable issue has been raised as to whether the Bank had become seized of a power of sale by late 1994.

Paragraph 28 of the current statement of claim pleads in the alternative, that if an RPA notice had been served "it was waived by the terms of the consent orders" and no new RPA notice has been issued since. The consent orders made on 18 November 1993 have been referred to earlier. No waiver can be found in the fact that the Bank agreed at that time to Mr Bryant's having the first opportunity of selling. If there was a "waiver", it was by Mr Bryant in his agreeing on 6 June 1994 that in appropriate circumstances the Bank was to be at liberty to sell. He cannot now be heard to say that the Bank lacked power to do so for lack of a valid RPA notice. Paragraphs 27-29 of the current statement of claim should be struck out.

Paragraph 31 of the current statement of claim

Paragraph 31 pleads that,

"In the premisses [sic], the bank's sale of the properties was in breach of the RPA and in contumelious disregard for the rights of the applicant."

The only way in which it is pleaded "in the premises" that the Bank's sale was in breach of the RPA is that the Bank sold without having first served on Mr Bryant an RPA notice. I have already concluded above that Mr Bryant has not raised a triable issue in this respect.

The language "in contumelious disregard for the rights of the applicant" do not refer to a cause of action known to the law. Paragraph 31 contains seven paragraphs of "particulars". If these were particulars of the pleading of "breach of the RPA" and "contumelious disregard", they are adequately disposed of by my conclusions above in relation to those two matters. To some extent, the "particulars" repeat allegations found earlier in the current statement of claim. An example is sub-para 31.6 which asserts that "the bank sold both the properties and the livestock without regard to the special value both had to the applicant."

At the risk of an over-simplification, the "particulars" seem to be directed to the proposition that there was a disparity between the Bank and Mr Bryant in terms of resources and knowledge of the law. I have not been able to find any allegation in the particulars which would suggest an independent cause of action known to the law. Paragraph 31 should be struck out.

CONCLUSION:

The proceedings should be dismissed in relation to the claims for relief referred to in paras 3, 4, 5, 6, 7, and 8 of the current application because, to that extent, no reasonable cause of action is disclosed and the proceedings are frivolous and vexatious: FCR O 20, r 2. That dismissal will leave the proceedings on foot in so far as the current application seek the following heads of relief against the Bank:

"1 Damages.

2 Exemplary damages.

3 ... 4 ... 5 ... 6 ... 7 ...

8 ...

9 A declaration that the management of the properties by the bank's manager was negligent.

10 A declaration that the bank's action in selling the properties and the livestock was in breach of the bank's duty to the applicant.

11 ..............................................

12 A declaration that the applicant is entitled to an equitable set-off for his damages against any monetary claim brought by the bank.

13 A declaration that the bank holds the proceeds of sale of the properties and/or livestock on constructive or resulting trust for the applicant.

14 An account as between the applicant as mortgagor and the bank as mortgagee.

15 Costs.

16 Such further or other orders as the Court deems fit."

Some of these heads of relief are unnecessary and some could be better expressed. The substance of what survives will be a claim for damages arising out of the alleged liability of the Bank to Mr Bryant arising out of the management of the properties, the sale of the properties and the sale of the livestock.

So much of the current statement of claim must be struck out that what remains will need to be re-cast. The only satisfactory course is to order those paragraphs of the statement of claim which are directed against the Bank to be struck out in toto and to grant Mr Bryant leave to re-plead within a limited time consistently with the foregoing Reasons for Judgment. The paragraphs to which I have just referred are paras 1 to 31. There will be an order that Mr Bryant pay any of the Bank's costs of its motion brought by notice of motion filed on 6 October 1994 not covered by my order made on 30 March 1995.

I certify that this and the preceding 47 pages are a true copy of the Reasons for Judgment of the Honourable Justice Lindgren.

Associate:

Dated: 20 September 1995

Heard: 5 May, 13 June 1995

Last

submission

received: 14 June 1995

Place: Sydney

Decision: 20 September 1995

Appearances: Mr M B Duncan of counsel instructed by Burt & Allen appeared for the applicant.

Mr R E Montgomery of counsel instructed by Everingham Solomons & Co appeared for the first respondent.

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