Burge v Commonwealth Bank of Australia

Background 6 The proceeding originally came before the primary judge in September 2016, when Ms Burge sought an injunction restraining the Bank from exercising its power of sale by auctioning, on 23 September 2016, the last of three properties she had mortgaged to it. His Honour was not persuaded to grant relief to Ms Burge on that occasion: Burge v Commonwealth Bank of Australia [2016] FCA 1159. 7 The parties have had a long history of disputation that is not necessary or appropriate to traverse in detail in these reasons. Relevantly, Ms Burge applied to the Service for it to consider her complaints about the way in which the Bank had dealt with her and her former husband in relation to its lending to them on the security of three properties, including one from which she conducted a business with her former husband. 8 In about August 2014, the Service arrived at its determination of Ms Burge's complaint. It sent that determination to Ms Burge for her to determine whether or not she wished to accept it. Under the terms of reference, to which, among others, the Bank and other financial institutions are party with the Service, the Service is not bound by any legal rules of evidence, but must decide a dispute and whether a remedy should be provided to a customer of the financial institution by determining what, in its opinion, is fair in all the circumstances. In reaching its determinations, the Service must have regard to legal principles, applicable industry codes or guidance as to practice, good industry practice and previous relevant decisions of the Service or a predecessor scheme, although in the latter cases, the Service was not bound by those. 9 His Honour held, in accordance with the decision in Mickovski v Financial Ombudsman Service Ltd (2012) 36 VR 456 at 467 [34]-[36], that when a customer applies to the Service with a complaint about the way in which a financial institution, bound by the Service's terms of reference, dealt with the customer, a tripartite contract comes into existence. Buchanan and Nettle JJA and Beach AJA held that each of the financial institution, the Service and customer promised to arbitrate the dispute in accordance with the terms of reference and be bound by the Service's decision, subject to the customer, within 30 days of receiving the determination, having the right, in accordance with cl 8.7(b) of the terms of reference, not to accept the decision as binding. 10 After Ms Burge received the determination, she returned the form of acceptance, on 12 September 2014, signed but adding the words "under duress" in brackets against her signature. On 16 September 2014, the Service responded to the transmission of her acceptance in those terms, saying that it would only accept a standard form release that had not been altered in any way, namely one that simply had been signed and dated by her. The letter said that by adding the words "under duress" next to her signature, she had failed to accept the final determination. The Service gave her the option, if she wished, to accept it by sending an unqualified signed form of acceptance of the determination (the acceptance) by no later than 19 September 2014, failing which the Service would assume that she intended to reject the final determination. The consequence of that course would be that she would be left to her rights to take proceedings to seek relief in the Courts about the conduct of the Bank of which she complained. 11 Ms Burge contended, in her principal affidavit before his Honour, as his Honour recorded at [37], that she had been "forced" to sign the acceptance "under duress" but had returned it on 19 September 2014 after covering her insertion of those words. His Honour found that she had signed and returned the acceptance in a form that appeared to be a clean copy in which she acknowledged her acceptance of the determination in full and final settlement of all matters between herself and the Bank arising out of the dispute. 12 He found that Ms Burge had no reasonable prospect of successfully prosecuting her contention that her placing of her signature on the final determination in the form in which she returned it to the Service on 19 September 2014 was not valid and binding on her. As a result of that conduct, the Bank gave effect to the final determination by recalculating the amounts due under its financial accommodation contracts with Ms Burge, reducing her debt by about $173,000, along with giving her some relief in respect of future interest. 13 Nonetheless, Ms Burge argued before her Honour, and in the present application, that she had never agreed to be bound by her conduct in returning the signed determination on 19 September 2014 because, she claimed, she did so "under duress". 14 Before me she argued that cll 8.7 and 8.8 of the terms of reference provided one reason why she had not given the Bank a binding release from liability in respect of the matters resolved by the recommendation or determination. Relevantly, cll 8.7 and 8.8 provided: 8.7 Recommendations and Determinations a) Each Recommendation and Determination: (i) must be in writing; (ii) may either reach: (A) a conclusion about the merits of the Dispute; or (B) the view that, given the procedures adopted by FOS, it would not be appropriate for FOS to reach any conclusion as to the merits of the Dispute; (iii) must set out reasons for any conclusion about the merits of a Dispute or view of the kind referred to in paragraph 8.7a)(ii)(B); (iv) must specify any remedy, determined in accordance with paragraph 9, that FOS considers fair and appropriate; and (v) must be provided to all parties to the Dispute; b) A Determination is a final decision and is binding upon the Financial Services Provider if the Applicant accepts the Determination within 30 days of receiving the Determination. 8.8 Applicant acceptance of a Recommendation or Determination In order to accept a Recommendation or a Determination, the Applicant must provide the Financial Services Provider (if the Financial Services Provider so requests) with a binding release of the Financial Services Provider from liability in respect of the matters resolved by the Recommendation or Determination. The release must be for the full value of the claim the subject of the Dispute, even if this amount exceeds the amount of the remedy decided upon by FOS. The release shall be effective from the date on which the Financial Services Provider fulfils all of its obligations under the Recommendation or Determination. (emphasis added) 15 However, cl 8.8 only operated if the financial services provider (in this case, the Bank) so requested. And, his Honour found, the Bank had not made any such request, so that both Ms Burge and it were bound by her acceptance in accordance with cl 8.7(b). For those reasons he held that there was no reasonable prospect of Ms Burge successfully prosecuting her claim that, despite her uncommunicated reservations, somehow she was not bound by her unqualified acceptance on 19 September 2014. I agree. 16 In my opinion, there is no reasonable prospect of challenging his Honour's decision. In Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at 178 [36], Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ adopted what Mason J had said in Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337 at 352, namely: We do not take into account the actual intentions of the parties and for the very good reason that an investigation of those matters would not only be time consuming but it would also be unrewarding as it would tend to give too much weight to these factors at the expense of the actual language of the written contract. 17 Their Honours also said (219 CLR at 179 [40]): This Court, in Pacific Carriers Ltd v BNP Paribas [(2004) 218 CLR 451], has recently reaffirmed the principle of objectivity by which the rights and liabilities of the parties to a contract are determined. It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction [Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 at 461-462 [22]]. (emphasis added) 18 In my opinion, there is no reason to doubt the correctness of the decision of the Court of Appeal of Victoria in Mickovski 36 VR at 467 [36] that there was a tripartite contract between Ms Burge, the Bank and the Service by which each promised to arbitrate the dispute in accordance with the terms of reference and to be bound by the Service's decision. I can see no arguable error in the conclusion of the primary judge that cl 8.7(b) operated so that Ms Burge's return, on 19 September 2014, of an unqualified acceptance of the determination bound her and the Bank to its terms: Toll 219 CLR at 178-181 [36]-[45]. Indeed, as Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ held in Toll 219 CLR at 180-181 [45]: It should not be overlooked that to sign a document known and intended to affect legal relations is an act which itself ordinarily conveys a representation to a reasonable reader of the document. The representation is that the person who signs either has read and approved the contents of the document or is willing to take the chance of being bound by those contents, as Latham CJ put it [Wilton v Farnworth (1948) 76 CLR 646 at 649], whatever they might be. That representation is even stronger where the signature appears below a perfectly legible written request to read the document before signing it. (emphasis added) 19 Ms Burge also argued that she should be able to succeed against the Service, because it had committed a breach of contract by acting in a legally unreasonable way in respect of how it arrived at its determination. That is not, in my opinion, a matter that arose in the way in which the case was put to the primary judge. There is nothing in the material before me to show that that is an argument which is anything more than a flimsy and weak attack on the merits of the Service's decision. 20 Next, Ms Burge challenged the deed that she entered into with the Bank on 7 March 2016 in settling two proceedings in the Supreme Court of Tasmania, one, for damages that she had brought against the Bank and, the second, for possession that the Bank had brought. On that day there was a hearing before Pearce J which the parties resolved on the terms of the deed. On that occasion, Ms Burge was represented by junior counsel. She alleged, through her (different) counsel in argument today, that her then counsel had threatened not to appear for her the next day unless she paid him $20,000. That is not a matter that the primary judge considered, or had been required to consider, in his reasons for judgment, but in any event Ms Burge signed the deed on terms that resolved those proceedings. 21 As his Honour found, Ms Burge consented to those terms which resulted in the Supreme Court entering a direction or order in the proceedings for judgment with costs in favour of the Bank. The Bank agreed not to take any steps to have the judgment entered before 18 April 2016. Ms Burge and the Bank agreed that she had to pay it $452,469.71, inclusive of $50,000 in costs, less the net proceeds of sale of her Abbott Street property, conditional on the payment occurring on or before 18 April 2016. However, the deed provided that if Ms Burge did not pay that amount by 18 April 2016, the Bank would exercise its power of sale over her Elphin Street property and the amount that Ms Burge would have to pay to the Bank (under the judgment) would be $402,469.71 plus costs, together with interest, until payment, on the sum of $335,628.37 from 8 March 2016, the costs of the sale in accordance with the loan agreement, less the net proceeds of sale of the Abbott Street property. 22 In addition, under cl 5 of the deed, Ms Burge agreed to release the Bank from all past, present and future liability and from, among other matters, all proceedings arising out of or connected with loan accounts that she alone or with any other person had conducted with it. 23 His Honour found that the release in the deed included all of the claims that Ms Burge was making in the proceeding before him. He found that the release was not conditional or executory but rather operated immediately as part of an accord and satisfaction that Ms Burge had made with the Bank. He found that, as a consequence of Ms Burge executing the deed, whatever claims she still might have had against the Bank ceased to exist and were replaced with the rights and entitlements which the deed itself gave her. He found that, accordingly, Ms Burge had released the Bank from all the claims that she now sought to make in that proceeding. 24 Ms Burge challenged the validity of the deed and the Bank's entry of the consent orders of 20 April 2016 on the basis of her claim that she had acted under economic duress when she entered into the deed. She called in aid the principles identified by McHugh JA, with whom Samuels and Mahoney JJA agreed, in Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 40 at 45D-F. She raised those challenges initially in an application in the High Court. Gordon J dismissed that proceeding on 16 September 2016 (see Burge v Commonwealth Bank of Australia [2016] HCA Trans 224). Subsequently Ms Burge applied to the primary judge, seeking, initially, an interlocutory injunction restraining the sale of her Elphin Street property, which his Honour dismissed on 22 September 2016 (Burge [2016] FCA 1159). 25 Following that, Ms Burge applied to Blow CJ, in the Supreme Court, for orders extending the time to appeal from the consent orders entered on 20 April 2016 and various other consent orders and for an injunction restraining the sale, or proposed sale, of the Elphin Street property, of which she still remained the registered proprietor: Burge v Commonwealth Bank of Australia [2016] TASSC 60. Ms Burge argued that she could appeal from the consent orders. 26 However, Blow CJ rejected her claim and applied conventional principles, including those in Harvey v Phillips (1956) 95 CLR 235 at 243-244. He held that an appeal from the consent orders could only succeed on a basis on which a contract might be impugned, such as fraud, duress, undue influence or unconscionable conduct: Burge [2016] TASSC 60 at [39]-[41]. His Honour dismissed Ms Burge's argument that she had acted under economic duress, either in entering into consent orders on an earlier occasion on 22 June 2015, or in entering into the deed on 7 March 2016. His Honour considered Ms Burge's evidence in support of her argument that she had entered into the deed of 7 March 2016 under duress. He held ([2016] TASSC 60 at [45]): If those threats were made, I do not think that they were improper or illegitimate. Obviously, [Ms Burge] was in a position of extreme financial disadvantage. However, the representatives of the [Bank] went no further than to threaten to exercise, and keep on exercising, the [Bank's] rights as a litigant. 27 His Honour also held that if he were wrong in that view, any appeal was unlikely to succeed. The primary judge came to the same conclusion for substantially the same reasons. He acted on the principles applicable to an application for summary dismissal. Mr Burge argued that his Honour, in some way, had failed to apply those principles correctly. 28 Hayne, Crennan, Kiefel and Bell JJ explained in Spencer v Commonwealth (2010) 241 CLR 118 at 140-141 [56]-[60], that the test in s 31A(2) of the Federal Court Act involves an assessment of the prospect of an applicant's success in the litigation. That test is distinct from the common law and earlier legislative criteria that required a party seeking summary dismissal to demonstrate a certainty of outcome of the proceeding. Their Honours held that the statutory test in s 31A(2), namely that a party had "no reasonable prospect of successfully prosecuting the proceeding", should not be qualified by judicial epithets such as "frivolous", "untenable", or "clearly", albeit that they recognised that the power was not to be exercised lightly. But, they said that the circumstances for the exercise of the power were not confined to cases of a kind that fell within earlier, different, procedural regimes. 29 French CJ and Gummow J (at 241 CLR 130-132 [22]-[25]) characterised the criterion of "reasonable prospect" in s 31A as not being limited to those in the earlier regimes, but they took a possibly more restrictive approach to that of Hayne, Crennan, Kiefel and Bell JJ, saying that: Where there are factual issues capable of being disputed and in dispute, summary dismissal should not be awarded to the respondent simply because the Court has formed the view that the applicant is unlikely to succeed on the factual issue. 30 The evaluation of a reasonable prospect of an outcome at an earlier, and perhaps protean, stage of litigation, than at a final hearing, is a task that invites a cautious approach, not least because, ordinarily, the decision must be made without the benefit of the ordinary preparation of evidence and issues for a full trial. 31 Ordinarily, the decision to dismiss proceedings under s 31A(2) will not be made without the benefit of the usual steps for preparation of evidence and issues for a full trial: see too TJ (on behalf of the Yindjibarndi People) v State of Western Australia [2016] FCA 553 at [151]-[153]. Nonetheless, the purpose of the Parliament in enacting s 31A was to broaden the power of the Court to bring to an end, summarily, litigation that the Court had evaluated judicially as having no reasonable prospect of success. That process of evaluation is substantively different to one determining whether a party has no prospect of success. 32 In my opinion, nothing has been urged by Ms Burge that identified any, let alone any arguable, error by the primary judge. Her submissions have not raised any issue of substance to suggest that his Honour may have erred in his application of s 31A(2). In particular, I agree with his Honour and Blow CJ that the test for economic duress, which they each applied, was whether the pressure that Ms Burge alleged had operated on her could be described as "illegitimate": Crescendo 19 NSWLR at 45D-F, and that, on the facts, whatever pressure the Bank brought did not exceed what, in the circumstances, was legitimate. 33 Ms Burge relied on what was entitled as a "notice of appeal (revised)", which she sought leave to file were she granted an extension of time and leave to appeal. That notice of appeal was in vague and unspecific terms. It did not identify with any precision any alleged error that she wished to agitate on appeal. Nonetheless, I have sought to consider the substance of what she put in argument. In my opinion, for the reasons above, there is nothing in what Ms Burge raised to suggest that his Honour arguably erred, in his evaluation of the material before him, in arriving at his conclusion under s 31A. 34 The second basis on which his Honour determined that the proceeding should be dismissed was in exercise of the Court's inherent power to prevent relitigation as an abuse of the process of the Court. Ms Burge did not raise a ground of appeal against that determination. The primary judge said: the repeated attempts by [Ms Burge] to litigate or relitigate matters which have already been resolved either by agreement or by orders of the Supreme Court of Tasmania or by judgment in that Court constitutes an abuse of process. 35 His Honour found that, accordingly, the proceeding should also be dismissed on that ground. I agree. In my opinion, the proceeding falls within the characterisation identified by Lord Diplock in Hunter v Chief Constable of the West Midlands Police [1982] AC 529 at 536B-D, and adopted by Mason CJ, Deane and Dawson JJ in Walton v Gardiner (1993) 177 CLR 378 at 392-393 and by Gleeson CJ, Gummow, Heydon and Crennan JJ in Batistatos v Roads and Traffic Authority of New South Wales (2006) 226 CLR 256 at 264 [6], namely, that the Court has: the inherent power which any court of justice must possess to prevent misuse of its procedure in a way which although not inconsistent with the literal application of its procedural rules, would nevertheless be manifestly unfair to a party to litigation before it, or would otherwise bring the administration of justice into disrepute among right-thinking people. 36 Gleeson CJ, Gummow, Heydon and Crennan JJ went on to hold (at 226 CLR at 265 [9]) that "[w]hat amounts to abuse of court process is insusceptible of a formulation comprising closed categories. Development continues". 37 In my opinion, the substantive arguments which Ms Burge wishes to raise in relation to her claims for economic duress have already been the subject of determination by Blow CJ in his decision. However unfortunate Ms Burge's personal circumstances may be, and however distressed she may be by her relationship with the Bank and the sequel of her complaint to the Service, there is nothing in her application for an extension of time and leave to appeal that could give rise to the threshold necessary for a grant of leave to appeal. That is because the primary judge's decision is not attended with sufficient doubt to warrant the grant of leave, and I am also not satisfied that substantial injustice would result from a refusal of leave. 38 Ms Burge has had many opportunities in which to raise her arguments, including when represented, both before Gordon J, Pearce J and Blow CJ, as well as before the primary judge. It is time this litigation came to an end. Her contentions raised only flimsy and weak arguments on the merits. I see no error in his Honour's decisions to dismiss the proceeding summarily and as an abuse of process that is incapable of raising an arguable ground of appeal. For these reasons, I refuse the application with costs. I certify that the preceding thirty-eight (38) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rares.