Commonwealth Bank of Australia v Bird

rties: Commonwealth Bank of Australia (Plaintiff) Raymond James Bird (First Defendant) Denise Barbara Bird (Second Defendant) Representation: Counsel: Mr S Aspinall (Plaintiff) Mr DA Allen (Defendants) Solicitors: Henry Davis York (Plaintiff) Hancocks Solicitors (Defendants) File Number(s): 2010/56056

Judgment 1By amended statement of claim filed on 13 August 2010, the plaintiff bank seeks monetary judgment and orders for possession of a property at North Richmond, of which the first defendant, Raymond Bird is the registered proprietor. The proceedings have a somewhat tortured procedural history. The defence filed by the second defendant, Denise Bird, has been struck out. By orders made by Davies J in February 2011, Mr Bird was permitted to advance a defence to the claim which rests on the provisions of the Farm Debt Mediation Act 1994 ('the Act') and for that purpose, to rely on specified paragraphs of an affidavit filed in February. His case was that any steps taken to enforce the mortgages which the plaintiff holds over the property are void, because of its failure to comply with the requirements of that Act. 2At issue between the parties was whether or not the Act applied to the loans. 3Mr Bird gave a mortgage over the property in October 2007, to secure a home loan facility under which $1 million was advanced and another home loan facility under which $280,000 was advanced. The second defendant, Mrs Bird, gave a guarantee in respect of those advances. 4It was in June 2008, that $368,630 was advanced to Clevedon Australia Pty Ltd ('Clevedon'), which was also provided with an overdraft with a limit of $200,000. These advances were supported by a guarantee given by Mr Bird and by a second mortgage over the property. 5In August 2008, a further $400,000 was advanced to Clevedon under a further Better Business loan. Mr Bird's guarantee was extended to include this loan, bringing the guarantee to $969,630. The loans later fell into default and demands for their repayment were not met. 6Affidavit evidence was given by Mr Bird. He now lives with his family in New Zealand. He was not required for cross examination. 7The property in question consists of 25 acres with a house and sheds. Mr Bird deposed that when he obtained the home loan he told a bank officer, Ms Goffett, that he intended to purchase Hereford cattle for the property, both for breeding and sale. He in fact ran up to a maximum of 18 cattle at any one time on the property, including bulls, cows and calves. He bought and sold Hereford cattle through sale yards at Windsor and Camden. Annexed to his affidavit were invoices from Inglis Livestock to a company Clevedon Eco International Pty Ltd, in respect of the sale of steers and heifers in October 2009 and cows and heifers in March and April 2010, in the sums, respectively $4,972.04, $3978.22, and $354.45. 8Also annexed to the affidavit was a 2011 rate notice addressed to Mr Bird, under the Rural Lands Protection Act 1998 and two photographs of the property, which showed a number of cattle. The notice imposed a meat industry levy and had regard to the carrying capacity of the property. 9Ms Goffett replied to this affidavit evidence. She was also not required for cross examination. Her affidavit evidence was that in 2007 at the time of the residential loan obtained by Mr Bird, she was employed by the plaintiff as a mobile lender specialising in residential property purchases. She was authorised to deal with loans for owner occupied residential properties and residential properties purchased for investment purposes. She was not authorised to deal with applications for business banking products, or applications by persons engaged in farming activities. She had to refer such applications to the plaintiff's business banking section. 10Ms Goffett understood that Mr Bird obtained an investment home loan for $280,000 and a complete home loan for $1 million. She had met with him at his residence at Five Dock and also had numerous telephone discussions with him. The purpose of the loan application made was stated to be to purchase an "established dwelling - House", in which Mr Bird indicated he would be living. The occupation which he disclosed was as a professional in the employ of Clevedon, whose business was stated to be gardening equipment. Mr Bird told her he was a self employed businessman importing and selling gardening tools which were sold in shopping centres, with some direct sales to customers and that his income was derived from his business. The application made no reference to Mr Bird being a farmer, or farming equipment. 11Ms Goffett said that the property had a separate flat. The purpose of the loan documents referred to the purchase of an owner/occupied home, which was a dual occupancy. Ms Goffett denied that Mr Bird told her that he intended to run, breed or raise cattle on the property. If he had, she would have had no alternative but to refer his application to the business banking section. He told her he was moving to Richmond for lifestyle and he intended to use sheds on the property to store equipment used in his business, which would save him large storage costs which he was then incurring. He said that in time he might want to build more sheds. Ms Goffett told him that would require an approach to the business banking section. 12Also in evidence were Mr Bird's tax returns for the years ending 2005, 2006 and 2007. His main occupation in 2005 was noted as being 'company director' and his payer as Clevedon. In 2006 and 2007 his income was disclosed as directors fees. ASIC searches disclosed that Mr Bird is a current director and secretary of Clevedon and Bird Imports International Pty Ltd, formerly known as Clevedon Eco International Pty Limited, as well as a former director and secretary of other companies. When Mr Bird departed Australia in April 2010, he indicated that his occupation was 'importer'. 13Clevedon's tax returns for the years ending 2004, 2005, 2006 and 2007 disclosed its main business activity as 'garden supplies retailing'. Its loan application summary to the plaintiff disclosed that it was set up to import and sell garden equipment, with Bunnings and Mitre 10 being its main competitors. In a later application it was disclosed that it was a retailer of gardening equipment operating in various shopping centres in New South Wales, Victoria and Western Australia; that it had completed a deal widening its product offerings to include cleaning products; and that its Better Business loan was to build a commercial shed for storage of stock, at the principal place of residence. 14Ms Laban, the plaintiff's solicitor, deposed that the receiver appointed to Clevedon did not disclose livestock or farming equipment in the Receiver's Report and that the Report to Creditors referred to the conduct of a business of portable kiosks selling gardening equipment. Ferrier Hodgson reported in December 2009 that it was an importer and retailer of gardening equipment with a single supplier based in Taiwan and that Mr Bird had been responsible for its management.