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[2020] FCA 1593
Federal Court of Australia
2020-11-04
Jackson J
Original judgment source is linked above.
Texts cited: Tyler, Young and Croft, Fisher and Lightwood's Law of Mortgage (LexisNexis Butterworths, 3rd Australian ed, 2014)
Division: General Division
Registry: Queensland
National Practice Area: Commercial and Corporations
Sub-area: Commercial Contracts, Banking, Finance and Insurance
Date of last submissions: 9 July 2020 (first prospective applicant) 1 July 2020 (prospective respondent)
Date of hearing: 2 July 2020
Counsel for the First Prospective Applicant: The first prospective applicant appeared in person
Counsel for the Second Prospective Applicant: The second prospective applicant did not appear
Counsel for the Prospective Respondent: Mr DJ Ananian-Cooper
Solicitor for the Prospective Respondent: Gadens Lawyers
17 November 2020 At [49], seventh line amended to correctly read: 'It is not clear …' At [57], sixth line amended to correctly read: '… even if I assumed …' At [111], second line amended to correctly read: '… arguments or gather …'
BETWEEN: WILLIAM JAMES ALEXANDER DAVIDSON First Prospective Applicant
RISA NAGATSUMA Second Prospective Applicant
AND: SUNCORP-METWAY LIMITED (ABN 66 010 831 722) Prospective Respondent
order made by: JACKSON J DATE OF ORDER: 4 NOVEMBER 2020
JACKSON J: 1 These reasons concern an application for preliminary discovery under r 7.23 of the Federal Court Rules 2011 (Cth). The prospective applicants are William James Alexander Davidson and his wife, Risa Nagatsuma. The prospective respondent is a bank, Suncorp-Metway Limited. However Mr Davidson and Ms Nagatsuma have separated, Ms Nagatsuma took no part in the proceeding and, as will appear below, she has no apparent basis to make any claim against the bank. In general, these reasons will only refer to Mr Davidson as the prospective applicant. 2 There is also before the court an application which Mr Davidson brought on an interlocutory basis to determine whether the mortgages he granted the bank are invalid by reason of asserted non-compliance with the Land Title Act 1994 (Qld). However I directed the parties to provide further submissions on that claim after hearing, which have not yet all been provided. While it will be necessary to mention that claim a couple of times below, it appears to me that it is independent of the application in respect of preliminary discovery. So I publish these reasons now to determine the preliminary discovery application alone, so as to minimise delay. 3 Rule 7.23 is: 7.23 Discovery from prospective respondent (1) A prospective applicant may apply to the Court for an order under subrule (2) if the prospective applicant: (a) reasonably believes that the prospective applicant may have the right to obtain relief in the Court from a prospective respondent whose description has been ascertained; and (b) after making reasonable inquiries, does not have sufficient information to decide whether to start a proceeding in the Court to obtain that relief; and (c) reasonably believes that: (i) the prospective respondent has or is likely to have or has had or is likely to have had in the prospective respondent's control documents directly relevant to the question whether the prospective applicant has a right to obtain the relief; and (ii) inspection of the documents by the prospective applicant would assist in making the decision. (2) If the Court is satisfied about matters mentioned in subrule (1), the Court may order the prospective respondent to give discovery to the prospective applicant of the documents of the kind mentioned in subparagraph (1)(c)(i). 4 The requirement in r 7.23(1)(a) is important in many applications for preliminary discovery and it is certainly important in this case. Mr Davidson believes that he has been grievously wronged by the bank, including certain former officers of the bank, and receivers and agents for the mortgagee in possession whom the bank has appointed. At the root of this belief is a view that a former officer of the bank defrauded him, which has led him to lose everything, including his assets, his farming business and his marriage. I have no doubt that those beliefs are deep seated and genuinely held. But in order to succeed on this application, the court must be satisfied that Mr Davidson holds a reasonable belief that he may have the right to obtain relief in this court from the bank. 5 Whether Mr Davidson's beliefs are reasonable here must be tested against two important matters. One is that in 2014 he signed a comprehensive deed of settlement with the bank. The other is that he commenced proceedings in the Supreme Court of Queensland in which the court found that he had no real prospects of establishing that the deed was voidable by reason of economic duress. For the reasons that follow, those matters present formidable obstacles - in my view insurmountable ones - which stand in the way of success on many of Mr Davidson's claims. There are also some claims he has sought to raise which are not barred by either of those matters. But they are largely without substance and in relation to some of them, Mr Davidson has not established that he needs preliminary discovery in order to decide whether to commence a claim. In some cases there are also discretionary factors weighting against making any order for discovery. The application must be dismissed.
Background 6 Mr Davidson is the director of Far North Queensland Cattle Company Pty Ltd (FNQ). It appears that through that company, as the name would suggest, he conducted a cattle farming business in far northern Queensland. 7 Mr Davidson swore an affidavit which was filed at the same time as the originating application in this proceeding. It exhibited parts of another affidavit which he swore in proceedings which he commenced in the Supreme Court of Queensland in 2014, from which much of the following background is taken. 8 In late 2012 or early 2013 Mr Davidson approached the bank for refinancing. The refinancing occurred in September 2013 with the establishment of overdraft facilities with limits totalling $1 million. There were also term loan facilities totalling $7.8 million. FNQ was the borrower and Mr Davidson guaranteed its liabilities and he provided security over a number of parcels of land which he owned. It appears FNQ also granted a mortgage over one parcel of land. 9 In the course of the refinancing, Mr Davidson met the former officer of the bank whom I have mentioned, Ben Houlihan. Mr Davidson alleges that Mr Houlihan engaged in various fraudulent dealings which had the result that the overdraft facilities were drawn to their limits without Mr Davidson's knowledge or authorisation. Mr Davidson alleges that Mr Houlihan used Mr Davidson's money for transactions that were to Mr Houlihan's benefit, including that money was taken from the overdraft facilities and diverted to Mr Houlihan. One of the overdraft limits was increased by $75,000, again, Mr Davidson says, without his knowledge. He alleges that a total of almost $732,000 was taken from his accounts without his approval. 10 One of the ways Mr Davidson says the fraud occurred was by authorisations for payment of invoices rendered by Mr Houlihan's company, Houlihan Rural, and bank transfer slips. Mr Davidson has produced copies of the authorisations and transfer slips which the bank has given to him. He claims that he never signed these documents; that they are forgeries. He also claims that Mr Houlihan stole cattle. Mr Davidson also seeks to implicate another officer of the bank, Robert Drewitt, in alleged fraud. 11 It is important to say that all these allegations against Mr Houlihan and Mr Drewitt remain allegations only. There was no evidence suggesting that they have been established in any court of law. This proceeding is not the appropriate vehicle for any determination about whether they are true. 12 Mr Davidson claims he became aware of the alleged seriousness of Mr Houlihan's conduct in December 2013 or January 2014. He says that after this, he discovered that the numbers of cattle he had at hand had been grossly inflated in the general security agreement which he entered into with the bank, and that terms had been added to that agreement restricting his ability to carry on business, to which he had not agreed. 13 Mr Davidson says that matters came to a head after an exchange of emails in early 2014 prompted the bank, on 4 April 2014, to appoint partners of BDO Australia as receivers and managers of land and livestock owned by Mr Davidson and of livestock owned by FNQ. The appointment was said to be on the basis that Mr Davidson had said he no longer wanted to look after his cattle, that he had threatened to let them die, and that he did not have insurance cover for the properties that secured his indebtedness to the bank. Mr Davidson disputes that he ever said that he would let the cattle die and also says that there was always insurance cover in place. 14 In April 2014 Mr Davidson and FNQ commenced proceedings in the Supreme Court of Queensland against the bank and the receivers seeking, among other things, declarations that the appointment of the receivers was invalid and of no effect. That action was discontinued in May 2014, after the execution of a document styled 'Settlement Deed' on or about 28 May 2014 (to which it will be necessary to return). As part of the settlement the appointment of the receivers was terminated. 15 The bank filed evidence in those proceedings which included an affidavit by an investigator employed by it, Tracey O'Keefe, in which she said she had reviewed the bank's records and believed that Mr Davidson had been aware of and authorised each of the transactions which he says happened without his authority. Mr Davidson rejects those conclusions and specifically denies many of the things that Ms O'Keefe said in her affidavit. Mr Davidson filed a second affidavit in this proceeding setting out further reasons why Ms O'Keefe's affidavit was wrong, but it is not necessary to describe the detail of that affidavit. 16 Mr Davidson has not made any repayments to the bank since February 2015. He claims, however, that he has made offers to settle with the bank which the bank has not accepted. 17 According to the bank, FNQ breached its obligations under the Settlement Deed, and in late 2014 and May 2015 the bank served demands. This led to a mediation which resulted in an executed document styled 'Heads of Agreement' dated 19 August 2015 which, the bank says, included further releases of Mr Davidson's claims against it. I will also return to that document below. 18 The bank claims that there were more defaults after that. It took further steps for the enforcement of the mortgages, including the service of notices of demand and notices of exercise of power of sale. In March and June of 2017 the bank appointed agents for it as mortgagee in possession to Mr Davidson's properties. These were the same partners of BDO who had acted as receivers. 19 In August 2017, a law firm acting for Mr Davidson, Kelly Legal, wrote to the bank's lawyers asking for copies of all of the bank's documents concerning Mr Davidson's allegations of wrongdoing. That request was made again, along with a request for more information, in April 2019. The request for documents was repeated in September 2019. The bank has refused to provide those documents, although it did, after the hearing of this application, give Mr Davidson a complete set of bank statements for his accounts. 20 In December 2017 Mr Davidson and FNQ commenced another action against the bank and BDO in the Supreme Court of Queensland, which proceeding I will call QSC 2017. In broad terms, they sought declarations that the bank's securities and the releases in the Settlement Deed and Heads of Agreement were unenforceable, and an injunction restraining further enforcement of the bank's securities. The Supreme Court refused an interlocutory injunction for which Mr Davidson and FNQ applied, and the Court of Appeal also refused an interlocutory injunction pending the determination of an appeal from that decision. Those proceedings remain on foot but no further steps have been taken in them. As will be seen, I consider the commencement and ongoing subsistence of that proceeding to be significant to the present application. 21 At various times in 2018 Mr Davidson, a company associated with him (not FNQ) and Ms Nagatsuma each lodged caveats on certain properties. The bank successfully applied to the Supreme Court of Queensland for those caveats to be removed. 22 In February 2018 the bank commenced proceedings in the Supreme Court of Queensland for orders for possession of the property at Heidke Road, Malanda, where Mr Davidson's home was located. It also applied for an injunction restraining him and Ms Nagatsuma from interfering with the sale of the property. It will be necessary to describe that proceeding further below. In broad terms, Mr Davidson and Ms Nagatsuma opposed the relief the bank sought on grounds that included the allegations of fraudulent conduct made against Mr Houlihan. Mr Davidson said that there was a draft statement of claim based on those allegations that would be filed and served in QSC 2017. 23 The Supreme Court (Ryan J) heard the bank's application on 28 September 2018. Her Honour delivered judgment for the bank on 7 February 2019: Suncorp-Metway Ltd v Nagatsuma [2019] QSC 16 (QSC 2019). The court ordered that the bank recover possession of the Heidke Road property, and granted an injunction prohibiting Mr Davidson and Ms Nagatsuma from interfering with the bank exercising its power of sale over that property. 24 Mr Davidson filed an affidavit in the present proceeding giving evidence to the effect that he had discussions with Mr Houlihan in 2019 in which Mr Houlihan told him that money was taken from his account without his authority. But after what was asserted to be a threat from the bank's lawyers, Mr Houlihan apparently refused to help further. 25 Mr Davidson's affidavit filed with the originating application gives evidence of the effect of these events on him and on Ms Nagatsuma. He says that the missing money, as well as Suncorp freezing his accounts, made it difficult to meet repayments to Suncorp. The enforcement action by Suncorp has, he says, led to the sale of assets at what he regards as 'fire sale prices' and has converted a significant surplus of assets over liabilities to a deficit. At the time of the affidavit the bank wanted to evict Mr Davidson from his home, and the court understands that this has since happened. Mr Davidson is being treated for mental health issues, including with prescribed medication.
This proceeding 26 Mr Davidson and Ms Nagatsuma commenced this proceeding on 21 January 2020. They were represented by Kelly Legal at that time. But Kelly Legal filed a notice of ceasing to act on 19 February 2020. A different lawyer filed a notice of acting (on behalf of Mr Davidson only) on 8 May 2020 but his appointment was brief and on 16 June 2020 he filed a notice of ceasing to act. Mr Davidson was self-represented after that time, including at the hearing of this application on 2 July 2020. At a different hearing on 22 June 2020 he applied for, among other things, orders removing the matter from Perth to Brisbane and for the matter to be heard in person, but for the reasons given in Davidson v Suncorp-Metway Limited (No 2) [2020] FCA 879 I refused that application. 27 The proceeding included not just an application for preliminary discovery, but also an application for an injunction restraining the bank from taking possession of, selling or otherwise dealing with or interfering with three properties owned by Mr Davidson, including the Heidke Road property. Derrington J heard and dismissed the application for the latter order on 2 March 2020: Davidson v Suncorp-Metway Limited [2020] FCA 795 (FCA 2020). His Honour described the releases, Ryan J's decision and her Honour's injunction restraining Mr Davidson from interfering with the bank's sale of the secured properties as 'seemingly insurmountable hurdles in demonstrating that there is a serious question to be tried' on his case to restrain the bank from proceeding with the sales: at [20]. His Honour found Mr Davidson's application for an injunction to be 'untenable' and ordered indemnity costs against him and Ms Nagatsuma. 28 The affidavits on which Mr Davidson relied were his affidavits and an affidavit of his former solicitor at Kelly Legal which annexed a great deal of correspondence. The background set out above is largely drawn from those affidavits and from an affidavit affirmed by a solicitor for the bank which annexes a large volume of correspondence and other documents. Mr Davidson also relied on an affidavit of one David Neve, who is an experienced agricultural consultant. Mr Neve deposes to various categories of documents which he would need in order to prepare 'a report in this matter'. But the purpose of any such report is not clear. Mr Neve appears to anticipate that it would be to 'assist the court by preparing a report as to the financial impacts of Suncorp's conduct upon the Prospective Applicants'. There is no need for a report to the court to be prepared, in order for Mr Davidson to decide whether to commence proceedings and it is hard to see why even a report to Mr Davidson would be required. In any event, nothing in the materials suggests that Mr Davidson would need discovery in order to ascertain the financial impact of these events on him; that is a matter within his own knowledge. As a result, the purpose of Mr Neve's affidavit is unclear. I place no weight on it.
The categories of documents of which discovery is sought 29 The originating application seeks discovery of some 23 documents or categories of documents. It is not necessary to list them out here. They can be summarised as follows. (1) Ms O'Keefe's 'investigative report' in relation to the evidence given in her affidavit in 2014, which is described at [15] above, all documents relating to her investigations and various supporting documents referred to in her affidavit, or the existence of which can be inferred from the affidavit. This includes originals of the documents which the bank says evidence Mr Davidson's authority for the withdrawals which he says were carried out by Mr Houlihan without that authority. I have placed 'investigative report' in inverted commas because there is no evidence that Ms O'Keefe actually prepared a report. The frequent use of that term by Mr Davidson and his former lawyers seems to be based on an assumption. However nothing really turns on that; it may be accepted that Ms O'Keefe is likely to have generated file notes and correspondence in the course of the investigation that led to her affidavit. More broadly, the bank does not say that it has no documents answering the descriptions in Mr Davidson's various categories. It resists the application on the basis that his belief that he may have various claims against it is not reasonable. (2) Other documentation about authorities Mr Davidson is said to have signed and denies signing, documents showing the destination of funds allegedly paid for cattle on invoices rendered to FNQ by Houlihan Rural, and documentation supporting a spreadsheet said to record certain purchases of cattle. (3) All internal records of communications between the bank and Mr Houlihan from January 2013 (not on its face limited to communications about Mr Davidson or FNQ). (4) All documentation about Mr Davidson's complaints to the bank about Mr Houlihan's conduct and the bank's investigations of those activities and about the termination of Mr Houlihan's employment with the bank. (5) Documents about the origination of the refinancing by the bank to FNQ in 2013, which may bear upon the suggestion that the bank committed some wrong when it advanced money to FNQ. (6) All documentation relating to the sale, by or on behalf of the bank, of the assets of Mr Davidson (and Ms Nagatsuma) and associated entities. (7) All communications between the bank and BDO about Mr Davidson and his associated entities. (8) All documentation confirming the current level of indebtedness of Mr Davidson and any associated entities from and including January 2013. It will be seen that, for the most part, documents in these categories may be relevant to the claims Mr Davidson wants to make, which are summarised below. 30 Mr Davidson also seeks documentation as to whether the mortgages were insured and whether Suncorp has been paid out by the insurer. But documents concerning insurance of the mortgages are not part of the originating application and Mr Davidson does not articulate any claim to which they might relate. He says he seeks those documents in a paragraph of his main written submissions which also alleges that the mortgages have been securitised (a claim I will return to below), but that appears to be a different issue. The claim for preliminary discovery of insurance documents is untethered to any potential claim against the bank, and I give it no further consideration.
Ms Nagatsuma's position 31 After Kelly Legal ceased to act for the prospective applicants on 19 February 2020, Ms Nagatsuma has been unrepresented in this proceeding. The bank has provided evidence that she has been served with notice of the hearing and the submissions made by the bank. She did not appear at the any of the hearings in this proceeding and Mr Davidson confirmed that she did not wish to. I was satisfied that it was appropriate to proceed with the hearing in her absence. 32 The bank adduced evidence to the effect that it had no contractual relationship with Ms Nagatsuma. It never provided any facilities to her and she has provided no guarantee or security for Mr Davidson's or FNQ's liabilities to the bank. That evidence was not contested. 33 No possible claim by Ms Nagatsuma against the bank was articulated in submissions. It appears that she was a party to the proceedings before Ryan J in the Supreme Court of Queensland because she was occupying the Heidke Road property at the time those proceedings were commenced. It also appears from the evidence that at the time of the hearing of this application, she was no longer at that property, having separated from Mr Davidson. 34 No basis has been put on which Ms Nagatsuma could have a claim against the bank in this court. Nor is there any evidence at all as to whether Ms Nagatsuma has a reasonable belief that she may have a claim. I am satisfied that no orders for preliminary discovery should be made in her favour.
Principles on preliminary discovery 35 Rule 7.23 has been set out above. In Pfizer Ireland Pharmaceuticals v Samsung Bioepis AU Pty Ltd [2017] FCAFC 193; (2017) 257 FCR 62 a Full Court (Allsop CJ, Perram and Nicholas JJ) authoritatively laid down the general approach to how the rule is to be applied. Each member of the court made it plain that it is the words of the rule which govern applications for preliminary discovery, and generally deprecated hedging the rule in by what Allsop CJ referred to as a 'complex matrix of sub-rules': Pfizer at [2], [7]-[8], [123], [178]. For the Chief Justice, that included deprecation of 'an overly abstracted conceptualisation of refined states of mind' concerning the belief that needs to be held by a prospective applicant: Pfizer at [8]. Rather, his Honour observed that r 7.23 is 'a tolerably straightforward provision': ibid. It is also 'a beneficial provision, the purpose of which is to enable a person who believes he, she or it may have a right to seek relief to obtain information to make a responsible decision as to whether to commence proceedings': Pfizer at [4], see also at [178]. 36 In particular, both Allsop CJ and Perram J emphasised that the words of the rule require the prospective applicant to have a reasonable belief that they may have a claim, not a reasonable belief that they do have a claim: Pfizer at [8], [17], [101], [108], [110], [120(i)]. It is an important part of the context of the rule that the Federal Court Rules contemplate that a proceeding may only be commenced where a proper basis exists for the making of the allegations, so preliminary discovery is a procedure that 'necessarily exists in a domain where that level of certainty has not been reached': Pfizer at [99]. So applications for preliminary discovery 'are summary applications, not mini-trials': Pfizer at [2], and see also at [119], [126]. 37 But r 7.23(1)(a) does require that the belief is, not only held subjectively, but reasonable when viewed objectively: Pfizer at [107]. This can be demonstrated by reference to material known to the person holding the belief or other material subsequently placed before the court: Pfizer at [120(ii)]. The question 'requires one to ask whether a person apprised of all of the material before the person holding the belief (or subsequently the Court) could reasonably believe that they may have a right to obtain relief': Pfizer at [120(iv)] (emphasis in original). Perram J, at least, was content to accept a proposition drawn from earlier authorities that belief is 'an inclination of the mind' towards assenting to something: Pfizer at [113], quoting St George Bank Ltd v Rabo Australia Ltd [2004] FCA 1360; (2004) 211 ALR 147 at [26(d)] (Hely J). But for Perram J, that was only if it is firmly kept in mind that the relevant belief is that a person may have a case on certain material. That belief can be held without one's mind being inclined in any way to the notion that they do have such a case: Pfizer at [120(v)].
The claims Mr Davidson says he is considering 38 There appear to be many claims which Mr Davidson wishes to pursue against the bank, and it was not always easy to discern from his submissions and affidavits how the claims are said to arise. As best the court can tell, the prospective claims are as follows. (1) Mr Davidson claims that Suncorp breached the Code of Banking Practice 2004 published by the Australian Bankers' Association (Banking Code) by advancing the original loans without assessing his ability to repay them. (2) Mr Davidson claims that Suncorp included a property in the securities for the advances which it did not need, which is also said to be a breach of the Banking Code. (3) Mr Davidson makes the allegations about fraudulent conduct by Mr Houlihan which are summarised above. He says Suncorp engaged in 'unconscionable, misleading and deceptive behaviour' by either allowing Mr Houlihan 'to carry out his nefarious activities without any oversight or, if there was, then knowingly or recklessly turning a blind eye to his activities'. It appears that Mr Davidson alleges that the bank is vicariously liable for Mr Houlihan's alleged fraud. (4) Mr Davidson says that the mortgages he granted the bank are 'void by fraud'. This is based on a claim that the mortgage noted that FNQ had 6,000 head of cattle when in fact it had at most 3,295. (5) Mr Davidson says that on 4 April 2014 Suncorp appointed BDO as receivers and managers of assets of FNQ and Mr Davidson on a false basis, namely that there was default because the assets were not insured, and some secured cattle were at risk of dying. He claims that Suncorp knew that the assets were fully insured and the cattle were not at risk, and so in appointing the receivers engaged in 'malicious unconscionable conduct'. He also claims that he was not served, or otherwise did not receive, any default notice before the receivers were appointed. (6) Mr Davidson claims in his affidavit that the bank misled him into signing 'the Releases', by which he presumably means the Settlement Deed and the Heads of Agreement. That is said to have occurred because he believed that Ms O'Keefe's 'report' had exonerated the bank of wrongdoing. (7) Mr Davidson also appears to want to claim that he signed the Settlement Deed because he was being threatened with the appointment of receivers. In fact BDO had already been appointed as receivers by then, so perhaps he means to say that the prospect that signing would terminate the appointment placed him under pressure. (8) Mr Davidson appears to claim that BDO sold a property at Cooktown when they had no right to do so and that furniture which was on the property has gone missing. (9) Mr Davidson claims that there was 'procedural unfairness' in the process of enforcement of the mortgages. He says that notices of default were not served before the appointment of receivers. (10) Mr Davidson claims to have evidence that Suncorp sold its interest in the mortgages to a United States based bond holder as part of a securitisation. He says this means that Suncorp has no legal interest in the mortgages. (11) Mr Davidson claims that Suncorp has either refused or not responded to a number of settlement offers made in 2016 and 2017. He claims this is unconscionable conduct. (12) Mr Davidson says that he wants a forensic accountant to verify the true amount owing to Suncorp. (13) Mr Davidson also claims in his affidavit that the bank or its agents have sold several of his properties at a significant undervalue. In the rest of these reasons I will refer to these claims by number as above. 39 Mr Davidson alleges in his affidavit that the bank has 'engaged in unconscionable, misleading and deceptive behaviour to prevent me from obtaining all proper documentation to enable me to properly pursue possible legal avenues' against the bank. It is not clear whether he advances this as one of the prospective claims he may make, or whether it is just an emphatic way of stating the dissatisfaction about the bank's attitude to the provision of documents which has led to the present proceeding. I do not treat it as a further claim. 40 Mr Davidson applied at an interlocutory hearing for leave to adduce evidence of someone he said was a handwriting expert to support his allegations of forgery. I dismissed that application: Davidson v Suncorp-Metway Limited (No 2). I mention it in these reasons because in his submissions on the present application, filed after the dismissal of the interlocutory application, Mr Davidson made a number of arguments which appeared to be responsive to the submissions that the bank had made on the interlocutory application. As that application had already been determined, I have not taken those further submissions into account. 41 I will now turn to consider whether Mr Davidson's apparent beliefs that he may have all these claims are reasonable. I have listed them above in roughly chronological order because that permits them to be grouped by reference to the matters I have said are particularly important: the releases signed in 2014 and 2015 above and Ryan J's decision in 2019. The first group is claims (1) to (7) above, which are affected by one or both of those matters. The second group is the balance of the claims, which are not affected by either of those two matters. I will consider each group in turn. 42 It will be convenient to start by examining the scope and effect of the releases in light of the judgment in QSC 2019, including various arguments which Mr Davidson advances by way of answer to those matters. The reasonableness of Mr Davidson's apparent belief that he may have claims (1) to (7) will then be assessed in light of my conclusions about those matters. I will then assess the reasonableness of that belief in respect of the balance of the claims, on which those two matters do not bear.
The Settlement Deed 43 The Settlement Deed was, as I have said, executed on or about 28 May 2014 in settlement of the proceedings which Mr Davidson and FNQ commenced in the Supreme Court of Queensland in 2014. Mr Davidson and FNQ were represented by solicitors and counsel during those proceedings and also had the assistance of one Geoff Shannon, of an organisation known as 'Unhappy Banking'. 44 As the name of the document suggests, the Settlement Deed was executed as a deed. The parties are FNQ, which is named as the 'Borrower', and Mr Davidson and two other companies apparently associated with him, who are all named as 'Guarantors'. Recital D says: The Borrower claims the Bank has engaged in unauthorised conduct in the operation of the Facilities as a consequence of which the Borrower claims it has suffered loss and damage. The Borrower also claims that employees of the Bank have engaged in conduct which the Borrower claim has caused it to suffer loss and damage, including the non-payment of certain cattle (the Borrower's Claims). 45 There are also recitals to the effect that FNQ is in default of the terms of its facilities and that the bank is entitled to declare all moneys immediately due for payment and to enforce its securities. One of the recitals refers to the commencement of the Supreme Court proceedings of 2014. Recital H says: 'The Parties have agreed to settle the matters in dispute, including the Borrower's Claims, on the terms set out in this Deed.' 46 The terms of the deed include a moratorium on the bank enforcing any of its rights under the securities until 31 March 2015 (cl 2). It also required FNQ to pay all moneys owing to the bank by that date (cl 4.1(c)). FNQ and Mr Davidson agreed to discontinue the Supreme Court proceedings (cl 4.2(b)) and the bank agreed to retire the receivers (cl 4.3(a)). The bank also agreed to capitalise interest and to give rebates of higher interest that had been applied, totalling $322,330.56 (cl 4.3(b) and cl 4.3(d)). 47 The Settlement Deed recorded the consent of the Guarantors including Mr Davidson to its terms (cl 5.1). It contained the following release clause (cl 6.1): The Borrower and the Guarantors hereby release, indemnify and hold harmless the Bank and the Receivers from and against any and all claims of whatsoever nature and description which they or any of them may have now against the Bank (or any present or past employee of the Bank) and/or the Receivers howsoever arising with respect to the Facilities, the Transaction Documents, the Amount Owing, the Bank's Current Enforcement Costs, the Securities, the Appointment of the Receivers, the conduct of the Receiver's appointment, the matters raised in the Proceedings and the Borrower's Claims, including without limiting the generality hereof, the claims made by the Borrower and Guarantor 1 with respect to any actions alleged to have been undertaken by employees of the Bank. 'Guarantor 1' is Mr Davidson. 48 It is clear that if the Settlement Deed is valid and effective, it has resulted in a release of all claims which Mr Davidson might otherwise have had against the bank as at the date of the deed. That includes claims (1) to (5), namely the claims about the manner in which or the basis on which the facilities were provided by the bank, the allegations about Mr Houlihan's and Mr Drewitt's conduct, and the claims about the appointment of the receivers. 49 Mr Davidson did not suggest that on its proper construction the Settlement Deed does not cover these claims, and nor could he. The words of release are wide. It is true that wide words can be read down by reference to what was in the contemplation at the time: see generally Grant v John Grant & Sons Pty Ltd (1954) 91 CLR 112. But the claims about the alleged fraudulent conduct and the appointment of the receivers were clearly in the parties' actual contemplation at the time that the deed was executed. They are referred to in the recitals and are among the express subjects of the release clause. It is not clear whether the parties were aware of the possible claims about the circumstances in which the facilities came to be advanced, including claims about breaches of the Banking Code (claims (1) and (2)). But a party may agree to release claims or rights of which it is unaware provided clear language is used to make that intention plain: Karam v Australia & New Zealand Banking Group Ltd [2001] NSWSC 709 at [406(2)] (Santow J). The language is plain and the intention is clear here. The release clause refers to claims howsoever arising in relation to, among other things, 'the Facilities', 'the Transaction Documents' and 'the Securities'. Each of those defined terms has specific and comprehensive definitions. The context of the Settlement Deed does not provide any reason to suggest the contrary; it was a settlement of a wide ranging claim by a borrower against a bank, which settlement was ostensibly comprehensive and intended to put the relationship between the parties on a sound footing for the future. 50 The release clause does not purport to affect any future claims. But assuming that the Settlement Deed was and remains effective, it released all presently relevant claims which Mr Davidson (or FNQ and other parties associated with Mr Davidson) might have had against the bank as at 28 May 2014. 51 Claims (6) and (7) are effectively attacks on the assumption that the Settlement Deed was and remains effective. It will be necessary to consider them below in the context of QSC 2019. Setting that aside for the moment, Mr Davidson also puts the following answers to the Settlement Deed. 52 First, he says that the deed cannot be used as a way of concealing or avoiding responsibility for what he says is Mr Houlihan's criminal fraud. He describes as the 'essential unresolved issue' whether Mr Houlihan and Mr Drewitt removed money from his account without authorisation. Related to this is an allegation that the bank ought to have known that it caused Mr Davidson's default because of Mr Houlihan's alleged stealing of Mr Davidson's money. He also says that it is unfair that the releases prevent him from bringing up his allegations that the various authorisations and transfer slips bearing his signature were forgeries. He says that the bank does not come to the court 'with clean hands'. 53 These submissions are misconceived. Alleged wrongs of the kind referred to in the preceding paragraph were all within the contemplation of the parties at the time Mr Davidson and FNQ gave the comprehensive releases in the Settlement Deed. Contrary to a submission Mr Davidson made, parties to a civil proceeding can release civil claims between them even though the alleged conduct on which those claims is based is criminal in nature, such as a fraud. After all, many civil claims concern behaviour with a possible criminal aspect, such as misleading or deceptive conduct and deceit. Private parties cannot absolve people of criminal responsibility which might be the subject of prosecution by government authorities. But that says nothing about the ability of private parties to release all civil claims they may have between themselves: see Kerridge v Simmonds (1906) 4 CLR 253. An agreement to stifle the prosecution of a criminal offence can be void because it is against public policy (ibid), but there is no suggestion in the evidence that it was an express or implied term of the deed of settlement that Mr Davidson would not refer the matter to the police or that any person would be constrained from giving evidence in any prosecution. There is a confidentiality clause in the Settlement Deed but it only relates to the negotiations for and contents of the deed, and so does not inhibit, for example, Mr Davidson's ability to raise his allegations of fraud with the police. 54 Mr Davidson's second answer to the Settlement Deed is that it cannot be a bar to litigation over settlement offers that were made after it was executed. That is correct, and the bank accepts it. Claims potentially arising after the execution of the Settlement Deed are addressed below on the basis that they have not been released. 55 Third, Mr Davidson says that he received no valuable consideration in return for the releases he provided in the deed. He claims that the deed is a 'peppercorn agreement'. That is said to be because Suncorp was in any event obliged to give him what it provided under the deed. This refers to the retirement of the receivers, a rebate on interest charges and a moratorium on enforcement action which were provided under the deed. Mr Davidson's submissions referred to those three things as 'grounds' for the deed, which grounds he denies. This seems to be the main basis of Mr Davidson's attempt to overcome the effect of the releases. He claims that had the bank litigated those three grounds, it would have been likely to lose. He also claims that 'equity in the sum of $230,000' given to him by Suncorp under the Settlement Deed was insignificant in comparison to the value of the properties that were at risk. 56 These claims are misconceived and without foundation. The three 'grounds' for the deed were, obviously, valuable consideration for the purposes of the law of contract. Even if they were 'peppercorn' consideration, at law that is still good consideration. This is because the law recognises that '[a] contracting party can stipulate for what consideration he chooses. A peppercorn does not cease to be good consideration if it is established that the promisee does not like pepper and will throw away the corn': Chappell & Co Ltd v Nestlé Co Ltd [1960] AC 87 at 114. And there is no apparent basis in any of the materials for the contention that the bank was obliged to provide the 'grounds' to Mr Davidson anyway. And even if there was, the document took effect as a deed, for which consideration was not required. 57 Finally, Mr Davidson says that 'the Deed cannot be pleaded as a bar to litigation based on the bank's mortgage because statutory law has precedence over contract law'. This appears to be a reference to the claim that the mortgages are invalid because they do not comply with the Land Title Act 1994 (Qld). As I have said, I will not determine those claims in these reasons. But even if I assumed that they are sound, that cannot provide any basis to set aside the deed. It settled such claims as Mr Davidson had, or may have had, at the time of the deed, whether those claims were sound or not.
The Heads of Agreement 58 The Heads of Agreement is dated 19 August 2015. The parties are the bank (who is defined as 'The Creditor), and Mr Davidson and FNQ (who are defined as 'The Borrowers'). The recitals refer to the farm debt mediation and say that the parties have 'reached agreement as to the matters of concern between them and have agreed to enter into this Heads of Agreement to record their agreement'. The recitals refer to the facilities provided by the bank and to certain mortgages and say that the facilities are in arrears. 59 The Heads of Agreement effectively set up a schedule for payment of certain instalments by certain dates (cl 1 and cl 2). In broad terms, there was also a requirement for the Borrowers to try to sell specified properties if they did not pay the first two instalments on time, and requiring them to give the bank vacant possession if they did not enter into satisfactory contracts of sale by certain defined times (cl 3). The bank was also entitled to vacant possession if the final payment was not made (cl 4). Clause 9 says 'In consideration of this Heads of Agreement, the Borrowers release the Creditor, its servants, agents, and employees from and against all or any claims they may have on any basis whatsoever'. 60 Mr Davidson says that the Heads of Agreement was not legally binding. It is true that documents with that title are often executed on a non-binding basis. But reading the document here as a whole, it is clear that the parties did intend it to be legally binding. Its contents are all in terms of positive and specific legal obligations and there is no suggestion that they are subject to further agreement. The statement in the recitals which I have quoted above confirms that the document is legally binding. 61 It does not appear that any of the claims Mr Davidson wants to make against the bank arose between 28 May 2014, when the Settlement Deed was signed, and 19 August 2015, the date of the Heads of Agreement. So in view of the comprehensive nature of the releases given in the Settlement Deed, the Heads of Agreement can only be relevant if the Settlement Deed is found to be void, or voidable, or otherwise rendered ineffective. In what follows there will be no need to refer specifically to the Heads of Agreement.
QSC 2019 62 It will be recalled that QSC 2019 is the judgment of the Supreme Court of Queensland giving the bank vacant possession of Mr Davidson's house on Heidke Road. The bank says this decision gives rise to relevant issue estoppel and Anshun estoppel. So it is necessary to consider the scope and effect of Ryan J's judgment. 63 To the extent that they are relevant to this proceeding, Ryan J's reasons for decision can be summarised as follows (with paragraph number citations from the judgment): (1) The proceeding was an application by the bank for vacant possession of the mortgaged Heidke Road property. (2) Mr Davidson resisted the application on the basis that he had a claim against the bank, founded on allegations of fraud or misconduct by Mr Houlihan and Mr Drewitt: at [3], [60], [266]. He argued that the releases from that claim which he had given the bank in the Settlement Deed and the Heads of Agreement were voidable because of economic duress, which was said to be illegitimate pressure which the bank applied to Mr Davidson compelling him to grant the releases: at [3], [61]. (3) The issue before Ryan J was whether the economic duress claim had real prospects of success, because the bank accepted that if it did, the bank would not be entitled to vacant possession of the Heidke Road property: at [4], [62], [64]. (4) Ryan J made findings describing the events occurring in the time up to her Honour's judgment: at [13]-[58]. These events are, in less detail, summarised in this judgment above in the section headed 'Background'. (5) Ryan J made a detailed review of the evidence that Mr Davidson had given in two affidavits before her Honour: at [117]-[160]. That evidence concerned Mr Houlihan's conduct, the appointment of the receivers, and the circumstances surrounding the execution of the Settlement Deed and the Heads of Agreement: at [142]-[159]. Ryan J also reviewed the evidence about those matters which the bank had adduced: at [161]-[210]. (6) Ryan J held that the economic duress claim did not have real prospects of success: at [7]. After reviewing the competing submissions of the parties (at [211]-[244]), her Honour held (at [248], citation removed): At the heart of a claim for economic duress is the use of illegitimate economic pressure to secure a benefit - including assent to an agreement. The law will not give effect to an apparent consent which was induced by illegitimate pressure exercised by one party upon another. Her Honour considered the ways in which Mr Davidson alleged that the bank had imposed illegitimate pressure, namely an alleged refusal to consent to the sale of cattle, and the bank's appointment of receivers, and found that he had no real prospects of establishing either: at [250]-[259]. Her Honour found that the security documents did not require the bank's consent before cattle could be sold in the ordinary course of business (at [190]), that the bank's lawyers had explained this to Mr Davidson's lawyers, and that Mr Davidson knew about this: at [197]-[202]. Her Honour also found that in appointing the receivers the bank was taking legitimate steps to protect its commercial interests in the context of its commercial relationship with Mr Davidson: at [255], [258]. (7) Ryan J also found that even if the bank had applied illegitimate pressure, on Mr Davidson's own evidence that was not the cause of his entry into the Settlement Deed or the Heads of Agreement. Rather, his evidence was that he did not know that he was giving releases in those documents. As difficult as that evidence was to accept (at [275]), if it was true then it meant that he did not sign the documents under some coercion which left him with no choice; he signed them because he did not know what they said. On that basis, her Honour found that even if the bank had applied illegitimate pressure, Mr Davidson did not have real prospects of success in a claim to set aside the releases on the basis of economic duress: at [260]-[282]. (8) It seems that Ryan J went on to find that even if Mr Davidson's evidence had alleged coercion, that did not cause him to sign the releases: at [283]-[287]. Her Honour based this on a finding that 'Mr Davidson was, on the evidence, legally advised and robustly supported by Mr Shannon': at [286]. 64 Ryan J thus made orders authorising the bank to obtain possession of the Heidke Road property as against Ms Nagatsuma and Mr Davidson. Her Honour also granted an injunction restraining them from interfering with the sale of the property by the bank.
The Settlement Deed and QSC 2019 - issue estoppel and Anshun estoppel 65 The bank relies on QSC 2019 as rendering Mr Davidson's attacks on the Settlement Deed untenable. It says that Ryan J's judgment and her reasons for it give rise to issue estoppel and Anshun estoppel. 66 In Blair v Curran (1939) 62 CLR 464 at 532, Dixon J described issue estoppel as arising when 'a state of fact or law is alleged or denied the existence of which is a matter necessarily decided by the prior judgment, decree or order'. His Honour went on to say: Nothing but what is legally indispensable to the conclusion is thus finally closed or precluded. In matters of fact the issue estoppel is confined to those ultimate facts which form the ingredients in the cause of action, that is, the title to the right established. Where the conclusion is against the existence of a right or claim which in point of law depends upon a number of ingredients or ultimate facts the absence of any one of which would be enough to defeat the claim, the estoppel covers only the actual ground upon which the existence of the right was negatived. But in neither case is the estoppel confined to the final legal conclusion expressed in the judgment, decree or order. In the phraseology of Coleridge J. in R. v. Inhabitants of the Township of Hartington Middle Quarter [(1855) 119 ER 288 at 293], the judicial determination concludes, not merely as to the point actually decided, but as to a matter which it was necessary to decide and which was actually decided as the groundwork of the decision itself, though not then directly the point at issue. Matters cardinal to the latter claim or contention cannot be raised if to raise them is necessarily to assert that the former decision was erroneous. 67 In QSC 2019 the point directly at issue was whether the bank was entitled to enforce its mortgage over the Heidke Road property. Ryan J's conclusion that it was necessarily entails a conclusion that the mortgages were valid and enforceable. To the extent that Mr Davidson claims to the contrary now, he necessarily claims that QSC 2019 is erroneous. He is estopped from doing so. That is why Derrington J dismissed his application for an injunction restraining the enforcement of certain mortgages in FCA 2020. 68 In QSC 2019 Ryan J also decided, as part of the groundwork for her decision, that Mr Davidson had no real prospects of establishing that the releases he gave were voidable because of economic duress. While her Honour's judgment was in form to grant an application by the bank, it was also in substance a decision to dismiss a countervailing attack on the releases which Mr Davidson mounted on the basis of economic duress. That engages the principle from Blair v Curran, to the effect that the estoppel only covers the actual ground upon which the existence of the legal right was negatived. In QSC 2019 the legal right asserted was the right to set aside the Settlement Deed and the actual ground on which it was negatived was that there was no duress, or if there was it did not cause Mr Davidson to sign the Settlement Deed. So the relevant issue estoppel is against asserting economic duress. 69 That assertion is the foundation of claim (7), that Mr Davidson signed the Settlement Deed because he was being threatened with the appointment of receivers. QSC 2019 means that claim is untenable. Ryan J directly considered this allegation, and for a court to find that the appointment of the receivers placed him in a situation where he had no choice but to sign the Settlement Deed would be to imply that QSC 2019 is wrong. 70 The bank's reliance on QSC 2019 went further than this. In this court it submitted that Ryan J's determination necessarily decided the issue of the enforceability of the releases. If that is correct, then claim (6), which is to the effect that the Settlement Deed is liable to be set aside because it was induced by misleading or deceptive conduct, would entail a conclusion that her Honour's decision was wrong. But I do not accept the bank's submission in that regard. In my view, the principles laid down in Blair v Curran apply, as I have indicated, only to preclude re-agitation of the actual ground upon which Ryan J negatived Mr Davidson's claim that the deed was voidable. That ground was economic duress, not misleading conduct. 71 Contrary to a submission by the bank, I do not consider that in FCA 2020, Derrington J reached the conclusion that QSC 2019 gave rise to an issue estoppel against any attack on the enforceability of the releases. While at [25] his Honour did include the validity of the Settlement Deed among a list of things that were 'the essential and necessary determinant in Ryan J's reasons', it is clear from the same paragraph that the actual basis of his Honour's decision was that QSC 2019 has 'determined the validity of the mortgage and the Bank's entitlement to enforce its security'. As will be seen, his Honour had already considered the validity of the releases separately, and I do not consider that he applied any issue estoppel to that question. 72 That is all academic, however, because I do accept the bank's further submission that the principles of Anshun estoppel stand in the way of Mr Davidson's attempt to impugn the Settlement Deed for misleading or deceptive conduct. An estoppel of that kind 'will preclude the assertion of a claim or of an issue of law or fact if the claim or issue was so connected to the subject matter of the first proceeding as to make it unreasonable, in the context of the first proceeding, for the claim or issue not to have been made or raised in it': Timbercorp Finance Pty Ltd (in liq) v Collins [2016] HCA 44; (2016) 259 CLR 212 at [27] (French CJ, Kiefel, Keane and Nettle JJ). While, in QSC 2019 Mr Davidson did not submit that the Settlement Deed should be set aside on the basis of misleading or deceptive conduct, the evidence he gave and the submissions he did make required Ryan J to consider his reasons for signing the deed in detail, and her Honour did so. The proceeding was, in effect, a full trial about why he entered into the Settlement Deed. Mr Davidson had raised that question, from the point of view of duress, in order to resist an order which would have had the drastic consequence that he would be evicted from his home. He was represented by solicitors and counsel and he must have known, or should be taken to have known, that if there was any basis open for impugning the Settlement Deed, it needed to be raised before Ryan J. If a claim based on misleading or deceptive conduct was open to be made, it was unreasonable of Mr Davidson not to have done so before Ryan J. 73 I accept that this was a ground of Derrington J's decision in FCA 2020. As I have indicated, his Honour did deal specifically with the validity of the Settlement Deed. He found (at [23]) that: any claim relating to the validity of the releases could have, and should have, been agitated in the proceedings in the Supreme Court of Queensland. That being so, the applicants are estopped from commencing or prosecuting any further claim in this regard, the validity of the releases having been settled by action. That is a conclusion which his Honour reached in the course of making an order dismissing Mr Davidson's application for an injunction against the bank in this proceeding. It would be extraordinary for a judge in the same proceeding to differ from that conclusion unless error had been conclusively shown. But there is no need for me to differ here, as I respectfully agree with Derrington J. 74 Mr Davidson nevertheless seeks to avoid the effect of the judgment of the Supreme Court of Queensland in QSC 2019 by alleging that it was obtained by arguments 'based on a fraud'. The fraud appears to be the allegedly forged withdrawal authorisations. This is misconceived. The issue in QSC 2019 was whether Mr Davidson had real prospects of having the Settlement Deed set aside. Only then could he pursue his allegations of fraud. Ryan J's judgment was not in any sense based on any finding that Mr Houlihan's alleged frauds did not occur. It was solely concerned with the circumstances in which the Settlement Deed (and Heads of Agreement) came to be executed. 75 Mr Davidson also seeks to impugn QSC 2019 on the basis that Ryan J did not consider his argument based on the Land Title Act 1994 (Qld). But this too is misconceived. The obvious reason why the court did not consider that argument is because Mr Davidson (advised and represented by solicitors and counsel) did not make the argument. That provides no basis to find, as Mr Davidson submitted, that QSC 2019 is unsafe. 76 Mr Davidson also made allegations in submissions that evidence of at least one bank officer which was put before Ryan J was 'perjury'. This was an example of a propensity Mr Davidson has displayed throughout this proceeding to make scandalous allegations, quite casually, without any attempt to refer to specific evidence that is reasonably capable of establishing them. The fact that he is not a lawyer with professional obligations not to make such allegations does not make it appropriate. 77 Mr Davidson submitted that by directing her Honour's attention to the question of the economic duress claim, the Supreme Court became 'misdirected' away from 'Houlihan's fraud and forgeries and theft'. The response to that which immediately occurs to one is that it was Mr Davidson through his lawyers who raised the claim of duress: see QSC 2019 at [3]. In any case, it was not a misdirection. Determining whether there were reasonable prospects of the avoidance of the release was an essential threshold issue to determine in the proceedings before Ryan J. 78 Mr Davidson also submits that the issue estoppel is being used 'to suppress evidence of Suncorp's fraudulent misdeeds'. He says that the judgment was based on limited information that he had and that Suncorp chose to put before the courts, and not on a complete investigation of the documents he now seeks. Once again, Mr Davidson had legal representation and the issues which were agitated (and not agitated) must be taken to reflect forensic choices made on his behalf. Any asserted gap in the evidence put before the Supreme Court of Queensland is no basis to disregard the judgment of that court, and neither it, nor any of the other matters Mr Davidson has raised, would give this court any power to overturn that judgment.
Any belief that Mr Davidson may make claims (1) to (7) is not reasonable 79 Where do the releases and QSC 2019 leave Mr Davidson's asserted belief about claims (1) to (7)? They do not falsify the allegations of fraudulent conduct against the bank and its officers and the allegations of breach of the Banking Code. So while Mr Davidson did not articulate this, it is not hard to see that if the former claims have a reasonable basis, they may found claims of misleading or deceptive conduct or unconscionable conduct against the Bank which could be actionable under s 18, s 20 and s 21 of the Australian Consumer Law (ACL) or their equivalents under the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act). The jurisdiction of this court would be attracted by such claims and, I assume (perhaps generously) that the Banking Code claims would be part of the same 'matter' so that the court would have jurisdiction over them too. There is also no basis on which the court could say that Mr Davidson's evidence about the conduct of which he complains does not provide a reasonable basis for his beliefs. While the bank contests that evidence, it did not suggest that there was any reason why it could be dismissed on a summary basis in this application. 80 Nevertheless, the conclusions I have reached above about the Settlement Deed and QSC 2019 mean that any belief that Mr Davidson may have the right to obtain relief in this court from the bank on the basis of claims (1) through to (7) is not a reasonable one. In my view they are conclusions that are not reasonably contestable. Mr Davidson signed a comprehensive release in 2014. He was represented by solicitors and counsel (and Mr Shannon). He signed another release in 2015. The Supreme Court of Queensland found him to have no real prospects of setting the releases aside. A reasonable person would recognise the finality imposed by that accumulation of events, on any prospect of making a claim against the bank concerning anything that happened before, at the earliest, 28 May 2014, when the Deed of Settlement was signed. 81 For completeness, even if Anshun estoppel does not preclude claim (6), I would still find that Mr Davidson does not hold a reasonable belief that he may have the right to obtain relief from the bank on the basis of that claim. His assertion that he signed the deed because he believed that Ms O'Keefe's 'report' exonerated the bank is implausible. The long and complicated history of his campaign against the bank, in the Supreme Court of Queensland and in this court, is in large part a history of his insistence that Ms O'Keefe's 'report' was wrong. While there is no evidence in this application of him having said so before he signed the Settlement Deed, there is also nothing to suggest that he had some change of mind after he signed it. It is inherently unlikely that he did, as the foundation of Ms O'Keefe's affidavit was that, contrary to his assertions, Mr Davidson did sign the authorities and transfer slips which led to the drawings on his overdrafts of which he complains. Mr Davidson is adamant that he did not; if he is certain of that now, he was certain of it in May 2014 too. 82 In fact, his evidence in QSC 2019 is inconsistent with the claim he now wishes to make, because that evidence was that he did not know that the deed contained a release: see QSC 2019 at [272]. The effect of his claim now is that he gave the release because he thought that the bank had been exonerated. If he did not know that there was a release, that alleged belief would not have influenced his behaviour. I am conscious that applications for preliminary discovery are not mini-trials and that there was no cross-examination of Mr Davidson. Nevertheless, I have a high degree of confidence that claim (6) has no basis in fact and so it is not reasonable to believe that Mr Davidson may have the right to obtain relief on the basis of it. 83 If I am wrong about all this, and Mr Davidson's apparent beliefs are reasonable, then QSC 2017 provides two further reasons to dismiss his application in relation to at least claims (3) to (7). In my view, both reasons are compelling. One is that claims (3) to (7) are substantially the same as the claims made in QSC 2017. The relief sought in the originating application is relevantly based on allegations that various instruments including the Settlement Deed and Heads of Agreement are unenforceable due to 'the fraudulent and/or misleading conduct of [the bank] or [the bank's] employees or agents' and that the Settlement Deed is vitiated by economic duress. The similarity is confirmed by the affidavit which Mr Davidson swore in support of the application, which makes all the allegations about Mr Houlihan's conduct on which Mr Davidson seeks to rely in this proceeding. It is further confirmed by a draft statement of claim in QSC 2017 which, he said in an affidavit sworn in May 2018 (in the QSC 2019 proceedings), 'will be filed and served': see QSC 2019 at [156]. Those matters indicate that Mr Davidson does not need preliminary discovery to commence proceedings in this court in respect of claims (3) to (7). In 2017 he had already commenced relevantly indistinguishable proceedings in the Supreme Court of Queensland and in 2018 he gave sworn evidence that he was ready to file a statement of claim in those proceedings. The requirement of r 7.23(1)(b), that Mr Davidson does not have sufficient information to decide whether to start a proceeding in this court in respect of claims (3) to (7) is not established. 84 The second reason why QSC 2017 means that the present application must be dismissed in relation to claims (3) to (7) is that QSC 2017 remains on foot. If Mr Davidson proceeds with them, he may be entitled to discovery in relation to those claims. There is no general rule that preliminary discovery must be refused if the prospective applicant can obtain documents in other ways, although the existence of other avenues can be relevant to the issue of whether a prospective applicant has made 'reasonable inquiries' for the purposes of r 7.23(1)(b). But the fact that a prospective applicant may already be entitled to the same discovery in different proceedings which are already on foot is a powerful reason not to exercise the discretion in the prospective applicant's favour. If I had found that the discretion arose, this factor would have led me to exercise it against Mr Davidson here in relation to claims (3) to (7). 85 Finally, I need to refer to a letter dated 1 July 2020 from Mr Neve which Mr Davidson sought to adduce into evidence, because the bank was objected to that and I said I would rule on its admissibility in my reasons for decision. The letter expresses Mr Neve's opinion about what material would be necessary to ascertain whether the bank advanced money to Mr Davidson without properly assessing his ability to repay. This could be relevant to claim (1). I rule that the letter is admissible because it is relevant to whether Mr Davidson has the belief required by r 7.23(c)(i), namely a reasonable belief that the bank has, or is likely to have, in its control documents directly relevant to the question whether he has a right to obtain relief: see Pfizer at [78]-[80], [151]-[158], [182]. But in view of my conclusions above, the evidence cannot avail Mr Davidson in this application.
The balance of the claims 86 There are six more claims which Mr Davidson wants to make which are not precluded by the Settlement Deed, the Heads of Agreement or QSC 2019, because they seem to have arisen after 2015. I will now consider each in turn.
Claim (8) - Cooktown house 87 It appears that BDO, acting as agents for the bank as mortgagee in possession, have sold a property in Cooktown which Mr Davidson owned. He claims that he agreed to transfer ownership of the property to his former wife but (on advice from Mr Houlihan) he never did. He also claims that furniture which was in a house on the property has gone missing. The bank says that the furniture is in storage in Cooktown and has produced letters from Gadens on behalf of the bank and BDO to Mr Davidson's former wife indicating that there is doubt about the ownership of the furniture. 88 This evidence provides no reasonable basis to think that Mr Davidson may have a claim against the bank. It is not at all clear what claim he wishes to make in relation to BDO's sale of the property. To the extent that it is a claim for failing to take reasonable care to sell the property for market value, that is considered below. To the extent that it is a claim based on the alleged existence of an interest in the property held by his former wife, it would appear that she is the proper claimant, not Mr Davidson. 89 As far as the claim for missing furniture goes, Mr Davidson did seek to tender two unsigned documents which he said were letters from his ex-wife about the matter. But the bank objected on the basis that Mr Davidson only gave notice of that the night before the hearing, and there was no evidence which permitted the court to understand why these unsigned printed documents were sent and who they were in fact from. The court gave Mr Davidson the opportunity to file an affidavit after the hearing which gave that necessary context, so that if appropriate the alleged letters could be admitted into evidence. He did not take up that opportunity; instead he filed a further affidavit seeking to repeat or add to the various allegations about other matters he had already raised. That affidavit was filed without leave after the hearing and it has not been admitted into evidence. Nor have the alleged letters. 90 As a result, the court is left with a bare assertion by Mr Davidson that the furniture has 'gone missing', and a vague assertion that '[c]omplaints have been made by my former wife to BDO … but no response has been received'. These provide no reason to doubt the unchallenged evidence from the bank that it has tried to identify the rightful owner of the furniture and remains willing and able to give it to that person, and in the meantime the furniture is safe. There is no basis to think that the bank has committed any actionable wrong in relation to the furniture which could found a reasonable belief that Mr Davidson may have the right to obtain relief from the bank in this court.
Claim (9) - procedural unfairness in the process of enforcement of the mortgages 91 Mr Davidson alleges that notices of default were not served before the appointment of the receivers in 2014. He claims that this culminated in default judgment in the Supreme Court of Queensland in favour of Suncorp as mortgagee in possession. That is simply wrong; as I have explained, in QSC 2019 the Supreme Court made orders for vacant possession of the Heidke Road property after a contested hearing at which Mr Davidson was represented by Queen's Counsel. It also necessarily follows from that judgment that it is not open to Mr Davidson to rely now on any procedural deficiency in relation to that mortgage, as the Supreme Court has conclusively determined that it is enforceable. 92 In relation to the other mortgages, I dismiss the application because Mr Davidson has failed to establish the requirement in r 7.23(1)(b) that he does not have sufficient information to decide whether to start a proceeding in this court to obtain that relief. If no notices of default were served on Mr Davidson in relation to any of the mortgages, Mr Davidson must know that. Perhaps Mr Davidson has some doubt about whether the bank will allege that it did in fact serve the notices, regardless of whether he thinks he received them. But the bank has put an apparently comprehensive set of the notices it served into evidence, not just in this application but also in previous proceedings in the Supreme Court of Queensland. Further discovery on that issue cannot help Mr Davidson. 93 I also have serious reservations about whether a claim of this kind, relying as it must on the law of Queensland concerning the enforcement of mortgages, attracts the jurisdiction of this court, and therefore could found a reasonable belief that Mr Davidson may have a claim in this court. But it is not necessary to determine that.
Claim (10) - securitisation of the mortgages 94 Mr Davidson says that certain alleged transactions by which the bank securitised his mortgages (presumably among many others) means that the bank has no legal interest in those mortgages. This claim was founded on two documents containing potentially complex and contestable opinion evidence which Mr Davidson provided to the court and the bank the night before the hearing. The bank objected on that basis, and I upheld that objection, as Mr Davidson gave no satisfactory explanation of why the documents were not put into evidence earlier. So there is simply no evidence to found a reasonable belief that he may have a claim against the bank in respect of this matter. In any event, none of the document categories sought in his application relate to this claim. I reject Mr Davidson's attempt, made for the first time in submissions, to obtain preliminary discovery in relation to this allegation.
Claim (11) - failure to accept settlement offers 95 Mr Davidson claims that Suncorp has either refused or not responded to a number of settlement offers that he made in 2016 and 2017. He claims this is unconscionable conduct. He gives as an example what he says was an offer made in March 2017 for a Chinese company to purchase his assets for $9 million. Another example is an offer from an entity called Mackay Green Energy Inc which included 'a finance proposal which was raising $8,000,000 to pay' the bank. A similar claim is made in relation to entirely unparticularised settlement offers said to have been made in 2020, although the complaint about these is 'bad faith'. 96 The evidence before this court about these offers gives no basis for any reasonable belief that Mr Davidson may have a claim against the bank. At its highest the evidence shows that an apparently Chinese potential investor (or possible investors) made informal written offers to Mr Davidson in 2017 to pay sums of money in return for an interest in the farms. Even assuming that those sums would have paid out the bank's debt had the offers come to fruition, the bank had no obligation to accept the (unspecified and possibly non-existent) offers from Mr Davidson. A mortgagee is only obliged to accept an offer if it is accompanied by legal tender of the full amount owing: see generally Tyler, Young and Croft, Fisher and Lightwood's Law of Mortgage (LexisNexis Butterworths, 3rd Australian ed, 2014) at [32.40]-[32.49]. While one can conceive of circumstances where the conduct of a creditor in failing to accept an offer is so unreasonable that it breaches, say, statutory prohibitions on unconscionable conduct, there is no evidence of any conduct by the bank here that comes anywhere near such a breach. The only response from the bank in evidence - and Mr Davidson put it into evidence - is an email which effectively invited the potential Chinese investor to participate in the bank's sale process.
Claim (12) - verification of the amount owing to the bank 97 Mr Davidson says that he wants a forensic accountant to verify the true amount owing to Suncorp. But he has advanced no evidence providing a foundation for any reasonable belief that the bank has made any miscalculation or misstatement of the amount owing. He has provided a letter dated 1 July 2020 from Mr Neve. Like the other letter from Mr Neve which I have mentioned, I rule that this letter is admissible as potentially going to the basis on which Mr Davidson has formed a belief that he may have a claim. But the letter does not persuade me that this belief is reasonable. It does not concern any specifics of Mr Davidson's circumstances. Rather, it refers to cases in which, it is said, there were miscalculations in respect of other (unspecified) customers of Suncorp. It then hypothesises as to what would be the result if similar mistakes had been made in relation to Mr Davidson. Mr Neve says in terms that he has not seen Mr Davidson's term loan and overdraft loan history and bank statement or letters of finance. I put no weight on the entirely hypothetical issues which are posited in the letter. 98 Also, the bank has provided evidence establishing that it has kept Mr Davidson informed of the outcome of asset realisations, and it has sent him a full set of bank statements. Even if there was a reasonable basis to think that Mr Davidson may have a claim of this kind, I am not persuaded that he has established the requirement in r 7.23(1)(b) that he does not have sufficient information to decide whether to start a proceeding in this court to obtain relief. Also, the nature of any relief he could seek is unexplained, and once again I doubt that this court would have jurisdiction to grant it.
Claim (13) - sale at an undervalue 99 Mr Davidson claims in his main affidavit in support of the application that the bank or its agents have sold several of his properties at a significant undervalue. He appears to want to allege that this is a breach of s 85 of the Property Law Act 1974 (Qld) to 'take reasonable care to ensure that the property is sold at the market value'. 100 Mr Davidson's main affidavit sets out what appear to be sale prices for various properties that have been sold by the bank as mortgagee in possession. It also annexes a letter dated 14 February 2019 from someone called Michael Murphy who, on the face of the letter, is a qualified land valuer. The letter sets out Mr Murphy's 'assessment so far' (his words) of the value of various properties. It is clear that the figures are not valuations, because the letter says 'the valuations are under preparation'. 101 At the moment, the letter is hearsay evidence of an opinion by a person who may turn out to be a qualified expert, but has not been established as such before the court. Also, the reasons for the opinion and its factual basis are not in evidence. Those matters mean that this evidence would not be admissible on any trial of the question of sale at an undervalue. But it is admissible in this proceeding for the reason that, hearsay opinion or not, it can provide a basis for Mr Davidson holding a reasonable belief, or it can be admitted not to prove the fact about which Mr Murphy expressed the opinion, but to prove the reasonableness of Mr Davidson's belief: see Pfizer at [78]-[80], [151]-[158], [182]. Counsel for the bank did not object to the admission of the letter into evidence. 102 However the weight that can be put on Mr Murphy's letter for the purpose of this application is very limited. That is so even when one takes into account that all Mr Davidson has to demonstrate is a reasonable belief that he may have a claim. For one thing, it is impossible to match several of the properties referred to in the letter to any of the properties sold by the bank as described in Mr Davidson's affidavit. The bank also pointed out that the letter says that the farms were valued on a going concern basis, not a vacant possession basis. The bank was selling as mortgagee of the land, and therefore presumably selling the farms with vacant possession. So in respect of the farms, I do not consider that it is possible to make any meaningful comparison between the assessments in Mr Murphy's letter and the sale prices achieved by the bank. That problem is compounded by the impossibility of telling from the evidence which of the properties listed in the letter actually were farms. There is a document in evidence titled 'WJA Davidson's Properties and Farms' which permits one to see that several properties included in it are probably farms, but for the most part it does not permit one to see that those farms are included in Mr Murphy's letter. This inability to make any meaningful comparison means that, without more, any belief that Mr Davidson may have a claim against the bank for sale at an undervalue does not have a reasonable basis. And there is no more; for example, there is no evidence about the process the bank (or BDO on its behalf) followed in selling the farms which might provide a reason to think that it did not take reasonable care in making the sales. 103 That leaves two properties assessed in the letter which are not farms and which do not appear to have been assessed on a going concern basis. One is an industrial lot in Cooktown. On Mr Davidson's own evidence, FNQ is the proprietor of that land, so any sale at an undervalue cannot found a reasonable belief that Mr Davidson may have a claim against the bank. The other is the house in Cooktown which I have mentioned above. I accept that the disparity between Mr Murphy's assessment of its value ($800,000) and the price at which the bank sold it ($400,000) is sufficiently large to provide a basis for a reasonable belief that Mr Davidson may have a claim against the bank in that regard. 104 It does not follow, however, that the requirement of r 7.23(1)(a) is satisfied in respect of that claim. That is because the reasonable belief must be that the prospective applicant may have a claim in this court. If there is no reasonable basis to believe that the Federal Court may have jurisdiction in relation to the claim, that requirement will not be satisfied. 105 Here, if the potential claim for sale of the Cooktown house at an undervalue is taken alone, there is no basis on which this court would have jurisdiction over it. It would be a claim for a breach of a provision of Queensland legislation (the Property Law Act 1974) and the common law. It is not a claim in relation to which any Federal Act of Parliament specifically vests jurisdiction in this court (see Federal Court of Australia Act 1976 (Cth) s 19), or a claim that would invoke the original jurisdiction of the court that is conferred by s 39B of the Judiciary Act 1903 (Cth). 106 The question which follows from that is whether that potential claim must be taken alone. That is, the question is whether this prospective claim, while having no federal character by itself, would nevertheless attract the jurisdiction of the court because, for the purposes of s 39B(1A)(c) of the Judiciary Act, it is part of the same 'matter' as other claims which do have the necessary federal aspect. Lee J considered this point in relation to preliminary discovery in Essential Energy v Rose [2020] FCA 722; (2020) 145 ACSR 106. His Honour held that this court could order preliminary discovery in respect of a claim which was not federal in character because it was part of the same matter as other claims which did have that character. That was so even if the federal claims were so unmeritorious that they were liable to be struck out, provided that they were not 'colourable', which imports improper purpose, or a lack of bona fides: at [12]. Lee J did not consider that the decision of Gilmour and Moore JJ in Apache Northwest Pty Ltd v Newcrest Mining Ltd [2009] FCAFC 39; (2009) 182 FCR 124 at [7]-[8] was authority to the contrary. Rather, what their Honours held there was that if the only prospective claim where the prospective applicant has the reasonable belief would not attract the court's jurisdiction taken alone, that is a discretionary reason against ordering preliminary discovery in respect of that claim: see Essential Energy v Rose at [13]-[15]. 107 I respectfully agree with Lee J in relation to all of this. But I do not consider that it is applicable in the present case, because I do not consider that the prospective claim in relation to the sale of the Cooktown house at an undervalue is part of the same matter as any prospective claim with the necessary federal character. A matter is a justiciable controversy comprised of the substratum of facts representing or amounting to the dispute or controversy between the parties: see Fencott v Muller (1983) 152 CLR 570 at 603-608; Australian Securities and Investments Commission v Edensor Nominees Pty Ltd [2001] HCA 1; (2001) 204 CLR 559 at [50]-[54]. Whether two claims are part of the same matter is a question of impression and practical judgment in the circumstances of the case: Fencott v Muller at 608. The central task is to identify the justiciable controversy: Re Wakim; Ex parte McNally [1999] HCA 27; (1999) 198 CLR 511 at [139]. If there is 'common substance, a substantial overlapping of the underlying facts and allegations in the federal claim and the non-federal claim out of which the different claims arise, that will suffice': Rana v Google Inc [2017] FCAFC 156 at [29]. 108 In my view, such substantial overlapping is absent here. The claims which have, or may have, a federal character are claims (1) to (7) (the alleged conduct leading up to and including the execution of the Settlement Deed, which could be based on the ACL or the ASIC Act, although as I have said that view is generous in relation to claims (1) and (2)) and claim (11) (the alleged rejection of settlement offers which could, conceivably, be unconscionable conduct in breach of the same legislation). Other than the bare facts of the making of the advances and the granting of the mortgage over the Cooktown house - facts which are not controversial - there is no common substratum between those claims and the claim for sale of that property at an undervalue. The true controversy in relation to the sale at an undervalue claim will concern the actions of the bank and BDO in how they went about the sale of the house from 2017 onwards. That does not touch on the claims about the allegedly fraudulent and oppressive conduct up to and including the execution of the Settlement Deed in 2014. It cannot be said that determination of one is essential to the determination of the other or that if they were determined by different courts there would be any potential for conflicting findings, being indicia referred to in Wakim at [140]-[141]. As a matter of impression and practical judgment, the two matters are not the same. I consider that to be sufficiently clear to mean that any belief that Mr Davidson holds that he may be able to make claim (13) in this court is not a reasonable one. 109 If I am wrong about that, I would in any event dismiss the application in relation to claim (13) for the discretionary reason identified in Apache Northwest Pty Ltd v Newcrest Mining Ltd. I do not consider it appropriate to grant preliminary discovery in relation to this one claim where it has no federal character and every other claim Mr Davidson wishes to advance which does have a federal character is hopeless. This court's power to order preliminary discovery should not be enlisted in aid of an application where the only claim that may be arguable is not a claim which, taken alone, would attract the court's jurisdiction. 110 I would also dismiss the application in relation to claim (13) because I am unpersuaded that Mr Davidson does not already have sufficient information to decide whether to start a proceeding in relation to the claim. It appears from his evidence that he already has an assessment of the value of the property from a qualified valuer and it appears that the valuer was preparing a valuation. The other main body of evidence to support the claim would be evidence as to the steps the bank and its agents took to market the property. Those are likely to have been steps taken in public and it can be inferred that Mr Davidson has kept a close eye on them.
Procedural unfairness 111 It is necessary to comment on another submission Mr Davidson made. He complained that the court had not permitted him enough time to develop his arguments or gather all of his evidence and that this was 'procedural unfairness'. He also claimed that he was not heard on the question of whether the evidence of the putative handwriting expert should have been admitted. 112 I do not accept those claims. Mr Davidson lodged the application on 21 January 2020. He was legally represented from well before then until 19 February 2020. His application was accompanied by three affidavits, two of which are voluminous. On 21 February 2020, he was granted a two month adjournment in respect of his entire application. He was legally represented once more from 8 May 2020 until 16 June 2020, during which time he asked for, and was granted multiple extensions, until he was directed on 26 May 2020 to file any such further evidence on which he sought to rely by 29 May 2020. 113 In circumstances where Mr Davidson has brought the application, had almost six months to put on evidence regarding matters that have been the subject of litigation since 2014, was legally represented for much of that period, and was granted multiple extensions to put on that evidence, I do not accept that the court has denied him procedural fairness. In respect of the evidence of the putative handwriting expert, it is clear for the reasons I gave in Davidson v Suncorp-Metway (No 2) that he was heard on the issue of its admissibility.
Conclusion and costs 114 The application for preliminary discovery must be dismissed. 115 The bank pressed for indemnity costs in relation to the preliminary discovery application, against both Mr Davidson and Ms Nagatsuma. The basis of the application will be clear enough from the reasons above. In light of the multiple difficulties which I have described, the bank submits that the application for preliminary discovery was hopeless. The bank relies on letters dated 28 January 2020 and 8 June 2020 from its solicitors to the prospective applicants' solicitors at the relevant times in which, it says, this was pointed out. 116 However, there is a threshold issue which, in my view, needs to be determined before or at the same time as any determination of Mr Davidson's and Ms Nagatsuma's liability for costs. The preliminary discovery application was commenced by Kelly Legal, who then acted for Mr Davidson and Ms Nagatsuma, on 21 January 2020. But as I have said above, it is not apparent why Ms Nagatsuma was a party to the application. She took no part in it. She did not even give the minimal evidence one would expect any prospective applicant to give at the time of filing the application, that she had a belief that she may have a claim against the bank and she wanted discovery to decide whether to make the claim. 117 Before determining Ms Nagatsuma's liability for costs, if any, I consider it is appropriate to hear from Kelly Legal, the solicitors who commenced the application, as to how, while they were advising and representing her, she came to be a party and to be exposed to substantial liability for costs. Since they have not to date received any notice of the court's concern about that, it is not appropriate to say more. The matter will be listed for a case management hearing, which a representative of Kelly Legal will be ordered to attend, so as to programme the determination of outstanding costs issues. I certify that the preceding one hundred and seventeen (117) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Jackson.
Davidson
Suncorp-Metway Limited
[2019] QSC 16
(2009) 182 FCR 124
(2001) 204 CLR 559
(1939) 62 CLR 464
(1983) 152 CLR 570
(1954) 91 CLR 112
(1906) 4 CLR 253
(2017) 257 FCR 62
(1999) 198 CLR 511
(2004) 211 ALR 147
(2016) 259 CLR 212