Davidson v Suncorp-Metway Limited

Federal Court of Australia|2020-03-02|Before: Derrington J

The application for relief in paragraph 2 of the Prospective Applicants' Originating Application dated 21 January 2020 (the Application) be dismissed.
The Prospective Applicants pay the Prospective Respondent's costs of the application on an indemnity basis.
By 4.00 pm on 17 April 2020, the Prospective Applicants shall file and serve any further affidavit material in support of the orders sought by paragraph 1 of the Application.
By 4.00 pm on 1 May 2020, the Prospective Respondent shall file and serve any further affidavit material in response to the orders sought by paragraph 1 of the Application.
By 4.00 pm on 15 May 2020, the Prospective Applicants shall file and serve written submissions in relation to the orders sought by paragraph 1 of the Application.
By 4.00 pm on 22 May 2020, the Prospective Respondent shall file and serve written submissions in relation to the orders sought by paragraph 1 of the Application.
Paragraph 1 of the Application be listed for hearing at 10.00 am on 12 June 2020. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Introduction 1 The prospective applicants (the applicants) commenced these proceedings seeking: (1) preliminary discovery from the prospective respondent, Suncorp-Metway Limited (the Bank) pursuant to r 7.23 of the Federal Court Rules 2011 (Cth); and (2) an injunction restraining the Bank from taking possession of, selling or otherwise dealing with or interfering with certain properties owned by the applicants, which are the subject of security in favour of the Bank. This hearing was for the purpose of determining the latter application for injunctive relief, the parties having agreed to an adjournment of the application in respect of the relief for discovery. 2 The applicants, Mr William Davidson and Ms Risa Nagatsuma, are a married couple, currently separated. Ms Nagatsuma did not appear and Mr Davidson appeared on his own behalf. The properties the subject of the present dispute (the secured properties) appear to be cattle stations run by the applicants or related entities, which are more particularly described as: (a) Lot 194 on Crown Plan NR401, title reference 20647021 (Heidke Road); (b) Lot 2 on RP739670, title reference 212792321 (Russel Road); and (c) Lot 1 on SP 121918, title reference 50300451 (Camp Creek). 3 The Bank objected to the granting of injunctive relief on the basis that such orders were precluded by the principles of res judicata and issue estoppel arising out of a previous decision of the Supreme Court of Queensland, and submitted that, in any event, the balance of convenience would not support such relief.

Abridged history of the matter 4 This matter has a protracted history, the minutia of which is unnecessary to set out in full. 5 In September 2013, Mr Davidson guaranteed a loan of $8,800,000, made by the Bank to Far North Queensland Cattle Company Pty Ltd (FNQCC), a company owned by Mr Davidson. The loan was secured by a mortgage over various properties variously owned by FNQCC and Mr Davidson, including Heidke Road, Russel Road and Camp Creek. 6 In April 2014, the Bank appointed receivers and managers to the assets of FNQCC. Shortly after, Mr Davidson and FNQCC commenced proceedings in the Supreme Court of Queensland against the Bank disputing the appointment of the receivers (the 2014 proceedings). In those proceedings Mr Davidson made allegations that, inter alia, an employee of the Bank, Mr Houlihan, had transferred $731,979.85 from FNQCC's bank account without authorisation. Mr Davidson appears to wish to ventilate this same complaint again in the present proceedings. As Mr Davidson states at [9] of his affidavit filed on 21 January 2020: I confirm that our complaint is as it has always been - monies were taken from our accounts without our authorisation and this in turn has resulted in loss and damage to me, my wife and our associated entities. 7 The 2014 proceedings were settled pursuant to a deed of settlement (which was the subject of extensive negotiations involving solicitors for both parties), whereby Mr Davidson and FNQCC released the Bank in the following terms: 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 with respect to any actions alleged to have been undertaken by employees of the Bank. The Borrower and the Guarantors further indemnify the Bank against all claims by any party howsoever arising with respect to any monies alleged to be owing to that party for the supply of cattle, goods or services. 8 The 'Borrower's Claims' were defined in the recitals to the deed to include the claim that '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'. 9 Pursuant to that deed of settlement, the Bank agreed to a moratorium on enforcement action against Mr Davidson and FNQCC until 31 March 2015, and retired the receivers. It also adjusted the accounts under the relevant facilities by capitalising interest, rebating certain high default interests and providing a rebate. 10 Although FNQCC was thereafter required to comply with the terms of the loan facilities, it did not do so. Mr Davidson continually sought to postpone re-payments while he investigated various re-financing options, investment schemes and joint venture projects which he appeared to believe would allow FNQCC pay out the loan. Nothing materialised and the Bank's debt was not discharged. 11 In May 2015, the Bank sent a Queensland Farm Debt Mediation Scheme Notice to Mr Davidson. A mediation took place in August 2015 and heads of agreement were signed, which allowed Mr Davidson and FNQCC until 30 April 2016 to repay the loan. This was not done. 12 In March 2016, the Bank sent Mr Davidson and FNQCC a demand for the total amount owing under the facilities. A further demand was made to both Mr Davidson and FNQCC in November 2016. None of these demands were met. In March 2017, the Bank commenced enforcement proceedings. It appears Mr Davidson was uncooperative and hostile to this process. 13 In December 2017, Mr Davidson and FNQCC brought an application in the Supreme Court of Queensland seeking an injunction to prevent the Bank (and its agents) from selling some of the secured properties (the 2017 proceedings). That application was dismissed by Jackson J. 14 In January 2018, caveats were lodged on the title to Russell Road by Mr Davidson, Ms Nagatsuma and one of Mr Davidson's companies, Tablelands Beef Australia Investments Pty Ltd. These caveats were removed in two separate court proceedings (the caveat proceedings), and the Bank was granted injunctive relief against Mr Davidson and Ms Nagatsuma, restraining them from lodging or procuring the lodgement of any further caveat on the title to Russell Road and Camp Creek, creating or procuring the creation of any other encumbrance in connection with these properties, and otherwise interfering with the Bank's sale of these properties. 15 The Bank subsequently commenced proceedings in the Supreme Court of Queensland for possession of the Heidke Road property, Mr Davidson's residence, and injunctive relief to restrain Mr Davidson and Ms Nagatsuma from interfering with its sale (the 2018 proceedings). Ryan J heard the matter on 28 September 2018, and delivered judgment in February 2019: Suncorp-Metway Ltd v Nagatsuma & Anor [2019] QSC 16. That proceeding was particularly important in the present case. Significantly, Mr Davidson alleged in the 2018 proceedings, that the releases he had previously provided were vitiated as a consequence of economic duress. After meticulous consideration of the history of the matter, and the submissions of both parties, Ryan J rejected this claim. Her Honour considered, inter alia, the fact that Mr Davidson asserted he signed the settlement deed documents out of ignorance, rather than coercion; that he had a reasonable alternative open to him (namely continuing his legal proceedings); that he did not protest the releases and took advantage of other terms in the deed of settlement and the heads of agreement; and that he was legally advised and 'robustly supported' by his legal representative. 16 Her Honour determined that the Bank have possession of the Heidke Road property, and ordered injunctive relief in favour of the Bank. Her Honour's orders were as follows: 1. Pursuant to section 78(2) of the Land Title Act 1994 (Qld), the applicant recover as against the first and second respondents, possession of the property described as Lot 194 on Crown Plan NR401, Title Reference 20647021 and known as 178 Heidke Road, Malanda in the State of Queensland (also known as 178 Heidke Road, North Johnstone in the State of Queensland) (the Heidke Road Property) within 14 days. 2. Upon the applicant by its counsel giving the usual undertaking as to damages, an injunction: that the first and second respondents, whether by themselves, their agents, employees or otherwise, be restrained until the sale of the Heidke Road Property by the applicant as mortgagee exercising power of sale under the mortgage bearing dealing number 715361425, without prior leave of the Court from: (a) lodging or procuring the lodgement of any caveat on the title to the Heidke Road Property; (b) creating or procuring the creation of any other encumbrance in connection with the Heidke Road Property; (c) otherwise interfering with the applicant's sale of the Heidke Road Property.

Application for injunctive relief in these proceedings 17 In these proceedings, the applicants seek an interlocutory injunction. Paragraph 2 of their originating application sets out the form of order sought, namely: That, until further order and subject to the leave of any Court that may be required, the Prospective Respondent be restrained from taking possession of, selling or otherwise dealing with or interfering with [Heidke Road, Russell Road and Camp Creek], including but not limited to the Prospective Applicants' right to occupy and possess those properties. 18 The basis for claiming this relief was not entirely clear from either the affidavit material filed by the applicants, or the oral submissions made by Mr Davidson in court. Mr Davidson's case appears to be that he believes once he obtains certain documents from the Bank (through an order for preliminary discovery), he will be capable of proving that the Bank is guilty of what he has variously described as fraud, unconscionable conduct, and misleading and deceptive conduct. However, this alleged behaviour does not relate to the validity of the initial loan made by the Bank to FNCQQ or the mortgage agreement in respect of the secured properties; at best it goes a small way to explaining why re-payments were not made. In any event, taking the applicants' case at its highest, the interlocutory injunction sought appears to be for the purpose of protecting the applicant's interests in the secured property, pending the hearing of the application for preliminary discovery. 19 To obtain the relief sought, the applicants must show that there is a serious question to be tried, and that the balance of convenience favours the granting of such relief: Castlemaine Tooheys Ltd v South Australia (1986) 161 CLR 148; Murphy v Lush (1986) 65 ALR 651. Ultimately, an injunction is a discretionary remedy: Cardile v LED Builders Pty Ltd (1999) 198 CLR 380 at 396.

A serious question to be tried 20 The applicants face three seemingly insurmountable hurdles in demonstrating that there is a serious question to be tried: (1) Mr Davidson has signed various releases which prevent him from pursuing any action against the Bank in connection with the loan agreement or the conduct of its employees; (2) The Bank's entitlement to possession of the secured properties has been finally determined by the Supreme Court of Queensland, and that question is therefore res judicata; and (3) Mr Davidson was restrained from interfering with the Bank's sale of the secured properties by order of the Supreme Court of Queensland.

Hurdle 1: The releases prevent the contemplated suit from being commenced 21 The release signed by Mr Davidson and FNQCC is broad and speaks specifically of releasing claims against the Bank in respect of the loan agreement or securities, and any conduct by the employees of the Bank. That release, prima facie, would bar the claim the applicants continue to agitate in relation to the alleged misappropriation of funds by the Bank, and would prevent any claim that may be contemplated by the applicants in respect of the validity of the loan agreement or securities held by the Bank. 22 The applicants have already unsuccessfully attacked the validity of the releases in the 2018 proceedings on the basis of economic duress. Before this Court, Mr Davidson argued that the releases might be vitiated on other grounds, the particulars of which were not entirely clear. Mr Davidson claimed that he was unable to ventilate the issue before the Supreme Court of Queensland because of a lack of information and documentation. Mr Davidson believes this shortcoming can be remedied through an order for preliminary discovery against the Bank. As Mr Davidson deposed in his affidavit at [75]: In my opinion, Suncorp's use of the Deeds of Release to prevent me seeking justice only exacerbates the extent of the deception. The judgments against us in the Supreme Court were based on the limited information and documentation that I had, and that Suncorp chose to put before the courts. The court's decisions did not involve an investigation of all documents that I have sought in this disclosure application, especially the Suncorp investigator's report… 23 The difficulty with this submission is 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.

Hurdle 2: The parties rights inter se have already been determined 24 The other significant difficulty for the applicants is that the orders of Ryan J in the 2018 proceedings have settled, as between them and the Bank, their respective rights and obligations. 25 In particular, the essential and necessary determinant in Ryan J's reasons is the validity of the loan agreement, the mortgage and the deed of settlement. Although her Honour's decision was related specifically to the Heidke Road property, the Russell Road and Camp Creek properties were mortgaged under the same document. For this reason, the security in relation to those properties is inferentially valid and enforceable. As a consequence, the decision of Ryan J has determined the validity of the mortgage and the Bank's entitlement to enforce its security. 26 In these circumstances, Mr Ananian-Cooper for the Bank submitted that any proposed proceedings in relation to the secured properties would be barred by estoppel. Mr Ananian-Coper relied on Blair v Curran (1939) 62 CLR 464 where Rich J (at 502) and Dixon J (at 532 to 533) concluded, contrary to Stark J, that where the proceedings are by the same parties in respect of the same issues, then the determination of the Court will bar action raising those same issues even if the assets in question are different. As Dixon J observed at 531 to 533: A judicial determination directly involving an issue of fact or of law disposes once for all of the issue, so that it cannot afterwards be raised between the same parties or their privies. The estoppel covers only those matters which the prior judgment, decree or order necessarily established as the legal foundation or justification of its conclusion, whether that conclusion is that a money sum be recovered or that the doing of an act be commanded or be restrained or that rights be declared. The distinction between res judicata and issue estoppel is that in the first the very right or cause of action claimed or put in suit has in the former proceedings passed into judgment, so that it is merged and has no longer an independent existence, while in the second, for the purpose of some other claim or cause of action, 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. 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, 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. 27 In my opinion, it is axiomatic that where a party to a security, such as a mortgagor, attacks the validity of a mortgage, and that question arises in relation to one particular asset, and the mortgage is found to be valid, no similar arguments can be agitated to prevent enforcement of the security with respect to other assets covered by the same mortgage. That being the case, I am bound to give full force and effect to the determination of the Supreme Court of Queensland in relation to the enforceability of the Bank's security: s 118 of the Constitution; s 185 of the Evidence Act 1995 (Cth); see also Rowe v Silverstein & Benson [1996] 1 VR 509 at 511.

Hurdle 3: The applicants are restrained by order of the Court from interfering with the sale of the secured properties 28 Even if I were not satisfied of the above, a matter which is of great concern is that the application by Mr Davidson seeks to enlist the aid of this Court in contravening orders of the Supreme Court of Queensland. As mentioned above, the applicants were enjoined from interfering with the sale of Russell Road and Camp Creek in the caveat proceedings. The applicants were also enjoined from interfering with the applicants' sale of the Heidke Road Property in the 2018 proceedings. In making this application it appears, but I need not decide the question finally, that the applicants are seeking to interfere with the Bank's sale of the secured properties. For this Court to contemplate assisting a party to contravene the orders of another Court is unthinkable in the absence of truly exceptional circumstances.

The balance of convenience 29 In any event, the balance of convenience does not favour the granting of the relief sought. 30 The usual principle is that a mortgagee will not be restrained from exercising its power of sale or its right to realise secured assets unless the mortgagor pays the disputed sum into Court: Inglis v Commonwealth Trading Bank of Australia [1971] 126 CLR 161 at 164 to 165. The disputed sum has not been paid into Court in this case. Further, neither of the applicants have offered any valuable undertaking as to damages: Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd (1981) 146 CLR 249 at 311 per Gibbs J and European Bank Ltd v Robb Evans of Robb Evans and Associates (2010) 240 CLR 432 at [14] to [17]. 31 The applicants seek relief from the Court in the form of an injunction to restrain the Bank from exercising what are apparently its legally enforceable rights, but appear not to offer any ability to remediate any damage which might be caused to the Bank were such orders to be made. The interest on the outstanding facility continues to grow, and it appears that the value of the property that remains is unlikely to satisfy the debt. As Mr Davidson deposes to in his affidavit, his remaining assets "would be worth about $2 million". In these circumstances, the balance of convenience does not favour the granting of the injunctive relief sought.

Conclusion 32 The application for the relief sought in paragraph 2 is dismissed.

Costs 33 The Bank seeks its costs as against each of the applicants. There is no reason why, given the application failed, that they should not have the costs of this application. 34 Further, upon becoming aware of the filing of the application, the solicitors for the Bank immediately wrote to the solicitors for the applicants. The letter is in the form of a Calderbank offer. In it the solicitors set out the various reasons as to why the proceedings were misconceived and could not succeed. In that letter they invited the applicants to withdraw the proceedings and indicated that if that invitation was not accepted, the letter would be drawn to the Court's attention on the question of costs and that they intended to seek a higher or more onerous order for costs than the standard basis. 35 Mr Davidson claimed at this hearing that he was not shown this letter by his solicitors. Whether that is so or not, need not be determined. Given that the solicitors to whom it was sent were the solicitors on the record at the time, he is deemed to have received it. 36 The letter made a reasonable offer in relation to the proceedings which were, for the reasons I have given, untenable. Therefore, the order for costs ought to be made on an indemnity basis. I certify that the preceding thirty-six (36) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Derrington.

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