Field v Perpetual Limited

PROCEEDINGS IN THIS COURT 4 The Applicant's application seeks an order striking out the Supreme Court Judgment, an injunction prohibiting the Respondent from relying on or enforcing the Supreme Court Judgment and compensation of $1,500,000 or, alternatively, $500,000. 5 The application raises three groups of allegations: 1. the Respondent engaged in unconscionable conduct in contravention of the ASIC Act by failing to respond to correspondence the Applicant sent to the Respondent, by not making adequate disclosure to the Applicant, by rejecting the Applicant's request for relief on account of hardship and by claiming a debt and possession of the land in the Supreme Court Proceeding in circumstances where the combined value of the land and the debt is said to far exceed the debt owed; 2. the Respondent breached ss 12EA and 12EB of the ASIC Act by: "B. Voiding the application of the Federal Law relevant to a financial service provided by the Respondent, as defined in ASIC ACT Subdivision E 12EA and 12EB, by application of Victorian State legislation when Federal Law applies. C. Voiding the application of Federal Law relevant to a financial service provided by the Respondent, as defined in ASIC ACT Subdivision E 12EA and 12EB, by prosecuting for possession of a client's land through the application of Victorian State legislation, when matters related to freehold land are exclusively under Commonwealth Jurisdiction. D. Voiding the application of Federal Law relevant to a financial service provided by the Respondent, as defined in ASIC Act Subdivision E 12EA and 12EB, by application of Victorian State legislation in a court other than that provided in the Australian Constitution Chapter III and in contravention of the Judiciary Act 1903 Section 39B." 3. the Respondent breached the Crimes Act 1914 (Cth) (the Crimes Act) by reason of the three matters set out under paragraph [5(2)] above. 6 In response, the Respondent filed a Notice of Motion that seeks the following orders: 1. Pursuant to s 31A of the Federal Court of Australia Act 1976 (Cth) (the FCA), there should be judgment for the Respondent in respect of the whole of the proceeding, alternatively, the application ought to be dismissed in its entirety, because the Applicant has no reasonable prospect of successfully prosecuting the proceeding; 2. Further or alternatively, pursuant to O 20 r 5 of the Federal Court Rules, the proceeding be dismissed because it is frivolous, vexatious and / or an abuse of process.

APPLICANT'S CLAIMS 7 As noted, the foundation of the Applicant's claims falls under a number of headings: see [5] above. I will deal with each claim in the context of s 31A of the FCA and then in the context of O 20 r 5 of the Federal Court Rules.

A. SECTION 31A OF THE FCA - NO REASONABLE PROSPECT OF SUCCESS 8 Section 31A of the FCA relevantly states: (2) The Court may give judgment for one party against another in relation to the whole or any part of a proceeding if: (a) the first party is defending the proceeding or that part of the proceeding; and (b) the Court is satisfied that the other party has no reasonable prospect of successfully prosecuting the proceeding or that part of the proceeding. (3) For the purposes of this section, a defence or a proceeding or part of a proceeding need not be: (a) hopeless; or (b) bound to fail; for it to have no reasonable prospect of success. 9 For a proceeding to have a "reasonable prospect of success" it must have real prospects of success as opposed to merely fanciful or arguable prospects: White Industries Aust Pty Ltd v Federal Commissioner of Taxation (2007) 160 FCR 298 at [59] and Spencer v Commonwealth of Australia [2010] HCA 28 at [17] - [26] and at [51] - [60]. 10 The Respondent submits that the Applicant's prospects of succeeding in any of his claims are less than fanciful or arguable because it is clear that: 1. the Respondent loaned $480,000 to the Applicant and his wife; 2. the loan was secured by mortgage; 3. the Applicant and his wife are in default of the loan; and 4. the required notices were served under the Transfer of Land Act 1958 (Vic) and the Consumer Credit Code.

I. Unconscionable Conduct in Contravention of the ASIC Act 11 The Applicant relies on s 12CA of the ASIC Act which relevantly provides: (1) A person must not, in trade or commerce, engage in conduct in relation to financial services if the conduct is unconscionable within the meaning of the unwritten law, from time to time, of the States and Territories. …

(a) Allegation of Inadequate Disclosure 12 The Applicant submits that the alleged failure to make disclosure is established in letters annexed to an affidavit sworn by the Applicant. The foundation of the Applicant's claim is that: The funds provided to me were not in truth a "loan" from Macquarie Mortgages or any bank. Those funds were, rather, created by my own action in signing the paperwork. Consequently, the lawful requirement of "full disclosure" for a contract was not met in regard to the loan contract offered [to] me by Macquarie Mortgages, thus rendering the loan contract null and void. 13 Put simply, the Applicant sought "to clarify the nature of the financial arrangements" between the Respondent and an entity known as "Macquarie Mortgages Ltd". Neither the Respondent nor Macquarie Mortgages Ltd provided the information sought. The Applicant contends that the failure to provide the information is unconscionable conduct in contravention of the ASIC Act. 14 Under the loan contract (which was in evidence before this Court) the Defendants were advanced $480,000 by the Respondent, a fact conceded by the Applicant in a letter dated 28 October 2009. The cover of the loan contract bore the words "Macquarie Mortgages Pty Ltd". The offer, which the Defendants accepted, read "Perpetual Trustees Australia Ltd ACN 000 431 827 offers to enter into a loan contract with you on the terms set out …". The offer was a loan of $480,000. The Credit Provider was named as Perpetual Trustees Australia Ltd ACN 000 431 827. The Mortgage Manager was named as Macquarie Mortgages Pty Ltd. As I have noted, the Defendants accepted the finance offer by signing it. $480,000 was advanced to them. The Applicant does not dispute that the Defendants signed the loan contract or that $480,000 was advanced. The Respondent's conduct was not unconscionable in contravention of the ASIC Act. This aspect of the Applicant's contention is untenable and discloses no cause of action.

(b) No response by the Respondent to "Administrative Process Correspondence" 15 The correspondence the Applicant sent to the Respondent also contained statements to the effect that unless the Respondent took certain identified steps (for example, to provide the documentation referred to in paragraphs [12] to [14]): 1. "it shall be taken and understood by all that [the Respondent/] Macquarie Mortgages contracts with me that it accepts the entitlements specified herein and agrees that the loan contract described herein is hereby immediately null and void;" 2. "[it] will create permanent estoppel by acquiescence barring any action against me by Macquarie Mortgages for further payments related to the loan agreement described herein"; 3. "it shall further be taken and understood that Macquarie Mortgages will immediately release my [land] from the Mortgage of Land held over it and immediately return to me the Title to that property;" 4. "[it] will result in an automatic default judgment securing forevermore all entitlements herein claimed and establishing permanent and irrevocable estoppel by acquiescence barring the bringing of charges against me by Macquarie Mortgages; and 5. "should Macquarie Mortgages … take action against me for its claims relevant to the loan specified herein, that action shall further entitle me to an automatic summary judgement (sic) against Macquarie Mortgages to reclaim any and all payments made on my behalf to Macquarie Mortgages pursuant to the said loan". 16 As noted earlier, the Respondent did not respond to the Applicant's Administrative Process Correspondence. The Applicant's contentions based on there being no response by the Respondent to these propositions are also untenable and disclose no cause of action. It is a fundamental principle of contract law that it is not possible to bind another party unless that other party (here, the Respondent) accepted the offer made by the offeror (here, the Applicant). Here, the Respondent did not accept the offer and, in fact, took steps to enforce its legal rights by instituting the Supreme Court Proceeding. This aspect of the Respondent's conduct was not unconscionable in contravention of the ASIC Act.

(c) Allegation in Relation to Hardship 17 The Applicant submits that the Respondent failed to address his claim of hardship and that conduct was unconscionable in contravention of the ASIC Act. The Applicant referred the Court to a letter dated 12 March 2010 which was sent by the Applicant to the Respondent. The letter, which was sent to the Respondent two months after the Supreme Court Proceeding was commenced, notes that the Applicant and his wife had "come upon hard times and were unable to afford legal counsel" and that it may be appropriate to activate "Hardship provisions". What those "Hardship provisions" were was not specified in the letter. How or why the Applicant had come upon hard times was not explained. 18 Section 72 of the National Credit Code (the New Credit Code) states: (1) A debtor who is unable reasonably, because of illness, unemployment or other reasonable cause, to meet the debtor's obligations under a credit contract and who reasonably expects to be able to discharge the debtor's obligations if the terms of the contract were changed in a manner set out in subsection (2) may apply to the credit provider for such a change. (2) An application by a debtor must seek to change the terms of the contract in one of the following ways: (a) extending the period of the contract and reducing the amount of each payment due under the contract accordingly (without a change being made to the annual percentage rate or rates); … (5) This section and sections 73 to 75 do not apply to a credit contract under which the maximum amount of credit that is or may be provided is more than: (a) $500,000; or (b) if the regulations prescribe a higher amount, that amount. 19 However, s 72(5) does not apply to the present case. On 1 July 2010, the National Consumer Credit Protection Act 2009 (Cth) (the NCCPA) came into effect. Schedule 1 to the NCCPA contains the New Credit Code. The transitional provisions for the NCCPA are contained in the National Consumer Credit Protection (Transitional and Consequential Provisions) Act 2009 (Cth) (the Transitional Act). Item 3 of Schedule 1 of the Transitional Act relevantly provides: (1) The new Credit Code does not apply in relation to a contract or other instrument that was made before commencement. (2) Despite subitem (1), the new Credit Code applies in relation to a carried over instrument. … (5) Despite subitem (2), subsection 72(5) of the new Credit Code does not apply in relation to a carried over instrument. Instead, the following provision applies from commencement in relation to a carried over instrument as if the provision were subsection 72(5) of the new Credit Code: Application (5) This section and sections 73 to 75 do not apply to a credit contract under which the maximum amount of credit that is or may be provided is more than an amount equal to 110% of the amount of the average loan size for the purchase of new dwellings in New South Wales as set out in the Table of Housing Finance Commitments in the most recent publication entitled Housing Finance, Australia, as published from time to time by the Australian Bureau of Statistics. (emphasis added.) 20 The phrase "carried over instrument" is defined in s 4 of the Transitional Act to mean a contract or other instrument that was made before commencement, was in force immediately before commencement and one which the old Credit Code of a State or a Territory applied to immediately before commencement. 21 The loan agreement between the Respondent and the Applicant was a loan entered into and in force immediately before commencement of the New Credit Code and a loan to which the old Consumer Credit Code applied. Therefore, the New Credit Code applies to that loan. However, by reason of Item 3(5) of the Transitional Act, the hardship threshold is "110% of the amount of the average loan size for the purchase of new dwellings in New South Wales as set out in the Table of Housing Finance Commitments in the most recent publication entitled Housing Finance, Australia, as published from time to time by the Australian Bureau of Statistics". 22 At the time the loan was entered into, 110% of the amount of the average loan size for the purchase of new dwellings in New South Wales was $340,670. For completeness, I note that the hardship threshold ($340,670) was the same under the old Consumer Credit Code: see s 66(3) of the old Consumer Credit Code and s 22A of the old Consumer Credit Regulations. 23 The original amount loaned was $480,000. Section 72 does not and cannot apply to the loan contract. This aspect of the Respondent's conduct was not unconscionable in contravention of the ASIC Act.

(d) Combined claim for Debt and Possession of the Land 24 The Applicant's next claim is based on a misconception that if the Respondent sells the land in accordance with its power of sale, the Respondent will retain both the secured debt and any surplus on the sale. 25 Section 77(3) of the Transfer of Land Act 1958 (Vic) regulates how purchase moneys following a mortgagee sale are to be applied. It relevantly states: The purchase money received arising from the sale shall be applied: (a) firstly in payment of all costs charges and expenses properly incurred incidental to the sale and consequent on such default; (b) secondly in payment of the moneys which are due or owing on the mortgage or charge; (c) thirdly in payment of moneys owing under or in respect of subsequent mortgages and charges in the order of their respective priorities; (d) fourthly in payment of the residue (if any) to the mortgagor … 26 The Applicant's claim is therefore misconceived. It discloses no cause of action and must fail. The Respondent's conduct in instituting the Supreme Court Proceeding in the form that it did and securing the judgment in the terms that it did was not unconscionable in contravention of the ASIC Act.

II. Contravention of ss 12EA and 12EB of the ASIC Act 27 As noted above (see [5(2)]), the Applicant relies on three matters in support of a contention that the Respondent's conduct contravened ss 12EA and 12EB of the ASIC Act. 28 Sections 12EA and 12EB provide: 12EA If: (a) the proper law of a contract for the supply by a person of financial services to a consumer would, but for a term that it should be the law of some other country or a term to the like effect, be the law of any part of Australia; or (b) a contract for the supply by a person of financial services to a consumer contains a term that purports to substitute, or has the effect of substituting, provisions of the law of some other country, or of a State or Territory, for all or any of the provisions of this Subdivision (sections 12EA to 12ED); this Subdivision applies to the contract notwithstanding that term. 12EB (1) A term of a contract (including a term that is not set out in the contract but is incorporated in the contract by another term of the contract) is void if it purports to exclude, restrict or modify or has the effect of excluding, restricting or modifying: (a) the application of all or any of the provisions of this Subdivision (sections 12EA to 12ED); or (b) the exercise of a right conferred by such a provision; or (c) any liability of the person for breach of a condition or warranty implied by such a provision. (2) A term of a contract is not taken to exclude, restrict or modify the application of a provision of this Subdivision unless the term does so expressly or is inconsistent with that provision. 29 In general terms, the Applicant contends that the Respondent abused legal process or violated the Applicant's rights by commencing proceedings in the Supreme Court of Victoria. Again, the claim must fail. It is without foundation. The Respondent's reliance on provisions in Victorian legislation (in circumstances where the Applicant and his wife were and are clearly in default of the loan contract and mortgage) is not and cannot be said to be an abuse of process. The Supreme Court of Victoria has and retains jurisdiction to hear and determine claims for the recovery of moneys advanced under a mortgage which have not been repaid and, if those proceedings are not defended, to grant appropriate relief. That is what occurred here. As was explained to the Applicant during the first directions hearing in this Court, if the Applicant seeks to set aside that judgment, then the appropriate course is for the Applicant and his wife to file a notice of appeal with the Supreme Court of Victoria. Sections 12EA and 12EB of the ASIC Act are not engaged.

III. Alleged Contraventions of the Crimes Act 30 The Applicant relied upon the same three matters (see [5(2)] above) in support of an allegation that the Respondent had sought to pervert the course of justice contrary to the Crimes Act. Again, the claim must fail for the same reasons as set out in [27] to [29]. The claim is without foundation and does not disclose a cause of action.

IV. The Court cannot review or grant an injunction in respect of a decision of the Supreme Court of Victoria. 31 As noted earlier, the Applicant seeks an injunction to restrain the Respondent from enforcing the judgment of Associate Justice Mukhtar, alternatively, an order that this Court set aside that judgment. Even if the Applicant's claims disclosed a cause of action (and they do not), this Court would not grant the Applicant the relief that he seeks. 32 First, as was clearly stated by Northrop J in Indrisie v General Credits (1984) 5 FCR 582 at 587, a case where General Credits had obtained judgments in the Supreme Court of Victoria for possession of land under mortgages against Mr and Mrs Indrisie and the Indrisies subsequently issued a proceeding in the Federal Court seeking an injunction restraining General Credits for taking steps to execute the judgments: … [T]he relevant rights of General Credits under the mortgage had merged in the judgment obtained in the Supreme Court. Those rights cannot be relitigated between the parties to those judgments. … In reality, the applicants are attempting to defeat a judgment properly obtained in the Supreme Court. … What is sought is a stay of a judgment validly obtained after due process. Having obtained that judgment, it would not be appropriate to restrain General Credits from giving effect to that judgment; in fact, it would be unfair and inequitable to restrain General Credits from giving effect to the judgments regularly obtained. I can see no equity which would support the contentions made. (citations omitted). 33 Secondly, the application to set aside the judgment of Associate Justice Mukhtar is a collateral attack on a judgment regularly entered which the Applicant has not sought to have set aside by the proper procedures. The application is therefore an abuse of process. In this context, it must be noted that the Applicant applied to set aside the judgment of Associate Justice Mukhtar but failed to appear: see [2] above. There was nothing preventing him from making a further application to the Supreme Court, an avenue which was discussed with him at the first directions hearing before me in these proceedings. 34 Thirdly, an injunction restraining the Respondent from enforcing the judgment of Associate Justice Mukhtar would be tantamount to an injunction restraining a mortgagee's sale. As a general rule, such an injunction will not be granted unless the mortgagor pays the mortgage debt into Court: Inglis v Commonwealth Trading Bank of Australia (1972) 126 CLR 161 at 164 -165 and 169; Clairview Developments Pty Ltd v Law Mortgages Gold Coast Pty Ltd [2007] 2 Qd R 501 at [6].

B. THIS PROCEEDING IS AN ABUSE OF PROCESS AND VEXATIOUS 35 Order 20 r 5 of the Federal Court Rules relevantly states: (1) This rule applies to a proceeding commenced on or after 1 December 2005 if the Court is satisfied that, for the proceeding generally or for a claim for relief in the proceeding: (a) the proceeding or claim is frivolous or vexatious; or (b) the proceeding or claim is an abuse of the process of the Court. (2) The Court may order that the proceeding be stayed or dismissed generally or in relation to the claim for relief. 36 In PNJ v R (2009) 252 ALR 612 at [3] the High Court stated: It is not possible to describe exhaustively what will constitute an abuse of process. It may be accepted, however, that many cases of abuse of process will exhibit at least one of three characteristics: (a) the invoking of a court's processes for an illegitimate or collateral purpose; (b) the use of the court's procedures would be unjustifiably oppressive to a party; or (c) the use of the court's procedures would bring the administration of justice into disrepute. (citations omitted). 37 The allegations made by the Applicant in this proceeding were also contained in, or at least substantially were contained in, an amended defence filed by the Defendants in the Supreme Court Proceedings that was struck out by the Supreme Court on 9 April 2010. The overlap in the allegations in this proceeding and the amended defence struck out in the Supreme Court Proceeding is as follows: 1. Allegations of unconscionable conduct are in paragraphs 40, 44 and 73 of the amended defence; 2. Allegations in relation to inadequate disclosure and that there was no loan are in paragraphs 37, 38, 41, 42, 46 and 47 of the amended defence; 3. Allegations in relation to hardship are in paragraph 73 of the amended defence; and 4. Allegations in relation to the Respondent abusing process and the applicability of Victorian legislation are in paragraphs 14, 16, 51 and 54 of the amended defence. 38 In my view, it would be unjustifiably oppressive for the Respondent to have to face the same issues again in this proceeding. It would also bring the administration of justice into disrepute if, having had the allegations struck out in the Supreme Court of Victoria, the Applicant could simply issue a proceeding in this Court raising the same allegations: see PNJ at [3]. 39 Further, re-litigation of an issue already decided is vexatious, oppressive and unfair. In this proceeding the Applicant seeks to re-litigate the Respondent's entitlement to possession of the land and to the debt under the loan contract. The Applicant also seeks to re-litigate issues contained in the amended defence that was struck out by Associate Justice Mukhtar. It is "prima facie vexatious to bring two actions where one will lie": Moore v Inglis (1976) 9 ALR 509 at 513-514 per Mason J citing Logan v Bank of Scotland (No 2) [1906] 1 KB 141 at 150. The issues sought to be agitated in this proceeding were raised in the Supreme Court Proceeding. An attempt to re-litigate a dispute or issue which has been resolved in earlier litigation in another Court or Tribunal may, depending on the circumstances, constitute an abuse of process even though the earlier proceeding did not give rise to res judicata or issue estoppel: Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589. 40 As the Respondent submitted, the present facts are similar to those in Shumack v Commissioner, Australian Federal Police [2005] FCA 1476 in which Gyles J dismissed a proceeding stating: [2] … I do not set out the terms of the application. Suffice to say that it clearly does not comply with the rules of Court in relation to the form of an application. It does not properly identify any cause of action known to the law. It consists of a statement of what might be called grievances. … [4] Furthermore, the evidence relied upon by the respondent indicates that very similar complaints, or complaints at least including those included in this application, had been sought to be pursued by the applicant in the Supreme Court of the Australian Capital Territory, and that successive statements of claim have there been struck out. It is therefore submitted that there is an additional basis on which it may be held that the proceedings are an abuse of process. There appears to be much substance in the latter point although it is not strictly necessary for me to come to any view about that because of the hopelessly inadequate form of the application itself. … [6] … Meanwhile, the successive proceedings are vexing to a respondent. The same difficulties exist with the present application and supporting material filed by the Applicant in these proceedings.

C. OTHER MATTERS 41 Although the Applicant filed lengthy submissions and a document entitled "Address to the Court", consideration of those documents reveals that the essential points the Applicant seeks to make are those that I have dealt with. It is neither necessary nor appropriate to deal separately with each elaboration or variation of those points. However elaborated or varied, each of the points encounters the fundamental difficulties that I have sought to identify in these reasons. Those difficulties are such as to require exercise of the power under s 31A of the FCA. 42 Indeed, although it is not necessary to go this far in this case, the better view is that even if the Applicant's allegations about the Respondent's alleged conduct were established, none of those allegations would found any of the relief which the Applicant seeks in this proceeding.

CONCLUSION 43 The proceeding is dismissed. The Applicant should pay the Respondent's costs of the proceeding. I certify that the preceding forty-three (43) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gordon.