Fitzsimons v Commonwealth Bank of Australia

Supreme Court of NSW|2012-06-14|Before: Stevenson J

Introduction 1The issue in these proceedings is whether consent judgments ("the Consent Judgments") entered on 2 July 2008 in proceedings 50164/2007 and 50053/2008 in this Court ("the Earlier Proceedings") should be set aside. The Consent Judgments were in favour of the defendant, the Commonwealth Bank of Australia ("CBA"). The plaintiffs claim the Consent Judgments should be set aside by reason of the alleged failure of CBA to discover letters received by CBA on 16 January 2006 and 22 February 2006 ("the Letters"). 2For the same reason, the plaintiffs also seek to set aside a Deed of Settlement and Release ("the Settlement Deed") they entered on the same day.

The plaintiffs 3The first plaintiff, Mr Christopher Fitzsimons ("Mr Fitzsimons"), and the second plaintiff, Mrs Maria Fitzsimons ("Mrs Fitzsimons"), are husband and wife. The third plaintiff, Ms Louisa Roberts ("Ms Roberts"), is the daughter of Mr and Mrs Fitzsimons. 4The proceedings brought by Ms Roberts have been stayed as she has not complied with an order made by the Chief Judge in Equity on 25 November 2011 that she provide security for costs. Accordingly, Ms Roberts' application is not before me. 5From 1969 until 22 December 2005 Mr Fitzsimons was a solicitor of this Court. 6Since 1990 Mrs Fitzsimons has been a solicitor. Until 21 December 2005 she was employed by Mr Fitzsimons.

The Properties 7At all material times: - (a)Mr and Mrs Fitzsimons were the registered proprietors of properties in Wylde Street, Potts Point ("Potts Point") and Kings Cross Road, Darlinghurst ("Darlinghurst"); (b)Mr and Mrs Fitzsimons and Ms Roberts were the registered proprietors of a property at Clifton Beach in Queensland ("Clifton Beach"); and (c)Ms Roberts was the registered proprietor of a property in William Street, Potts Point ("William Street") (together "the Properties"). 8Prior to 21 December 2005, CBA had advanced funds to one or more of the plaintiffs. Those advances were secured by registered mortgages over one or more of the Properties. 9Payments in respect of the mortgages over Clifton Beach were made by direct debit from a joint account of Mr and Mrs Fitzsimons at the Cairns branch of CBA ("the Cairns Joint Account"), and in respect of Potts Point and Darlinghurst, from a joint account of Mr and Mrs Fitzsimons at the Chatswood branch of CBA ("the Chatswood Joint Account"). 10Ms Roberts made payments in respect of William Street from her own resources. 11Mr Fitzsimons maintained trust and office accounts in connection with his practice. These accounts were also held with CBA.

The 2005 Orders 12Mr Fitzsimons had been a heavy gambler for many years. He gambled on the TAB using a direct debit facility between the CBA accounts to which he was a signatory, and accounts held by the TAB with Westpac Banking Corporation. By late 2005, Mr Fitzsimons was gambling over $20,000 per month. 13On 21 December 2005 the Law Society of New South Wales obtained an order from this Court appointing Ms Jean Sayer as receiver of Mr Fitzsimons' law practice and also obtained a freezing order over Mr Fitzsimons' assets ("the 2005 Orders"). 14On the same day, Mr Fitzsimons' practising certificate was suspended on the grounds of misappropriation of trust monies. 15Mr and Mrs Fitzsimons became aware of the 2005 Orders soon after they were made; certainly by early January 2006.

The Letters 16I now set out the Letters that Mr and Mrs Fitzsimons claim should have been discovered by CBA in the Earlier Proceedings. On 16 January 2006 Ms Sayer wrote the first of the Letters to CBA in the following terms: - "RE: CHRISTOPHER RONALD FITZSIMONS RECEIVERSHIP I advise that by Order of the Court dated 21st December, 2005 I was appointed Receiver for Mr Christopher Ronal Fitzsimons pursuant to Section 630 of the Legal Profession Act. A copy of the Notice of Appointment of Receiver pursuant to Section 631 is attached. Mr Fitzsimons kept a Trust Account with your Bank styled 'C.R. Fitzsimons Trust Account', Account No. 06 2140 10072183. Pursuant to Section 651 of the said Act, I should be pleased if you would provide me with copies of the statements relative to the above account from when the account was opened up to 1st January, 2002 and from 28th March, 2005 until the account was closed." 17CBA received the 16 January 2006 Letter on 19 January 2005. Receipt of that letter constituted the first notice CBA had of the making of the 2005 Orders. 18On 22 February 2006 the Law Society of New South Wales wrote the second of the Letters to CBA in the following terms: - "On 21 December, 2005, the Supreme Court of New South Wales made an Order with respect to Christopher Ronald Fitzsimons, among other things, appointing Jean Sayer as the Receiver of the Law Practice, C R Fitzsimons pursuant to Section 630(2) of the Legal Profession Act, 2004 (NSW) and restraining Mr Fitzsimons, the principal of the Law Practice from dealing with, or disposing of, any of his assets within New South Wales without first obtaining the leave of the Court of the Law Society ('Order'). Attached is a copy of the sealed Order. Pursuant to Order 6 of the Order, Mr Fitzsimons was required to deliver an affidavit of assets and liabilities to the Law Society. Mr Fitzsimons' Affidavit was sworn on 17 February, 2006 ('Affidavit'). In his Affidavit, he swore that, among other things:

jointly with Maria Angela Fitzsimons, he is indebted to the Commonwealth Bank of Australia ('CBA') in the sum of $1,950,000; and
the above loan is secured by a registered mortgage, being Dealing No. AC23948, to CBA over the propertyies in Certificate of Title Computer Folio 13/SP63601 known as [Potts Point] and Certificate of Title 106/SP55773, known as [Darlinghurst]. I note that the Order, being Dealing No. AC73225, is also registered on the Real Property Act Register. You should be aware that, now that CBA is on notice of the Order, CBA may also be liable in certain circumstances for its breach. CBA may like to take its own legal advice on this issue. Finally, your attention is drawn to the fact that the Order is extant and that the Law Society will enforce it, if necessary."

Continued operation of the accounts 19Notwithstanding the 2005 Orders, on 27 February 2006, Mr Fitzsimons opened an account styled "C R Fitzsimons Trust Account" ("the 2006 Trust Account") with CBA and deposited into that account various cheques drawn in favour of his clients ("the Clients' Cheques"). Mr Fitzsimons misappropriated the proceeds of the Clients' Cheques and used those proceeds to gamble. 20Further, and again despite the 2005 Orders, Mr Fitzsimons continued to operate the Cairns Joint Account and the Chatswood Joint Account. He deposited into those accounts the proceeds of his gambling activities together with funds borrowed from relatives and friends. 21Because of the appointment of Ms Sayer as receiver to his solicitor's practice, he had no income from the practice to use for gambling. 22Mr Fitzsimons used the funds in the Cairns Joint Account and the Chatswood Joint Account to fund his gambling activities. 23Until August 2006, periodic debits were made from these accounts in respect of the mortgages over Clifton Beach, Potts Point and Darlinghurst. There were insufficient funds in the accounts to meet all those mortgage payments, some of which were dishonoured. Nonetheless, between January 2006 and August 2006, $34,116.70 was paid from the Cairns Joint Account in respect of the Clifton Beach mortgage, and $33,592.00 was paid from the Chatswood Joint Account in respect of the Potts Point and Darlinghurst mortgages. I will discuss this further below. 24In circumstances not revealed in the evidence, and notwithstanding CBA's knowledge of the 2005 Orders from 19 January 2006, it permitted Mr Fitzsimons to operate the various accounts this way. This conduct of CBA is the basis of Mr and Mrs Fitzsimons' allegation that CBA acted in "breach" of the 2005 Orders between January 2006 and August 2006. I will return to this below. 25On 23 June 2006 Mr and Mrs Fitzsimons wrote to CBA stating, amongst other things: - "We are the mortgagors in relation to the above loans. Last December, the Law Society of NSW obtained an ex parte injunction against C. R. Fitzsimons for alleged Trust account violations, and the Supreme Court Order granting the injunctions has been registered on the titles to the Potts Point and Kings Cross properties, over which the bank has registered first mortgages. Loans received from our daughters have been recorded on the titles by caveats supporting unregistered mortgages as evidence of debt. Initial legal advice was that the Orders would be temporary and removed in a short time. We are now at the end of June, the Orders have been in place for 6 months, and there is no sign that the Law Society will lift the Orders presently or at any foreseeable time in the future." 26On 4 August 2006 Ms Sayer wrote to CBA again notifying it of the 2005 Orders and continuing: - "I am seeking to claim and recover from the Bank trust moneys covered by cheques accepted by the Bank for deposit to accounts other than those of the payee of the cheques concerned. In each case the funds were misappropriated by Christopher Ronald Fitzsimons from the account kept with your Bank into which the cheques were banked." 27Ms Sayer then referred to the 2006 Trust Account Mr Fitzsimons had opened with CBA on 27 February 2006 (see [19] above). Ms Sayer referred to the deposit into that account of the Clients' Cheques and alleged that Mr Fitzsimons had misappropriated those funds. She continued: - "Pursuant to the provisions of the Legal Profession Act I am required as Receiver to take all step necessary to recover the trust moneys, being regulated property as defined in the Act which vests in me as Receiver. I should therefor be pleased if the Bank would give favourable consideration to this claim which totals $243,753.12 as shown hereunder to avoid the necessity and costs involved in taking further action as provided by the said Act to recover this sum: -

33,164.42
3,258.92
33, 744.00
173,585.78 $243,753.12" 28Finally, in August 2006, CBA froze all the accounts.

Proceedings for possession 29Between 1 September 2006 and 23 June 2008 CBA issued Notices of Default against Mr and Mrs Fitzsimons and Ms Roberts pursuant to s 57(2)(b) of the Real Property Act 1900 and the equivalent provision of the Property Law Act 1974 (QLD). 30On 20 September 2007 CBA commenced proceedings in this Court against Mr and Mrs Fitzsimons. In the proceedings, CBA sought possession of Potts Point and Darlinghurst, together with judgment for the principal and interest alleged to be due under the mortgages over those properties. 31On 1 February 2008 CBA commenced proceedings in the Supreme Court of Queensland seeking possession of Clifton Beach. In due course the Queensland proceedings were transferred to this Court pursuant to the Jurisdiction of Court (Cross-Vesting) Act 1987 (QLD). 32Later, CBA's claims were amended to include a claim against Ms Roberts for possession of William Street, together with judgment for principal and interest alleged to be due under the mortgage over that property. 33Each of Mr and Mrs Fitzsimons and Ms Roberts defended CBA's claim and brought cross-claims for relief against CBA and against several third parties, which included the TAB ("the Cross-Claims"). 34All proceedings were fixed for hearing before McDougall J on 30 June 2008. 35On 2 July 2008 the proceedings between the Mr and Mrs Fitzsimons, Ms Roberts and CBA were settled. 36On that day the Consent Judgments were made granting CBA possession of each of the Properties and entering judgment in favour of CBA against Mr and Mrs Fitzsimons and Ms Roberts for specified amounts. 37Mr and Mrs Fitzsimons and Ms Roberts also entered into the Settlement Deed. 38Mr Fitzsimons continued to prosecute the Cross-Claims against the third parties. On 4 August 2008 McDougall J gave judgment dismissing those Cross-Claims. 39Thereafter CBA took possession of, and in exercise of its power of sale, sold each of the Properties.

Discovery 40On 22 February 2008, nearly five months prior to the Consent Judgments and the Settlement Deed, the Court made an order in the Earlier Proceedings that the parties exchange categories of documents for discovery and that verified discovery be given by each party of documents in such categories. 41On 21 April 2008 the solicitors for Mr and Mrs Fitzsimons and Ms Roberts specified the categories of documents required for discovery including category 6 ("Category 6") as follows: - "All files letters correspondence emails faxes and notes relating to and dealing with claims made on [CBA] by Jean Sayer and particulars of monies paid to her." 42CBA, by its solicitors, served on Mr and Mrs Fitzsimons' solicitors a List of Documents. 43The Letters (see [16] - [18] above) were not included in the List of Documents.

The contentions of Mr and Mrs Fitzsimons 44The contentions of Mr and Mrs Fitzsimons are found in their pleadings (ultimately, the Fourth Amended Statement of Claim - "the Pleading") and their affidavits ("the Affidavits"), both sworn on 20 October 2011. The Pleading and Affidavits are not entirely congruent. The Affidavits are in almost identical terms, so can be referred to together. 45Mr and Mrs Fitzsimons contend that: - (a)by omitting to discover the Letters, CBA by itself and its solicitors represented that CBA was not on notice of the 2005 Orders any earlier than its receipt of Mr and Mrs Fitzsimons' letter of 23 June 2006 (see [25] above) (according to the Pleading) or Ms Sayer's letter of 4 August 2006 (see [26] and [27] above) (according to the Affidavits); (b)had Mr and Mrs Fitzsimons become aware of the Letters between receipt of CBA's List of Documents (shortly after 8 May 2008) and the negotiations which took place between 30 June and 2 July 2008, they would not have settled the Earlier Proceedings; and (c)in that event, Mr and Mrs Fitzsimons, according to the Affidavits, would have instructed counsel appearing for them in the Earlier Proceedings "to amend the pleadings to include breach of the 2005 Orders" by CBA "even if it meant vacating the hearing date" because "it would have been apparent to [them] that [CBA's] breaches of the [2005 Orders] was the cause of the cheque accounts being illiquid thereby causing the mortgage defaults" (described by Mr and Mrs Fitzsimons, and referred to in this judgment, as the "Unpleaded Allegation"). 46An allegation, made in the Third Amended Statement of Claim, that the alleged representation was made by CBA fraudulently, was withdrawn by the Fourth Amended Statement of Claim.

The relevant principles 47I considered the principles relevant to the setting aside of a consent judgment in Land Enviro Corp Pty Limited v HTT Huntley Heritage Pty Ltd [2012] NSWSC 382 at [216] to [234]. 48Relevantly to this case, the general principle is that this Court has inherent jurisdiction to set aside a consent judgment on any ground on which a court can set aside a contract: see Harvey v Phillips (1956) 95 CLR 235 at 243-244 per Dixon CJ and McTiernan, Williams, Webb and Fullagar JJ; Singh v Ginelle Pty Ltd [2010] NSWCA 310 per Campbell JA at [35] (Beazley and Handley JJA agreeing); and Handley JA, writing extra judicially in Spencer Bower and Handley, Res Judicata (2009) at [17.04]. 49Thus, if CBA made a false representation which induced Mr and Mrs Fitzsimons to agree to the Consent Judgments, a basis may well exist to set aside the Consent Judgments. 50However, a matter of discretion arises, and the Court would not set aside the Consent Judgments unless satisfied that there was a "real possibility" that the Unpleaded Allegation, if allowed, would have led to a different result in the Earlier Proceedings: cf Commonwealth Bank of Australia v Quade (1991) 178 CLR 134 at 142-143 per Mason CJ and Deane, Dawson, Toohey and Gaudron JJ (dealing with the analogous situation of an application for a new trial, following a failure to give full discovery).

Were the Letters discoverable? 51So far as is relevant, Category 6 called for documents "relating to and dealing with claims" made on CBA by Ms Sayer. 52The question is whether the Letters were caught by Category 6. In argument, particular focus was made on Ms Sayer's Letter of 16 January 2006. 53Mr Rollinson, who appeared for Mr and Mrs Fitzsimons, accepted that Ms Sayer's Letter was not one "dealing with" claims made on CBA; because Ms Sayer did not make a "claim" on CBA in that letter. 54However Mr Rollinson submitted that Ms Sayer's Letter was one "relating" to claims made by her on CBA, because it was a precursor to the claims Ms Sayer very clearly did make in subsequent correspondence: in particular her letter of 4 August 2006 (see [26] and [27] above). 55It is true that the expression "relating to" is of wide import, capable as a matter of language, of "indicating any sort of relationship that there may be between A and B": per Campbell JA in Franklins Pty Ltd v Metcash Trading Ltd (2009) 76 NSWLR 603 at [599]. 56However, the expression used in Category 6 is "relating to and dealing with" rather than "relating to or dealing with". 57What was called for, in my opinion, were documents which both "related to" and "dealt with" claims made on CBA by Ms Sayer. 58In my opinion, neither of the Letters did so, and for that reason neither fell within Category 6. 59By the 16 January 2006 Letter (see [16] above), Ms Sayer did no more than notify CBA of the making of the 2005 Orders and request copies of statements in relation to the 2006 Trust Account. 60Ms Sayer made no "claim" on CBA. No "particulars of monies" paid were requested or given. 61By the 22 February 2006 Letter (see [18] above), the Law Society of New South Wales did no more than further notify CBA of the 2005 Orders. 62That Letter does not make or refer to any "claim" or deal in any way with "particulars". 63Accordingly, the plaintiffs' case fails at the threshold.

The Representation made by service of the List of Documents 64Nonetheless, I will deal with the other arguments that arose in the proceedings. 65Mr and Mrs Fitzsimons allege that, on service of its List of Documents, CBA made a representation to them about when it became aware of the 2005 Orders. The representation, said to arise from the absence of the Letters in the List of Documents, was that CBA was not aware of the 2005 Orders before 23 June 2006. 66The nature of any representation arising from service of the List of Documents must be determined by what CBA said in its List of Documents about the disclosure it was making concerning Category 6. 67The List of Documents was verified by the Client Manager of CBA's Credit Management Unit, who on 8 May 2008 deposed that she: - (a)had access to CBA's records concerning Mr and Mrs Fitzsimons and Ms Roberts; (b)had made reasonable enquiries concerning the existence and location of the documents called for by Category 6; and (c)believed CBA was not, and had not within six months of the commencement of the Earlier Proceedings been in possession of documents called for by Category 6. 68Further, CBA's solicitor certified on the same date that he was not aware of any documents called for by Category 6 then, or within six months of the commencement of the Earlier Proceedings, in the possession of CBA. 69In these circumstances, the representation made by CBA concerning Category 6, and the Letters, was that reasonable enquiries had been made as to whether CBA had in its possession any documents called for by Category 6 and that, following such enquiries, the CBA's Client Manager "believed" no such documents existed and CBA's solicitor was "not aware" of any such documents. 70In my opinion, CBA did not represent that, as a matter of fact, no such documents existed. 71In any event, because the Letters were not discoverable under Category 6, the absence of disclosure of the Letters did not, in my opinion, constitute any representation by CBA as to when it became aware of the 2005 Orders. 72But there is more. CBA did discover documents which showed that it became aware of the 2005 Orders prior to 27 February 2006; that is four months before 26 June 2006 and over four months before 4 August 2006. 73CBA discovered the letter from Ms Sayer to CBA of 4 August 2006 (see [26] - [27] referred to above) which referred to the 2006 Trust Account opened by Mr Fitzsimons on 27 February 2006. 74A further document discovered by CBA was a letter written by its General Counsel to Ms Sayer on 7 December 2006 which stated: - "I am now instructed that my client concedes that, having received notification of the appointment of receiver to Mr Fitzsimons' practice it ought not to have allowed the opening of [the 2006 Trust Account] and the subsequent depositing of the cheques totalling $70,167.34. In the circumstances the Bank will arrange to forward to you a cheque for that amount." 75CBA discovered two further letters, dated 4 January 2006 and 15 January 2006 (intended to be 2007) from it to Ms Sayer in which the General Counsel repeated that concession. 76Those letters made clear that CBA had received notification of the appointment of Ms Sayer prior to the date of the opening of the 2006 Trust Account; that is prior to 27 February 2006. 77Thus, by service of its List of Documents, far from representing to Mr and Mrs Fitzsimons that it was not on notice of the 2005 Orders any earlier than receipt of Mr and Mrs Fitzsimons' letter of 23 June 2006, or Ms Sayer's letter of 4 August 2006, CBA made clear that it was on notice of those orders since a date earlier than 27 February 2006. 78Mr and Mrs Fitzsimons allege that discovery of the Letters would have revealed to them, for the first time, that CBA was in "breach" of the 2005 Orders throughout the period between 19 January 2006 and August 2006, during which time CBA had permitted Mr Fitzsimons to continue to operate on the various accounts to which he was signatory. They claim that, had they known of these matters, they would not have settled the Earlier Proceedings and would not have agreed to the Consent Judgments. Rather, they claim, they would have sought to amend their pleadings in the Earlier Proceedings to include the Unpleaded Cause of Action. 79The discovery given by CBA showed CBA became aware of the 2005 Orders prior to 27 February 2006. Had CBA discovered the Letters, Mr and Mrs Fitzsimons would have learned that the precise date on which CBA became aware of the 2005 Orders was 19 January 2006. This could not possibly have made any difference to their decision to agree to the Consent Orders. 80For these reasons, I reject Mr and Mrs Fitzsimons' contentions as to the representations alleged to have been made by CBA by reason of service by its List of Documents. 81It follows that no basis has been made out to set aside the Consent Judgments. 82In those circumstances, it is not necessary for me to consider what causes of action might have been available to Mr and Mrs Fitzsimons had I upheld their claim as to the representation allegedly made by CBA. 83However, out of deference to the arguments addressed to me in relation to those matters, I will deal with them, albeit briefly.

Duty of care 84In Ferguson v Eakin [1997] NSWCA 106 Powell JA said that: - "It is a contempt of court for anyone with notice of an order of the court so to act as to interfere with, or otherwise obstruct, the course of justice." 85Thus, as is stated in Biscoe, Freezing and Search Orders, 2nd ed (2008) at [4.12]: - "A bank is guilty of contempt if, knowing of a [freezing] order against the defendant, it allows the defendant to move money in breach of the injunction, even where the defendant had not been served with the order and had therefore not committed any contempt to which the bank could be an accessary." 86See also Z Ltd v A - Z [1982] QB 558 at 572H per Lord Denning MR and 586C per Kerr LJ (approved in Attorney General v Times Newspapers Ltd (the "Spycatcher case") [1992] 1 AC 191. 87However it does not follow from the fact that a bank may be guilty of contempt in such circumstances that the applicant for the freezing order, let alone any other party, thereby gains a cause of action against the bank for any loss that party may suffer as a result of the bank's conduct. 88In Customs and Excise Commissioners v Barclays Bank Plc [2007] 1 AC 181, the House of Lords unanimously held that Barclays Bank did not owe the Commissioners, who were the applicants for a freezing order, a duty to take reasonable care to comply with that order.

Implied term 89Before me, Mr Rollinson eschewed reliance on any "private cause of action through a contempt of court or anything of that sort" and relied, instead, on what he contended to be an implied term of the banker customer contract between CBA and Mr and Mrs Fitzsimons. 90Mr Rollinson formulated that the implied term was in the following terms: - "That the bank, if on notice of the existence of an order of a Court prohibiting the customer(s), or any of them, from conducting transactions on the account (which the customer(s) absent the order, would be entitled to conduct) should take reasonable steps to prevent the occurrence of such transactions" ("the Alleged Implied Term"). 91Mr Rollinson argued that: - (a)the effect of the 2005 Orders was to prohibit Mr Fitzsimons from conducting transactions on the accounts; (b)by reason of the alleged implied term CBA was obliged to take reasonable steps to prevent Mr Fitzsimons operating on those accounts; and (c)such breach caused Mr and Mrs Fitzsimons to suffer damage because (to use their words in the Affidavits) "compliance [with the 2005 Orders] would have prevented withdrawals being made from the cheque accounts and the defaults occurring under the mortgages". 92Mr Rollinson accepted that Mr Fitzsimons, as the person who was actually in breach of the 2005 Orders, could not avail himself of any such cause of action. 93Thus, as the argument was finally put, only Mrs Fitzsimons was said to have any Unpleaded Cause of Action against CBA - for breach of the alleged implied term. 94I do not accept the submission that Mrs Fitzsimons had this Unpleaded Cause of Action. 95First I do not accept the existence of the Alleged Implied Term. 96Mr Rollinson pointed to no authority in support of the proposition that such a term should be applied into a contract between a bank and its customer. 97In order that such a term be implied it is necessary that the conditions referred to by the Privy Council in BP Refinery (Western Port) Pty Limited v Hastings Shire Council (1977) 180 CLR 266 at 283 be established, namely the term must: - (1)be reasonable and equitable; (2)be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3)be so obvious that it "goes without saying"; (4)be capable of clear expression; and (5)not contradict any express term of the contract. 98In my opinion, the Alleged Implied Term does not satisfy the second of these conditions. I cannot see that the implied term is necessary to give business efficacy to the banking customer contract. It seems to me that the banking customer contract would be quite effective without the implication of any such implied term. 99It was also submitted on behalf of CBA that the Alleged Implied Term does not satisfy the fifth of these conditions, in that it would contradict the following express terms applicable to Mr and Mrs Fitzsimons' joint accounts current at 3 January 2006: - "We are not obliged to enquire into the circumstances of any instructions you give in relation to the operation of your joint accounts and we are not liable for any loss or damage you or anyone else suffers due to us acting on those instructions in good faith, unless it is proved we were negligent ("the First term")". and "Generally speaking you are liable for any losses arising from the acts and omissions of all uses. This includes you and any person authorised by you to carry out EFT transactions on your accounts. You will be liable for: transactions carried out by you or with your knowledge and consent; transactions carried out by any other user, unless you have told us to cancel that user's PIN, password or other code, and you have taken all reasonable steps to have the card and or other device returned to us...("the Second term")". 100As to the First term, it is common ground that the words "unless it is proved we were negligent" did not, themselves, impose on CBA an obligation to act otherwise than negligently, and did no more than remove from the ambit of the exclusion any circumstance where CBA was "negligent". 101As I have mentioned, Mr Rollinson did not contend that CBA had a general law duty to Mr or Mrs Fitzsimons to comply with the 2005 Orders. 102I accept the submission of Mr Aspinall, who appeared for CBA, that "where there is a clause which excludes liability under the contract for transactions which are made on the instructions of an accountholder, it is inconsistent with that term for there to be an implied term that could give rise to such a liability under the contract". 103In my opinion, the Alleged Implied term is inconsistent with the First Term. 104As to the Second term, it is common ground that the introductory words "Generally speaking" mean something to the effect "Subject to what is below" and have the effect that the exclusion in the Second term does not apply to "unauthorised transactions", which are dealt within some detail in subsequent provisions. 105The effect of the Second term is, amongst other things, that Mrs Fitzsimons is "liable" for "any transactions carried out by any other user" and is thus "liable" for any transactions carried out by Mr Fitzsimons. 106In those circumstances, I see a plain inconsistency between the Alleged Implied term and the Second term. 107In any event, as the parties have made express provision, in the First term and Second term, for the circumstances in which CBA might be liable to its customers in respect of operations on their accounts, it is not, in my opinion, "so obvious that it goes without saying" that a term such as the Alleged Implied term should be implied. Accordingly, the Alleged Implied Term does not satisfy the third of the conditions laid down in BP Refinery. 108Further, even if there was such an implied term in the banking customer contract between Mrs Fitzsimons and CBA, Mrs Fitzsimons has suffered no loss as a result of any breach by CBA of such an implied term. 109Mrs Fitzsimons' contention is that, in effect, CBA should have frozen the Cairns Joint Account and Chatswood Joint Account as soon as it received notice of the 2005 Orders; that is on or soon after 19 January 2006. 110The 2005 Orders extended to the Cairns Joint Account, notwithstanding the "location" of the account at a Queensland branch of CBA. As CBA's "place of residence" is throughout Australia, the debt represented by credit funds in the Cairns Joint Account was recoverable anywhere in Australia, including New South Wales. Accordingly the situs of the debt, and thus the account, was also throughout Australia, including New South Wales. The Cairns Account was thus an asset of Mr Fitzsimons "within the State of New South Wales" for the purpose of the 2005 Orders: see Assetinsure Pty Limited v New Cap Reinsurance (2006) 225 CLR 331 at [58] per Kirby and Hayne JJ; and see Davies, Bell and Brereton, Nygh's Conflict of Laws, 8th Ed (2010) at [32.34]. 111Freezing of the Cairns Joint Account and the Chatswood Joint Account would not have prevented defaults occurring under the Potts Point, Darlinghurst and Clifton Beach mortgages. On the contrary, freezing of those accounts would have caused those mortgages to go into default, almost immediately. 112At that time, there was only $2,000 in the Cairns Joint Account and $5,000 in the Chatswood Joint Account. The total monthly mortgage payments were in the order of $20,000. Following the 2005 Orders, Mr Fitzsimons ceased earning income from his solicitor's practice. Assuming Mr Fitzsimons continued gambling (he said he was then an addicted gambler and that he then "did not care" about the consequences), it is inconceivable that he would have deposited the proceeds of his gambling activities into an account from which he could not withdraw such proceeds. It is probable, as was put to him in cross-examination, that he would have simply "migrated" activities to dormant accounts which then existed in his and Mrs Fitzsimons' name at HSBC Bank. 113The result would have been that no further deposits would have been made into the account. The funds in the account were insufficient to pay even one months' interest. As stated above, the loans would have gone into default almost immediately. 114In those circumstances, Mrs Fitzsimons would have been worse off than as events transpired. This is because, as it happened, the accounts were not frozen until August 2006 and, in the meantime $34,116.70 was paid off the Clifton Beach mortgage and $33,592.00 had been paid off the Potts Point and Darlinghurst mortgages, from the proceeds of Mr Fitzsimons' gambling activities (see [20] above). 115For those reasons it is my opinion that Mrs Fitzsimons did not have any Unpleaded Cause of Action against CBA of substance or value.

Did the 2005 freezing order apply to the Joint Accounts? 116Mr Aspinall submitted that, in any event, the 2005 Orders did not apply to accounts held by Mr Fitzsimons jointly with another, and thus not to the Cairns Joint Account and Chatswood Joint Account. 117In view of the conclusions to which I have come, it is not necessary for me to decide this question. 118However, again, in deference to the arguments put, I will deal with it briefly. 119Mr Aspinall relied upon the observations of the United Kingdom Court of Appeal in Z Ltd v A-Z. 120The Court of Appeal stated, by way of general guideline, that a freezing order should not be taken to restrain drawings on a joint account held by the defendant with another unless so drafted to make clear that this was intended. 121Thus, Kerr LJ stated: - "Similarly, take the case of joint accounts in the name of the defendant and of some other person or persons. A bank will not generally know what way the amounts standing to the credit of such accounts have been provided by the defendant or the other account holders respectively; and the other account holders may not be parties to the action and accordingly cannot be subjected to the injunction. Accordingly, any order which it is intended to serve upon a bank should not be applicable to joint accounts unless the order is so drafted as to make it clear that it is also intended to apply to them; but this would only be justifiable in rare cases. Where it is justifiable and the other holders of the joint account are not parties, the order should include references to joint accounts, and a copy of the order should be served on the other holder or holders." 122The learned authors of Paget's Law of Banking, 13th ed (2007) at [26.11] commented: - "The guidelines presuppose that a Mareva over a joint account restrains drawings by either account holder, even where the mandate provides either to sign. Although, strictly speaking, each account holder owns separate choses in action against the bank, it is clearly preferable for Mareva purposes to treat the asset as being the fund itself. It is for this reason that the injunction should be extended to a joint account only if there are good grounds for suspecting that the account belongs in truth to the defendant alone." 123It appears to me that the question of whether any freezing order extends to funds in a joint account depends on who is the owner of the funds in the joint account. That question will depend on the intention of the parties to the joint account. 124In this case, the 2005 Orders restrained Mr Fitzsimons from, relevantly, "dealing with ... any of his assets" in New South Wales. The question of whether "his assets" extended to the funds in the Chatswood Joint Account depends upon whether the funds in that account were Mr Fitzsimons' funds alone. 125On the face of it, it appears they were, as only Mr Fitzsimons deposited funds to that account (comprising his gambling winnings and funds he borrowed from relatives and friends). There is no reason to suppose Mr Fitzsimons intended to give Mrs Fitzsimons an interest in the funds. He intended to use them for gambling. And Mrs Fitzsimons had no knowledge of Mr Fitzsimons' gambling activities through this account. 126For those reasons my opinion is that the 2005 Orders did extend to the funds in the Cairns and Chatswood Joint Accounts.

Estoppel by deed 127Mr Aspinall said a further answer to Mr and Mrs Fitzsimons' claim arose from Clause 2.2 the Settlement Deed, in which Mr and Mrs Fitzsimons "acknowledged and confirmed" that they had not entered into the Settlement Deed in reliance on any statement or conduct on behalf of CBA. 128Mr Aspinall relied upon the doctrine of estoppel by a deed and made reference to the extra judicial writings of Handley JA in Estoppel By Conduct and Election, (2006) at ch 7. 129In view of the conclusions to which I have come, it is not necessary to deal with this submission in detail. 130However, the short answer to it is that while the existence of that provision in the Settlement Deed is a factor relevant to the question of whether or not it be set aside on the basis of misrepresentation, if a basis to set aside the Settlement Deed was otherwise made out, the clause would fall with the rest of the Deed.

Conclusion 131Mr and Mrs Fitzsimons have failed to make out a basis to set aside the Consent Judgments, or the Settlement Deed. 132The Fourth Amended Statement of Claim should be dismissed, as against Mr and Mrs Fitzsimons, with costs.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 18 June 2012

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