BETWEEN : NATIONAL AUSTRALIA BANK LIMITED (ACN 004 044 937)

Summary judgment - Application for possession of two properties mortgaged by the defendants to the plaintiff - Turns on own facts

Second-named Defendant : Mr C K Savas & Mr A P Skerritt

1 MASTER SANDERSON: By chamber summons filed 19 June 2009 the plaintiff sought summary judgment in this matter. The matter was programmed and was listed for hearing on 21 July 2009. Despite no amendment being sought to the programming orders, the defendants were not ready to proceed on that date. The matter was re-listed for 19 August 2009. After hearing argument I entered judgment in favour of the plaintiff. I indicated I would publish reasons for that decision. These are those reasons.

2 An amended statement of claim was filed by the plaintiff on 14 May 2009. Essentially, the plaintiff was seeking possession of two properties owned by the defendants which had been offered as security for certain borrowings. The application was supported by two affidavits of Gregory John Daniel, the first sworn 11 June 2009 and the second sworn 4 August 2009. The summary of facts which follows is taken from the amended statement of claim and from the affidavits of Mr Daniel.

3 On or about 13 February 1998 the plaintiff and the defendants executed a document entitled 'Fixed Rate Owner Occupied Home Loan Individuals Professional's/Executive's/Investor's Choice Package'. Pursuant to this agreement, the plaintiff agreed to provide the defendants a home loan (the Home Loan Agreement). Shortly after these documents were signed the plaintiff advanced funds to the defendants in an amount of $200,000 on the terms contained in the Home Loan Agreement. On or about 16 March 2004 the plaintiff and the defendants executed a document entitled 'Variation from Fixed Rate Owner Occupied Home Loan Individuals Choice Package To Variable Rate Owner Occupied Home Loan Individuals Choice Package'. The effect of this agreement was to vary the applicable interest rate but to otherwise preserve the Home Loan Agreement.

4 As at 28 November 2008 the defendants were indebted to the plaintiff in an amount of $160,819.72 pursuant to the Home Loan Agreement. The defendants had failed to pay the plaintiff on time payments totalling $932, these payments being due and payable under the terms of the Home Loan Agreement.

5 On 28 November 2008 the plaintiff issued a notice of default to the defendants pursuant to the Home Loan Agreement. Despite this notice of default, the defendants failed to pay to the plaintiff within 35 days (the time specified in the default notice) the outstanding sum.

6 On or about 16 May 2006 the plaintiff and the defendants (trading as Lyddon Farm Aquaculture) executed a document entitled 'Business Letter of Offer'. The effect of this Business Letter of Offer was that the plaintiff agreed to provide the defendants a market rate facility (First Market Rate Facility). Shortly after the Business Letter of Offer was signed, the First Market Rate Facility Agreement was made available by the plaintiff to the defendants with a facility limit of $1,132,000.

7 As at 28 November 2008 the First Market Rate Facility was drawn $114,127.81 in excess of the facility limit. This prompted the plaintiff to send the defendants a notice of default in relation to the First Market Rate Facility agreement. The defendants failed to rectify the default and did not pay the plaintiff the sum of $114,127.81.

8 On or about 13 December 2007 the plaintiff and the defendants executed a document entitled 'Business Letter of Offer'. Pursuant to this letter the plaintiff agreed to provide to the defendants a further market rate facility (Second Market Rate Facility). As part of the Second Market Rate Facility agreement, the defendants were required to give the plaintiff a registered mortgage over two properties the subject of this application. One of these properties, described as the 'Reserve Road property' had in fact been mortgaged in 1998 to secure the home loan. With the provision of the two market rate facilities, the mortgage on that property was extended to cover those facilities.

9 As at 28 November 2008 the Second Market Rate Facility had expired and the defendants had failed to pay the plaintiff an amount of $162,521.33 pursuant to the Second Market Rate Facility. This prompted the plaintiff to send the defendants a notice of default. That default was not rectified. On 1 December 2008 the plaintiff sent the defendants a default notice pursuant to the property mortgages. Again, the default was not rectified. A demand was subsequently served and a notice to vacate, but the defendants have refused to deliver up the properties to the plaintiff.

10 Along with this security documentation, the plaintiff and the defendants have, from time to time, entered into certain other written agreements. On or about 16 December 2007 the plaintiff and the defendants executed a document entitled 'Deed of Arrangement'. That Deed of Arrangement was varied by execution of deeds of variation on 12 March 2008, 28 April 2008, 8 August 2008 and 16 September 2008. In the Deed of Arrangement, as varied, the defendants acknowledged their indebtedness to the plaintiff pursuant to the Home Loan Agreement, the First Market Rate Facility agreement and the Second Market Rate Facility agreement. Nothing in these agreements in any way affects the liability of the defendants to the plaintiff. The agreements represent an attempt by the parties to allow the defendants time to rationalise their affairs and sell assets to repay the plaintiff. For present purposes it is unnecessary to analyse the terms of the Deed of Arrangement or the variations in any detail.

11 The defendants do not deny they entered into the various agreements with the plaintiff or that they are indebted to the plaintiff pursuant to those agreements. Nor do they deny they are in default under the terms of the agreements. But nonetheless it was said there were various matters which, when properly considered, raised triable issues so that summary judgment should not be entered.

12 (At the hearing of this application the second-named defendant was represented by solicitors. The first-named defendant appeared in person. The first-named defendant was content to rely upon the submissions both written and oral put on behalf of the second-named defendant. In considering the merits of the application I have assumed the interests of the first-named and second-named defendant are identical. It was not suggested otherwise.)

13 It was suggested on behalf of the second-named defendant that there were three grounds upon which the defendants had a defence to this action. The first was an allegation of misleading and deceptive conduct. This allegation was based upon discussions which allegedly took place between Mr Trystan Joyce, an employee of the plaintiff, and the defendants on or about 13 December 2007. This was prior to the defendants entering into the Second Market Rate Facility. In opposition to this application the second-named defendant swore two affidavits - the first dated 27 July 2009, and the second dated 3 August 2009. In the first of these affidavits the second-named defendant sets out the circumstances which led to the various loans being made by the plaintiff to the defendants. It is clear that the defendants had a number of discussions with Mr Joyce in his capacity as manager of the Narrogin branch of the plaintiff. It is also clear that Mr Joyce appears to have done what he could in assisting the defendants to present a business case to the plaintiff which would allow them to borrow an amount the defendants believed they needed. But there is nothing in the evidence which could, in my view, constitute misleading and deceptive conduct on the part of Mr Joyce. The starting point in any allegation of misleading and deceptive conduct is to fix upon 'conduct' and then analyse whether that conduct was misleading or deceptive. The second-named defendant's evidence does not even go so far as to identify the conduct which might be complained of. In my view, there is nothing to suggest the defendants have a defence under the Trade Practices Act 1974 (Cth).

14 Secondly, it was alleged that there was, on the part of Mr Joyce, negligent misrepresentation. This allegation is, as I understand it, based upon the fact that Mr Joyce assisted the defendants in preparing a business plan which in turn was used to satisfy the bank the defendants could service their borrowings. Even assuming that Mr Joyce assisted the defendants in drafting the business plan, there are no facts upon which it could be suggested he was negligent. He relied upon material supplied to him by the defendants. In the end it was the defendants themselves who submitted the business plan. There is nothing in the second-named defendant's affidavit which could be characterised as a representation by Mr Joyce to them, let alone anything that could be characterised as a negligent misstatement. In my view, there was no substance to this aspect of the defendants' submissions.

15 Finally, it was suggested that the defendants were subjected to 'illegitimate pressure' or economic duress by the plaintiff. With respect, this submission was without any foundation whatever. A reading of the correspondence passing between the plaintiff and the defendants, and a consideration of the Deed of Arrangement and the variations, shows the plaintiff went to quite remarkable lengths to allow the defendants to rationalise their affairs and repay the money they had borrowed. No criticism at all could be levelled at the plaintiff for its conduct; still less could there be any suggestion of economic duress. Again, this submission was without foundation.

16 In all the circumstances then I was satisfied that the defendants had no defence to this claim and that the plaintiff was entitled to judgment. I made orders accordingly.