National Australia Bank Limited v Kim Francis Hunter & Anor

Judgment 1The second defendant/cross-claimant in these proceedings, Ms Kim Hunter, seeks leave under Civil Procedure Act 2005 ("CPA") s 64 to file an amended first cross claim which will include for the first time a claim for relief pursuant to the Trade Practices Act 1974 ("TPA") s 52. 2This application for leave was made at the conclusion of a three-day hearing on 30 April, 1 May and 9 May 2013. 3There is no need to explain the matters in issue in these proceedings or the relationships of the various parties. They are all set out in my first judgment, National Australia Bank Limited v Kim Francis Hunter & Anor [2013] NSWSC 71. Events, matters and things are referred to in this judgment in the same way as they are in that first judgment. 4The second defendant/cross claimant, actually seeks to make two kinds of amendments to her cross claim: one is uncontested, and the other is contested. The uncontested amendments introduce a plea that the cross defendant Bank has breached its contract with Mrs Hunter by contravening provisions of the Code of Banking Practice ("the Code"). Those amendments are uncontentious because the Bank had been on notice from the beginning of these proceedings that breaches of the Code were an issue. The cross claim as originally framed had assumed that the Code had the force of law under Competition and Consumer Act 2010 ("CCA") s 51ACA. This assumption turned out to be legally erroneous. But the Bank was nevertheless on notice that breaches of the Code were alleged and needed to be defended. For that reason the amended plea of the breaches of the Code, as a matter of contract, was not really contested by the Bank. 5But Mrs Hunter seeks another group of amendments. She now seeks to rely upon breaches of the Code as constituting contraventions of s 52 of the TPA. The Bank opposes these amendments. 6I note that on 1 January 2011 s 52 of the TPA was replaced by s 18 of the Australian Consumer Law (introduced by the Competition and Consumer Act 2010 (Cth)). But the transitional provisions in Schedule 7 of the Trade Practices Amendment (Australian Consumer Law) Act (No.2) 2010, which effected this change, provide that the TPA continues to apply in relation to acts or omissions that occurred before that commencement. But in fact neither the TPA nor the Australian Consumer Law is applicable here. As the Bank correctly notes in its submissions, the proposed relief should in fact be sought under the Australian Securities and Investments Commission Act 2001 which applies to conduct in relation to "financial services", such as provision of loans, to the exclusion of the TPA (see TPA s 51AF), and now the Australian Consumer Law (see Competition and Consumer Act 2010 (Cth) s 131A). But there is no material difference between the relevant provisions of the TPA and of the Australian Securities and Investments Commission Act 2001. And the fact that the amendments were expressed in terms of TPA s 52 does not influence the outcome of this application. 7There is no doubt the s 52 amendments have been crafted with some ingenuity by Mr Cutler of counsel for Mrs Hunter in an endeavour to minimise the inconvenience and possible prejudice to the Bank from the amendments. This is designed to increase the prospect of the amendments being granted. But despite that effort I am still of the view that the amendments should not be allowed. The reasons for this require an understanding of the course of the proceedings and of the nature of the amendments themselves. 8The proceedings have advanced very far. The evidence is closed after three hearing days. The parties are about to prepare their final written submissions. Mr and Mrs Hunter have both given evidence about the circumstances in which they entered into the various loan agreements and security documents the subject of the proceedings. On the Bank's side Mr Dewstow and Mr Archer, two bank officers, have given evidence of their involvement in the two main transactions comprising a first guarantee in April 2009 and a second guarantee in 2009. A complicating factor was that Mr Archer's evidence was taken by video link while he was in the United Kingdom. When he gave this video link evidence he was about to travel to uncertain destinations in Asia. Mr Archer is an employee of the Bank on leave. He was tracked down in the United Kingdom so that he could be cross-examined by video-link in the United Kingdom. Both Mrs Hunter and her husband, and Mr Archer and Mr Dewstow, were extensively cross-examined. 9The amended pleadings in respect of both the first and second guarantees are structured in the same way. It is only therefore necessary to look at the amendments with respect to the first guarantee to understand the nature of the amendments sought with respect to the second guarantee. They are in virtually identical terms, other than the differences in the dates and documents concerned. 10Paragraphs 19, 19A, 19B, 19C, 28, 20B, 20C, 20D and 20E of the proposed amended cross claim set out the TPA plea with respect to the first guarantee together with the claim for TPA relief: 19 The cross-defendant has breached: a.clause 28.4(d) of the Code in that it did not provide the documents referred to in paragraph 13A in accordance with clauses 28.5(a) and (b) of the Code; b.clause 28.5 of the Code, in that: i.It did ask the cross claimant to sign the First Guarantee; and ii.It did purport to the accept the First Guarantee from the cross claimant; in circumstances where the cross claimant was not allowed until the next day to consider the information as required by clause 28.5(b) of the Code. 19A At the time of signing the First Guarantee, the cross claimant was unaware that the Seaview Mortgage was: (a) an all moneys mortgage; and (b) security for the cross claimant's obligations under the First Guarantee. 19B Had the documents referred to in paragraph 13A been provided to the cross claimant in accordance with the clause 28.4(d) of the Code, the cross claimaint would have known that the Seaview Mortgage was security for the First Guarantee. 19C Had the cross claimant been aware that the First Guarantee was secured by the Seaview Mortgage she would not have signed the First Guarantee. 20A The cross defendant's provision of the First Guarantee to the cross claimant on 3 April 2009 was an offer to enter into the First Guarantee which was conditional on the cross defendant's compliance with the Code. 20B By reason of the cross defendant's breaches of the Code (as set out in paragraph 19), the First Guarantee is void ab initio and not binding on the defendants. 20C Further or in the alternative, the cross defendant's compliance with the Code is an express term of the First Guarantee and a condition precedent to the enforcement of the First Guarantee. 20D By reason of the cross defendant's breaches of the Code (as set out in paragraph 19): (a) the First Guarantee is not enforceable against the defendants; and/or (b) The cross claimant has suffered loss or damage. 20E Further or in the alternative, the cross claimant repeats paragraphs 19A, 19B and 19C and says that the defendant's breaches of the Code (as set out in paragraph 19) were misleading and deceptive conduct within the meaning of section 52 Trade Practices Act. 11The same structure of pleading appears for the second guarantee between paragraphs 30A and 32E of the proposed amended cross claim. Ms Hunter claims also in paragraph 41A damages for misleading and deceptive conduct and a prayer for orders that the first and second guarantees are unenforceable. The essence of the misleading and deceptive conduct alleged seems to be that the failure to draw attention to the Seaview mortgage in accordance with the Code was misleading and deceptive because it gave Mrs Hunter the impression that the much earlier Seaview mortgage did not secure the first and second guarantees. That is a fairly readily understandable case in light of the way the proceedings have unfolded. 12But in my view claims under TPA should not be allowed for the first time at this stage. Mr Koch on behalf of the Bank submits that the amendments would cause prejudice. He says he would have cross-examined Mrs Hunter further in relation to the May 2008 first guarantee and indemnity, would have cross-examined Mr and Mrs Hunter differently about the circumstances, and may have deployed the evidence of Mr Dewstow and Mr Archer differently. 13I see the force of Mr Koch's contentions. It is not unusual for a defendant to cross-examine a plaintiff propounding a misleading and deceptive conduct case based on a plaintiff's personal history of signing guarantees and mortgages and to deal with a wider range of surrounding circumstances than might be the subject of cross-examination in a contract case. Thus what Mr Koch says is quite supportable from common forensic experience. 14Of course, it might in some cases be possible to grant leave to amend the pleadings even at this stage, on the basis that Mr Koch was given liberty to further cross examine. I might have been minded to do that but for the fact that this case presents special problems. Any such further cross-examination on expanded pleadings by Mr Koch may well raise the prospect of him seeking to adduce further evidence from Mr Archer or Mr Dewstow. The former will be difficult to find at this time. 15The prejudice of allowing the amendments at this late stage is too great. I am mindful of what Griffiths CJ said in Gordon v MaGgregor [1909] 8 CLR 316 at 321: ... it is a very dangerous thing after the close of the evidence to allow an amendment to raise a point founded on some oral statement by a witness, which may be perfectly complete so far as it is relevant to the issues which are being tried, but which if it were given with reference to entirely different issues would be incomplete. It is like allowing a party to raise a new case on appeal when the Court has not all the materials before it. 16And a judge is always in a very difficult position to decide whether a case would have been differently conducted had the amendment not occurred. These difficulties were emphasised in Commonwealth Bank of Australia v Mehta (1991) 23 NSWLR 84 at 106 (per Waddell A-JA repeating on appeal the comments made by the trial judge in that matter, Rogers CJ Comm D): It is always a matter of great difficulty for any counsel to indicate in what way a case for the client would have been differently presented had the amendment sought by the other side been part of the matrix of the case at an earlier point. It is even more difficult for a judge, considering the application, to determine whether in truth the case would have been differently conducted and thereby occasion irreparable prejudice to the party confronting the proposed amendment. 17Those difficulties can often be cured whilst the evidence is under way in allowing short adjournments for the parties to readjust their positions. But the problem with this case is that all the evidence is concluded on both sides but for this amendment. It is too late to reopen what has been a three-day trial, after an earlier contested application in February this year. 18For those reasons the application will be refused. Ordinarily costs would follow the event. But I will hear the parties on the costs issues with their final submissions on the hearing. So the orders of the Court will be: (1)Grant leave to the second defendant/cross claimant to file in Court an Amended First Cross Claim and Statement of Cross Claim but in a form excluding any proposed amendment in relation to the Trade Practices Act 1974. (2)Dismiss the second defendant/cross claimant's motions seeking amendments to the First Cross Claim and Statement of Cross Claim adding causes of action under the Trade Practices Act 1974. (3)Direct that if the second defendant/cross claimant wishes to contest the making of an order for costs on the dismissal of the motion that submissions concerning that should be filed with final submissions in the proceedings. (4)Direct the parties to agree upon a timetable for hearing final submissions commencing at 9.30 am for no more than two hours which should be provided to my associate by Friday 14 June 2013. I certify that this and the preceding pages are a true copy of the reasons for judgment of Justice Slattery delivered on 13 June 2013. Associate..................................