Supreme Court of WA|2010-09-01|Before: Mr J, Corboy J

NATIONAL AUSTRALIA BANK -v- MCCOURT [2010] WASC 237 (1 September 2010)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

Caveats - Whether mortgagee bank entitled to exercise power of sale - Estoppel - Waiver - Duty of good faith and fair dealing - Misleading or deceptive conduct - Unjust transactions - Allegations concerning the bank's exercise of its powers of sale - Turns on own facts

Consumer Credit (Western Australia) Code, s 6, s 8, s 70(1), s 70(2), s 80

Ajayi v R T Briscoe (Nigeria) Ltd [1963] 3 All ER 556

American Cyanamid Co v Ethicon Ltd [1975] UKHL 1; [1975] AC 396

Australian Broadcasting Corporation v O'Neill [2006] HCA 46; (2006) 227 CLR 57

Barns v Queensland National Bank Ltd [1906] HCA 26; (1906) 3 CLR 925

Bashford v Bashford [2008] WASC 138

Beecham Group Ltd v Bristol Laboratories Pty Ltd [1968] HCA 1; (1968) 118 CLR 618

Bond v Hongkong Bank of Australia Ltd (1991) 25 NSWLR 286

Bunbury Foods Pty Ltd v National Bank of Australasia Ltd [1984] HCA 10; (1984) 153 CLR 491

Commonwealth Bank of Australia v Renstel Nominees Pty Ltd [2001] VSC 167

Craine v Colonial Mutual Fire Insurance Co Ltd [1920] HCA 64; (1920) 28 CLR 305

Custom Credit Corporation Ltd v Ravi Nominees Pty Ltd (1992) 8 WAR 42

Ellison v Alliance Acceptance Ltd (1984) NSW ConvR 55-217

Eng Mee Yong v Letchumanan [1980] AC 331

Equititrust Ltd v Franks [2009] NSWCA 128; (2009) 258 ALR 388

Fletcher v Ould Pty Ltd [2000] WASC 322

Grundt v Great Boulder Pty Ltd [1937] HCA 58; (1937) 59 CLR 641

Harvey v McWatters (1948) 49 SR (NSW) 173

Hughes Aircraft Systems International v Airservices Australia [1997] FCA 558; (1997) 76 FCR 151

Inglis v Commonwealth Trading Bank of Australia [1972] HCA 74; (1972) 126 CLR 161

J & H Just (Holdings) Pty Ltd v Bank of New South Wales [1971] HCA 57; (1971) 125 CLR 546

Linnpark Investments Pty Ltd v Macquarie Property Development Finance Ltd [2002] WASC 272

McCourt v National Australia Bank Ltd (No 2) [2010] WASC 151

McCourt v National Australia Bank Ltd [2010] WASC 121

Navarac Pty Ltd v Moondancer Holdings Pty Ltd [2009] WASCA 95

Perron Investments Pty Ltd v Tim Davies Landscaping Pty Ltd [2009] WASCA 171

Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234

Super Chem Products Ltd v American Life and General Insurance Co Ltd [2004] UKPC 2; [2004] 2 All ER 358

Tadrous v Tadrous [2009] NSWSC 407

The Commonwealth of Australia v Verwayen [1990] HCA 39; (1990) 170 CLR 394

Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7; (1988) 164 CLR 387

Websdale v S & JD Investments Pty Ltd (1991) 24 NSWLR 573

Wiltrading (WA) Pty Ltd v Lumley General Insurance Ltd [2005] WASCA 106; (2005) 30 WAR 290

1 CORBOY J: This is an application by the plaintiff (the Bank) for the removal of caveats lodged by the first defendant (Mr McCourt) against certificate of title volume 1643 folio 765 (the Elizabeth Crescent property) and certificates of title volume 1593 folio 645 and volume 2044 folio 114 (together, the Joel Crescent property).

2 The Bank also seeks orders that Mr McCourt be prohibited from lodging fresh caveats over the Elizabeth Crescent and Joel Crescent properties until further order of the court and that he pay the Bank's costs of the application on an indemnity basis.

3 The application is made by chamber summons for an urgent hearing. However, the relief sought is in the same terms as the orders claimed in the originating summons by which these proceedings were commenced.

(a) an order should be made directing the second defendant to remove each of the caveats the subject of the application;

(b) no order should be made restraining Mr McCourt from lodging any further caveats against the titles to the Elizabeth Crescent and Joel Crescent properties;

5 Mr McCourt and the fifth defendant (Ms McCourt) are the registered proprietors of the Elizabeth Crescent and Joel Crescent properties. In July 2007, the Bank provided a facility to Mr and Ms McCourt in their own right and as trustees for The McCourt Family Trust and to Redden (WA) Pty Ltd (Redden) as trustee for the Redden Family Trust (together, the Borrowers). The facility was secured by mortgages granted over several properties, including the Joel Crescent and Elizabeth Crescent properties.

6 On 19 December 2008, the Bank gave notice (the Notice) that it had cancelled the facility as a result of the Borrowers' default by failing to repay all monies due and owing on expiry of the facility. The Notice was apparently drawn so as to comply with the provisions of the Consumer Credit (Western Australia) Code (the Code); it specified that the Borrowers had 35 days to pay $10,488,802.63 so as to remedy the default claimed by the Bank (see s 80 of the Code). An issue to be considered in this application is whether the Code applies to the facility agreement and if so, with what effect in the context of the disputes between Mr McCourt and the Bank.

7 The Bank served notices of default under the Transfer of Land Act 1893 (WA) (TLA) contemporaneously with the Notice. The TLA notices referred to the same default as that indentified in the Notice: failure to pay the amount outstanding on expiry of the facility.

8 The amount specified in the Notice was not paid and subsequently, on 29 January 2009 the Bank served further notices of default and demand under the TLA. The notices of default and demand included a demand made under the mortgage granted over the Joel Crescent property (the TLA Notice of Demand); however, there was no demand made under the mortgage granted in respect of the Elizabeth Crescent property. The TLA Notice of Demand did not refer to the expiry of the facility but rather, made demand for payment of an amount secured by the mortgage over the Joel Crescent property and said to be 'currently due and owing'.

9 The Bank has realised its securities by selling various properties, including most recently, four units forming part of the Joel Crescent property (a unit development has been undertaken on the property). The Bank intends to dispose of the Elizabeth Crescent property and the remaining units in the Joel Crescent property. Ms McCourt and the children of Mr and Ms McCourt reside in the Elizabeth Crescent property. In September 2009, the Bank obtained an order for possession of that property.

10 Mr McCourt has endeavoured to prevent the Bank from exercising powers of sale over the properties securing the facility by lodging caveats against the titles to the properties. That has resulted in various applications to this court concerning different properties to the Elizabeth Crescent and Joel Crescent properties. However, those applications were, in substance, similar to this application: McCourt v National Australia Bank Ltd [2010] WASC 121 (McCourt); McCourt v National Australia Bank Ltd [No 2] [2010] WASC 151 (McCourt (No 2)) and McCourt v National Australia Bank Ltd (decision of Kenneth Martin J delivered on 28 June 2010 in CIV 1809 of 2010) (McCourt CIV 1809). Those applications provide important context for this matter.

11 The Bank's summons was first heard on 30 July 2010. Directions were made at the conclusion of the hearing to give Mr McCourt an opportunity to adduce further evidence, if he chose, about his ability to make a payment into court or as to the worth of any undertaking that he might be willing to provide if the court declined to remove the caveats. The possibility that this evidence could be relevant was raised in the context of the balance of convenience in acceding to or refusing the Bank's application.

12 Further evidence was provided and submissions were made about that evidence at a reconvened hearing. Mr McCourt sought leave to provide further submissions following that hearing. Leave was not opposed and further submissions were received from Mr McCourt on 17 August 2010. Those submissions raised for the first time an argument that the Bank owed the Borrowers a duty of good faith and fair dealing in its conduct of the facility.

13 The second to fourth defendants and Ms McCourt did not appear on the hearing of the Bank's chamber summons. The second defendant informed the court by letter that it would abide by any order made by the court. The third and fourth defendants are the purchasers of the units sold in Joel Crescent. Counsel for the Bank advised that the purchasers did not wish to be heard. He also provided a letter from Ms McCourt's solicitors indicating that she would abide by any order made by the court and that she supported the Bank's 'position'.

(a) An affidavit sworn by Kristy Cherie Yeoh on 5 July 2010. The affidavit incorporated as an annexure an affidavit sworn by Christie Teresa Facius on 16 June 2010 and filed and served in McCourt CIV 1809.

(b) Affidavits sworn by Mr McCourt on 29 July and 10 August 2010.

15 There was no objection to any part of the evidence led in the affidavits.

16 The following matters concerning the facility provided by the Bank were stated by Ms Facius in her affidavit; they were not disputed by Mr McCourt:

(a) The facility was provided by the Bank to the Borrowers on 27 July 2007.

(b) On 29 January 2008, the Bank increased the limit of the facility to $9,300,000. A fresh 'facility agreement details' document (the Facility Details) was issued by the Bank on that date and a facility letter bearing the same date was sent to the Borrowers (attachment 'CTFA' to Ms Facius' affidavit).

(c) The facility (and a home loan provided to Mr and Ms McCourt as trustees for The McCourt Family Trust) was secured by:

(i) a registered mortgage granted by Mr and Ms McCourt over property located at 1 Agett Road, Claremont (the Agett Road property);

(ii) separate registered mortgages granted by Mr and Ms McCourt over properties located at 23A and 23B Leon Road, Dalkeith (the Leon Road properties);

(iii) a registered mortgage granted by Ms McCourt over property located at Lot 1002 Butterfly Road, Yallingup (the Yallingup property);

(iv) a registered mortgage granted by Mr and Ms McCourt over the Joel Crescent property.

17 The mortgages identified above are those that were expressly referred to by Ms Facius in her affidavit. The Facility Details indicated that the facility was also secured by other mortgages, including a mortgage granted over the Elizabeth Crescent property (see attachment 'CTFA' to Ms Facius' affidavit). An oddity in this application is that neither party put into evidence a copy of the mortgage granted in respect of any of the secured properties. However, an inference can be readily drawn that a mortgage was granted to the Bank over the Elizabeth Crescent property from other documents that were tendered (in addition to the Facility Details):

(a) the particulars recorded on the title to the Elizabeth Crescent property referred to the registration on 16 May 2006 of a mortgage granted in favour of the Bank (see attachment 'KCY 3' to Ms Yeoh's affidavit);

(b) the order made on 23 September 2009 requiring Ms McCourt to deliver up possession of the Elizabeth Crescent property to the Bank referred to a mortgage self-evidently granted to the Bank and bearing the same dealing number as that given in the particulars appearing on the title to that property (see attachment 'KCY 2' to Ms Yeoh's affidavit);

(c) the descriptions of the estate or interest claimed by Mr McCourt against the title to the Elizabeth Crescent property referred to a mortgage granted to the Bank (the descriptions are reproduced later in these reasons).

18 The documents constituting the facility agreement were not in issue (see for example, par 25 of Mr McCourt's written submissions dated 30 July 2010). They comprised the Facility Details, a 'Portfolio Package Customer Agreement' (annexure 'B' to Mr McCourt's affidavit sworn 29 July 2010) (the Customer Agreement) and the letter dated 29 January 2008 from the Bank to the Borrowers that accompanied the Facility Details.

19 The documents constituting the facility provided that:

(a) as at 29 January 2008, the limit on the facility was $9,300,000;

(b) the facility could be accessed through various linked sub-accounts;

(c) the 'minimum repayment' for each linked sub-account under the facility was the unpaid balance of the sub-account and any other money owing under the agreement when the facility was cancelled;

(d) the annual review of the facility was 30 January 2009 and each anniversary of that date;

(e) each of the Borrowers was jointly and severally liable for the unpaid balance of any linked sub-account and any amount owing under the agreement;

(f) the Bank could cancel the facility at any time whether or not there was a breach of the agreement and if the facility was cancelled:

(i) the Bank was to give the Borrowers notice of the cancellation;

(ii) the portfolio limit and any sub-account limit would be reduced to zero;

(iii) the Borrowers were to immediately repay any unpaid balance in any linked sub-account and any other money owing under the agreement;

(cl 5.1 of pt 2 of the Customer Agreement)

(g) the Bank might conduct an annual review of the Borrowers' operation of the facility and their financial position, the review to be undertaken prior to or on the annual review date (cl 5.4 of pt 2 of the Customer Agreement);

(h) the events of default included a failure to pay on time any amount due under the facility or the Borrowers doing something they had agreed not to do or not doing something they had agreed to do under an agreement they had with the Bank (cl 9.1 of pt 3 of the Customer Agreement).

20 A significant effect of the provisions of the facility agreement was that the amount advanced under the facility was immediately repayable on cancellation of the facility with there being no pre-condition to the Bank's right of cancellation; that is, the facility was an 'on-demand' or 'at call' facility.

21 The facility letter of 29 January 2009 contained various 'approval' conditions. Properties were to be listed for sale, with the proceeds of sale to go to reducing the Borrower's indebtedness to the Bank. Further, 'full proceeds of Partnership Dissolution Funds confirmed as $850,000 and due no later than 29th February 2008' were to be applied to debt reduction.

22 Separate titles had not been issued for the lots to be created as part of the Joel Crescent unit development at the time that the Bank commenced proceedings and its summons was first heard. However, titles have been recently issued.

23 The contracts of sale made between the Bank's agents and the third and fourth defendants were dated 28 May and 3 June 2010 respectively and provided that settlement on each sale was to occur 30 days after registration of the strata plan and the issue of separate titles (see attachment 'CTF 36A' and 'CTF 36B' to Ms Facius' affidavit at pages 524 and 578 respectively of Ms Yeoh's affidavit, special condition 5.1; see also pars 4.91 and 4.93 of Ms Facius' affidavit). Those provisions of the sale contracts explain the urgency for the Bank's application.

24 Ms Facius stated in her affidavit that the Bank did not expect that the amount owing pursuant to the facility would be repaid from the proceeds of the sale of all of the secured properties excluding the Elizabeth Crescent property. Consequently, the Bank anticipated that it would seek to sell the Elizabeth Crescent property. Counsel for the Bank advised that the Bank had decided to sell that property last as Ms McCourt and her children reside at the property (I note in that regard that the order for possession that was obtained some time ago was made by consent).

25 Mr McCourt has not disputed that the amount outstanding on the facility as at 19 December 2008 and 29 January 2009 was as stated in the Notice and the TLA Notice of Demand respectively. Ms Facius stated that as at the date she made her affidavit (16 June 2010), the amount owing to the Bank was $5,402,500 and that it was not expected that the sale of the units comprising the Joel Crescent property would be sufficient to discharge the debt. Again, those statements were not contested by Mr McCourt.

26 Counsel for the Bank advised during the reconvened hearing of the summons that the amount claimed as owing under the facility was $2,936,575.73. Whether the sale of all the secured properties, including the Joel Crescent and Elizabeth Crescent properties, would discharge the Borrowers' debt to the Bank is considered later in these reasons.

The Customer [the Borrower] is in default under the Credit Contract with [the Bank] ... because the Credit Contract has expired and the Customer has failed to repay to the Bank all of the moneys outstanding pursuant to the Credit Contract (such moneys having become immediately due and payable on the expiry of the Credit Contract). As a result of this default, the Credit Contract is hereby cancelled in accordance with the terms of the Credit Contract.

28 The Notice indicated that the term 'Credit Contract' was to be understood as a reference to the facility. The notice further stated that 'the action' necessary to remedy the default was for the Borrowers to pay $10,488,802.63 to the Bank within 35 days from the date of the notice failing which:

(a) all amounts owing under the Credit Contract would become immediately due and payable;

(b) the Bank might commence enforcement proceedings against the Borrowers for all amounts owing under the Credit Contract.

29 It is not necessary to reproduce the terms of the TLA Notice of Demand; it is sufficient to note that it made demand for payment of an amount that was said to be then due and owing to the Bank (the TLA Notice of Demand is attachment 'CTF 11' to Ms Facius' affidavit, at pages 84 - 86 of Ms Yeoh's affidavit).

30 Mr McCourt lodged caveats L343283 against the title to the Elizabeth Crescent property and L343286 and L343284 against the Joel Crescent property prior to the commencement of these proceedings (the caveats were each dated 14 June 2010). The caveats claimed an estate or interest in the properties in identical terms (see attachments 'KCY 4' and KCY 5' to Ms Yeoh's affidavit):

As registered proprietor who has been granted a mortgage and the mortgage has (i) purported to exercise its power of sale contrary to previous representations and (ii) exercised its purported power of sale in bad faith in relation to this property, further or alternatively other properties in which Mr McCourt has a interest and which secured by mortgages with the same mortgagee.

31 The wording of the estate or interest claimed in each caveat reflected, in part, observations made by Murphy J in McCourt [23].

32 Mr McCourt lodged fresh caveats in respect of the Elizabeth Crescent and Joel Crescent properties between the commencement of the proceedings and the hearing of the Bank's summons for urgent relief. The caveats were lodged after caveats L343283 and L343284 had lapsed (see attachments 'C' and 'D' to Mr McCourt's affidavit sworn 29 July 2010). The replacement caveats were L375721 (the Elizabeth Crescent property) and L375720 lodged against certificate of title volume 2044 folio 114 (forming part of the Joel Crescent property). The estate or interest claimed in the properties was described in the following terms:

The estate [or] interest being claimed is as a mortgagor who [has] been granted a mortgage secured by properties including the land described above and the mortgagee has:

(i) Purported to exercise its power of sale in relation to these properties (including the land described above) contrary to previous representations;

(ii) Further or alternatively, has not satisfied the requirements to exercise its power of sale over these properties (including the land described above);

(iii) Further or alternatively, exercised its purported power of sale over other properties securing the mortgage in bad faith. As a result the caveator fears the same will happen if the mortgagee exercises its purported power of sale over the land described above.

33 The replacement caveats added a new ground for the claimed estate or interest: that the requirements for the exercise of the power of sale had not been satisfied. The new ground for the claimed estate or interest principally related to the basis upon which the Bank stated in the Notice (and in the notices of default and demand issued under the TLA at the same time as the Notice) that it had cancelled the facility: that the facility had expired and the Borrowers had defaulted by failing to repay the amount outstanding on expiry. Mr McCourt contends that on a proper construction of its terms, the facility agreement made no provision for the consequences of the facility expiring. That is, the facility agreement did not stipulate that all moneys outstanding at an 'expiry date' were repayable as the agreement made no provision for expiry and so there was no obligation to repay the money advanced at the time that the Notice was issued.

34 The new ground goes to whether the power of sale is exercisable by the Bank at all rather than to whether a power, admittedly available, had been properly exercised. Mr McCourt submits that the distinction is significant for the approach to be taken to the balance of convenience and in particular, the application of the principle expressed in Inglis v Commonwealth Trading Bank of Australia [1972] HCA 74; (1972) 126 CLR 161.

35 The Bank made no submission to the effect that the description of the estate or interest claimed did not encompass each of the matters argued by Mr McCourt as to why the caveats should be maintained. It has not been necessary to further consider that question given the findings I have made on Mr McCourt's contentions and the balance of convenience.

36 Mr McCourt contended that the caveats should not be removed for the following reasons:

(a) The Bank had not satisfied the requirements of s 106 and s 108 TLA for the exercise of its powers of sale. The real point of that contention was the submission, previously noted, that there had been no default under the facility at the time of the Notice and the TLA Notice of Demand as there was no obligation to repay any amount outstanding under the facility.

(b) The facility agreement attracted obligations of good faith which conditioned the Bank's right to make a demand and the means by which the demand could be made.

(d) The Bank was estopped from relying on its notices of default and demand as:

(i) [the Bank] represented that Mr McCourt would not be in default if he had unpaid debt at the expiry date;

(ii) Mr McCourt relied on this representation; and

(iii) [the Bank] changed its position to Mr McCourt's detriment.

(Paragraph 44 of Mr McCourt's written submissions dated 30 July 2010.)

(e) The Bank engaged in conduct that contravened s 52 of the Trade Practices Act 1974 (Cth) (TPA) by 'representing to Mr McCourt that he would not be in default if he had unpaid debt at the expiry date and then issuing default notices stipulating that the event of default was failure to pay all moneys due at the expiry date'.

(f) The Bank had failed to exercise its powers of sale in good faith and it was feared that it would act in bad faith in the future.

(g) The issue of the notices of default and demand and/or the Bank's exercise of a power of sale were 'unjust transactions' within the meaning and for the purpose of s 70 of the Code.

37 As previously noted, it was further submitted by Mr McCourt that it was not necessary for him to make any payment into court on the principle stated in Inglis v Commonwealth Trading Bank of Australia as he had put in issue whether the Bank's power of sale was exercisable at all; that is, his case was not confined to the question of whether the Bank had exercised in good faith a power that was admittedly available: and see Harvey v McWatters (1948) 49 SR (NSW) 173; Fletcher v Ould Pty Ltd [2000] WASC 322.

38 The submissions made on behalf of Mr McCourt did not clearly distinguish between the Notice, the notices of default and demand issued for the purpose of the TLA at the same time as the Notice, the TLA Notice of Demand and the notices issued in respect of other mortgages that were also served with the TLA Notice of Demand. All but the first of the contentions referred to above were directed to the Bank's conduct in issuing all or any of the various notices of cancellation, default and demand that were served on Mr McCourt. Strictly, the first contention was directed to the TLA Notice of Demand. However, the argument was expressed by reference to the Notice and it was, in substance, an argument that there had been no default that could properly found any of the notices of default and/or demand. It was said that the Bank had not lawfully exercised its powers of sale in the past and it could not do so in the future where the exercise was based on a failure to satisfy the demand contained in the Notice.

39 The principles to be applied in considering applications for the removal or extension of a caveat were comprehensively summarised by Beech J in Bashford v Bashford [2008] WASC 138 [42] - [57]. It is, however, necessary to make some short observations concerning the exercise of the discretion conferred by s 138 TLA to fully expose the approach that I consider should be taken in determining the Bank's application:

(a) The principles governing interlocutory injunctions are relevant to applications under s 138 having regard to the purpose and effect of a caveat (as to which, see J & H Just (Holdings) Pty Ltd v Bank of New South Wales [1971] HCA 57; (1971) 125 CLR 546). However, those principles must be applied in a way that is sensitive to the statutory context. Consequently, it will be unusual for a caveat to be removed on an interlocutory application where a prima facie case (in the sense explained in the next paragraph) as to the existence of a caveatable interest has been demonstrated. That is because the purpose of a caveat is to protect a proprietary interest. In many cases, the removal of a caveat will have the practical effect of destroying the benefit of the proprietary interest that is claimed: Custom Credit Corporation Ltd v Ravi Nominees Pty Ltd (1992) 8 WAR 42, 50 and see also the observations of Pullin JA in Navarac Pty Ltd v Moondancer Holdings Pty Ltd [2009] WASCA 95 [22] and [29]. The court retains, however, a discretion as to whether it will require the withdrawal of a caveat on grounds of convenience even where there is a 'seriously arguable or ... indisputable caveatable interest': Tadrous v Tadrous [2009] NSWSC 407 [6] and see Navarac.

(b) The principles stated in cases such as Custom Credit must now be understood in the light of Australian Broadcasting Corporation v O'Neill [2006] HCA 46; (2006) 227 CLR 57: Perron Investments Pty Ltd v Tim Davies Landscaping Pty Ltd [2009] WASCA 171, [42]. In Australian Broadcasting Commission v O'Neill, the High Court re-affirmed and explained Beecham Group Ltd v Bristol Laboratories Pty Ltd [1968] HCA 1; (1968) 118 CLR 618. The first question to be considered in determining an application for an interlocutory injunction is whether the applicant has made out a prima facie case for relief if the action proceeds to trial. That does not mean that the applicant must show that it is more probable than not that it will succeed at trial; 'it is sufficient to show a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial': Australian Broadcasting Commission v O'Neill, [65] and see Perron Investments Pty Ltd v Tim Davies Landscaping Pty Ltd, [42] and Meagher RP, Heydon JD, Leeming MJ, Meagher, Gummow & Lehane's Equity: Doctrine and Remedies (4th ed, 2002) [21-345], [21-350] and [21-370]. The expression 'prima facie case' is used in these reasons to denote the 'sufficient likelihood of success to justify the preservation of the status quo' test.

(c) What constitutes a sufficient likelihood of success depends 'upon the nature of the rights [the plaintiff] asserts and the practical consequences likely to flow from the order he seeks': Australian Broadcasting Commission v O'Neill [65], citing from Beecham (612) and see Perron Investments Pty Ltd v Tim Davies Landscaping Pty Ltd [42].

(d) In Australian Broadcasting Commission v O'Neill, Gummow and Hayne JJ (with whom Glesson CJ and Crennan J agreed) observed that much of the assumed disparity between Beecham and American Cyanamid Co v Ethicon Ltd [1975] UKHL 1; [1975] AC 396 lost its force when the decisions were read in context. However, their Honours noted that a difference between the reasoning in each decision lay in Lord Diplock's statement in American Cyanamid to the effect that there would be a serious question to be tried if the court was satisfied that the applicant's claim was not vexatious or frivolous and that this would be sufficient. That statement was inconsistent with Beecham and was not to be followed: Australian Broadcasting Commission v O'Neill [71].

40 The right asserted by Mr McCourt, as caveator, is to prevent the registration of instruments that are inconsistent with his estate or interest as a mortgagor who challenges the Bank's exercise of its powers of sale. In assessing what constitutes a sufficient likelihood of him succeeding in any challenge, it is relevant to note (particularly as the practical consequences likely to flow from maintaining the caveats are to be considered) that:

(a) Mr McCourt does not dispute the validity of the mortgages granted to the Bank.

(b) Mr McCourt has not commenced proceedings to vindicate his claims despite the various notices of default and demand being issued in late 2008 and early 2009 and the Bank taking possession of some of the secured properties in February 2009. The Bank has subsequently sold several of the secured properties and the only steps taken by Mr McCourt in that time have been to lodge caveats against the titles of the remaining properties and to contest their removal.

(c) Prior to this matter, there had been no allegation that the Bank was not entitled, under the terms of the facility agreement and the TLA, to exercise its powers of sale. The complaints previously made concerned the manner in which the powers were exercised and the conduct of the Bank in seeking to exercise rights that were inconsistent with representations or arrangements that it was said to have previously made.

(d) Four of the units forming part of the Joel Crescent property have been sold so that the consequences of refusing the Bank's summons would be to prevent settlement on the contracts of sale.

41 Mr McCourt's affidavit sworn on 29 July 2010 referred to and annexed a statutory declaration he declared on 16 July 2010 in support of caveat L343286. Mr McCourt's evidence as contained in the affidavit and the statutory declaration was to the following effect:

(a) Mr McCourt has extensive experience in real estate, including as a settlement agent and since 1995, a property developer. As a result of that experience he was 'in constant appraisal of valuations and the buying and selling of property'. He had 'referred to this experience when assessing National Australia Bank Limited's actions regarding its exercise of the power of sale over various properties'.

(b) He was the sole director of Redden, which was now in receivership.

(c) The terms of the facility were to be found in the Facility Details, the facility letter of 29 January 2008 and the Customer Agreement.

(d) There was an understanding between himself and the Bank to the effect that he would repay the facility by developing and selling properties. An aspect of that arrangement was that the Bank had demonstrated a 'great degree of flexibility' in its dealings with Mr McCourt concerning the management of the facility, reflecting its understanding of the nature of what Mr McCourt did with the properties that were acquired and the role that the sale of those properties played in servicing the facility.

(e) In mid-April 2008, the Bank agreed to release funds from an account established for the purpose of covering interest payments subject to certain conditions, including the sale of the Agett Road property and receipt of funds from the dissolution of a partnership involved with the ownership of the Clifton Motel, Bunbury by specified dates. The funds were to be fully applied to debt reduction (see 'DPRM 9' to the statutory declaration declared on 16 July 2010). According to the Bank's letter, the funds from the dissolution of the partnership were confirmed as being a minimum of $850,000 (that is, the same amount as was referred to in the letter of 29 January 2008) and were said to be due no later than 31 May 2008.

(f) On 25 August 2008, the Bank wrote to Mr and Ms McCourt advising that the facility had been 'increased' and 'extended' until 30 November 2008 (the letter forms part of a bundle of documents marked 'DPRM 16' to Mr McCourt's statutory declaration, pages 119 - 120 of his affidavit). The increase referred to, among other things, an increase in the facility limit to permit 'continued capitalization of interest until 30/11/08 settlements'. The extension of the facility was to permit the settlement of offers on the Agett Road property and another property. The increase and extension were said to be subject to various conditions including settlement on the sale of the specified properties by 30 November 2008, all of the proceeds from the dissolution of the Clifton Motel being applied in reduction of the Borrowers' debt and the provision of financial information prior to 30 November 2008.

(g) The letter was sent contemporaneously with letters on other facilities granted by the Bank to the various partnerships involving Mr McCourt. Those facilities were also extended to 30 November 2008 (see 'DPRM16'). I note that there was no suggestion in Mr McCourt's affidavit or statutory declaration that he did not agree with the Bank's proposal in the letter of 25 August 2008, including the conditions contained in the proposal. Indeed, subsequent correspondence with the Bank indicates that Mr McCourt and the Bank dealt with each other in October 2008 on a basis consistent with the terms of the letter of 25 August 2008.

(h) On 23 September 2008, Mr McCourt met with the southwest regional manager for the Bank, Mr Kappler. Mr McCourt was behind with payments on the facility at the time of the meeting. However, the meeting was amiable, its purpose being to 'discuss how to get things back on track'. According to Mr McCourt, it was apparent that Mr Kappler wanted Mr McCourt to 'keep trading' and there were discussions about how that could be achieved. To that end, Mr Kappler suggested that:

[Mr McCourt] [a]pply the proceeds I expected to receive from the settlement of the Clifton Hotel in Bunbury servicing my debts in the following manner:
1. Pay off my credit card debt of $30,000;
2. Pay my tax bill of approximately $120,000;
3. Put $200,000 into debt reduction; and
4. Apply the reminder into an offset account to cover interest.
In return, NAB would keep the facility going, that is, operating normally.

(i) Subsequent to the meeting, there were various communications between the Bank and Mr McCourt in October 2008. Those communications are dealt with later in these reasons but it should be noted that in his statutory declaration, Mr McCourt denied that the Bank gave him 'the impression' that it expected him to repay the facility by 30 November 2008. Rather, 'the impression' that the Bank gave him was that 'the facility would continue beyond that date and that the settlement of the Clifton Motel would be a continuation of the arrangements' that he had with the Bank.

(j) Mr Clifton was counting on the Bank 'following through with what was agreed concerning the application of the proceeds of the Clifton Motel'. He planned to pay off his credit card and then use the credit available for daily activities. He also planned on paying a tax bill and on being able to continue trading.

(k) The sale of the Clifton Motel settled on 26 February 2009. The entire amount of the settlement sum was paid to the Bank but it did not apply the sale proceeds according to what Mr McCourt contends was agreed at the meeting with Mr Kappler on 23 September 2008. Rather, the Bank applied the proceeds to servicing the facility. As a result of the Bank's actions, Mr McCourt experienced and continues to experience extreme financial hardship.

(l) Mr McCourt had purchased the Leon Road properties for redevelopment. He intended to live in one of the properties and to sell the other property. The properties were purchased for $1.75 million each in October 2007. He caused the houses located on the properties to be demolished and the properties were vacant land at the time that they were auctioned by the Bank in May 2010.

(m) He attended the auction of the Leon Road properties conducted on instructions from the Bank. In the course of the auction, he heard the auctioneer advise those present that the Leon Road properties were going 'cheap, cheap, cheap'. The properties were sold at auction for a combined total of $2.71 million. The sale price was said to be less than the true value of the properties, reference being made to valuation reports obtained by the Bank in early December 2009. The valuation reports valued the properties at $1.6 million each.

(n) Mr McCourt purchased the Agett Road property in May 2007 for $1.9 million. He purchased the property with a view to renovating and reselling the property. He expended $450,000 in renovations and expected to sell the property for between $2.6 million and $2.75 million. The property was sold at auction in April 2009 for $2 million. The property was sold the day before it was due to be auctioned.

(o) He had been informed by Ms Gray of Acton Real Estate, Dalkeith that a colleague had attended the auction and that there were other prospective buyers waiting at the auction. On the Monday after the scheduled auction, 'Ms Gray's colleague told Ms Gray that she (the colleague) would have been prepared to bid $2.5 million for the Agett Road property'.

(p) He had reason to believe that the Bank did not exercise its power of sale over the Agett Road property in good faith as the property was sold the day before it was due to be auctioned; on 7 July 2008 he had sold the Agett Road property for $2.875 million, although settlement did not occur; the property was further sold in October 2009 for $2.495 million and he had been informed by Ms Gray of the sale of two other properties in Agett Road, Claremont from which he concluded that the Agett Road property had been sold at an undervalue.

(q) He purchased the Yallingup property in 1985. In mid-October 2009, Burgess Rawson provided a valuation report, valuing the property at $3.69 million. In mid-November 2009, NAB sold the Yallingup property for $2.8 million.

(r) One of the directors of the corporate purchaser of the Yallingup property had an association with a person who was formerly employed by the real estate agent who sold the Yallingup property on behalf of the Bank. Further, the sale of the Yallingup property did not follow a 'closed tender process'. According to Mr McCourt 'in effect, everyone who was interested in buying the Yallingup property knew the amount that NAB was prepared to except for it'.

(s) No work was required to ready the Elizabeth Crescent property for sale at the time that NAB issued the Notice. Consequently, over 15 months had passed during which the Bank could have exercised its power of sale but it had not yet done so. He estimated that the property could have been sold for about $1 million and:

[h]ad [the Bank] exercised its power of sale over the Elizabeth Crescent property sooner than [my] overall debt position would be improved. I regard their failure to do so as an unacceptable delay.

(t) In relation to the Joel Crescent property, little work was required to ready it for sale after the Bank issued the Notice. He estimated that the work required to ready the property for sale could have been completed within 60 days and he regarded the Bank's failure to exercise its power of sale during the 15 months that had passed since the Notice had been served as an unacceptable delay. He estimated that the Joel Crescent property could have been sold for between $2.2 million and $2.4 million had the Bank exercised its power of sale shortly after the Notice had been issued.

(u) Mr McCourt 'feared' that the Bank had not exercised its powers of sale in good faith in the past and that it would not do so in the future.

42 Ms Facius stated in her affidavit that the Bank had no record of a meeting between Mr McCourt and Mr Kappler on 23 September 2008. Some hearsay matters were deposed to in that regard but there was no direct evidence provided by Mr Kappler. It was, however, common ground that there was correspondence between Mr McCourt and the Bank in October 2008. That correspondence needs to be considered in the context of not only what Mr McCourt says transpired in the previous month but also what the Bank maintains were its relevant dealings with Mr McCourt.

43 The matters to which Ms Facius deposed in her affidavit can be broadly divided into three parts: evidence concerning the facility, evidence of the circumstances surrounding the sale of the secured properties and evidence about the Bank's dealings with Mr McCourt. Ms Facius' evidence was not directly contested by Mr McCourt in his affidavits, although there were obvious differences about the meeting of 23 September 2008.

44 As to the exercise by the Bank of its powers of sale, Ms Facius stated that:

(a) The Bank took possession of the Agett Road property in February 2009. On 25 February 2009, it appointed real estate agents for the purpose of marketing and selling the property. At about the same time, it received a valuation report valuing the property at $2.12 million. Shortly afterwards, the Bank received a marketing appraisal from the real estate agents it had appointed recommending that the property be sold by auction. The agents advised that they considered that the selling price of the property would be between $2 million and $2.2 million.

(b) On the day before the auction was scheduled to be held, the Bank's agents received a cash offer for the purchase of the Agett Road property for $2 million. The Bank accepted the offer. Settlement of the sale of the property occurred in early July 2009.

(c) The Bank took possession of the Yallingup property in February 2009. It appointed agents for the purpose of selling the Yallingup and Joel Crescent properties at about the same time. In late March 2009, the Bank's agents received a valuation report for the Yallingup property which valued the property at $2.75 million. Real estate agents were appointed for the sale of the Yallingup property in May 2009. They advised that the likely selling price of the property would be between $2.8 million and $2.9 million. A marketing campaign was undertaken for the sale of the property by public tender. Five offers were received, three of which were conforming bids. The highest of those bids was for $2.8 million.

(d) The two non-conforming offers received by the Bank's agents were from Mr Rod Carter. The Bank knew of Mr Carter as an associate of Mr McCourt (I infer that the references are to the same Mr Carter who has sworn an affidavit in these proceedings). The highest of the non-conforming offers from Mr Carter was for $3.69 million, subject to finance with settlement in 180 days and payment of a 2% commission.

(e) On about 9 October 2009, Mr McCourt provided the Bank with a proposal for the release of its securities over the Yallingup and Joel Crescent properties on payment of $4 million financed by the Bank of Queensland. There was a letter within the proposal suggesting that a further $400,000 might be provided once a valuation of the properties had been completed. The Bank rejected that proposal as it would not repay sufficient debt to release the securities. The Bank subsequently accepted the $2.8 million conforming bid for the Yallingup property. Settlement occurred in November 2009.

(f) The Bank took possession of the Joel Crescent property in February 2009. In April, the Bank's agents received a valuation report which valued the property at $1.68 million if the units were sold as a single complex and $2.065 million if the units were sold individually. It was necessary for work to be undertaken before the strata plan could be lodged for registration and that work was, in due course, completed.

(g) Market appraisals and a further valuation report were received in early 2010. The market appraisals and valuation report suggested a per unit sale price of between $260,000 and $350,000. In March 2010, the Bank appointed real estate agents for the purposes of selling the Joel Crescent property. One unit has been sold for $310,000 and three units for $265,000 each.

(h) The Bank took possession of the Leon Road properties in February 2009. The Bank obtained a valuation report shortly afterwards valuing each property at $1.35 million. It subsequently appointed real estate agents who advised that the properties should be marketed at a sale price of $1.4 million each. In April 2009, the Bank obtained a further valuation report valuing each of the properties at $1.2 million.

(i) In September 2009, the Bank entered into an unconditional contract for the sale and purchase of each of the Leon Road properties with Mr Carter. Settlement was to occur in early December 2009, the combined sale price of the properties being $3 million. Subsequently, Mr Carter requested the Bank to either release him from his obligation to settle on the contract or alternatively, extend the time by which settlement was to occur. The sale contract was varied following negotiations with Mr Carter but settlement did not occur. On 30 December 2009, Mr Carter purported to withdraw his offer to purchase the properties and the Bank terminated the contract on 3 February 2010.

(j) In February 2010, the Bank obtained a valuation of the Leon Road properties which valued each property at $1.45 million. Subsequently, the Bank appointed real estate agents who advised that the properties should be sold at auction with the expected sale price to be between $1.35 million and $1.45 million. The auction was held on 1 May 2010 and the Bank entered into contracts for the sale of the properties for $1.35 million and $1.36 million respectively.

45 Ms Facius also deposed to the Bank's dealings with Mr McCourt in 2008 and 2009. In summary, Ms Facius stated that:

(a) In about January 2008, Mr McCourt agreed with the Bank that he would sell his interest in the Clifton Motel and dissolve the partnership that operated the Motel in an attempt to reduce his indebtedness to the Bank. It was anticipated that an amount of $850,000 would be received by Mr McCourt from the dissolution of the partnership.

(b) A meeting was held on 2 July 2008 between Mr McCourt and representatives of the Bank's strategic business services department (Ms Facius' note of the meeting is attachment 'CTF 51' to her affidavit; pages 1005 - 1007 of Ms Yeoh's affidavit). It was the Bank's practice that the delegated commitment authority for all credit decisions passed to the impaired asset manager once that department received a file. The purpose of the meeting held on 2 July was to explain to Mr McCourt the involvement of the strategic business services department and to 'work out a solution to regularise the financial position of Mr McCourt'. At the time of the meeting, interest was being capitalised on the facility and Mr McCourt sought a 90-day extension during which time he intended to sell the Agett Road property (which was then on the market). Mr McCourt indicated that he had sold, and was endeavouring to sell, other properties.

(c) There were various exchanges between the Bank and Mr McCourt in October 2008. Those exchanges are dealt with in the next paragraph.

46 The evidence of Mr McCourt and Ms Facius indicated that the following exchanges occurred between the Bank and Mr McCourt in October 2008:

(a) The Bank wrote to Mr McCourt on 7 October 2008 (the letter is attachment 'DPRM 13' to Mr McCourt's statutory declaration made 16 July 2010). The letter commenced by noting that on 19 September 2008 the existing authority for accounts through which the facility was provided had been cancelled by Mr McCourt. Further, '[a]ll transactions (with the exception of monthly interest capitalisation per existing approval Dd 25/8/08), including any direct debits and periodic payments on the accounts have now been stopped'. The letter then sought Mr McCourt's written advice on certain matters, including the current status of the dissolution of the Clifton Motel partnership and his intentions 'in respect to review of NAB facilities from 30/11/08 expiry and conditional settlements'. The letter concluded by reminding Mr McCourt of the existing approval conditions as stated in the Bank's letter of 25 August 2008.

(b) On 16 October 2008, Mr McCourt wrote to the Bank in response to its letter of 7 October 2008. The letter advised on progress towards the sale of various properties and then stated, among other things, that:

(i) full proceeds from the sale of the Clifton Motel would be applied towards debt reduction, with dissolution of the partnership expected within seven days;

(ii) the Agett Road property would be sold prior to 30 November 2008 with the proceeds to go to debt reduction;

(iii) a full copy of '2007 financials and tax returns' would be provided prior to 30 November 2008;

(iv) it was Mr McCourt's intention to 're-negotiate' the facility on 30 November 2008.

(c) On 21 October 2008, a further meeting was held between representatives of the Bank and Mr McCourt (Ms Facius' note of the meeting is attachment 'CTF 53' to her affidavit; pages 1009 - 1010 of Ms Yeoh's affidavit). The purpose of the meeting was said to be to 'sort out the issues relating to Mr McCourt's portfolio facility, home loan, sale of properties and cash flow issues'. In the course of the meeting, Mr McCourt asked the Bank to advance $155,000 to a business partner on the basis that this was a condition of the sale of the Clifton Motel and to advance $50,000 to Mr McCourt for living expenses. The Bank agreed to advance the $155,000 requested on the basis that it would assist in the dissolution of the partnership in respect of the Clifton Motel, with the proceeds from the sale to be applied to reduction of the Bank's debt.

(d) On 27 October 2008 the Bank wrote to Mr McCourt (the letter is attachment 'CTF 54' to Ms Facius' affidavit; pages 1011 - 1013 of Ms Yeoh's affidavit) advising that:

(i) it had agreed to increase the facility limit from $10.3 million to $10.455 million, with the Bank to transfer $155,000 to Mr McCourt's business partner on condition that it received at least $730,000 from the dissolution of the partnership relating to the Clifton Motel;

(ii) existing conditions in respect of the facility were confirmed, including that all interest and costs due until expiry of the facility were to be lodged in an account specifically held for that purpose.

(e) The Bank's letter of 27 October 2008 referred to the facility expiring on 30 November 2008 and a number of conditions required steps to be taken by that date. The letter specified additional conditions for the facility, including that there was to be a full review of the facility at settlement of the Agett Road property or by 30 November 2008, whichever was the earlier. Non-compliance with any of the conditions contained in the letter constituted an event of default. Mr and Ms McCourt signed the letter in a section that requested that they do so to acknowledge their agreement.

47 Obviously, any observations about the evidence relied on by the parties must reflect the interlocutory nature of the application. It is well established that in considering whether there is a prima facie case the court does not ordinarily evaluate the applicant's evidence or undertake a preliminary trial: Beecham (622); but see also Eng Mee Yong v Letchumanan [1980] AC 331, 341, where the Privy Council held that a trial judge had not erred in finding that there was no serious question to the tried on the American Cyanamid test given the vague, inconsistent and implausible assertions contained in an affidavit made by a caveator. Much of the evidence in this application was not contested and I consider that the following matters are relevant to the determination of the Bank's application:

(a) It appears from the Bank's letter of 29 January 2008 that from at least that time, the Bank was concerned to impose conditions on the facility that would result in a significant reduction of the Borrowers' debt through the sale of properties and/or the realisation of partnership assets.

(b) Mr McCourt's evidence concerning the understanding that he says subsisted between himself and the Bank as to how the facility would be serviced, and the flexibility that he asserts the Bank demonstrated in dealing with the facility, would need to be considered at trial in the context of the conditions imposed by the letter of 29 January 2009 and the subsequent correspondence from the Bank in which conditions, with time stipulations, were imposed for debt reduction. In any event, there was no submission that the arrangement to which Mr McCourt deposed could found an estoppel.

(c) Having regard to the evidence that has been led, I consider that I should accept Mr McCourt's assertion that the meeting of 23 September 2008 occurred and his evidence of what transpired at the meeting for the purpose of determining the Bank's chamber summons. However, the effect of what occurred at the meeting must be considered in the context of the contemporaneous documents, particularly as there was no evidence from Mr McCourt, and no submission that suggested, that the documents did not accurately record the dealings between himself and the Bank.

(d) The use of the proceeds from the dissolution of the Clifton Motel partnership to reduce the Borrowers' indebtedness to the Bank was first raised in the facility letter of 29 January 2008. Correspondence in mid April 2008 and subsequently, suggested that funds from that source would be available shortly. As at 16 October 2008, Mr McCourt was still advising the Bank that the dissolution of the partnership was expected within seven days. The statements attributed to Mr Kappler at the meeting held on 23 September 2008 and whatever arrangements might have been made at that meeting would need to be assessed against that background. Mr McCourt contends that the statements, which concerned the use of the funds to be realised on the dissolution of the partnership, formed the basis of an arrangement that the Bank would maintain the facility for some indefinite time into the future.

(e) The correspondence exchanged between Mr McCourt and the Bank in October 2008 made no reference to any arrangement concluded at the meeting on 23 September 2008, nor did Mr McCourt refer to any representation, understanding or impression that the facility would remain available after 30 November 2008 and that the settlement of the Clifton Motel would simply represent a continuation of arrangements with the Bank.

(f) Further, the correspondence exchanged between the Bank and Mr McCourt in October 2008 referred to different arrangements for the use of the proceeds from the dissolution of the Clifton Motel partnership to those which Mr McCourt states he made with Mr Kappler at the meeting on 23 September 2008. The Bank's letter of 7 October 2008 confirmed the conditions stipulated in its letter of 25 August 2008. Those conditions required the full proceeds of the dissolution of the partnership to be used for debt reduction. Mr McCourt replied by stating that the full proceeds from the sale of the Clifton Motel would be applied to debt reduction and the Bank again confirmed that this was required in its letter of 27 October. As I have already indicated, I accept Mr McCourt's account of the meeting for the purpose of this application. However, the October correspondence strongly suggests that neither the Bank nor Mr McCourt regarded whatever was discussed at the meeting as creating a binding agreement or arrangement for the future conduct of the facility. Mr McCourt's letter of 7 October and the fact that he signed the Bank's letter of 27 October to acknowledge his agreement with its terms are obviously important matters in assessing any argument concerning the effect of the meeting of 23 September 2008.

(g) There is other evidence that must be considered when assessing what Mr McCourt says about the impressions that he formed from the September meeting or the conclusions that he reached about any arrangement made at the meeting. In particular, it seems that the notion of extending the facility and fixing an expiry date arose in the context of the Bank capitalising interest. Clearly, that could not continue indefinitely (Ms Facius' note of the meeting of 2 July 2008 refers to the fact that a point would be reached when there was insufficient equity). Further, it is difficult to see how references in the Bank's correspondence to an expiry date for the facility could be understood as conveying anything other than an intention on the part of the Bank to regard the facility as being at an end (cancelled) on that date unless some other agreement or arrangement was reached and that all money advanced under the facility would then become due and owing. That is particularly as transactions had ceased on the sub-accounts through which the facility was provided. It is also difficult to see how Mr McCourt can maintain that he did not understand that the Bank's references to an expiry date in its letters of 25 August and 7 and 27 October 2008 were to the possible termination or cancellation of the facility with a concomitant obligation to repay the money advanced, when he wrote to the Bank on 16 October 2008 stating that he intended to 're-negotiate' the facility prior to 30 November 2008. The steps that he proposed in his letter were consistent with an understanding that he needed to satisfy the Bank's requirements prior to that date or the facility would be terminated and the amount outstanding would become due and owing.

48 I emphasise that those observations concerning the evidence relate only to the question of whether Mr McCourt has established a prima facie case in the sense explained in Australian Broadcasting Commission v O'Neill. However, Mr McCourt's assertion that at no stage did the Bank give him the impression that it expected him to repay the facility on expiry on 30 November 2008 or that he was given the impression that the facility would continue beyond that date cannot be unreservedly accepted even for that limited purpose when the cotemporaneous documents containing or recording the dealings between the Bank and Mr McCourt are considered.

49 In McCourt, Mr McCourt applied for an order extending caveats lodged against the titles to the Leon Road properties following notice being given under s 138B TLA_._ The Leon Road properties had been sold and settlement was imminent at the time of Mr McCourt's application.

50 The statutory declaration sworn by Mr McCourt in support of the caveats is reproduced at [3] of the reasons delivered by Murphy J. It indicated that Mr McCourt 'feared' an 'improper dealing' by the Bank in selling the Leon Road properties as:

(a) the properties might have been sold at an undervalue;

(b) the Bank might not have exercised its power of sale in good faith by selling the Agett Road and Yallingup properties at an undervalue and by not selling the Joel Crescent property despite it being ready for sale for 15 months.

(a) There was competing authority on the question of whether a registered proprietor had a caveatable interest in its own property. However, it was unnecessary to reach a concluded view on that question as the caveats should not be extended on other grounds: [8] - [12]. The Bank did not seek to revisit that issue in this application.

(b) Mr McCourt had not demonstrated that he had a valid caveat or that the caveat disclosed a proprietary interest as:

(i) There was no satisfactory evidence that the Leon Road properties had been sold at an undervalue: [17] - [19].

(ii) The matters stated in Mr McCourt's statutory declaration did not raise even an arguable case of want of good faith on the part of the Bank in exercising its powers of sale: [21].

(iii) The caveats were invalid having regard to the description of the estate or interest claimed:[22].

(iv) It was likely that the caveats were also invalid as they forbade absolutely any dealing with the properties. Such a claim appeared to exceed any legitimate claim that Mr McCourt might have in equity for the contracts of sale to be set aside;[26].

(i) The total debt owed by Mr McCourt to the Bank well exceeded not only the value of the properties caveated, but also the combined values of those properties and all others properties sold by the Bank (even assuming that all of the properties ought to have been sold for the amounts suggested by Mr McCourt).

(ii) The grounds of relief sought by Mr McCourt would not have the effect of destroying his claim which was really a money claim for the difference between the sale price of the land and its alleged higher market value. It was, in other words, a claim for which damages (or more precisely, an account or equitable compensation) was an adequate remedy.

NATIONAL AUSTRALIA BANK -v- MCCOURT [2010] WASC 237 (1 September 2010)

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (312 paragraphs)

NATIONAL AUSTRALIA BANK -v- MCCOURT [2010] WASC 237 (1 September 2010)

NATIONAL AUSTRALIA BANK -v- MCCOURT [2010] WASC 237 (1 September 2010)

Whether the Bank was entitled to exercise a power of sale

The exercise by the Bank of its powers of sale

Legislation Cited (2)

Cases Cited (17)