Paola v State Bank of NSW

THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

20118 OF 2000 LYN PAOLA v STATE BANK OF NEW SOUTH WALES LIMITED JUDGMENT 1 The plaintiff and her husband have been directors and shareholders of certain companies which have been referred to as the Currabubula Group of Companies (the group). In February 1990, the group had financial arrangements with the defendant. There was an indebtedness in excess of eight million dollars. 2 On 15 February 1990, the defendant froze the financial facilities that had been available to the group. Bank statements were issued with the words "in liq". The first of such bank statements was issued on 16 February 1990, and the last was issued on 28 March 1990. 3 There was a sale of assets (which has been described as a Fire Sale). This reduced the debt to about 1.13 million dollars. On 3 June 1992 the balance of the indebtedness was paid out by finance received from the Commonwealth Development Bank of Australia. 4 In December 1995, proceedings (the earlier proceedings) were brought against the defendant seeking the recovery of damages. The plaintiffs were two members of the group (Currabubula Holdings Pty Limited and Paola Holdings Pty Limited). The claims were founded on breach of contract (it was alleged inter alia that the defendant was in breach of contract in freezing the financial arrangements) and defamation. 5 The earlier proceedings were heard by Einstein J. He delivered two judgments. The first was delivered on 30 March 1999. The second was delivered on 3 May 1999. The earlier proceedings were resolved in favour of the plaintiffs (on both aspects of the claim). Damages were awarded in a large sum. The judgments are now under appeal. 6 On 30 March 2000, the plaintiff commenced these proceedings by the filing of a Statement of Claim. It seeks the recovery of damages and is founded on breach of duty (both under contract and in tort). Firstly, there is a claim for economic loss. This part of the claim looks to the loss of a property (at St Ives and owned by her) that she says she was forced to sell to meet the obligations of the group. This was an unencumbered property that she had purchased for $1,050,000. Secondly, there is a claim for damages for personal injury. This looks to a psychiatric disorder from which she has allegedly suffered. 7 The Statement of Claim alleged inter alia contractual arrangements (including the giving of a guarantee by the plaintiff) and other material founded on findings made by Einstein J. It alleged inter alia the breach of the following duties of care:- "17. In the premises in and after February 1990, the Defendant owed a duty of care to the Plaintiff to ensure that it did not withdraw finance in breach of its facility agreement with the companies in any manner as might cause the Plaintiff to suffer financial or emotional hardship (including mental distress or nervous shock). ………. 24. In the premises, the Defendant owed a duty of care to the plaintiff not to make the defamatory statements. ………. 28. In the premises, the Defendant owed a duty of care to the Plaintiff to remedy its breach of its facility agreement with the companies, as to the due provision of finance to the companies." 8 The plaintiff seeks certain extensions of time under the Limitation Act 1969 (the Act). The relief which is now sought is that set forth in an Amended Notice of Motion filed in Court on 10 August 2000 (which was the day of the hearing of the application). The original Notice of Motion had been filed on 30 March 2000. In support of the application, the plaintiff has sworn an affidavit (upon which she was cross-examined). Three exhibits have been tendered (including Exhibit B which is a report from Paul Friend dated 23 December 1999). Dr Friend (who is a psychiatrist), has treated her since 1993. The court was referred to material contained in the judgments of Einstein J. The defendant has relied on two affidavits sworn by Mr Fairlie. 9 It is now convenient to refer to some of the material which appears in the plaintiff's evidence. This reference is not intended to be an exhaustive statement of all relevant material. 10 The plaintiff has been diagnosed as suffering from bipolar disorder. This may be a lifelong condition and she may need to remain on medication. It is a disorder generally characterised by recurrent episodes of mania and of depression. It may be that the manic episodes are of greater significance in her case. 11 It may be that she first manifested problems during the 1980's. It may well be that she has an inherited condition. Because of other problems she is required to use various medications (including an inhaled steroid). The evidence is that steroids have been reported as causing mood disorders. 12 The plaintiff has deposed to becoming depressed and anxious about their financial situation (during the months following February 1990 when the financial arrangements had been frozen). She was panicking and trying to think of ideas to rectify the financial situation. Medical treatment was sought. In about August 1990, she was referred to Dr Ellard (a psychiatrist). He diagnosed a bipolar disorder and admitted her to the Northside Clinic. She received some medication. 13 She had further treatment and medication in about July 1992. This followed the death of her father, the shock of which caused a deterioration resulting in an admission once again to the Northside Clinic. She was prescribed a medication which she took regularly until 1996. 14 In September 1993, she suffered another deterioration and was again admitted to the Northside Clinic. On 29 February 1996, her younger brother died and her condition again deteriorated requiring an admission to the Northside Clinic. She was again admitted to the clinic in May/June 1996. 15 She was reviewed by Dr Friend on about six occasions. She was relatively well until February 1998. At that time, the earlier proceedings were approaching a hearing and she suffered a further deterioration requiring an admission to the clinic. She was prescribed Epilim which she has continued to take. There was a further deterioration in November 1998. Following a delay in the hearing, again she was admitted to the clinic. 16 In his report, Dr Friend said inter alia:- "4. I have detailed the treatment that Mrs Paola has received since February 1990. Taking account of the number of admissions to hospital since 1990 compared to prior to 1990, it would seem that Mrs Paola's condition has deteriorated. I have previously stated that I believe that the difficulties of dealing with the Colonial State Bank and the various court actions have been a factor in the frequency of Mrs Paola's relapses. However, it is also fair to say that between episodes of illness and putting aside her back pain, Mrs Paola is alert and quite functional. As far as I can see, the effect of the various court cases and the original action of the bank was to cause recurrent episodes of mania. ………. 6. As I have previously stated, I think that if the legal proceedings are like (sic) to be ongoing then it is likely they will continue to be a factor in the relapse of Mrs Paola's illness, necessitating repeated readmission with episodes of manic illness." 17 In her affidavit, she deposed inter alia to the following:- "6. My initial reaction to the bank's action was anger directed at my husband as I felt he was to blame for expending the companies' business operations too quickly and allowing bank borrowings which I felt were excessive, even though they never exceeded our assests (sic). ………. 22. After Judgment had been given in the action against the bank on the 30th March 1999 and the 3rd May 1999 I realised that my husband was not to blame for the action taken by the bank in February 1990 and that the bank's action was in fact quite unjustified." 18 Her oral evidence revealed an involvement in the business activities of the company, knowledge as to what had been done by the defendant and as to the claim made against the defendant. In 1990, she had been told by her husband that the bank had done what it was not entitled to do. She said that her anger subsided after he had explained this to her. At least from time to time, she has had the view that the defendant was liable for the losses and she has supported the conduct of the earlier proceedings (her husband gave the instructions). 19 I now turn to the relief presently sought by the plaintiff. On these matters, counsel for the parties have made written submissions. These submissions have been supplemented by oral argument. 20 In respect of the alleged causes of action said to accrue prior to 1 September 1990, the plaintiff looks to s 58 of the Act. It is said that she did not have means of knowledge of the material facts referred to in s 57B (I) (b) (i), (iii), (iv) and (v). In respect of the alleged causes of action said to accrue prior to 30 March 1992, the plaintiff looks to s 60G. It is said that she was unaware of the matters listed in s 60I (a) (ii) and (iii). In respect of the alleged causes of action said to accrue after 30 March 1992, the plaintiff looks to s 60C. 21 For present purposes, it is not necessary to set out each of the many statutory provisions that are of relevance to the relief sought by the plaintiff. It suffices to make general observations in relation to them. 22 The plaintiff bears the onus of demonstrating an entitlement to an extension of time under the Act. In my view, in the circumstances of this case, that onus has not been discharged. 23 By way of general observation, it can be said that the application is beset by manifest evidentiary problems. The clever presentation of the case seeks to gloss over these problems. Primarily, there is a deficiency in evidence on matters of lack of knowledge or unawareness which are relevant to her application. These deficiencies are understandable in the light of the actual knowledge had by her and the means available to her to acquire any actual knowledge that she did not have. 24 The problems for the group arose in 1990. It could be expected that matters concerning the bank were investigated and that this investigation led to the commencement of proceedings in 1995. It appears that these proceedings were vigorously litigated and resolved in the early part of 1999. 25 The plaintiff places reliance on the judgments delivered by Einstein J (particularly the lengthy judgment delivered in March). It is not said that she has read either of the judgments. Her affidavit merely deposes to the March judgment bringing about a realisation that the defendant's action in February 1990 was unjustified (and that her husband was not to blame). There are further problems. Her oral evidence presented a different picture. The judgment did little more than provide a judicial determination of matters in issue in the proceedings. I am not satisfied that she had the lack of knowledge or unawareness asserted in the submissions. Indeed, I prefer the view that she had knowledge as to the liability of the defendant at least by 1995 and probably as early as about 1990. 26 This is not a case where the plaintiff labours under any intellectual handicap. It is not a case in which it is suggested that material information was concealed from her by her husband or others. It is not a case where it can be suggested that she lacked the means to obtain any expert advice that may have been required by her. Indeed, expert advice (including legal and medical advice) has been available for many years. 27 There is credible evidence of the plaintiff having a psychiatric disorder. It seems that there may have been a pre-existing condition. It may have been exacerbated by both conduct of the defendant and other causes. Indeed, it appears that the present proceedings are a factor in her continuing problems. 28 The diagnosis had been made as early as 1990. She has not given evidence of unawareness of connection between it and the conduct of the defendant. I am not satisfied of such unawareness. Indeed, the evidence would suggest that she would have to be aware of it. 29 The task of disentangling what may be attributed to conduct of the defendant and what may be attributable to other causes may not be an easy one in any circumstances. There has been significant delay. It could be expected that this delay would make the task even more difficult. 30 The defendant has not adduced evidence of actual prejudice. Delay of itself may of course throw up presumptive prejudice. 31 In relation to certain matters there has already been extensive litigation. It could be expected that little (if any) prejudice would be occasioned in relation to these matters. 32 There is issue as to whether or not the plaintiff has a viable cause of action. In the case of s 58, there is a statutory requirement that there be evidence available to establish the alleged cause of action. Whether or not there be such a statutory requirement, the existence of a viable cause of action is a relevant matter in the circumstances of this case. Clearly, it would be futile to grant relief if the plaintiff did not have a viable cause of action. 33 The plaintiff looks to what has been said in the judgments of Einstein J. At best, these matters go no further than dealing with matters of liability between the plaintiffs and the defendant in the earlier proceedings. 34 In the present case, terms such as "novel" and "bold" may be used in relation to the plaintiff's alleged cause of action. There are clearly problems (inter alia those thrown up by Morgan v Tame [2000] NSWCA 121). There are evidentiary deficiencies. Leaving aside those deficiencies, it seems to be one of those cases where a final view could only be formed at trial after having had the advantage of all relevant facts and circumstances being put before the court. 35 This is one of those cases where the plaintiff's actual knowledge and her means of knowledge are matters relevant to the considerations of whether or not it is just and reasonable to make an order and discretionary considerations. 36 Before proceeding further, I should mention that this is one of those cases where separate heads of damage (economic loss and damages for personal injury) are being sought pursuant to the same allegations of breach of duty. The jurisdiction of the court to extend time is limited to a cause of action for damages for personal injury. The plaintiff accepts this limitation and seeks relief only in respect of that part of the case relating to the claim for damages for personal injury. 37 In the case of claims for relief pursuant to sections 58 and 60G, there are particular threshold requirements that must be satisfied before the court can grant relief. In respect of s 58, these are found in (a) and (b) of (2). In respect of s 60G, these are found in s 60I. In my view, in the case of both sections 58 and 60G the plaintiff has failed to satisfy any of these threshold requirements. 38 In each case, the power to grant an extension is discretionary. This discretion is exercised having regard to the relevant circumstances of the particular case before the court. 39 In the case of both sections 60C and 60G, the discretion arises only after the court decides that it is just and reasonable to order an extension of the limitation period. Again, the court is to have regard to all the circumstances of the case (including, to the extent that they are relevant, the matters set forth in s 60E). 40 In the circumstances of this case, I am not satisfied that I should decide that it is just and reasonable to make an order. Further, if I had taken a different view on that matter and on questions of the threshold requirements (where applicable), I would not have been disposed to exercise the discretion in her favour. 41 Accordingly, the Notice of Motion is dismissed. The plaintiff is to pay the costs of the Notice of Motion. The Exhibits may be returned. **********

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