Pearson v ING Bank

PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - SECURITY FOR COSTS - FACTORS RELEVANT TO EXERCISE OF DISCRETION - JUSTICE OF CASE - where the plaintiff claims damages from the defendant arising out of a loan agreement to refinance a residential unit - where the plaintiff defaulted under the loan agreement and the unit was sold by the mortgagee in possession - where the plaintiff's claims relate to breach of contract, unconscionable conduct, and personal injury - where the pleading of the plaintiff's claim suffers from numerous deficiencies - where the limitation periods have passed - where the defendant has applied for security for costs against the plaintiff - whether the plaintiff is impecunious and would be unable to pay an adverse costs order if his claims are unsuccessful - whether the plaintiff's claims have poor prospects of success - whether an order for security for costs would operate to stifle the proceedings - whether the justice of the case requires the making of a security for costs order

Australian Securities and Investments Commission Act 2001 (Cth), s 12CA(1), s 12CB, s 12DB(1), s 12DB(1)(i), s 12GF(2)

Corporations Act 2001 (Cth), s 912A

Limitation of Actions Act 1974 (Qld), s 10, s 11, s 31, s 38

Uniform Civil Procedure Rules 1999 (Qld), r 11, r 670, r 671, r 672

Babcock & Brown DIF III Global v Babcock & Brown International Pty Ltd [2015] VSC 453, cited

Base 1 Projects Pty Ltd v Islamic College of Brisbane Ltd [2012] QCA 114, cited

Bhagat v Murphy [2000] NSWSC 892, cited

Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447; [1983] HCA 14, cited

Commonwealth Bank of Australia v Doggett [2014] VSC 423, considered

Dae Boong International Co Pty Ltd v Gray [2009] NSWCA 11, cited

Dealer Support Services Pty Ltd v Motor Trades Association of Australia Ltd [2014] FCA 1065; (2014) 228 FCR 252, cited

Doggett v Commonwealth Bank of Australia [2015] VSCA 351; (2015) 47 VR 302, cited

Equititrust Ltd v Tucker [2020] QSC 269, cited

Fiduciary Ltd v Morningstar Research Pty Ltd [2004] NSWSC 664; (2004) 208 ALR 564, cited

Gentry Bros Pty Ltd v Wilson Brown & Associates Pty Ltd (1992) 8 ACSR 405, cited

Green (as liquidator of Arimco Mining Pty Ltd) v CGU Insurance Ltd [2008] NSWCA 148; (2008) 67 ACSR 105, cited

Harpur v Ariadne Australia Ltd No 2 [1984] 2 Qd R 523, cited

Jeffrey & Katauskas Pty Ltd v SST Consulting Pty Ltd (2009) 239 CLR 75; [2009] HCA 43, cited

KP Cable Investments Pty Ltd v Meltglow Pty Ltd [1995] FCA 76; (1995) 56 FCR 189, cited

Louth v Diprose [1992] HCA 61; (1992) 175 CLR 621, cited

Mbuzi v Hall [2010] QSC 359, cited

Melville v Craig Nolan and Associates Pty Ltd [2002] NSWCA 32; (2002) 54 NSWLR 82, cited

Menegazzo v Pricewaterhousecoopers (A Firm) & Ors [2016] QSC 94, cited

Merribee Pastoral Industries Pty Ltd v Australia & New Zealand Banking Group Ltd (1998) 193 CLR 502; [1998] HCA 41, cited

Morris v Hanley [2000] NSWLR 957, cited

Pioneer Mortgages Limited v Pearson [2013] QDC 310, related

Re CGS Constructions (Qld) Pty Ltd [2022] QSC 28, cited

Re Timbercorp Finance Pty Ltd (in liq) [2019] FCA 957; (2019) 137 ACSR 189, cited

Robson v Robson [2008] QCA 36, cited

Rozenblit v Vainer (2018) 262 CLR 478; [2018] HCA 23, applied

Sinclair v Registrar-General [2010] NSWSC 173, cited

Soh v Commonwealth of Australia [2006] FCA 575; (2006) 231 ALR 425, cited

Spincode Pty Ltd v Look Software Pty Ltd [2001] VSCA 248; (2001) 4 VR 501, considered

Stubbings v Jams 2 Pty Ltd [2022] HCA 6; (2022) 399 ALR 409, cited

Thompson v Perpetual Trustees Victoria Ltd [2021] NSWSC 622, cited

Weger v Boola Boola Petroleum and Natural Gas Co (No Liability) [1923] VicLawRp 46; [1923] VLR 570, cited

Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515; [2004] HCA 16, cited

[1] In this proceeding the plaintiff (Mr Pearson) claims more than $5.6 million in damages from the defendant (ING).

[2] Mr Pearson's claims arise out of a loan agreement which he executed in April 2008 to refinance a residential unit located at Miami.

[3] On its face, the loan agreement was one between himself as borrower, Pioneer Mortgages Limited (PML) as lender and Pioneer Mortgage Services Pty Ltd (PMS) as manager. ING was not named as a party to the loan agreement. Mr Pearson's obligations under the loan agreement were secured by a mortgage granted in favour of PML.

[4] Mr Pearson defaulted under the loan agreement in 2011 and the unit was ultimately sold by PML as mortgagee in possession in 2014.

[5] On 14 November 2022, Mr Pearson commenced these proceedings by way of originating application.

[6] Mr Pearson is self-represented, and the proceeding was placed on the Self Represented Litigants Supervised Case List. At a review before Freeburn J on 9 February 2023, ING indicated its intention to file an application for security for costs against Mr Pearson. Directions were made at that review for the filing of affidavit material and written outlines of submissions. The application for security for costs was listed for hearing for one day in the Civil List on 24 March 2023.

[7] Mr Pearson did not comply with a direction that he file and serve his written outline of submissions on ING's application in advance of the date listed for hearing. At the commencement of the hearing he sought, and was granted, leave to read and file written submissions along with amended points of claim.

[8] Mr Pearson also filed two applications of his own, and sought leave to file a third application, to be heard on the same date as ING's application for security for costs.

[9] As events transpired, the argument on ING's application for security for costs took up the entire hearing on 24 March 2023. Directions were made at the conclusion of the hearing for the delivery of further written submissions to permit ING to address matters raised in documents not served by Mr Pearson until the commencement of the hearing and to permit Mr Pearson to respond to those further submissions. In addition to filing further written submissions, Mr Pearson also filed and served a further affidavit after the conclusion of the hearing for which he sought leave to rely upon. ING objected to Mr Pearson being granted leave. Ultimately, it is not necessary to determine that dispute because, even if leave was to be granted, the matters set out in the additional affidavit would not alter my decision on whether or not an order should be made for the provision of security for costs.

[10] Although this judgment deals only with ING's application for security for costs, for reasons I will come to, the various applications Mr Pearson sought to agitate and the circumstances in which he sought to agitate those applications are relevant to the determination of ING's application.

[11] The following issues arise for determination on ING's application:

(a) whether the court's discretion to order the provision of security for costs is engaged in this case, particularly in circumstances where Mr Pearson is a natural person;

(b) in the event the discretion is engaged, whether, in all the circumstances, the discretion should be exercised in favour of or against making an order for security for costs;

(c) if the discretion is to be exercised in favour of making an order for security, the amount and form of security.

[12] Before turning to consider those issues, it is necessary to set out more detail about the background to the proceeding.

[13] On 11 April 2008, MacGillivrays, who acted as the solicitors for PML and PMS on the refinance, sent a copy of the loan agreement, the mortgage and other transaction documents to McDonald Brown Solicitors, who acted for Mr Pearson.

[14] Mr Pearson executed the loan agreement on 15 April 2008 and certified that, among other things, he:

(a) had read the loan agreement, including the MMF General Terms and Conditions which formed part of that agreement;

(b) had been given the opportunity to obtain legal advice on the nature and effect of the loan agreement but had chosen not to do so;

(c) understood the nature and effect of the loan agreement;

(d) understood the obligations and risks involved in signing the loan agreement.

[15] The loan to refinance the property settled on 10 June 2008.

Default under the loan agreement and repossession of the residential unit

[16] In about February 2011, Mr Pearson stopped making payments due under the loan agreement and the mortgage.

[17] On 3 December 2012, PML commenced proceedings in the District Court of Queensland against Mr Pearson for possession of the mortgaged property.[1]

[18] On 18 October 2013, PML obtained default judgment against Mr Pearson for possession of the mortgaged property.

[19] Mr Pearson subsequently applied to set aside that default judgment and to defend the proceeding on the basis that the loan agreement and the mortgage were void because of unconscionable conduct in the assessment and approval of his loan application.

[20] On 6 December 2013, Rackemann DCJ dismissed Mr Pearson's application to set aside the default judgment.[2]

[21] On 6 January 2014, Mr Pearson filed a notice of appeal against the decision of Rackemann DCJ.[3] That notice sought to join ING and PMS, as well as the Financial Ombudsman Service, as respondents to the appeal. PML subsequently applied to remove ING, PMS and the Financial Ombudsman Service as respondents. Those parties were removed as respondents to the appeal by order of Gotterson JA on 19 February 2014.

[22] PML settled the sale of the mortgaged property on 12 May 2014.

[23] Mr Pearson's appeal was dismissed on 15 May 2014.

[24] The originating application filed by Mr Pearson sought ten declarations. Some of those declarations can best be characterised as relating to discrete factual matters. Declarations about such matters would not involve the determination or declaration of any rights as between Mr Pearson and ING.[4] In the usual course, such matters would be expected to be pleaded as part of the material facts necessary to establish a cause of action. Other declarations sought in the originating application related to legal consequences which would follow from determination of the factual matters but, again, in my view, do not extend to a declaration of rights as between the parties.[5]

[25] On 25 November 2022, Gadens wrote to Mr Pearson on behalf of ING objecting to the nature of the declaratory relief sought and the inappropriate use of an originating application to commence the proceeding in circumstances where resolution of factual matters would be required. Mr Pearson did not accept those criticisms.

[26] When the proceeding first came on for hearing in the Applications List on 30 November 2022, Kelly J concluded that, by reason of r 11 of the Uniform Civil Procedure Rules 1999 (Qld) (UCPR), it should not have been commenced by originating application. His Honour directed that:

(a) the proceeding continue as if started by claim;

(b) Mr Pearson file points of claim which identified in a concise and succinct way the material, factual allegations and legal conclusions which he seeks to establish in the proceeding;

(c) the parties participate in a conference convened by the Resolution Registrar on a convenient date on or before 23 December 2022;

(d) the proceeding be placed on the Self Represented Litigants Supervised Case List and be reviewed by Freeburn J on 9 February 2023.

[27] Mr Pearson filed points of claim on 14 December 2022.[6]

[28] On 20 December 2022, the parties attended the conference with the Resolutions Registrar. Mr Pearson was present at the conference and, on that occasion, was represented by counsel. During that conference, ING sought orders for a timetable for the hearing of an application it proposed to file seeking security for costs. The parties agreed upon the timetable at the conference.

[29] After the conference had ended, Mr Pearson informed the Resolution Registrar that he no longer agreed to the making of directions in accordance with the timetable because he considered that the previous order made by Kelly J did not contemplate ING applying for security for costs.

[30] At the review hearing on 9 February 2023 (see [6] above), Freeburn J made orders for a timetable for the hearing of ING's proposed application for security for costs. Mr Pearson did not give any indication at that review that he intended to file any application of his own.

[31] On 24 February 2023, Mr Pearson sent an email to Gadens raising a concern about a conflict between the interests of ING and his own interests as a former client in circumstances where, in the period between 2006 and 2008, MacGillivrays had acted for Mr Pearson and, at a later time, merged with Gadens.

[32] On 28 February 2023, Mr Pearson filed an application seeking three declarations which, like the declarations sought in the originating application (see [24] above) sought final determination of factual and legal questions as an intermediate step to the further progression of Mr Pearson&#821[7]s claims.7

[33] On 21 March 2023, Mr Pearson filed a further application seeking that:[8]

(a) Gadens be restrained from acting for ING in this proceeding;

(b) the proceeding be stayed until such time as Gadens is joined as a party to the proceedings.

[34] At the commencement of the hearing on 24 March 2023, Mr Pearson sought, but was refused, leave to file and read a further application seeking to join Gadens as a party to the proceeding.

(a) his initial purchase of the residential unit financed by the National Australia Bank (NAB) and the fact he was considering selling the unit as he could not keep up the repayments due;[9]

(b) the involvement of a broker named John Jenkins in the application to refinance the unit through PMS;[10]

(c) that ING was a party to the loan agreement[11] or, alternatively, that PMS assessed and approved the refinance application and executed the loan agreement as agent for ING;[12]

(d) that he executed the loan agreement and the mortgage without obtaining independent legal advice;[13]

(e) if his application for finance had not been approved, and the loan agreement had not been executed, he would have sold the unit and invested the net proceeds of sale in the amount of $445,000;[14]

(f) ING was required to ensure, and Mr Pearson held a reasonable expectation ING would ensure, that the loan agreement included a statement in compliance with cl 10.3 of the Code of Banking Practice (Code);[15]

(g) if he had discovered that the loan agreement omitted the statement required by cl 10.3 of the Code he would not have entered into the loan agreement but would have sold the unit and invested the net proceeds of sale;[16]

(h) that following the refinance he was unable to keep up his mortgage payments such that the last payment he made under the loan agreement was on or about 1 February 2011;[17]

(i) ING took possession of the unit as mortgagee-in-possession on about 3 December 2012;[18]

(j) Mr Pearson did not receive any proceeds from the sale of the unit by the mortgagee-in-possession;[19]

(k) numerous duties and obligations which (on his case) ING owed to him during the period from the time Mr Jenkins approached him until the sale of the mortgaged unit,[20] although I note that the basis for some of the alleged duties or obligations, and how it is said that they are material to the more limited breaches he pleads, is not clearly articulated;

[36] By the amendments to the points of claim which were filed by leave at the commencement of the hearing, Mr Pearson relevantly:

(a) alleges that ING, by its agent PMS, altered his loan application for the purposes of defeating the Consumer Code,[29] but without articulating how those alleged facts are material to his pleaded causes of action;

(b) alleges that ING, by its agent PMS, failed to assess his application appropriately and instead engaged in asset based lending,[30] but without articulating how those alleged facts are material to his pleaded causes of action and in circumstances where those allegations formed the basis of his application to set aside the default judgment obtained by PML in the District Court proceeding (see [17] to [21] above);

(c) pleads allegations concerning a failure to disclose the terms of "Common Provisions under the Mortgage" lodged at the Queensland Land Registry,[31] but without articulating how that alleged failure is material to his pleaded causes of action;

(d) significantly expands the number and scope of the duties and obligations which (on his case) ING owed to him,[32] but without clearly articulating the basis for many of those duties and obligations or how he says those duties and obligations are material to the more limited breaches he pleads;

(e) introduces allegations of fraud without pleading any proper basis for such serious allegations;[33]

(f) abandons the alleged breaches of the ASIC Act and the Corporations Act, but continues to allege unconscionable conduct,[34] without clearly identifying the offending conduct or the basis upon which that conduct is alleged to be unconscionable in all of the circumstances;

(g) introduces allegations against Gadens[35] without properly articulating any cause of action against them in circumstances where those solicitors did not act for Mr Pearson on the refinance transaction, that being the reason leave was refused to file the application seeking joinder of Gadens as a party to the proceeding (see [34] above).

[37] In applying for security for costs pursuant to rr 670 and 671(h) of the UCPR or, alternatively, in the court's inherent jurisdiction, ING submitted that the court should be satisfied that the justice of the case requires the making of the order in circumstances where:

(a) ING's costs of defending the claim are likely to be substantial and Mr Pearson's impecuniosity means he would be unable to pay an adverse costs order if his claims are unsuccessful;

(b) Mr Pearson's claims have poor prospects of success;

(c) Mr Pearson has conducted this proceeding in a vexatious manner.

[38] Mr Pearson rejected the suggestion that his conduct of the proceeding could be characterised as vexatious. He submitted that the application for security amounted to an impermissible attempt to bring a summary end to the proceeding. He relied upon the general principles that:

(a) impecuniosity should not be a bar to his ability to pursue his claims;

(b) where a claim is prima facie regular on its face and discloses a cause of action, in the absence of evidence to the contrary, the court should proceed on the basis that the claim is bona fide with a reasonable prospect of success.

[39] Rule 670(1) confers a discretion in broad terms to order that a plaintiff give security the court considers appropriate for a defendant's costs.

[40] Rule 670(2) provides that the discretion must be exercised subject to the provisions of the UCPR, particularly rr 671 and 672. Further, the discretion must be exercised in the way which best suits the interests of justice in the particular circumstances and with the obligations set out in r 5 kept firmly in mind.[36]

[41] Rule 671 sets out eight circumstances which enliven the court's jurisdiction to order security for costs under the UCPR. As already noted, ING submitted that the prerequisite for security for costs stated in r 671(h) is established in the present circumstances: that the court should be satisfied that "the justice of the case requires the making of the order".

[42] Rule 672 sets out various matters to which the court may have regard in deciding whether to exercise the discretion to make an order for security for costs. These discretionary factors are also relevant to the court's consideration whether the prerequisite for security for costs stated in r 671(h) is established.[37]

[43] The matters stated in r 671 and the discretionary considerations stated in r 672 also provide guidance about matters which may be relevant to the exercise of the court's inherent jurisdiction.[38]

[44] However, these are not exhaustive of the factors that may be considered in deciding whether to order security for costs pursuant to either r 670 or the court's inherent jurisdiction.[39] The discretion to order security for costs is unfettered. The factors relevant to the exercise of the discretion will vary from case to case and the weight to be given to any circumstances depends upon its own intrinsic persuasiveness and its impact upon other circumstances which must be weighed.[40]

[45] As Mr Pearson's submissions emphasised, one well established principle which bears upon the determination of this application is that, so far as natural persons are concerned, poverty should not bar their access to justice.[41] The effect of this general rule is that the impecuniosity of a natural person plaintiff will not, without more, establish the prerequisite stated in r 671(h).[42]

[46] That does not mean that want of assets in the jurisdiction by an Australian resident, natural person plaintiff may not, in combination with other matters, lead to a conclusion that the justice of the case requires the making of an order for security for costs. Whether such a conclusion is warranted depends upon the weighing of factors favouring the making of an order against those matters which do not.[43]

[47] Authorities dealing with applications for security for costs against impecunious natural person plaintiffs have identified various factors which might be relevant depending upon the circumstances of the particular case.[44] These can include:

(a) whether the plaintiff's claim is bona fide;

(b) whether the plaintiff has reasonably good prospects of obtaining the order he or she seeks;

(c) whether an order for security would bring an end to the proceedings;

(d) whether the plaintiff is impecunious and how this was brought about;

(e) whether there is anyone standing behind the plaintiff who might benefit from the action but who is unwilling to contribute to the risk involved in the action;

(f) the question of delay.

[48] These matters reflect an underlying principle that security for costs would be ordered against an impecunious natural person plaintiff where, in the circumstances, not to do so would allow proceedings to continue which were vexatious, oppressive or an abuse of the court's process.[45] Expressed in a slightly different way, the real question the court must consider on an application such as this is whether it would be vexatious or oppressive to the defendant, or otherwise be an abuse of the court's process, to permit the action to continue in all the circumstances without the provision of security for costs.[46]

[49] ING submitted that Mr Pearson's bona fides in pursuing this claim must be in question because of the eight-year hiatus between his unsuccessful attempts to overturn the default judgment awarded to PML in the District Court and the commencement of the present proceeding, as well as the fact that many of his arguments were previously rejected in the earlier proceedings. Mr Pearson strongly rejected the suggestion that he was acting other than bona fide in pursuing his claim against ING.

[50] In support of its submission, ING relied on the case of Weger v Boola Boola Petroleum and Natural Gas Co (No Liability),[47] as providing an example of "vexatious conduct of litigation by a plaintiff who had failed to set aside an earlier judgment."

[51] In Weger, the plaintiff had successfully opposed an application for final judgment in earlier debt proceedings brought against him by the defendant and obtained leave to defend the debt proceedings on the ground that he had a valid counterclaim. Despite the grant of leave, the plaintiff did not defend the debt proceedings and judgment was obtained against him by default. He took no steps to have that judgment set aside. After six months had passed the plaintiff commenced proceedings against the defendant. The subject matter of those proceedings was the same as the counterclaim identified in the earlier debt proceedings. Macfarlan J considered that the plaintiff's failure to defend the debt proceedings after obtaining leave suggested a want of bona fides in his counterclaim and was satisfied that, considering the case as a whole, there were special circumstances which justified the making of an order for security for costs in an amount sufficient to evidence the bona fides of the plaintiff's claim.

[52] This case is not on all fours with Weger. Mr Pearson took steps to set aside the default judgment obtained by PML in the District Court, albeit unsuccessfully. Further, although there appears to be some overlap, Mr Pearson's claims in this proceeding are not limited to those he sought to advance by way of counterclaim against PML in the District Court.

[53] I am not persuaded that the matters identified by ING are sufficient for me to conclude that Mr Pearson lacks bona fides in bringing the present proceeding. In my view, this should be treated as a neutral factor.

[54] Mr Pearson has deposed that he does "not have access to" the funds necessary to provide security in the amount of $164,354.10 sought by ING.[48] Based on that evidence there appears to be no dispute that Mr Pearson would be unable to pay an adverse costs order if his claims are unsuccessful.[49]

[55] That circumstance is relevant to the assessment of the justice of the case, because of the additional burden placed on a successful defendant of paying its costs of the litigation with little or no prospect of recovery under an order for costs,[50] but it is no more than a factor to be weighed in all the circumstances. The fact that a plaintiff may, or even will, be unable to pay an adverse costs order after the trial does not mean that the commencement or further prosecution of the proceeding is an abuse of process.[51] Nor does the fact that a defendant is harassed or vexed by the prospect that a plaintiff without substantial assets will be unable to pay a costs order made as a result of the successful defence of the proceeding is not sufficient to qualify the claim as vexatious or oppressive to the defendant in the sense referred to at [48] above. Something further is required.

[56] The burden on a defendant in such a case might be less relevant in the weighing of relevant factors where the court is persuaded that the impecuniosity was caused by the defendant's conduct. Mr Pearson bears the onus of establishing this.[52] The apparent strength of the case is relevant to this issue.[53]

[57] For reasons set out below in my consideration of the merits of Mr Pearson's claims, I have concluded that the proceeding has poor prospects of success. Accordingly, for the purpose of determining the application for security for costs, I am not persuaded that Mr Pearson's impecuniosity was caused by ING.

[58] In my view, Mr Pearson's impecuniosity, although not sufficient on its own to justify the making of an order, is a relevant factor in favour of the provision of security.

Whether an order for security would be oppressive or stifle the proceeding

[59] The fact that an order for security for costs would operate to stifle the proceedings is relevant because it is generally thought to be oppressive to the plaintiff to stifle a claim that may prove to be genuine, and unjust to permit a defendant to achieve a "victory" in the litigation without any contest. That an order for security would operate in such a manner does not automatically lead to refusal of the application for security, but it does operate as a powerful factor against the making of the order.[54]

[60] Mr Pearson submitted that any order for security for costs would stifle the proceeding.

[61] In response, ING submitted that the evidence referred to at [54] above is not sufficient to discharge the onus on Mr Pearson to establish that the order would stifle the proceeding. In the course of oral argument, ING submitted that in order to persuade the court of that would require Mr Pearson to lead evidence about attempts he had made to access funds from other sources such as family, friends or a litigat[55]n funder.55

[62] I do not accept ING's submission. The evidence of Mr Pearson which ING relies upon to establish Mr Pearson's impecuniosity is also sufficient in the circumstances of this case to establish that an order for security for costs would stifle the proceedings. That is consistent with the assessment which ING appears to have made in deciding to bring its application. In a letter dated 22 December 2022,[56] ING's solicitors informed Mr Pearson of ING's position that its application for security for costs "is the most efficient means of dealing with a dismissal in a summary manner." It is also consistent with the assumption expressed in ING's written submissions that there was no amount below the quantum of security sought on the application that Mr Pearson would be able to pay.[57]

[63] In those circumstances, I am satisfied that Mr Pearson has satisfied the onus on him of demonstrating that an order for security for costs would stifle the litigation.

[64] As I have already noted, that is a powerful factor weighing against the making of the order. However, in this case, the relative importance of this factor must be assessed having regard to my conclusion as to the prospects of success of Mr Pearson's claims.

Prospects of success or merits of the proceeding

[65] The pleading of Mr Pearson's claim, both in the points of claim filed pursuant to the direction made by Kelly J and in the amended points of claim, suffers from numerous deficiencies. I have already adverted to a number of these issues in my summary of the pleaded case (see at [35](k), [35](l), [35](n) and [36](a) to [36](g) above). Those matters do not encompass the full extent of the difficulties with the pleading.

[66] These pleading difficulties might be explained by Mr Pearson's position as a self-represented litigant. However, two things should be borne in mind. First, the material suggests that Mr Pearson was assisted by a barrister acting pro bono in preparing the original points of claim.[58] Secondly, I accept ING's submission that the following statement of Keane J in Rozenblit v Vainer[59] applies in a case such as this:[60]

"Litigation is sufficiently stressful and expensive for all concerned without the unnecessary aggravations of additional cost, stress, distraction and delay occasioned by inefficiency, incompetence or sheer disregard of the rules. To the extent that the contention advanced on behalf of [the plaintiff] reflects an assumption that inefficiently or incompetently conducted litigation, and the waste in terms of time and money inflicted upon the other party or parties, is nevertheless consistent with the promotion of access to justice because the end may ultimately justify the means, that assumption must be rejected. Inefficient or incompetent conduct of litigation may cause injustice even if it is not intended to do so. Litigation that is conducted inefficiently, incompetently or in disregard of the rules by one party is no less oppressive to the other party because it is not intended to be oppressive. And it is no less oppressive because the litigant who engages in such conduct is impecunious."

[67] Consistently with those observations, the fact that a plaintiff has pleaded its claim in an unsatisfactory manner is a factor which courts have had regard to when determining whether it would be vexatious and oppressive to the defendant to permit the action to continue in all the circumstances without the provision for security for costs.[61]

[68] The deficiencies in the pleading also make it difficult to discern Mr Pearson's real case against ING. Having regard to the section of the amended points of claim which is set out under the heading "Breaches of the Loan Agreement and breach of statute",[62] it appears that Mr Pearson advances his claim on two bases: breach of the loan agreement,[63] and unconscionable conduct in equity.[64] The particulars of the loss Mr Pearson claims to have suffered also indicates he is pursuing a claim for personal injury, although none of the matters relevant to that aspect of his claim have been pleaded as material facts.

[69] It is necessary for me to address in more detail some of the more readily apparent difficulties with these different causes of action which I consider to be relevant to a consideration of the merits of Mr Pearson's claims. In doing so, it is not necessary or appropriate for me to reach a concluded view on any of Mr Pearson's claims. It is sufficient that the material permits me to form a view on the merits of the claims solely for the purposes of determining the present application.

[70] In considering the merits of the claims, I have assumed (although I note that ING rejects the proposition) that Mr Pearson has reasonable prospects of establishing that ING was a party to the loan agreement, either directly or as the undisclosed principal of PMS. For the reasons which follow, even on that assumption, I have reached the conclusion that Mr Pearson's claims have very limited prospects of success.

[71] Mr Pearson alleges that ING breached clauses 2.1, 2.2 and 10.3 of the Code. The Code is a voluntary code of conduct which sets good banking practice for those banks which adopt its provisions. Although the amended points of claim make repeated reference to the Code, the document does not clearly plead that ING had adopted the provisions of the Code by the time the loan agreement was entered into. Nevertheless, Ms Muir (who appeared for ING) expressly accepted that ING voluntarily subscribed to the Code.[65]

[72] Mr Pearson relies upon the case of Commonwealth Bank of Australia v Doggett[66] as authority for the proposition that the provisions of the Code were incorporated into the loan agreement and bound ING as a party to that agreement.

[73] At first instance in Doggett, Hargrave J accepted that cl 25.1 of the Code was incorporated into a credit facility agreement and a separate guarantee which secured the obligations of the borrower. That clause imposed a contractual obligation on the bank to exercise care in performing its credit risk analysis and deciding whether or not to provide finance.[67]

[74] The credit facility agreement in Doggett included an express term to the effect that if the borrower was an individual or small business,[68] relevant provisions of the Code would apply.[69] The guarantee which secured the borrower's obligations under that credit facility agreement also contained a statement that relevant provisions of the Code applied to the guarantee.[70]

[75] Mr Pearson sought to rely upon the reference by McLeish JA (on the appeal from the first instance decision) to a two-step process involved in the incorporation of words taken from another instrument into a contract.[71] The first step in the process is to construe the clause of the contract which operates to incorporate the words from the other instrument. It is the construction of the incorporation clause which determines the width of the incorporation.[72] That is because the question whether words from another instrument are incorporated in a contract depends upon the objective intention of the parties to the contract. In this case, the question then is whether Mr Pearson and ING (if it is assumed to be a party to the loan agreement) objectively intended to incorporate clauses 2.1, 2.2 and 10.3 of the Code into the loan agreement.

[76] Mr Pearson does not plead that the terms and conditions of the loan agreement included any term which expressly incorporated the provisions of the Code into the loan agreement. On my reading of the loan agreement, including the MMF Terms and Conditions, it does not contain any such incorporation clause. Nor does Mr Pearson plead any facts which would support a finding that the provisions of the Code were incorporated by some means other than by an express incorporation clause. Nothing in the material read on the application suggests such facts existed.

[77] On that basis, Mr Pearson faces substantial difficulty in establishing that clauses 2.1, 2.2 and 10.3 of the Code were incorporated into the loan agreement.

[78] Even if Mr Pearson could overcome that problem, there are other serious difficulties with his breach of contract case.

[79] The clauses of the Code which Mr Pearson alleges ING breached provide as follows:[73]

(a) continuously work towards improving the standards of practice and service in the banking industry;

(b) promote better informed decisions about our banking services:

(i) by providing effective disclosure of information;

(ii) by explaining to you, when asked, the contents of brochures and other written information about banking services; and

(iii) if you ask us for advice on banking services:

• (A) by providing that advice through our staff authorised to give such advice;
• (B) by referring you to appropriate external sources of advice; or
• (C) by recommending that you seek advice from someone such as your legal or financial adviser;

(c) provide general information about the rights and obligations that arise out of the banker and customer relationship in relation to banking services;

(d) provide information to you in plain language; and

(e) monitor external developments relating to banking codes of practice, legislative changes and related issues.

2.2 We will act fairly and reasonably towards you in a consistent and ethical manner. In doing so we will consider your conduct, our conduct and the contract between us.

10.3 Any written terms and conditions will include a statement to the effect that the relevant provisions of this Code apply to the banking service but need not set out those provisions."

[80] The conduct alleged to have breached these clauses was the failure to include a statement to the effect required by cl 10.3 of the Code in the terms and conditions of the loan agreement.[74]

[81] Mr Pearson asserts that the effect of this alleged breach of contract was to render the loan agreement legally ineffective from the time it was signed.[75] Although a court may declare an executed contract void ab initio in various circumstances, that would not be the consequence of a breach of the obligation imposed by cl 10.3 of the Code (on the assumption that clause was incorporated into the loan agreement). Where a breach of contract occurs, the party not in breach is entitled to recover damages. A breach of contract does not result in the automatic termination of the contract unless the parties have agreed to such a result. Where a breach of contract is sufficiently serious to entitle the party not in breach to terminate then termination requires an election by that party. On this basis, Mr Pearson's claim for breach of contract is framed in a way that is legally unsustainable.

[82] This difficulty flows through to the loss claimed by Mr Pearson. That loss is the same under each cause of action he has pleaded and relevantly includes the net proceeds Mr Pearson would have earned from the sale of the property if he had not entered into the loan agreement plus the investment return he claims he would have earned on that sum. That is, in respect of breach of contract, Mr Pearson seeks to have the court assess damages on the basis that the loan agreement never took effect, by putting him into the position he would have been in if he had not entered into that agreement.

[83] In my view, the court would not approach the assessment of damages for breach of the loan agreement in this way. The most common basis for an award of damages in contract is expectation damages which are directed towards placing a plaintiff in the position he or she would have been in if the promise had been performed. I can see no reason why that would not be the approach to the assessment of contractual damages in this case. Based on the matters pleaded by Mr Pearson, I cannot see how he would displace the general presumption in favour of expectation damages with an award of reliance damages[76] or restitution damages.[77]

[84] On an assessment of expectation damages, the court would consider the position Mr Pearson would have been in if the terms and conditions of the loan agreement had included a statement to the effect required by cl 10.3 of the Code: that is, the position Mr Pearson would have been in if there was an express statement that the relevant provisions of the Code applied to the refinance of the mortgaged property.

[85] Mr Pearson does not plead that, if such a statement had been included in the terms and conditions of the loan agreement, that he would not have entered the agreement.[78] It is difficult to see how he could sensibly pursue the action for breach of contract on that basis in any event. In my view, there is no logical causal connection between the breach of contract Mr Pearson relies on and the loss he claims to have suffered.

[86] Unconscionability under the general law involves: a relationship that places one party at a "special disadvantage" vis-à-vis the other; knowledge of that special disadvantage by the stronger party; and unconscientious exploitation by the stronger party of the weaker party's disadvantage.[79] In this context, "special disadvantage" means something that seriously affects the ability of the innocent party to make a judgment as to his or her own interests.[80]

[87] Mr Pearson's pleading does not address these matters in a comprehensible way and makes it difficult to understand the bases of his cause of action for unconscionable conduct.

[88] One difficulty is Mr Pearson's failure to plead facts from which it could be found that, when he executed the loan agreement and granted the mortgage over the property, he was at a special disadvantage in any relationship with ING. Although he pleads that ING had a duty not to take advantage of his "vulnerable circumstances ... as a borrower of money"[81] and not to take advantage of "a person at a special disadvantage",[82] Mr Pearson does not plead facts which would support a finding that he was in vulnerable circumstances or that he was at a special disadvantage when the loan agreement was executed. Similarly, although he pleads that ING had a duty not to take advantage of his "inexperience in the borrowing of money"[83] and not to take advantage of "a person unable to protect his own interests in applying to borrow money",[84] Mr Pearson does not plead facts that would support a finding the he was inexperienced in the borrowing of money or that he was unable to protect his own interests in applying to borrow money. These matters are plainly important in circumstances where Mr Pearson had previously borrowed money from NAB to finance the purchase of the subject property and provided a mortgage to secure his obligations to NAB.

[89] A further difficulty is that Mr Pearson does not plead that ING had knowledge of any special disadvantage. This is important because it appears from the amended points of claim that Mr Pearson did not deal directly with ING. His application to refinance the mortgaged property was made through the introducer, Mr Jenkins. I note that in refusing to set aside the default judgment obtained by PML,[85] Rackemann DCJ did not accept that there was a prima facie case for the conduct of Mr Jenkins to be attributed to PML. There is nothing in the amended points of claim or in the material Mr Pearson relied upon on the security for costs application to suggest that he has any better prospects of attributing any knowledge or conduct on the part of Mr Jenkins to ING.

[90] Finally, Mr Pearson does not clearly identify what he says amounts to unconscientious exploitation by ING of the special disadvantage (if it could be established). That is, Mr Pearson has not clearly identified how it is he says ING, by making the loan offer and entering into the loan agreement, impermissibly took advantage of his "vulnerable circumstances", his "inexperience in borrowing", his "inability to protect his own interests in applying to borrow money" or any other circumstance he relies upon as constituting his special disadvantage. Mr Pearson pleads aspects of the loan approval process and the transaction documents about which he complains: erasure of the words "for personal use" from the face of the loan application;[86] a failure by PMS to independently check the financial information supplied as part of his loan application leading to its approval of an asset based loan;[87] the failure to include the statement required by cl 10.3 of the Code in the loan agreement;[88] a failure to direct his attention to the common provisions which applied to the mortgage, particularly the power of attorney granted by cl 6.10 of those common provisions;[89] and formal defects in ING's execution of the loan agreement.[90] What is not clear is which of these complaints founds the unconscionable conduct claim and how it is said that those matters, if established, amounted to ING's unconscientious exploitation of Mr Pearson's special disadvantage.

[91] In my view, each of these difficulties present significant obstacles to Mr Pearson succeeding on his claim of unconscionable conduct.

[92] Mr Pearson claims damages for personal injury in excess of $4 million on the basis that he suffered from an exacerbation of existing psychiatric disorders as a consequence of ING exercising the power to sell the mortgaged property.[91] Here again the amended points of claim is deficient as it does not adequately plead any material facts in support of this claim including the duty owed by ING, the breach of that duty by ING, the exacerbation of the injuries suffered as a consequence of that duty or any facts supporting the quantum of damages Mr Pearson seeks.

[93] Beyond those matters there is a more fundamental difficulty in that the proceedings in the District Court make it clear that it was PML which held the mortgage and took possession of the property pursuant to that mortgage. Although Mr Pearson asserts that PMS acted as the agent of ING,[92] he does not allege that PML acted as ING's agent. Mr Pearson confirmed this expressly in the further written submissions he filed after the hearing.[93] There is therefore no basis upon which ING could be liable for any personal injury Mr Pearson suffered because of PML taking possession of the property and exercising its power of sale as mortgagee in possession.

[94] In addition to these substantive obstacles to the success of Mr Pearson's claims, the time which has passed since he executed the loan agreement means that he would also need to overcome the operation of relevant limitation periods.

[95] The claim for breach of contract has a limitation period of six years from the date the cause of action arose.[94] Mr Pearson appears to accept that the cause of action arose in April 2008 when he executed the loan agreement.[95] He seeks to postpone the running of the limitation period by the application of s 38 of the Limitation Act. That provision applies in circumstances where:

(a) the action is based on the fraud of the defendant;

(b) the right of action is concealed by the fraud of the defendant;

(c) the action is for relief from the consequence of a mistake.

[96] Although the amended points of claim refer to fraud, Mr Pearson indicated during argument that it was unlikely that he would maintain those allegations.[96]

[97] It seems that Mr Pearson's real argument for the purposes of the postponement of the limitation period for breach of contract is that his action is one for relief from the consequences of mistake. The argument proceeds on the basis that the relevant mistake was that of ING or its agents (the failure to include the statement required by cl 10.3 of the Code in the loan agreement).[97]

[98] The difficulty for Mr Pearson is that s 38(1)(c) of the Limitation Act will only apply where the relevant mistake, from the consequences of which relief is sought, is one made by the plaintiff.[98] Mistake by a defendant does not of itself found a cause of action.

[99] When this issue was raised with Mr Pearson in argument, he submitted that it was a mistake on his part to enter into the loan agreement.[99] In my view, such a mistake would not come with s 38(1)(c). That is because an action is "for relief from the consequence of mistake" within the meaning of s 38(1)(c) when the mistake is an essential element of the cause of action.[100] In this case, the mistake Mr Pearson referred to in argument is not an essential element of his claim for breach of contract. That claim does not depend upon pleading or proof of a mistake on his part. The same can be said about the mistake Mr Pearson attributes to ING.

[100] In these circumstances, Mr Pearson faces significant obstacles in demonstrating that s 38(1)(c) is available to postpone the running of the limitation period for the breach of contract claim.

[101] The cause of action for unconscionable conduct is, in my view, likely to be subject to a six year limitation period applied by analogy with the corresponding statutory remedy and limitation period provided by sections 12CA(1), 12CB(1) and 12GF(2) of the ASIC Act.

[102] Although Mr Pearson has removed his earlier reference to s 12CB of the ASIC Act from the amended points of claim, that does not alter the fact that both ss 12CA(1) and 12CB(1) capture the unconscionable conduct he now alleges. As Rees J observed in Thompson v Perpetual Trustees Victoria Ltd:[101]

"There is an 'identity' of unconscionable conduct between the law of equity and section 12CA. Equitable unconscionable conduct is a sub-set of unconscionable conduct within the meaning of section 12CB. The plaintiffs' claim for equitable damages for unconscionable conduct corresponds to the remedy provided by section 12GF(2) for contravention of sections 12CA(1) and 12 CB(1)."

[103] On that analysis it seems likely that the court would conclude that the analogy between the statutory remedy and the equitable remedy is apt such that the statutory limitation period should apply to Mr Pearson's claim for unconscionable conduct subject to whether it would be unjust to apply the statutory limitation in the circumstances of this case.

[104] In that regard, Mr Pearson argued that he did not become aware of the existence of his claim against ING until recently when he became aware of the argument that ING was a party to the loan agreement as the undisclosed principal of PMS such that the provisions of the Code applied to the loan agreement.[102] That position is inconsistent with submissions Mr Pearson made to Reid DCJ on 31 January 2014 in support of an application for a stay of the default judgment obtained by PML pending the determination of Mr Pearson's appeal.[103] In the course of argument on that application, Mr Pearson made the following submission:

"... And I intend to adduce further evidence at the appeal. And these areas would, for example, support my argument of agency, which was a central pillar of that decision. And, also, it now - I'm now in a position to allege fraudulent activity, not by the broker [Mr Jenkins] but between the - the IMG [sic] Bank which is the loan service for the plaintiff [PML], and IMG [sic] Bank's authorised agent, Pioneer Mortgage Services, all joined as respondents ... where a second credit file was essentially - or ostensibly generated as like a phoenix file, out of a redundant, rejected original application."

[105] That submission clearly indicates that, by no later than January 2014, Mr Pearson was aware of a basis for arguing that PMS was the agent of ING, and it was that awareness which caused him to seek to join ING and PMS as respondents to his appeal against the refusal to set aside the default judgment obtained by PML. That assessment is consistent with emails Mr Pearson sent to ING and Gadens in April 2014 in which he asserted that PMS entered into the loan agreement as agent for ING and that ING was thereby liable to a claim for unconscionable conduct, as well as for breach of provisions of the Code.[104]

[106] In those circumstances it is difficult to see how it would be unjust to apply the statutory limitation period by analogy, at least from January 2014 by which time Mr Pearson was aware of the basis upon which to bring a claim against ING.

[107] The claim for damages for personal injury is subject to a limitation period of three years pursuant to s 11(1) of the Limitation Act. Mr Pearson seeks to rely upon s 31(2) of the Limitation Act to extend the limitation period on the basis that ING's status as a party to the loan agreement was a material fact of a decisive character relating to the right of action which was not within his means of knowledge.[105] Even if ING's position could properly be characterised in that way, s 31(2) would only operate to extend the limitation period for one year after that fact came within Mr Pearson's means of knowledge. Based on the material referred to in [104] and [105] above, ING's status as a party to the loan agreement through its agent, PMS, was known to Mr Pearson in 2014. An application to extend the limitation period under s 31(2) could not, in my view, have the result in the limitation period for Mr Pearson's personal injury claim be extended until November 2022.

[108] I do not consider that any of the obstacles I have identified above arise in a context where it could properly be said that the law is uncertain or in a state of development as Mr Pearson sought to argue.[106]

[109] My conclusion that Mr Pearson's claims have very limited prospects of success substantially diminishes the force which the stifling effect of an order for the provision of security would otherwise have as a factor weighing against the making of such an order.

Whether the proceeding involves a matter of public importance

[110] Mr Pearson submitted that the question whether ING breached cl 10.3 of the Code, and thereby failed to give him notice of an important set of consumer rights at the time of making the loan offer, raises an area of law which requires clarification for the benefit of a wider group than himself as the plaintiff in the present proceeding.[107]

[111] While I accept the correctness of the statements of principle Mr Pearson relied upon in support of that submission,[108] I am not persuaded that the application of cl 10.3 of the Code or other concerns Mr Pearson has raised about the loan transaction rise to a level that it would be in the public interest for those issues to be determined. Even if I had been persuaded that the issues were of public importance, the matters I have addressed above in considering Mr Pearson's prospects of success would have led me to conclude that this proceeding is not an appropriate vehicle for the determination of those issues.

[112] ING has not delayed in bringing the application for security for costs.

[113] Notwithstanding Mr Pearson's submission[109] that he did not commence the proceeding for the purpose of harassing or annoying ING, upon considering the material read on the application I am satisfied that the way Mr Pearson has conducted the proceeding can properly be characterised as vexatious. I set out below the considerations which lead me to that conclusion.

[114] Deficiencies in the court documents prepared by Mr Pearson have made it very difficult for ING and the court to discern the true basis of his claims. As to the originating application, I refer to what I said at [24] to [26] above. As to the points of claim and the amended points of claim, I refer to what I said at [35] to [36] and [65] to [68] above.

[115] Although the court has not yet heard the interlocutory applications which Mr Pearson wishes to pursue, it seems to me on a preliminary assessment undertaken for the purposes of the present application, that those applications are misconceived and have little prospect of success.

[116] I find it surprising that Mr Pearson filed the interlocutory application seeking declarations (see [32] above) after Kelly J had informed him, in reference to the originating application, that it was not appropriate to seek to have a judge resolve questions of fact such as the agency issue (which is the focus of two of the declarations sought by way of interlocutory application) on an interlocutory application witho[110]a trial.110 For the same reasons given by Kelly J in relation to the originating application, I do not consider it was appropriate for Mr Pearson to have sought the form of declarations he did by means of an interlocutory application.

[117] There are also the applications to restrain Gadens from acting for ING in this proceeding and to join Gadens as a party to the proceeding (see [33] and [34] above).

[118] In addressing the substance of the restraint application, Mr Pearson referred to the decision of the Victorian Court of Appeal in Spincode Pty Ltd v Look Software Pty Ltd.[111] That decision identified three potential grounds for restraining a solicitor from acting against a former client: first, where there is a danger of misuse of confidential information;[112] secondly, where it would amount to a breach of the solicitor's duty of loyalty to act against a former client in the same or a closely related matter; [113] thirdly, in the inherent jurisdiction of the court where the restraint is necessary to ensure the due administration of justice and to protect the integrity of the judicial process.[114]

[119] An application for restraining a solicitor on the first ground - that there is the danger of misuse of confidential information - may be approached by asking the following sequence of questions:[115]

(a) What is the relevant information?

(b) Is that information confidential?

(c) Does the legal practitioner have possession of that information?

(d) Is the legal practitioner proposing to act 'against' the former client in the requisite sense?

(e) Is there a real risk that the confidential information will be relevant?

(f) Is there no real risk of misuse of the confidential information?

[120] The applicant bears the onus of answering question (a) with sufficient particularity, and also satisfying the court of affirmative answers to questions (b) to (e). In the event the court is satisfied of those matters, the evidential onus shifts to the respondent to address question (f).

[121] My preliminary assessment of the material filed by Mr Pearson is that he has not identified the relevant information with any particularity. Given Mr Pearson's broad description of his earlier matters and the information MacGillivrays would have obtained by reason of acting for him in those matters, he is likely to have great difficulty in satisfying the court of, at least, question (e).

[122] Even if Mr Pearson could overcome that difficulty, ING has filed material concerning the steps taken by Gadens to ensure that no information relevant to the conduct of the present proceeding is misused.[116] The material indicates that only one of the solicitors identified[117] as having worked on Mr Pearson's earlier matters remains at Gadens. That solicitor, Mr Jacobson, is a partner in Gadens' Corporate Advisory team. Ms Forrest, the partner at Gadens with responsibility for the conduct of this proceeding for ING, has deposed that her contact with Mr Jacobson is limited to partnership matters and does not include discussion of any specific files. Ms Forrest has deposed that she has never discussed Mr Pearson or any of his earlier matters with Mr Jacobson and the other Gadens solicitors working on ING's proceeding have informed her that they have not either. Further, each solicitor and secretary involved with ING's proceeding has signed an undertaking to the court which requires that they not have any involvement with Mr Jacobson for the purposes of the proceeding and, more particularly, that they will not seek or receive any confidential information about earlier matters involving Mr Pearson from Mr Jacobson or in any other way. Mr Jacobson has also provided an undertaking not to disclose confidential information about Mr Pearson's earlier matters. Having regard to that evidence, it is difficult to see how there could be any real risk of misuse of any information obtained by MacGillivrays in the course of acting for Mr Pearson in any of his earlier matters.

[123] The second ground identified in Spincode - the solicitor's duty of loyalty - has not received general acceptance.[118] Even if the court were ultimately to accept in principle that such a ground for restraining a solicitor for acting existed, on the material filed by Mr Pearson it is difficult to see how he could establish that, by acting for ING in the present proceeding, Gadens is acting against him in "the same or a closely related matter."[119]

[124] The third ground - the administration of justice - would involve considering whether a fair-minded, reasonably informed member of the public would conclude that the proper administration of justice requires that a solicitor be prevented from acting in the interests of the protection of the judicial process and the appearance of justice. In considering that issue, due weight should be given to the public interest in a client not being deprived of the solicitor of its own choice. The jurisdiction is an exceptional one and is to be exercised with due caution.[120]

[125] If Mr Pearson is unable to establish a real risk of misuse of confidential information, that would weigh against restraint of Gadens under the third ground.[121] Further, I cannot see any basis in the material to suggest that there is an actual conflict of duty and duty or conflict of duty and interest associated with Gadens acting for ING in the present proceeding.[122] Again, this suggests that Mr Pearson would face significant difficulties in establishing that the present case is such an exceptional case to warrant restraining Gadens from continuing to act for ING.

[126] Finally, there is the application which Mr Pearson sought leave to file at the commencement of the hearing seeking joinder of Gadens as a party to the proceeding. As already explained (see [36](g) above), that application is based upon amendments to Mr Pearson's points of claim which introduce allegations against Gadens without properly articulating any cause of action against them in circumstances where those solicitors acted for the lender in the refinance transaction, not for Mr Pearson. It was for that reason that I refused Mr Pearson leave to file the application (see [34] above).

[127] There is no apparent basis, either in the amended points of claim or in the materials filed by Mr Pearson, that he could identify a reasonably arguable cause of action against Gadens arising from MacGillivrays' conduct in preparing the loan refinance documents on behalf of the lender.

[128] Mr Pearson has delivered what I consider to be an unreasonable volume of written material in the form of correspondence, affidavit material and written submissions. Much of that material is repetitious and addresses matters which are likely to have little, if any, bearing upon the real matters in issue in the proceeding. The character of Mr Pearson's written material is compounded by the timing of its delivery.

[129] Ms Forrest deposed that on 8 February 2023, the day prior to the matter being reviewed by Freeburn J, Mr Pearson served written submissions which exceeded 20 pages and an affidavit which, including exhibits, exceeded 50 pages. Although Mr Pearson swore the affidavit on 31 January 2023 he did not serve it on ING until 8 February 2023.[123] Mr Pearson did not seek to contradict that evidence.

[130] Mr Pearson adopted a similar approach to the preparation and delivery of written material for the present application.

[131] On 9 February 2023, Freeburn J directed that Mr Pearson file and serve his written outline of submissions on the security for costs application by 13 March 2023, some 11 days before the application was listed for hearing.[124] As already noted at [7] above, Mr Pearson did not comply with that direction. There was some reference in Mr Pearson's affidavit material about his having been admitted to Gold Coast Private Hospital from 17 to 19 [125]ch 2023.125 Those circumstances do not explain Mr Pearson's failure to file his written submissions as directed. It appears that in the period prior to the hearing of the present application Mr Pearson was instead focussed on his concerns regarding Gadens continuing to act for ING.

[132] Notwithstanding Mr Pearson's apparent health issues, he was able to prepare:

(a) his application to restrain Gadens from continuing to act for ING, dated 20 March 2023 and filed on 21 March 2023;[126]

(b) an affidavit in support of that application, comprising more than 100 pages (including 87 pages of exhibits) which was sworn on 16 March 2023 and filed on 20 March 2023;[127]

(c) his application to join Gadens as a party to the proceeding;[128]

(d) his amended points of claim filed at the commencement of the hearing on 24 March 2023;[129]

(e) a further affidavit comprising 65 pages (including 39 pages of exhibits) which was sworn on 21 March 2023 but not filed until the commencement of the hearing on 24 March 2023;[130]

(f) almost 50 pages of written submissions which were filed at the commencement of the hearing on 24 March 2023.[131]

[133] Mr Pearson did not serve ING with copies of any of the material filed at the commencement of the hearing. This resulted in ING having to revisit its submissions on the prospects of Mr Pearson's claims and required further written submissions to be prepared and delivered after the conclusion of the hearing.

[134] The material filed at the commencement of the hearing also contains inconsistencies. An example is the provision of written submissions concerning:

(a) ING having made misleading representations in contravention of s 12DB(1) of the ASIC Act and, as a consequence, having breached its obligation under s 912A of the Corporations Act to comply with financial services laws;[132] and

(b) ING's conduct constituting unconscionable conduct within the meaning of s 12CB of the ASIC Act.[133]

Mr Pearson made those submissions even though the allegations relying upon those statutory provisions were struck out of the amended points of claim.[134] His further written submissions delivered after the hearing suggest that he does in fact wish to pursue those statutory claims even though they had been struck out of the amended points of claim.[135] This simply emphasises the difficulty in discerning Mr Pearson's real case against ING.

[135] In my view, the length, content and late delivery of material prepared by Mr Pearson has added significantly to the time ING was required to devote to dealing with the present application and the various issues which Mr Pearson sought to agitate. There is little reason to think that position is likely to change as the matter progresses.

[136] Mr Pearson has made serious allegations about the conduct of both ING and Gadens without identifying a proper basis for the allegations.

[137] I have already referred to Mr Pearson's amendment of his points of claim to raise fraud without pleading any proper basis for such serious allegations[136] and Mr Pearson's indication during argument that it was unlikely that he would maintain those allegations.[137]

[138] In documents filed with the court, Mr Pearson has asserted that ING, assisted by Gadens, devised "the perfect crime" to defraud the public at large and defeat the effective application of the consumer rights conferred by the Code,[138] and that ING "colluded with" Gadens for the purpose of defeating the Code.[139]

[139] In correspondence sent to Gadens and, in some cases, also to the court, Mr Pearson has questioned whether Ms Forrest considers herself above the law and solicitors conduct rules,[140] and asserted that Ms Forrest "acted immorally" and "knowingly caused further harm" by sending email correspondence.[141] He has demanded that ING "stop obfuscating and wasting precious court resources and confess to the [ING/PMS] master/servant relationship".[142] He has asserted that ING "suborned perjury,"[143] that Ms Forrest falsely asserted a sworn statement,[144] and that Gadens were inappropriately "verballing" him concerning the form of his points of claim.[145]

[140] It was clearly explained to Mr Pearson on several occasions that he should not communicate with the court about the substance of the dispute, other than through submissions made in open court. Those explanations were provided by the Resolution Registrar on 1 March 2023,[146] the Associate to Freeburn J on 2 March 2023,[147] and my Associate on 23 March 2023.[148] Despite those warnings, Mr Pearson continued to send inappropriate communications to the court.

Conclusion on whether security for costs should be ordered

[141] Weighing the likelihood that an order requiring Mr Pearson to provide security for costs will stifle the proceeding against his apparent inability to pay costs ordered against him if his claims are unsuccessful, the limited prospects of success of his claims, and the vexatious manner in which he has conducted the proceeding, I am satisfied that the justice of the case requires the making of the order. Pursuant to r 671(h), the discretion to make an order is engaged in the circumstances of this case.

[142] The same considerations have led me to the conclusion that it would be vexatious or oppressive to ING to permit the proceeding to continue in all the circumstances without the provision of security for costs.

[143] I do not accept Mr Pearson's submission[149] that ING's decision to bring its application, in circumstances where it believes an order for the provision of security for costs will bring an end to the proceeding, amounts to an abuse of process. ING might have brought a different form of application, but for the reasons set out above I am satisfied that there is a proper basis for the present application and that I should exercise the discretion conferred by rr 670 and 671(h) of the UCPR in favour of making an order for security.

[144] The amount of security sought by ING is based on Ms Forrest's evidence as to the tasks required to be undertaken in future to defend the proceeding and the likely cost of those tasks.[150] Mr Pearson did not challenge that evidence.

[145] The total estimated future costs are $301,315.85. Having regard to the way Ms Forrest prepared that estimate, I am satisfied it is a reasonable estimate of ING's likely future costs. That figure has been reduced to $164,354.10 to reflect the amount likely to be recovered upon an assessment of costs on the standard basis. Again, I am satisfied that is an appropriate reduction.

[146] As ING submitted, it was open to Mr Pearson to demonstrate that there was some lower amount of security which he would be able to provide without the order stifling the proceeding. Mr Pearson did not address that question. That may be because there is no lower amount of security which Mr Pearson would be able to provide. If there was, that would have been an important consideration in fixing the quantum of security. As matters stand, I am satisfied that the amount of $164,354.10 sought as security is appropriate.

1. The plaintiff provide security for the defendant's costs of these proceedings from 20 February 2023 in the amount of $164,354.10.
2. The security be paid into court, or provided in a form acceptable to the Registrar, within 21 days of the making of these orders.
3. The proceeding be stayed until the plaintiff provides the security in accordance with paragraphs 1 and 2 of these orders.
4. The plaintiff pay the defendant's costs of and incidental to the application for security for costs to be assessed on the standard basis if not agreed.

[2] Pioneer Mortgages Limited v Pearson [2013] QDC 310.

[3] Court of Appeal proceeding No 84 of 2014.

[9] Court document 16, [5]-[9] (pages 2-3).

[10] Court document 16, [10]-[16] (page 3).

[11] Court document 16, [19], [20], [22] and [23] (page 8 - note the numbering error as [19] follows on from [45]).

[12] Court document 16, [17], [39] and [21]-[23] (pages 3, 5-6 and 8).

[13] Court document 16, [24]-[26] (page 4).

[14] Court document 16, [19] and [27] (pages 3 and 4).

[15] Court document 16, [20], [34] and [35] (pages 3 and 5).

[16] Court document 16, [28] (page 4).

[17] Court document 16, [30] (page 4).

[18] Court document 16, [36] (page 5).

[19] Court document 16, [37] (page 5).

[20] Court document 16, [45] (pages 7-8).

[21] Court document 16, [24] (page 10).

[22] Court document 16, [25] and [26](i) (page 10).

[23] Court document 16, [26](ii) (page 10).

[24] Court document 16, [26](iii) (page 10).

[25] Court document 16, [27] (page 10).

[26] Court document 16, [29](i)-(iii) (page 11).

[27] Court document 16, [29](iv)-(viii) (page 11).

[28] Court document 16, [29](ix) (page 11).

[29] Court document 36, [17](a) and [17](b).

[30] Court document 36, [17](d)-[17](f).

[31] Court document 36, [6A], [22] and [45](h).

[33] Court document 36, [45](e), [45](x), [45](nn) and [56].

[34] Court document 36, [52] and [53].

[35] Court document 36, [20]-[22], [45](b), [45](f), [45](g), [52] and [56].

[36] Equititrust Ltd v Tucker [2020] QSC 269, [42].

[37] Robson v Robson [2008] QCA 36 (Robson), [32]-[33], [37] and [61].

[38] Mbuzi v Hall [2010] QSC 359 (Mbuzi), [57].

[40] KP Cable Investments Pty Ltd v Meltglow Pty Ltd [1995] FCA 76; (1995) 56 FCR 189, 196-197 citing Gentry Bros Pty Ltd v Wilson Brown & Associates Pty Ltd (1992) 8 ACSR 405, 415.

[41] Harpur v Ariadne Australia Ltd (No 2) [1984] 2 Qd R 523, 530; Mbuzi, [58].

[44] Morris v Hanley [2000] NSWLR 957, [23]-[24] cited in Mbuzi, [66]; Bhagat v Murphy [2000] NSWSC 892, [18]-[28].

[45] Melville v Craig Nolan and Associates Pty Ltd [2002] NSWCA 32; (2002) 54 NSWLR 82, [136] cited in Mbuzi, [61] and [65].

[46] Bhagat v Murphy [2000] NSWSC 892, [28].

[47] [1923] VicLawRp 46; [1923] VLR 570 (Weger).

[49] See also the evidence of Ms Forrest in Court document 22, [11]-[13].

[50] Merribee Pastoral Industries Pty Ltd v Australia & New Zealand Banking Group Ltd [1998] HCA 41; (1998) 193 CLR 502, 513-14 [26] cited in Green (as liquidator of Arimco Mining Pty Ltd) v CGU Insurance Ltd [2008] NSWCA 148; (2008) 67 ACSR 105, [37].

[51] Mbuzi, [67] citing Jeffrey & Katauskas Pty Ltd v SST Consulting Pty Ltd [2009] HCA 43; (2009) 239 CLR 75, 96 [37].

[52] Base 1 Projects Pty Ltd v Islamic College of Brisbane Ltd [2012] QCA 114, [26]; Fiduciary Ltd v Morningstar Research Pty Ltd [2004] NSWSC 664; (2004) 208 ALR 564, [100].

[53] Dae Boong International Co Pty Ltd v Gray [2009] NSWCA 11, [34].

[54] Fiduciary Ltd v Morningstar Research Pty Ltd [2004] NSWSC 664; (2004) 208 ALR 564, [72]-[73].

[56] Court document 18, exhibit MAP-39.

[59] (2018) 262 CLR 478.

[60] (2018) 262 CLR 478, 492 [42] (citations omitted).

[61] Bhagat v Murphy [2000] NSWSC 892, [26].

[62] Court document 36, [51]-[55]. I note that [52] of the amended points of claim has been amended to delete the previous allegation of false and misleading representations under s 12DB(1) of the ASIC Act and to replace it with the following: "In the Premises, the Defendant a corporation by its conduct and that of its legal representatives, Gadens lawyers as particularised in the Plaintiff's claim hereof, has engaged in conduct generally and conduct in all the circumstances in trade or commerce in relation to the supply or possible supply of financial services to a person and/or a consumer that was, and is, deemed materially defective in its proper execution, if somehow lacking with a mindset determined: which constituted an invalid execution of the Loan Agreement ab initio." Beyond the fact that Mr Pearson alleges that the execution of the Loan Agreement was invalid and of no effect, it is impossible to ascertain from that pleaded statement what cause of action (if different from breach of contract or unconscionable conduct) he relies upon to advance that claim.

[66] [2014] VSC 423 (Doggett). Upheld on appeal in Doggett v Commonwealth Bank of Australia [2015] VSCA 351; (2015) 47 VR 302.

[68] It was not in issue that the borrower was a small business.

[71] Court document 34, [19] and [20].

[72] [2015] VSCA 351; (2015) 47 VR 302, [122].

[74] Court document 36, [20](b)-(d), [28], [34] and [35].

[75] Court document 36, [20](d)(iv) and [34].

[76] Where a plaintiff expends money in the performance of a contract but the consequence of the defendant's breach of contract is that the expenditure is wasted, that wasted expenditure being the quantum of the damages.

[77] Where a plaintiff has paid money to the defendant and the money is effectively lost or thrown away.

[78] Mr Pearson's allegation in [28] of the amended points of claim that if he had been aware of the deficiency in the loan agreement (being the failure to include the statement required by cl 10.3 of the Code) he would not have entered into that agreement does not address the relevant issue. See also Mr Pearson's response at Transcript 1-66 and 1-67 when asked during argument how his position would have differed if the statement required by cl 10.3 of the Code had been included in the loan agreement.

[79] Stubbings v Jams 2 Pty Ltd [2022] HCA 6; (2022) 399 ALR 409 (Stubbings), [39] citing Commercial Bank of Australia Ltd v Amadio [1983] HCA 14; (1983) 151 CLR 447 (Amadio), 459-61 and Louth v Diprose [1992] HCA 61; (1992) 175 CLR 621, 626.

[80] Stubbings, [40] citing Amadio, 462.

[85] Pioneer Mortgages Limited v Pearson [2013] QDC 310, [13]-[24].

[87] Court document 36, [17](e) and (f).

[89] Court document 36, [6] and [22].

[91] Court document 36, [56](iv)-(ix) and (xii)-(xvi).

[92] Court document 36, [2](v), 3(iii), [17] and [20].

[93] Court document 32, [69] and [70].

[94] Limitation of Actions Act 1974 (Qld) (Limitation Act), s 10(1)(a).

[97] Court document 36, [34]; Court document 25, [30]-[35], [91] and [99]; Court document 28, [77]-[82]; Court document 37, [15], [19], [33] and [37]; Court document 34, [10], [33]; [64] and [70]; Court document 35, [24](c), [32] and [34]; Transcript 1-49:20-32.

[98] Sinclair v Registrar-General [2010] NSWSC 173, [38].

[100] Menegazzo v Pricewaterhousecoopers (A Firm) & Ors [2016] QSC 94, [95].

[101] [2021] NSWSC 622, [70].

[102] Court document 25, [79]-[90]; Court document 34, [71]-[86].

[103] Court document 14, [23] and pages 63-64 of exhibit SF-1.

[104] Court documents 6, 7 and 8, exhibit MAP-15.

[106] Court document 35, [25]-[31] relying upon Woolcock Street Investments Pty Ltd v CDG Pty Ltd [2004] HCA 16; (2004) 216 CLR 515, 565-6 [138] per Kirby J.

[107] Court document 34, [35] and [62]-[68]; Court document 35, [1].

[108] Merribee Pastoral Industries Pty Ltd v Australia & New Zealand Banking Group Ltd [1998] HCA 41; (1998) 193 CLR 502, 517 [31]; Soh v Commonwealth of Australia [2006] FCA 575; (2006) 231 ALR 425, [26].

[109] Plaintiff's outline of submissions filed by leave on 24 March 2023, [53].

[110] The transcript of the hearing before Kelly J is exhibit MAP-40 to the affidavit of Mark Andrew Pearson filed 2 February 2023 (Court document 18). The relevant passage is at 1-6:44 to 1-7:6.

[111] [2001] VSCA 248; (2001) 4 VR 501 (Spincode).

[115] Re Timbercorp Finance Pty Ltd (in liq) [2019] FCA 957; (2019) 137 ACSR 189, [64] applying Babcock & Brown DIF III Global v Babcock & Brown International Pty Ltd [2015] VSC 453, [70].

[117] Whether identified in Mr Pearson's material or by Gadens own inquiries.

[118] Dealer Support Services Pty Ltd v Motor Trades Association of Australia Ltd [2014] FCA 1065; (2014) 228 FCR 252 (Dealer Support Services), [89]-[90].

[120] Dealer Support Services, [93]-[97]; Re CGS Constructions (Qld) Pty Ltd [2022] QSC 28, [27]-[29].

[121] Dealer Support Services, [104].

[122] Dealer Support Services, [108]; Spincode, [40].

[125] Court document 37, [74]-[75] and pages 31-32 of exhibit MAP-46; Court document 30, exhibit SF-7 at pages 54-56.

[128] For which leave to file and read was refused at the commencement of the hearing on 24 March 2023.

[134] Court document 36, [52]-[53].

[135] Court document 32, [30], [33], [62]-[67], [86].

[136] Court document 36, [45](e), [45](x), [45](nn) and [56]. See also references to fraud in Mr Pearson's written submissions (Court document 34), [71] and [85].

[138] Court document 34, [87] and [98]; Court document 35, subparagraph (e) on page 11.

[140] Exhibit 1, email sent by Mr Pearson at 12.41 pm on 23 March 2023.

[141] Exhibit 1,email sent by Mr Pearson at 8.25 am on 23 March 2023.

[142] Court document 26, exhibit SF-5 at page 35.

[143] Court document 26, exhibit SF-5 at page 34.

[144] Court document 26, exhibit SF-5 at page 51; See also Court document 25, [100]-[101].

[145] Court document 26, exhibit SF-5 at pages 54 and 56.

[146] Court document 26, exhibit SF-5 at page 70.

[147] Court document 26, exhibit SF-5 at page 53.

[148] Exhibit 1, emails sent to Mr Pearson at 8.51 am and 9.02 am on 23 March 2023.

[150] Court document 22, [17]-[28].