Reid v Commonwealth Bank of Australia

THE APPLICATIONS

1. The parties bring separate applications. By a notice of motion filed on 28 November 2020, the plaintiff applied for leave to amend his statement of claim.
2. By its notice of motion, filed on 2 February 2021, the CBA seeks an order for dismissal of the proceeding under r 13.4(1) of the Uniform Civil Procedure Rules 2005 (NSW) ('UCPR'). Order 1 on this motion indicates that the application is directed to the entirety of the proceeding. But none of the particular grounds in r 13.4(1)(a), (b) or (c) were specifically identified.
3. This particular application was brought with the knowledge of the plaintiff's subsisting amendment application; presumably because of the CBA's conviction that even on the basis of an amended pleading, the result of the summary dismissal application would not be any different. This much was indicated by Mr Robert Ralston, who swore the affidavit in support, indicating that his affidavit was relied upon not only in relation to summary dismissal, but also in opposition to the plaintiff's amendment application.
4. At the hearing of these applications, I indicated my inclination to hear the summary dismissal application first, but in doing so, also indicated that I intended to hear it on the basis of Mr Reid's claim as he would want it to be - that is, on the assumption that he was permitted to rely upon his proposed amended pleading. Counsel for both parties on the applications did not object to that course.
5. If I may say so, the propriety of that course was borne out when, during his submissions, Counsel for Mr Reid indicated that there were multiple changes that he would wish to make even to the proposed amended version the subject of the amendment application should his client withstand the application for summary dismissal. In other words, the amendment application has fallen away for now.

The CBA's application for summary dismissal

1. As indicated, for this application, the CBA relies upon the affidavit of Mr Ralston, who is a Manager within the Risk Management section of the Bank. Mr Reid did not rely upon evidence in opposition to this application, and there was no affidavit in response to Mr Ralston's affidavit. On the hearing of the application, and with limited notice given to the CBA, Mr Reid's Counsel required Mr Ralston's attendance to be cross-examined on his affidavit. I rejected that application for reasons delivered ex tempore. I was informed that Mr Reid's lawyers informally requested the production of the original version of a trust deed that was ascertainable from one of the documents Mr Ralston exhibited to his affidavit [2] , but that request was late, did not amount to a notice to produce, appeared to be a document more likely to be in Mr Reid's own possession and at any rate, was not produced. Eventually, no submission was made on Mr Reid's behalf about inferences which may be drawn from its non-production.
2. In the circumstances noted, I accept Mr Ralston's factual account, to which I now turn.

The Facts

1. Mr Ralston deposed to the CBA making loan advances, in 2003, to two of the three companies that Mr Reid had referred to in paragraph 6 of the statement of claim; and another (Goroma Pty Ltd). Between 2003 and 2010, these companies entered into further facilities with the CBA (what Mr Ralston identified as 'the loan agreements').
2. Mr Ralston deposed that on 28 October 2003, Mr Reid and his then wife, Mrs Reid, individually guaranteed the companies' obligations as borrowers for the facilities entered between 2003 and 2010. On the same date, they also mortgaged the Menangle property identified by Mr Reid in his statement of claim as security for their obligations as guarantors.
3. In May 2009, among others, Mr Reid executed an agreement, as director of Fundola Pty Ltd (as trustee for the Reid Trust) with the CBA for the variation of 'BetterBusiness' bill facilities) in the aggregate sum of $2,746,750. The agreement was also executed by two other trustee companies associated with Mr Reid (Fretilla Enterprises Pty Ltd and Gorama Holdings Pty Ltd). By the terms of that document, Mr Reid declared (on 30 March 2009) that the credit facilities identified in the Acceptance document were to be "applied wholly or predominantly for business or investment purposes (or for both purposes)". The terms and conditions of the facilities identified the 'borrower' in broad terms as the persons set out in the letter of offer or acceptance document (and their successors). Mr Reid was one of those.
4. Further, Mr Ralston deposed that between July and November 2011, the Bank made demands upon Mr and Mrs Reid, as guarantors, for the amount owing, being quantified as $1,143,957.44.
5. On 24 January 2012, the CBA commenced the Possession Proceeding previously referred to. Mrs Reid and Mr Reid filed defences, respectively, in February 2012 and May 2012. There were further pleadings until pleadings were closed by December 2013.
6. Coincident with the CBA's Possession Proceeding, Mr and Mrs Reid commenced their own proceeding against the CBA in the Supreme Court on 23 May 2012. Mr Ralston described that proceeding, in essence, as a proceeding seeking the avoidance or variation of a default interest provision in the loan agreements. In his statement of claim, amongst other things, Mr Reid characterised (at paragraph 4) the purpose of the 2003 facilities as being "to assist with the purchase and development of an industrial property" in a site in Ingleburn. The pleadings in respect to that litigation also closed in December 2013.
7. Mr Ralston deposed that in May 2012, the CBA had been joined as a party in the proceeding between Mr and Mrs Reid in the Family Court; because of its interest in the mortgaged property at Menangle. This was referred to as the Family Court proceeding.
8. Mr Ralston deposed that in October 2013, Mrs Reid entered into a settlement with the CBA of the Possession Proceeding. That left the Possession Proceeding still on foot against Mr Reid.
9. But on 13 February 2015, Mr Reid also entered into a settlement with the CBA of the Possession Proceeding.
10. At the hearing of this application, Counsel for the CBA drew the Court's attention to the following provisions of that deed of settlement: 1. Cl ­­­2 indicated that Mr Reid signed the Deed voluntarily and of his own free will; having obtained independent legal advice as to his obligations prior to entering into the deed; 2. Cl 4.3(i) provided that CBA would pay Mr Reid $80,000 within 7 days of being given vacant possession of the Property. Mr Reid accepts he was paid this sum; 3. Cl 4.3(b) and (j) also provided that CBA would pay Mr Reid $20,000 in the event that the Menangle property was sold for an amount in excess of the valuation amount obtained under the provisions of the deed. Mr Reid also accepts that he was paid this sum; 4. By cl 4.3(k), and subject to cl 4.3(j), CBA was entitled to retain the Net Sale Proceeds of the sale; 5. Cl 5.1 provided a release in the following terms: "Mr Reid, the Companies and Dorgal release and discharge the Bank from all liability for damages or loss and from all sums of money, accounts, actions, proceedings, claims, demands, costs and expenses whatever which Mr Reid, the Companies and/or Dorgal or any of them has or had or at any time in the future may have against the Bank for or by reason or in respect, cause, matter, or thing arising out of or in connection with or incidental to the Loans, the Loan Agreement, the Property, the Sale, the Mortgage, the Guarantee, the Bank proceedings, the Family Court proceedings, the Companies' proceedings, or in any way relating to the matters referred to in the recitals"
11. On 12 June 2015, the CBA took possession of the Menangle property.
12. On 9 September 2015, the Menangle property was sold at public auction.
13. On 10 November 2015, Mr Reid's solicitor requested details in respect to any damage caused to the Menangle property. The CBA's response, expressed through its solicitor's letter to Mr Reid's solicitor, on 12 February 2016, was that the CBA was waiting on a quote obtained from the purchaser for repairs for damage which would enable the Bank and the purchaser to agree to an appropriate reduction of the purchase price.
14. On 26 July 2016, the CBA' solicitors notified Mr and Mrs Reid's respective solicitors of completion of settlement of the Menangle property.
15. Between April and September 2017, Mr Reid's solicitors requested the CBA to provide it with a copy of the Settlement Statement. The CBA apparently took the position that because of confidentiality obligations to the purchaser, it could not supply the settlement statement to Mr Reid. But between April and July 2018, Mr Reid pressed his request as this was relevant to his tax affairs. On 20 August 2018, the CBA's solicitor supplied a document relating to the sale and valuation of the Menangle property.
16. In October 2018, Mr Reid and the CBA were in dispute about the apparent reduction in the sale price in the sum of $370,000.
17. Mr Ralston deposed to his belief that Mr Reid has no valid claim against the CBA.

Summary dismissal applications

1. Although no specific ground was identified for summary dismissal in either the motion or Mr Ralston's affidavit in support, through its Counsel's written submissions, the CBA relied upon r 13.4(1)(b) of the UCPR.
2. As is well-established, the power to summarily dismiss claims is exceptional, exercised only where a claim is obviously untenable (General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129). A high degree of certainty is required to deprive Mr Reid of his opportunity to have his claim determined in the usual way: Agar v Hyde (2000) 201 CLR 552. In particular, where claims involve arguable points of law, the discretion should not be exercised: General Steel at 130. That is not, however, to say that the existence of a difficult question of law precludes the exercise of the power, but the more complex it is, the more likely it may be regarded as unsuitable for summary determination: NRMA Insurance Ltd v AW Edwards (1995) 11 BCL 200.
3. It will be noted that the authorities I have referred to pre-date the enactment of the Civil Procedure Act 2005 (NSW). It has been suggested that the interpretation of r 13.4 since that enactment has resulted in a less strict test in the standard for exercising the power than before the enactment, having regard to the objects of case-management (see Hamilton & Ors, New South Wales Civil Procedure Handbook (2020, Thomson Reuters) and the authorities cited at [r.13.4.130]; and Ritchie's Uniform Civil Procedure at [13.4.15]).
4. However, Counsel for the plaintiff drew my attention to the following passage in the reasons for judgment of Macfarlan JA (with whom Beazley P and Ward JA agreed) in O'Brien v Bank of Western Australia Ltd [2013] NSWCA 71 where his Honour said at [3] (citations omitted): "(a) On a summary judgment application, the real issue is whether there is an underlying cause of action or defence, not simply whether one is pleaded. (b) The critical question can be expressed as whether there is more than a "fanciful" prospect of success or whether the outcome is so certain that it would be an abuse of the process of the Court to allow the action to go forward. Demonstration of the outcome of the litigation is required, not an assessment of the prospect of its success. (c) Powers to summarily terminate proceedings must be exercised with exceptional caution."

The construction of releases

1. There was argument in the Court about the construction of the release in the deed. There are certain principles potentially at play: 1. general words in a release are confined to matters raised in recitals: Grant v John Grant & Sons Pty Ltd (1954) 91 CLR 112 ("Grant") at 123; 2. a plaintiff, against whom a release is pleaded by way of defence, has an equity to restrain the defendant's unconscientious reliance upon general words in the release; such as where the plaintiff can establish that at the time of the release, it did not know of the liability, or intend to release the claim as part of the release, did not know of the defendant's intention that the claim should be released: Grant at 130. However, this doctrine does not apply to the parties' clear release of unknown or future claims: Doggett v Sullivan (2015) 47 VR 302 at [63]; Keydata Corporation Ltd v Burencar Pty Ltd (in liq) [1992] NSWCA 288; also Herzfield & Prince, Interpretation (2020, Thomson Reuters fn 33[30.80]).
2. Counsel for Mr King referred me to a passage of the Full Federal Court's decision in Sarina v Fairfax Media Publications Pty Ltd [2018] FCAFC 190, which compared the principles for construction of releases in common law and the equitable doctrine from Grant. The Full Federal Court said (citations omitted): "[20] Where, in a deed (or agreement) a clause provided one party with a release in wide or general words, the common law principle of construction restricted the otherwise wide or general operation of those words by construing the release clause as operating upon only the subject or occasion to which the deed (or agreement) read as a whole referred. Thus, where, as often occurs, a deed recited that the parties have had a particular dispute, but the clause creating the release did not expressly confine its operation to the dispute mentioned in the recitals, the principles of construction at common law read down the wide words of the release to apply only to the dispute in the recitals. Indeed, Dixon CJ, Fullagar, Kitto and Taylor JJ explained that the common law principle was that a written instrument expressed in general terms (be it a deed or statute) had to be construed having regard to the circumstances to which the instrument must have intended to apply. This in substance accords with the modern principles applicable to the construction of contracts and deeds. .... [21] However, where one of the parties to a release sought to rely upon its wide and general words, equity considered whether it would be unconscientious for that party to enforce such a meaning by examining each party's actual knowledge and intention at the time of entry into the release. In other words, as Dixon CJ, Fullagar, Kitto and Taylor JJ held (at 129-130), equity will restrain a party seeking to enforce a wide or general release where it would be unconscientious for that party to do so in all of the circumstances. In such a case, the court will examine the knowledge and intention of both releasor and releasee as to the subject matter on which the release would operate.

The CBA's submissions

1. The CBA, as applicant, argued that either in its current, or proposed form, the pleading does not disclose a reasonable cause of action.
2. Put very generally, the release in the Deed prevents Mr Reid from bringing any complaint about the implementation of the loan agreements (with the companies), CBA's enforcement of its security or any other related matter. Further, he cannot invoke provisions in the National Credit Code to circumvent the operation of the release in the Deed.
3. Having regard to the release, read in conjunction with other payments that the CBA had already paid Mr Reid under the Deed, Mr Reid now claimed a further sum of $370,000, reflective of a discount given by the CBA to the purchaser of the property, as a consequence of extensive damage caused to the Menangle property by unknown parties whilst CBA was in possession, prior to settlement. This, it was said, fell squarely within the terms of the release.
4. But even if it was not, Mr Reid's claim could not succeed because the Deed contained no stipulation of his consent to the terms of the sale of the Menangle property, including the sale price, other than the express provisions in the Deed to which reference has been made. There was no scope for implied terms.
5. Given that the Deed regulated the payments to be made to Mr Reid, he had not suffered any loss or damage from breach of additional implied terms. Further, given that the Deed governed the circumstances in which he might receive payments from the sale proceeds, there was no scope for any alternative restitutionary claim.
6. Mr Reid had no standing to bring a claim under the National Credit Code as: (a) he was not a party to the credit agreements; (b) they related to commercial developments (and accordingly did not fall within s 5 of the National Credit Code) and (c) any claim in relation to that code would be statute-barred in any event.
7. As to (a), the credit facility designated by account number 06 2185 10587333, which Mr Reid says (in paragraph 29 of his statement of claim) was changed by the CBA in an unjust manner, was a reference to a facility offered by the CBA to the companies in August 2003 (and restructured, on maturity, on 3 January 2009). But Mr Reid was not a debtor under that agreement. The agreement in question was not a mortgage or a guarantee. Even though he was a guarantor under a guarantee he gave on 28 October 2003 and a mortgagor under a mortgage on the same date (to secure his obligations as guarantor), he makes no claim in respect of the entry or change to that guarantee or mortgage.
8. As to (b), there were express indications that the facility, styled a 'BetterBusiness Facility' was a business loan made to three companies; the purpose being to finance a commercial development of an industrial property [3] . Mr Reid himself acknowledged the loan to be a business loan in his statement of claim in the Supreme Court, referred to above.
9. As to (c), it is not a reasonable cause of action where it is clearly statute-barred [4] . The 2 year time bar (in s 80) was applicable to actions brought after the expiration of two years from the conduct complained of (s 76), with no Court power to extend (Renouf v RAC Finance Ltd (No.2) [2018] FCCA 182). Here the facility was offered in 2003 and renewed in 2009. The conduct complained of occurred between July 2015 and August 2016. The proceeding commenced on 21 December 2019.
10. The CBA submitted that it did not assist Mr Reid to rely, as he did in his Reply and in his proposed amended pleading, upon statutory claims of unconscionable conduct or misleading or deceptive conduct under the ASIC Act. The first part of the claim, in unconscionable conduct (paragraph 30 of the proposed pleading), related to events occurring after the Release and, since they concerned the realisation of the CBA's security (the 'Sale') this part of the claim was caught by the release. The second part of the claim, in unconscionable conduct (paragraph 33) had nothing to do with the realisation of the property.
11. The CBA submitted that the statutory claims hinged upon Mr Reid's success in overcoming the release as they were at least incidental to the subject matter covered by that release. But, it argued, Mr Reid could only overcome the release by its claim under the NCC which, as indicated, he could not do.

Mr Reid's submissions

1. Mr Reid, as respondent, argued that the essence of his client's claim (even if it was not pellucidly clear from the existing pleading) was that the CBA had wrongfully forfeited to itself the sum of $370,000 to cover itself for property damage for which it was responsible after it took possession of the Menangle property. This was after Mr Reid had left the property in good condition at the point when the Bank took possession. He had a continuing equitable interest, as mortgagor, until the mortgage was discharged (the Court was informed, on 25 July 2016) and the Bank's negligence in allowing the property to be vandalised impaired the value of that interest. The Bank itself admitted in its Defence that as mortgagee in possession it owed Mr Reid obligations (even if it did not admit the implied terms of the Deed Mr Reid contended for).
2. Mr Reid argued that it was not inarguable for him to say that the Release did not have the broad effect contended for by the CBA. The possibility that the CBA might act as it did after entering into possession of the property was not within the parties' contemplation. The Release had to be construed with reference only to events in contemplation of the parties at the date the Deed was entered into.
3. But if the CBA's construction was accepted, Mr Reid says he can seek remedies under the Contracts Review Act (not as yet pleaded, or proposed to be pleaded), the ASIC Act, the National Credit Code or the Australian Consumer Law (not as yet pleaded, or proposed to be pleaded) to have the Deed varied so as to alter the operation of the release. This was because the compromise was not just of the Possession Proceeding, but other proceedings, or disputes on foot, between the related companies, Mr Reid and the CBA.
4. Mr Reid said that the CBA's points about the National Credit Code were not such as to render that particular claim untenable. First, it was inappropriate for the CBA to even raise a time-bar when that defence had not been pleaded in its Defence (contrary to r 14.14(3) of the UCPR). But the defence of the time bar was not maintainable in any event since a bank account statement in evidence [5] showed that the account was still open as at 18 August 2016 and there was no evidence on the application to show if or when it was closed. A Ferrcom inference [6] could be drawn that Mr Ralston did not explain why the account appeared to remain open because he feared doing so.
5. Secondly, the evidence before the Court about the purpose of the credit was equivocal. since by reason of s 13(1) of the National Credit Code (Schedule 1 to the National Consumer Credit Protection Act 2009 (Cth)) where, as here [7] Mr Reid claimed the existence of a credit contract, it was presumed that this was the fact unless the contrary was established. Further, any declaration made by Mr Reid, as was cited by the Bank was made, on 30 March 2009, prior to the operation of the Code. The CBA could not, accordingly, take advantage of the presumption in s 13(2). In this regard, the CBA did not take issue with the applicability of the NCC provisions in its Defence (in paragraphs 29-30).
6. In response to the CBA's third point as to the lack of applicability of the NCC to the contract, being that the pleaded credit contract was one in respect to which he was not a debtor (as required by s 76 of the National Credit Code), Counsel for Mr Reid argued that there were indications in the offers made to Mr Reid and the other companies that he fell within the defined term of being a 'borrower'.
7. Mr King also argued that, in substance, the deed of compromise itself was a credit contract: it altered the operation of the range of loan agreements referred to in the Deed and in so doing, created new rights. On a summary dismissal application, Mr King argued that the matter should not be determined on the current pleading of the contract (or even the one in the proposed pleading that had been placed before the Court), but, rather, Mr Reid should have opportunity to re-plead so as to indicate the credit contract he wanted to rely upon.

CBA's submissions in reply

1. Counsel for CBA argued that Mr Reid had no remedy about the CBA's dealing with the purchaser in relation to the effective reduction of the sale price. The suggested implied terms argument was untenable because of conflict with the express provision in the deed for payment and any equitable claim was also subsumed by the terms of the agreement.
2. On the construction of the release, it was not an open-ended release, but one with clear definition and its subject matter was clear enough to indicate that it dealt with a suite of transactions. There was no indeterminacy that gave occasion to reading down its scope.
3. On the NCC action, Counsel for the CBA argued that there is no temporal requirement about the declaration referred to in s 13(2) and Mr Reid had misinterpreted that provision. It matters not when the declaration is made. What is relevant is the fact, and content of, the declaration. Once the declaration was made by the debtor, then subject to an exception in s 13(3), which was presently immaterial, the presumption would apply.
4. The CBA also argued that Counsel for Mr Reid had simply left it open-ended what his client's case was on the credit contract. The existing pleading (and the proposed pleading the subject of the concurrent amendment application) indicated that only one credit contract was identified, and Mr Reid was not a debtor. The deed could not be characterised as a credit contract. It functioned to discharge, by agreement, other credit contracts. To the extent that there may be other unpleaded 'credit contracts' Mr Reid wanted to rely upon, it was necessary to identify the injustice that warrants the Court's intervention, whether it be at the point of entry into the Deed or at the time of some 'change' effected by the creditor. Aside from the existing pleading, this had not occurred in relation to other 'credit contracts'.

Consideration

1. I accept that the application is not to be determined in accordance with any deficiency in the form of Mr Reid's action. I also accept that the power to summarily terminate his action is exceptional and accordingly must be exercised with great care and, to that end, the onus practically falls upon the applicant for the order to demonstrate, with a high degree of certainty, the eventual outcome.
2. However, in my view, this is not a case where the factual disputes are of such breadth as to make it inappropriate to exercise the power. This was indirectly hinted at by Counsel for Mr Reid's observation that the CBA had admitted much of the factual allegations made by Mr Reid in his current pleading. The argument between the parties was, in most respects, such that the factual base is sufficient for the Court to decide whether or not to exercise the discretionary power.

An arguable cause of action?

1. There is force to the CBA's contention that the content of the Deed is such that it leaves no room for the implied contractual terms which Mr Reid has signified, in his current pleading and proposed amended pleading presently before the Court. In particular, as the CBA submits, cl 4.3(j) of the Deed expressly makes provision for payment of a kind to Mr Reid after the sale of the property. Otherwise cl 4.3(k) indicates that subject to the payments it expressly agreed to make to Mr Reid, it could deal with the sale, and its proceeds, as it liked. It is difficult to ascribe any intention to the parties that Mr Reid was entitled to anything more following the sale.
2. Further, although it might not be regarded purely as a 'commercial' transaction, the deed of compromise was certainly entered into at arm's length, with the parties having the opportunity to obtain independent legal advice. Further, in circumstances where no party suggests that the Deed, as a whole, is ineffective or should be set aside, it is even harder to see any role that the law of restitution may play [8] . It is difficult, conceptually, to avoid the conclusion that any on-going equitable obligations would have to be accommodated to the provisions of the Deed.
3. Contrary to the submission advanced by Counsel for the CBA, on the premise that there is an implied term, or terms, as Mr Reid contends, it is not inarguable that he would not have proved a loss; even if the deed did provide for what payment he might receive on the sale of the property. Subject to the release, which I am about to come to, there is no indication in the Deed to exclude remedies in common law for breach of the Deed.
4. There is an arguable, if perhaps barely arguable, basis for entitlement which, subject to what follows, would not warrant summary dismissal.

The scope of the release

1. However, Mr Reid confronts the problem with the release. The recitals, when understood with reference to the definitions, covers a broad field of subject matter including not only the Possession Proceeding, but other proceedings involving Mr Reid and the companies he controlled or managed relating to transactions with the CBA from 2003 to 2010. The evident purpose of the Deed, through the compromise, was to induce finality, for the benefit of all parties to it; merging the rights and obligations to the parties to the multiple credit transactions, which gave rise to the multiple proceedings, into a new document.
2. In my opinion, the release in cl 5, when read in the context of the recitals, is not defined in so general a way that readily engages the principle in Grant. Specific reference is made about a release, inter alia, of claims that Mr Reid (relevantly) "has had or at any time in the future may have" against the CBA "arising out of or in connection with or incidental to the Loans … the Property (ie the Menangle property), the Sale (ie the sale of the Menangle property), the Mortgage (also over the Menangle property)" in addition to claims "in any way relating to the matters referred to in the recitals."
3. Further, as noted in the last observation, the release specifically addresses future claims in respect to the subject matter of the release.
4. It is not to the point that, when the deed was entered into, the parties did not contemplate that following the delivery of possession, but before the completion of the sale, the property might be vandalised in such way that it might impair the value of the property and thereby diminish Mr Reid's remaining interest in it. As the Victorian Court of Appeal held in Doggett v Sullivan, the decision cited earlier in these reasons, Grant is not authority for the proposition that a release can only ever apply to matters and circumstances then known to the parties; and there is no room for the application of the equitable principle if it is clear that the parties intended the words of the release to encompass all conceivable disputes about the subject matter identified in the release.
5. Whether or not the text in cl 5.1 was intended to encompass all conceivable further disputes, in my opinion, it is clear that the parties intended cl 5.1 to encompass all disputes about the disposal of the Menangle property. Subject to other arguments advanced on Mr Reid's behalf, relating to the ouster of the release, I consider this point to be dispositive in favour of the power of summary dismissal being exercised.

Attempt to overcome the release

1. This brings me to consideration of the action under the National Credit Code. On this, Mr Reid's argument rested on shifting sands. His Counsel appeared, at one point, to accept that the 'wrong' credit contract had been pleaded and postulated that the deed itself could constitute a credit contract; even though that argument had not previously been articulated, or at least clearly so.
2. In my view, it would be an untenable argument to suggest that the Deed itself was a credit contract, as that expression was defined in ss 3(1) and 4 of the National Credit Code. It was, instead, a compromise of court proceedings whose subject matter concerned transactions involving the supply of credit. I agree with the submission of Counsel for the CBA that the Deed did not create new rights in respect to the provision of credit, but was, in language and in purpose, designed to discharge prior obligations in relation to the provision of credit and substitute a new agreement, susceptible of independent enforcement. Further, I also accept CBA's argument that there was no suggestion that the Deed could be vitiated by reason of circumstances known by the CBA at the time that the deed was entered into.
3. That then leaves the existing pleading of a credit contract (retained in the original proposed amended version of the pleading).
4. Section 76 of the National Credit Code only is engaged on the application of a 'debtor, mortgagor or guarantor'. It was common ground that although Mr Reid was both mortgagor and guarantor that was only in relation to a credit facility that he did not rely upon with reference to the Code.
5. I agree with the CBA's submission that it is not enough to point to extrinsic material to indicate that, at one point, Mr Reid may have been contemplated as a 'borrower'. Section 76 speaks of 'debtor' and the provision generally is to be construed distributively, so that it is a debtor who may bring an application in relation to a contract, a mortgagor in relation to a mortgage or a guarantor in relation to a guarantee. 'Debtor' is defined (by s 204 of the National Credit Code) to mean "a person (other than a guarantor) who is liable to pay for (or to repay) credit, and includes a prospective debtor". Mr Reid did not fit that description.
6. I do not accept that the evidence of the purpose of the loan is equivocal. Mr Reid himself admitted in a pleading in another proceeding that its purpose was to assist with the purchase and development of an industrial property (at Ingleburn). The description of the facility is also revealing - it is a 'BetterBusiness Bill Facility'.
7. Nor do I consider that there is substance in the contention that because the 'Business Purpose Declaration' was made by Mr Reid before the Code came into effect, that no account can be taken of it. What matters is the substance of the declaration, at the time that it was made; namely that the credit facility was to be applied 'wholly or predominantly for business or investment purposes (or for both parties)'. It is unnecessary for the CBA to rely upon any statutory presumption.
8. It matters not that in its Defence, at paragraph 29 and 30(a), the CBA made a statement only of 'non-admission' as to the application of the National Credit Code; even if the CBA had more specifically, denied any basis for there being any 'change' that might warrant a court's intervention. The documents I have referred to which clearly point to the business purposes were referred to in an exhibit to an affidavit served by Mr Ralston over 3 months before the hearing. There is no unfairness in the CBA raising the point about the nature of the credit facility; if that is what was being suggested. Given that it was Mr Reid who advanced its application, he is taken to know of the requirements for proof of a credit contract, an issue which the CBA had put in issue by its Defence.
9. In respect to the pleaded credit facility, I accept that the plaintiff's NCC action is not reasonably arguable.
10. This, then leaves, the pleaded claims of unconscionable conduct and misleading or deceptive conduct under the ASIC Act. As indicated, both claims were made in Reply, so it is not the case that the CBA were unaware of them - unlike the muted suggestions from Counsel for Mr Reid that there may yet be other actions available under the Contracts Review Act or Australian Consumer Law.
11. In the Reply, both claims are premised upon the view that it is unconscionable or misleading for the CBA to rely upon the release and cites the loss or damage sustained by Mr Reid. No material facts were identified and that part of the Reply would be susceptible to a striking out.
12. This might explain why, in the current proposed amended pleading, further flesh is put on the bones of these claims. Both actions for unconscionable conduct and misleading or deceptive conduct cite two categories of circumstances.
13. The first (proposed paragraphs 29 - 32) is no more than a restatement of the action under the National Credit Code for which, as I have found, it is not reasonably arguable that Mr Reid has standing to maintain.
14. The second category of circumstances (proposed paragraphs 33-34) refers to conduct that preceded the entry into the Deed. These circumstances are, generally speaking, directed to the claim about the CBA's wrongful conduct concerned in the sale of the Ingleburn property in 2010 and liquidation of the family business located on those premises.
15. The premise for the relief sought here is that the release is broad enough to encompass that 'claim' or dispute. That explains why the relief sought, as explained by Mr Reid's counsel, is the setting aside or variation of the release. There is, certainly, at least arguable basis for contending that the remedies in the ASIC Act are broad enough to accommodate that remedial objective (s 12GM(7)). However, an applicant for such remedy needs to pass the gateway of proving that it has suffered, or at least is likely to suffer, loss or damage because of the contravening conduct.
16. But the problem for Mr Reid remains that this proposed pleading of the claims of unconscionable conduct and misleading or deceptive conduct remains tied to the entry into a credit facility in which he was not a debtor. For reasons previously advanced, Mr Reid has no standing to do so. Further, given also that he was not a guarantor or mortgagor in relation to that facility, if there be any unconscionable conduct or misleading conduct, it is the debtor under that facility that has the standing under ss 12GF or 12GM to bring claims for remedial relief for contravention of the prohibitions against misleading or deceptive conduct or unconscionable conduct.
17. In my view, a vice with paragraphs 33-34 of the currently proposed amended pleading is that Mr Reid assumes he has standing to apply for the setting aside of the release on the basis that the CBA's alleged unconscionable conduct or misleading conduct caused damage to the "former family businesses" (apparently the three trustee companies) which he equates to loss that he has personally suffered. This, it seems to me, is reflective only of the loss that the company, or companies have suffered [9] . In the absence of any suggestion that Mr Reid has suffered separate or distinct losses from those suffered by the companies, he would not have standing to claim remedies under the ASIC Act.
18. That being so, I do not consider that the plaintiff has, by its existing pleading, or what has firmly been mooted in any prospective claim, have a reasonably arguable basis for saying that the release in the Deed should be set aside or varied under the ASIC Act.
19. There is the additional difficulty, alluded to by the CBA, that the proposed new pleaded basis of unconscionable conduct or misleading or deceptive conduct is so vague as to be incoherent. Although general criticism is made of the Bank about conduct occurring in 2010, 5 years before the deed was entered into, and some surrounding circumstances (such as its putative 'overwhelming relative bargaining power' it is difficult to identify in what way the Bank engaged in unconscionable conduct or how it actually misled Mr Reid or the other trustee companies. It verges on the speculative.
20. The consequence is that I find that the plaintiff has no reasonably arguable cause of action.
21. There is no particular discretionary reason why, in the light of that finding, I should not exercise the power in the Court under r 13.4 of the UCPR. The proceeding should not be prolonged on the basis that, nearly 18 months after he commenced the proceeding, Mr Reid might conjure something done by the Bank before the entry into the deed in 2015 which he says the Bank was aware about, but he was ignorant about, which might engage the principle in Grant; or something else which might be said to vitiate the deed which had been freely and voluntarily entered by him with the benefit of independent legal advice. His claim is not salvageable by further amendment.
22. The plaintiff's notice of motion dated 28 November 2020 should be dismissed with costs.
23. Further, I order that the proceeding is dismissed under r 13.4 of the Uniform Civil Procedure Rules.
24. I also order that the plaintiff pay the defendant's costs of the proceeding, including its notice of motion filed 2 February 2021, as agreed or assessed. If a party seeks variation of that costs order, it should so by filing a notice of motion with supporting affidavit within 7 days and further directions will be made for the determination of such application.

Endnotes

1. The divorce proceeding commenced in the Family Court in 2011.
2. This being the trust deed of the Reid Trust identified on Exhibit B to the application, p 78.
3. Exhibit 2, p 78
4. The CBA cited the decision of Austin J in Hillebrand v Penrith Council [2000] NSWSC 1058 at [27], followed by Davies J in Palindrome Holdings Pty Ltd v Wass [2009] NSWSC 797 at [92]
5. Ex B, p 614, when read in conjunction with p 591
6. Commercial Union Assurance Co of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389 at 418-19
7. In paragraph 29 of the Statement of Claim
8. Mann v Paterson Constructions Pty Ltd [2019] HCA 32 at [19], [23]-[24]; Roxborough v Rothmans of Pall Mall (2001) 208 CLR 516 per Gummow J at [65]; Baltic Shipping Co v Dillon (1993) 176 CLR 344 per Mason CJ at 355-6
9. Oates v Consolidated Capital Services Ltd (2009) 76 NSWLR 69 at [207]-[217]

Amendments 02 June 2021 - Fixed typo DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 02 June 2021