Westpac Banking Corporation v Allerton

Reasons for refusing orders sought by Mr Allerton

1. As I have said, Mr Allerton's primary position was that he should be permitted to pursue his positive defences and cross-claims and that the matter should be adjourned to a date to be fixed after Westpac had produced accounting records sought by Mr Allerton.
2. The view I took was that in substance Mr Allerton was seeking to withdraw admissions he had made by his solicitor's letter dated 18 July 2016. The principles relevant to the withdrawal of an admission were summarised in these terms by Santow J in Drabsch v Switzerland General Insurance Co Ltd, Supreme Court of New South Wales, unreported, 16 October 1996 at pp 7-8: I set these principles out as follows: 1. Where a party under no apparent disability makes a clear and distinct admission which is accepted by its opponent and acted upon, for reasons of policy and the due conduct of the business of the court, an application to withdraw the admission, especially at appeal, should not be freely granted; Coopers Brewery Ltd v Panfida Foods Ltd (1992) 26 NSWLR 738 per Rogers CJ Comm D, followed in IOL Petroleum Ltd v O'Neill per Young J (Young J, 17 November 1995, unreported) and Apex Pallett Hire Pty Ltd v Brambles Holdings Ltd (full Supreme Court of Victoria, 8 April 1988, unreported), and in that respect not following H Clark (Doncaster) Ltd v Wilkinson [1965] Ch 694 at 703. 2. The question is one for the reviewing judge to consider in the context of each particular appeal, with the general guideline being that the person seeking on a review to withdraw a concession made should provide some good reason why the judge should disturb what was previously common ground or conceded; IOL Petroleum Ltd v O'Neill (supra), in the context of withdrawing a concession made before the Registrar. 3. Where a court is satisfied that admissions have been made after consideration and advice such as from the parties' expert and after a full opportunity to consider its case and whether the admissions should be made, admissions so made with deliberateness and formality would ordinarily not be permitted to be withdrawn; Coopers Brewery Ltd v Panfida Foods Ltd (supra) at 745 and 748. Thus a court will not lend its approval to the withdrawal of admissions where, by analogy with the making of amendments, this is actuated by purely tactical reasons; compare Devae Prufcoat Pty Ltd v Altex Industrial Paints Ltd (Cole J, 15 March 1989, unreported). 4. It will usually be appropriate to grant leave to withdraw an admission where it is shown that the admission is contrary to the actual facts. Leave may also be appropriate where circumstances show that the admission was made inadvertently or without due consideration of material matters. Irrespective of whether the admission has or has not been formally made, leave may be refused if the other party has changed its position in reliance upon the admission; H Clark (Doncaster) Ltd v Wilkinson (supra), in that respect not doubted. 5. Following Cohen v McWilliam and Anor (1995) 38 NSWLR 476, a court is not obliged to give decisive weight to court efficiency, such that a party who wishes to defend its claim is entitled to a hearing on the merits, with cost orders being available as a means of compensating the other party for any costs thereby unnecessarily incurred or not fairly visited on the other party.
3. These principles were stated prior to the passing of the Civil Procedure Act 2005 (NSW) and the adoption in that Act of the case management principles set out in ss 56-60. But the principles stated by Santow J are consistent with the requirements of ss 56-60.
4. Mr Allerton advanced two reasons why the hearing should be adjourned and he should be permitted to resile from the position taken in his solicitor's letter dated 18 July 2016. First, Mr Allerton said that on 19 July 2016 his solicitor, after speaking to Mr Allerton's accountant, told Mr Allerton that he could expect a tax refund of a minimum of $10,000 but likely between $20,000 and $30,000. The possibility of a refund is said to arise from the fact that Mr Allerton has not lodged a tax return for at least 10 years. Mr Allerton submitted that the refund could be used to fund the legal fees associated with running his positive defences and cross-claim. Second, at the time the letter was written, Mr Allerton understood that the only evidence that Westpac would rely on to prove its case was the affidavit sworn by Mr Cochrane on 28 March 2014. Mr Allerton submitted that he could not have anticipated that Westpac would serve an additional affidavit just before the hearing in which it sought to prove its case through a Dobbs Certificate. If he had known that that is what Westpac would do, he would not have abandoned his positive defences.
5. I did not consider that either of these matters provided an adequate reason for adjourning the hearing or permitting Mr Allerton to resile from the position that he had taken previously.
6. There was no reliable evidence from which the court could reach a conclusion that Mr Allerton will, on the lodgement of his returns, be entitled to a tax refund. The only evidence was the hearsay evidence given by him of a conversation his solicitor had with his accountant. There was no evidence of how the refund was estimated. Mr Allerton, who is an accountant by training, conceded in cross-examination that he had no idea whether or not he would receive the refund. More significantly, there was evidence before the court that Mr Allerton had an outstanding tax liability for a penalty of $268,180. Mr Allerton gave evidence that he had not been pursued by the tax office for that amount and that he had been told by his accountant that because of the time that had elapsed since the penalty was imposed, it was unlikely that he would be pursued for it now. But even accepting that, there is no reason to suppose that the tax office would not setoff any refund to which Mr Allerton was entitled against that liability. I concluded that it was entirely speculative whether and when Mr Allerton might receive a tax refund.
7. As to Mr Allerton's second point, I did not accept that he chose to abandon his positive defences and cross-claim on the basis of the state of Westpac's evidence and that if he had known that Westpac would serve a further affidavit he would not have done so. As his solicitor's letter made clear, he abandoned those defences and the cross-claim because he did not have the funds to pay his legal advisors to pursue the defences and cross-claim.
8. Mr Allerton made a clear and distinct decision not to pursue his positive defences and the cross-claim. His solicitor notified Westpac's solicitors of that decision and the parties notified the court of it and asked the court to postpone the commencement of the hearing in light of it, which the court did. On that basis, Westpac proceeded on the basis that its witnesses, other than Mr Cochrane, were no longer required. As a result, and as might be expected, those witnesses have made other commitments during the time when the trial was supposed to occur. At the time Mr Allerton made his decision, he was represented by competent and experienced legal advisors. Mr Allerton knew at the time that the current amount of Westpac's claim was in the order of $1.2 million. It is the usual practice for a plaintiff bank seeking to recover money lent by it to file an affidavit on the first day of the hearing giving evidence of the then current amount of the debt that it claims. Mr Allerton's legal advisors must have known that that is what Westpac would seek to do in this case. Previously, Westpac had sought to prove the amount owing to it by reference to reports generated from its electronic records. It had a contractual right to issue a Dobbs Certificate. Mr Allerton's legal advisors must have known that there was at least a substantial risk that Westpac would on the first day of the hearing seek to prove the amount owed to it by reference to its electronic records and by reference to a Dobbs Certificate and that the court would admit that evidence. If those matters were important to Mr Allerton's decision whether to continue with his positive defences and cross-claim, it is to be expected that Mr Allerton's legal advisors would have given him advice concerning those risks; and that he took his decision in the light of that advice.
9. The orderly conduct of a trial depends on the parties being held to positions that they take immediately before and during the trial. As Santow J explained in Drabsch, it is for that reason that the court should not readily permit a party to depart from a position taken deliberately. Here, the position taken by Mr Allerton was the result of a deliberate decision that was taken with the benefit of legal advice. For the reasons I have given, I concluded that no new circumstance had arisen which would justify permitting Mr Allerton to resile from the position he had taken. The result that Mr Allerton sought to achieve was a vacation of the hearing date which suggested that his apparent change of position was a tactical manoeuvre on his part to delay the hearing. But whether that is the case or not, there were no circumstances which explained Mr Allerton's change of position.
10. Mr Allerton contended that had he known that Westpac would rely on a Dobbs Certificate to prove the amount of its liability, he would have sought additional documents from it in order to investigate the question whether the amount claimed by it was properly payable by him. Westpac made it clear during the course of the hearing of the motion that it was in a position to produce the documents sought by Mr Allerton in a relatively short period of time. The court had set aside two weeks for the hearing and a number of days in those two weeks were still available to deal with the matter. It was in those circumstances that I adjourned the hearing until 3 August 2016.

Westpac's claim

1. In support of its claim, Westpac relies on the affidavit of Mr Cochrane sworn on 25 July 2016 and, in particular, the printouts from its electronic records and the Dobbs Certificate. Absence evidence to the contrary, those documents are sufficient to prove that as at 25 July 2016 Mr Allerton owed Westpac $1,249,424.82. Westpac seeks judgment for that amount.
2. Mr Reynolds advanced a number of reasons why Westpac had not proved its case. The principal one was that the evidence established that Westpac had not given Mr Allerton credit for the amount that it recovered from the sale of the secured property or that there was sufficient doubt concerning that matter that Westpac should not be entitled to judgment for the amount that it claims.
3. In support of that submission, Mr Reynolds pointed to the bank statements in respect of the Bank Bill Business Account and the Business One Account, two of the facilities made available to Vimol under the Business Finance Agreement. The bank statements for the Bank Bill Business Account show that as at 27 March 2013, the balance of the account was -604,585.97. On 12 April 2013, the proceeds of sale of the property over which Westpac held security, which were $1,294,531.70, were credited to the account to produce a balance of 690,160.58. The same amount was then debited from the account on 15 April 2013 to return the balance to -604,585.97. The bank statements in respect of the Business One Account show that on the same day the $1,294,531.70 was credited to that account. Prior to that credit, the balance of the account was -81,321.00.10, with the result that, following the credit, the balance was 1,213,210.60. The statements then show that on 17 April 2013 there was a debit from that account of $1,213,210.60, leaving a balance of zero. It is not apparent from the evidence what was done with the amount debited.
4. A number of points are said to follow from these transactions.
5. First, having credited the Bank Bill Business Account with the proceeds of sale, Westpac was not entitled to pay the amount out of the account without the mandate of Vimol, which it did not have. In support of that proposition, Mr Reynolds relied on a number of authorities. It is sufficient for present purposes to refer to Clarke JA's statement of the relevant principle in National Australia Bank Ltd v Hokit Pty Ltd (1996) 39 NSWLR 377 at 396f: It has been established for a very long time that, in the absence of a written cheque or order, or some obligation or entitlement arising out of an express or implied contract with a customer or recognised or laid down by the law, a banker is only entitled to make debits to its customer's account in accordance with the customer's authority … Should a bank pay out moneys without a customer's authority or written mandate, the bank is regarded in law as having paid away its own money and will be obliged to restore the credit balance to its customer's account …
6. Second, the balance shown for the Business One Account was zero as at 17 April 2013. Yet it is plain from evidence given by Mr Cochrane that Westpac's claim includes interest said to be owing on that account.
7. Third, the evidence does not establish what happened to the $1,213,210.60 debited from the Business One Account on 17 April 2013. Consequently, the court cannot be satisfied that Mr Allerton has received credit for the amount recovered by Westpac.
8. I do not accept any of these submissions.
9. The amount of $1,294,531.70 that was credited to the Bank Bill Business Account belonged to Westpac as a result of the exercise of its rights as mortgagee. Under cl D6 of the MCP, Westpac was entitled to apply that amount in any way that it considered appropriate. That is what it did.
10. In relation to the second point, Mr Cochrane explained in cross-examination that as the loan was a non-performing one, Westpac did not continue to debit Vimol's account with interest. However, Westpac was entitled to continue to accrue interest on the facility and that accrued interest was reflected in its electronic records. That accrued interest was not repaid from the proceeds of sale. I accept that explanation.
11. In relation to the third point, having regard to the Dobbs Certificate and the extracts from Westpac's electronic records, the onus was on Mr Allerton to establish that the amount stated in the certificate was wrong. Consequently, so far as recoveries are concerned, the onus was on Mr Allerton to prove that Westpac has not applied the proceeds of sale to discharge the debts owed by Vimol. Mr Allerton does not do that by pointing out that Westpac has not produced evidence to show how the $1,294,531.70 was applied.
12. Mr Reynolds also submitted that Westpac was not entitled to rely on the Dobbs Certificate because Mr Cochrane had signed it merely relying on the Westpac's electronic records and without properly investigating the facts to satisfy himself that what he saw was in fact correct. For that proposition, Mr Reynolds relied on the decision of Young J in Shomat Pty Ltd v Rubinstein (1995) 124 FLR 284. In that case, the relevant clause made a statement given in accordance with the clause "absolutely final and conclusive and binding upon the Mortgagor who shall not be entitled to make any objection thereto". The person who signed the statement did not have access to the books and records of the creditor and instead prepared the statement on the basis of information given to him. In cross-examination, he conceded that the figures he had relied on were faulty because they had been put together with inadequate material and in too much haste. Young J held that, on its proper construction, the clause under which the statement was given required the statement to be prepared "by a properly qualified official on due investigation" (at 289). That had not happened. Consequently, the statement on which the creditor relied was not given in accordance with the contract.
13. It is plain that Young J's decision turned on the construction of the particular clause in question. It is far from clear that cl H5 should be construed in a similar way. But even if it is, Mr Cochrane did have access to the relevant records, which were Westpac's electronic records; and his certificate was based on those records. Mr Cochrane gave evidence that in his long history with Westpac, he found those records reliable. In those circumstances, Westpac was entitled to rely on the Dobbs Certificate signed by Mr Cochrane.
14. Finally, Mr Reynolds submitted that the court had to be satisfied that the recovery expenses claimed by Westpac were reasonable and it could not be satisfied of that matter on the basis of the evidence before it.
15. I do not accept that submission. Westpac's enforcement costs fall into two categories. First, there are the costs of these proceedings. Mr Cochrane states in his affidavit that the amount claimed by Westpac does not include any of the costs of these proceedings. He was not challenged on the evidence. Instead, Westpac claims an order for indemnity costs. The court retains a discretion in relation to costs irrespective of the parties' agreement: Kyabram Property Investments Pty Ltd v Murray [2005] NSWCA 87 at [11] per Beazley JA. However, there is no reason why Westpac should not have its costs on an indemnity basis in this case. If those costs cannot be agreed, they will be subject to assessment. Westpac will only be able to recover its reasonable costs on assessment.
16. Apart from the costs of these proceedings, Westpac is entitled to recover all reasonable amounts that it has reasonably paid in enforcing its rights under the Business Finance Agreement and Guarantee. The amount due to Westpac in respect of those costs is covered by the Dobbs Certificate. As a result, Mr Allerton bears the onus of proving that the costs claimed by Westpac are unreasonable. He has not sought to discharge that onus. It follows that Westpac is entitled to the costs that it claims.

Orders

1. The court makes the following orders: 1. Judgment for the plaintiff against the second defendant for the sum of $1,249,424.82 (the Judgment Amount). 2. The second defendant pay interest on the Judgment Amount from the date of judgment up to the date of payment in accordance with s 101 of the Civil Procedure Act 2005 (NSW). 3. The cross-claimant's/second defendant's cross-claim against the first cross-defendant/plaintiff be dismissed. 4. The second defendant pay the plaintiff's costs on an indemnity basis.

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