Westpac Banking Corporation v Billgate Pty Ltd

Supreme Court of NSW|2012-11-22|Before: Stevenson J, Sackar J, Barwick CJ

Introduction 1The plaintiff, Westpac Banking Corporation ("the Bank") seeks summary judgment pursuant to Uniform Civil Procedure Rules r 13.1 for possession of properties in Darling Point and Joadja. 2The Bank brings these proceedings as successor in law to St George Bank Limited. 3The registered proprietor of the Darling Point property is the second defendant, 101A Darling Point Road Pty Ltd ("101A Darling Point"). 4The Darling Point property comprises three apartments. The third defendant, Mr William Jamieson lives in one apartment. The fourth defendant, Mrs Jennifer Jamieson lives in another apartment with two of Mr and Mrs Jamieson's three children and with Mrs Jamieson's aged mother. The third apartment is vacant. 5The registered proprietor of the Joadja property is Mr Jamieson. Mrs Jamieson operates a farm stay business on that property. That business is Mrs Jamieson's only source of income. 6Mr and Mrs Jamieson are married but separated in February 2011. 7The Bank has mortgages over both properties to secure advances made to 101A Darling Point and to the first defendant, Billgate Pty Ltd ("Billgate"). 8Each of the defendants has signed guarantees in respect of those advances. 9The amount owing to the Bank under the various facilities is in excess of $28 million. 10On 16 August 2012 the Bank and the defendants entered into a deed ("the Deed") in which the defendants agreed to pay the Bank $23 million in full satisfaction of the Bank's claims, such sum to be paid as to $10 million on 17 August 2012, and as to $13 million on 21 September 2012. 11In the Deed the defendants acknowledged their default under the various facilities and agreed that if they defaulted under the terms of the Deed they would, among other things: - (a)deliver vacant possession of the Darling Point and Joadja properties to the Bank; and (b)consent to judgment for possession and debt. 12The first payment ($10 million) was paid. The second payment ($13 million) was not. 13The Bank first moved for summary judgment before Sackar J on 2 November 2012. On that occasion, his Honour ordered that Mrs Jamieson be joined as a defendant and that the defendants put on pleadings. 14The defendants have filed Responses and Cross Claims. 15On 22 November 2012 the Bank renewed its application for summary judgment.

Decision 16In my opinion, for the reasons that follow, the Bank's application for summary judgment should be dismissed.

Principles 17In General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125 at 128-129, Barwick CJ said that: - "...the jurisdiction summarily to terminate an action is to be sparingly employed and is not to be used except in a clear case where the Court is satisfied that it has the requisite material and the necessary assistance from the parties to reach a definite and certain conclusion." 18The test has been variously expressed, including "so obviously untenable that it cannot possibly succeed" and "manifestly groundless": General Steel at 129 per Barwick CJ. See also Dey v Victorian Railways Commissioners [1949] HCA 1; (1949) 78 CLR 62 at 91 per Dixon J; Theseus Exploration NL v Foyster [1972] HCA 41; (1972) 126 CLR 507 at 514; Webster v Lampard [1993] HCA 57; (1993) 177 CLR 598 at 602-603; Cosmos E-C Commerce Pty Ltd v Bidwell & Associates Pty Ltd [2005] NSWCA 81 at [37]-[38]. 19Summary disposal is not limited to cases where argument is unnecessary to show the futility of the claim (or defence). It is not necessary to show that such futility is apparent at a glance. Argument, even of an extensive kind, may be necessary to demonstrate that the case of the plaintiff (or defendant) is so clearly untenable that it cannot possibly succeed: General Steel at 130. 20The power to order summary judgment should be exercised with great care, and not unless it is clear that there is no real question to be tried: Fancourt v Mercantile Credits Ltd [1983] HCA 25; (1983) 154 CLR 87 at 99. 21In the Commercial List as a general rule, applications for summary judgment will not be entertained (Practice Note SC Eq 3 at [62]).

Mrs Jamieson 22Mrs Jamieson has no present propriety interest in either the Darling Point or Joadja properties. 23However, arising out of the circumstances which I will summarise below, Mrs Jamieson claims that: - (a)101A Darling Point holds the Darling Point property wholly on constructive trust in her favour; (b)that Mr Jamieson holds the Joadja property wholly on constructive trust in her favour; (c)her interests in the Darling Point and Joadja properties are held in priority to any interest of the Bank; and (d)alternatively, she is entitled to a life estate to each of the Darling Point and Joadja properties.

Basis for Mrs Jamieson's claim 24Mrs Jamieson's claim arises out of the following circumstances. 25In April 2005 Mrs Jamieson was the registered proprietor of the then family home in Vaucluse. At that time, the Vaucluse property was subject to a mortgage in favour of Perpetual Trustee Company Limited ("Perpetual"). 26On 31 October 2005 the Perpetual mortgage was refinanced by a Portfolio Loan of $3.5 million advanced by the Bank. 27As at June 2009 the Bank had made available to 101A Darling Point a facility for the purpose of acquiring and developing the Darling Point property and a facility to Billgate for the purpose of refurbishing a property in Woollahra. 28At that point, Mrs Jamieson had no liability either as a borrower or a guarantor for either of those facilities. 29On 18 June 2009 Mrs Jamieson executed a guarantee (with a $1 million limit) and a second registered mortgage over the Vaucluse property to secure the obligations of 101A Darling Point. 30Mrs Jamieson claims that she executed the guarantee in reliance upon various representations made by the Bank, including a representation that the funds made available by the Bank to 101A Darling Point would be made available to Mr Jamieson to make payments when due and payable on the Portfolio Loan facility secured by the Vaucluse property (of which Mrs Jamieson was the registered proprietor). 31Mrs Jamieson claims that, contrary to this representation, the Bank set off the relevant increase in the facility granted by the Bank to 101A Darling Point against other loans, with the result that there were no funds available to service the Portfolio Loan secured over the Vaucluse property. 32Mrs Jamieson claims that as a result, the Portfolio Loan fell into arrears, that on 2 March 2011 the Bank demanded repayment of those arrears and that as a result she was forced to sell the Vaucluse property in a depressed market and (with two of her three children and her mother) move into one of the apartments at the Darling Point property. By that time Mr and Mrs Jamieson had separated. Mr Jamieson was living in another of the apartments at the Darling Point property. 33Mrs Jamieson alleges that the Bank did not make available to her the net proceeds of sale of the Vaucluse property but placed those proceeds into a term deposit. 34Mrs Jamieson does not allege that the Bank was not entitled, according to the terms of its security document, to take these steps. 35In the meantime, on 15 April 2010, Mrs Jamieson had signed a second guarantee, this time in respect of the obligations to the Bank of Billgate, and with a limit of $1.3 million. Mrs Jamieson claims that she, wrongly, understood the guarantee to do no more than increase by $300,000 the limit of her liability under the guarantee given on 18 June 2009. As I understand it, Mrs Jamieson does not allege that entry by her into this second guarantee is of direct relevance to her claim for a constructive trust over the two properties.

Pleading 36In these circumstances, Mrs Jamieson pleads that the Bank engaged in unconscionable conduct and that: - "In the circumstances described above and having regard to the conduct of the Bank by which Mrs Jamieson lost her Vaucluse Property and home it would be unconscionable for the Bank to rely on their legal interests in the Darling Point Property and the Joadja Property without giving effect to Mrs Jamieson's interest in those properties by way of the imposition of a constructive trust." 37Mrs Jamieson also pleads that: - "...the Bank is estopped from enforcing its legal rights and obtaining the benefit of its mortgages over the Joadja Property and the Darling Point Property." 38So far as the Deed is concerned, Mrs Jamieson claims that she did not receive "truly independent" advice (she accepts she received some legal advice from Mr Jamieson's solicitor), and that the Bank "exercised economic duress in procuring the signature of Mrs Jamieson and requiring the release by her of her rights". 39In these circumstances, Mr Williams SC, who appeared for Mrs Jamieson, submitted that it was not "beyond the realms of possibility" that Mrs Jamieson would succeed in having the Deed set aside and establishing what he described as a "remedial constructive trust" sufficient to give her a proprietary or equitable interest in the Darling Point and Joadja properties in priority to those of the Bank. 40Mr Simpkins SC, who appeared for the Bank, submitted that there was "no prospect" of Mrs Jamieson setting aside the Deed in circumstances where Mrs Jamieson knew the Deed contained a release and knew that there was uncertainty as to whether the second payment ($13 million) would be paid. 41Mr Simpkins also submitted that there was "no prospect" of a constructive trust being declared in Mrs Jamieson's favour in relation to either of the properties because: - (a)the imposition of a constructive trust must conform to principle and is not established by resort to general considerations of "fairness": for example Muschinski v Dodds [1985] HCA 78; (1985) 160 CLR 583 at 615 per Deane J; (b)a constructive trust is not ordered where there are other available remedies capable of quelling the controversy: for example Bathurst City Council v PWC Properties Pty Ltd [1998] HCA 59; (1998) 195 CLR 566 at [42] per Gaudron, McHugh, Gummow, Hayne and Callinan JJ and Giumelli v Giumelli [1999] HCA 10; (1999) 196 CLR 101 per Gleeson CJ, McHugh, Gummow and Callinan JJ at [10]. 42Mr Simpkins submitted that, in substance, Mrs Jamieson's claim is that she suffered financial loss because of the alleged "forced sale" of the Vaucluse property and the allegedly improper retention by the Bank of the net proceeds of sale and that "it is obvious that equity can be done without resort to the imposition of a construction trust". 43Mr Simpkins emphasised that Mrs Jamieson did not allege that any representation had been made to her by the Bank to the effect that she would have a proprietary interest in any security property and that Mrs Jamieson acknowledged in her pleading that she, and not the Bank, sold the Vaucluse property. 44In my opinion there is considerable weight in Mr Simpkins's submissions. I see difficulties, perhaps considerable difficulties lying in the way of Mrs Jamieson establishing a proprietary interest in the properties. 45However, I am not able to conclude, at this stage, that her claim is hopeless or that she has "no prospect" for making out her claim. 46Similarly, in relation to Mrs Jamieson's application to set aside the Deed, there is weight in the matters put by Mr Simpkins concerning the difficulties that lie ahead for Mrs Jamieson on this part of the case. However, again, I am not prepared to conclude, at this stage, that her claim is so clearly destined to fail that it should be dealt with summarily.

Mr Jamieson 47In my opinion, the Bank's position is stronger in relation to Mr Jamieson. 48As Mr Simpkins pointed out, and as examination of Mr Jamieson's pleadings reveal, Mr Jamieson does not seek to impugn the relevant facilities, mortgages or guarantees. Rather, his position is that but for the "contravening conduct" of the Bank and what he describes as being the "attendant delays to the completion of the project" he would not have been in default under the facilities. 49Mr Jamieson does seek to set aside the Deed. That does seem an ambitious claim as the evidence does suggest, as Mr Simpkins submitted, that the Deed recorded an arrangement that Mr Jamieson desired; namely one whereby (if performed) the Bank would discharged the securities in return for payments thought by Mr Jamieson to be equivalent to the net proceeds which would be obtained had the Bank then proceeded to exercise its securities. 50Further, as Mr Simpkins pointed out, there does appear to be what he described as being a "disconnect" between some of the allegations made by Mr Jamieson in his pleadings and the evidence offered by him to make out those allegations. 51However, despite the reservations I have about Mr Jamieson's position, I am ultimately persuaded of the correctness of the following submission, put by Mr Coleman SC, who appeared with Mr Parsons for Mr Jamieson: - "The position of Mrs Jamieson should not be ignored. Whilst she has somewhat different and more extensive claims against [the Bank] (and claims against Mr Jamieson), if it is arguable that she is entitled to the relief she is claiming, including with respect to an interest in the properties the subject of the motion and there should not be summary judgment against her, that is a powerful discretionary reason not to order summary judgement against Mr Jamieson... Both sets of claims are bound up in the same factual circumstances and should be heard together."

Decision 52In all these circumstances, the conclusion to which I have come is that the Bank's application for summary judgment should be refused, and the matter should go to trial in the usual way. 53Although I have not acceded to the Bank's application, there was a proper basis for the bringing of the application and, in those circumstances, I do not propose to make any orders as to the costs of the Bank's Motion. 54I invite the parties to bring in short minutes. The short minutes should make provision for the directions needed to ready the matter for hearing, and for the allocation of a final hearing date.

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: 04 December 2012

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