Woollard v Australia and New Zealand Banking Group Ltd

Woollard v Australia and New Zealand Banking Group Ltd - [2016] NSWCA 258 - NSWCA 2016 case summary — Zoe

Judgment

MEAGHER JA: On 20 May 2016 the primary judge (Adams J) entered judgment for the first respondent (ANZ) for possession of the appellant's (Mr Woollard) property at Blaxlands Ridge. His Honour also granted leave for the issue of a writ for possession of that property and entered judgment in favour of ANZ for $105,303 (excluding cents) together with interest from 22 March 2016: Australia and New Zealand Banking Group Ltd v Adventure Quest Paintball-Skirmish Pty Limited; Woollard v Hodgson; Hodgson v Woollard (No 2) [2016] NSWSC 621. These judgments and orders gave effect to the primary judge's earlier reasons of 8 March 2016: Australia and New Zealand Banking Group Ltd v Adventure Quest Paintball-Skirmish Pty Limited; Woollard v Hodgson; Hodgson v Woollard [2016] NSWSC 188.
Mr Woollard's notice of appeal from those judgments and orders was filed on 19 August 2016. He was held liable as a guarantor of advances and facilities made available by ANZ to Adventure Quest Paintball-Skirmish Pty Limited (Adventure Quest). That liability was secured by a first registered mortgage over the property. The other director of Adventure Quest, Mr Hodgson, also guaranteed its indebtedness to ANZ and was a defendant and cross respondent in the proceedings before the primary judge.
On 7 September 2016 Mr Woollard filed a motion seeking the following orders: 1. The court grant a stay of the orders made in the Supreme Court in file number 2014/00065969, of 20 May 2016, pending the Hearing of this Appeal. 2. Specifically, the Court grant a stay of the Writ of Possession, issued by the Plaintiff in relation to 1200 Putty Rd, Blaxlands Ridge and requesting vacation by 13 September 2016.
The order in para 1 was sought against Mr Hodgson and the order in para 2 against ANZ. As between Mr Woollard and Mr Hodgson the motion was resolved on the basis that Mr Hodgson undertook until the final determination of the appeal not to enforce the judgments and orders in his favour entered on 20 May 2016. Mr Hodgson's legal representative was then excused from further attendance in the application.
At the conclusion of the argument as between Mr Woollard and ANZ, I made the following orders: 1. Dismiss paragraph 2 of the notice of motion filed on 7 September 2016. 2. Appellant/applicant to pay the first respondent's costs of that motion. 3. Note the second respondent's undertaking not to enforce any judgment or order in his favour made on 20 May 2016 until the final determination of the appeal. 4. No order as to costs as between the appellant/applicant and the second respondent. 5. Notice of motion filed on 7 September 2016 otherwise dismissed.
I reserved my reasons for the making of orders 1 and 2. These are my reasons for making those orders.
In an application to stay execution of a judgment pending appeal the applicant must demonstrate a proper basis for a stay that will be fair taking account of the competing interests and rights of the parties. Ordinarily that requires that the Court make a preliminary assessment as to whether there are arguable grounds of appeal: Alexander v Cambridge Credit Corporation Ltd (Receivers Appointed) (1985) 2 NSWLR 685 at 695.
The notice of appeal contains six grounds. Grounds 5 and 6 relate to the judgments and orders made as between Mr Woollard and Mr Hodgson. For that reason they need not be considered. Grounds 2 and 3 address a matter which was not argued before the primary judge, nor dealt with by his Honour. Mr Weller, who appeared for Mr Woollard, accepted that these grounds were not argued at trial. For that reason they also may be put aside.
An assessment of the prospects of the remaining grounds 1 and 4 requires reference to the circumstances in which the proceedings arose.
ANZ advanced monies to Adventure Quest under a loan facility entered into in March or April 2004. As at November 2009 an amount of $101,544 (omitting cents) was due under that facility. It was not contested by Mr Woollard that he was liable as guarantor for the repayment of that amount and that his liability was secured by the registered first mortgage over the property. In November or early December 2009 that existing facility was "re-written" and increased to $151,545. At that time a letter of offer was sent by ANZ to Adventure Quest. That offer was accepted on 10 December 2009 by signatures of Mr Hodgson and (purportedly) Mr Woollard, in each case as a director. The officer of the bank responsible for sending the letter of offer was Ms Dakwer. Subsequently that amount was advanced to Adventure Quest and $101,500 was applied to discharge the existing facility.
Mr Woollard denied that he was liable under the guarantee in respect of any monies advanced under the 2009 loan facility. His evidence, which the primary judge accepted, was that he did not sign the letter of offer as a director of Adventure Quest and did not become aware that a further advance had been made until late December 2009, or early in January 2010.
It was contended before the primary judge that Adventure Quest was not bound by the 2009 loan facility; that Mr Woollard's guarantee did not extend to monies due under that facility because he had not been given notice of it and did not consent to it; that by relying on the guarantee in those circumstances ANZ engaged in unconscionable conduct contrary to s 12CB(1) of the Australian Securities and Investment Commission Act 2001 (Cth); and that in circumstances where the guarantee did not include a requirement that he receive notice of any further advances, Mr Woollard was entitled to relief under the Contracts Review Act 1980 (NSW).
The pleaded claim that ANZ had engaged in unconscionable conduct was not pressed and the primary judge rejected each of the remaining arguments. Accepting that Mr Woollard's signature had been forged, the primary judge held that ANZ had the benefit of an assumption as to the due execution of that document in accordance with subs 128(1) of the Corporations Act 2001 (Cth) and was entitled to make the assumption in s 129(5) that the acceptance had been signed by the company in accordance with subs 127(1)(a). In doing so, his Honour rejected Mr Woollard's contention that ANZ was not entitled to make that assumption because its officers "knew or suspected that the assumption was incorrect", thus engaging the exception in s 128(4).
Ground 1 addresses the primary judge's conclusion that ANZ had the benefit of the assumption in s 129(5). It is contended that the primary judge erred in not concluding that the exception in s 128(4) applied because ANZ knew or suspected that Mr Woollard's signature was forged.
The primary judge rejected that argument in circumstances where the relevant employee, Ms Dakwer, gave evidence that she did not know or have any reason to suspect that the signatures on the relevant documents were or could have been forgeries. That evidence was not challenged in cross-examination or otherwise and the primary judge concluded ([2016] NSWSC 188 at [30]) that the exception did not apply. No written or oral submissions were made in this Court explaining or supporting this ground. Nor is there any obvious or apparent basis for suggesting that this finding involved error. As the matter stands there is no reason for concluding that ground 1 has any real prospect of success.
It remains to consider ground 4 which is to be understood as directed to the claim to relief under the Contracts Review Act. As formulated it is concerned with "unconscionable conduct". Mr Woollard's claim to relief under that Act was directed to the absence of any requirement in the guarantee that he be given notice of any increase or variation in the amount of the borrowings secured by it, and the fact that he received no such notice. This ground does not enunciate any particular basis for challenging the primary judge's rejection of this claim. Furthermore, ANZ submits that even if there may be an arguable basis for setting aside this claim, Mr Woollard's success in relation to any such ground would not entitle him to have the whole of the money judgment in favour of ANZ, or the judgment for possession, set aside. That is because before the primary judge it was accepted that as the monies advanced under the 2009 facility were used to discharge the earlier facility, any relief under the Contracts Review Act would leave Mr Woollard liable for an amount of approximately $32,000 (instead of $81,975) plus interest.
It is necessary now to consider the respective positions of the parties in relation to the grant of the stay. Mr Woollard does not live on the property, which is apparently used for the commercial recreational activity of "paintball". The property was leased to Ultimate Paintball Pty Ltd for a term of three years commencing on 31 October 2012. That company has continued in possession since the expiry of that lease. On 1 August 2016 a notice requiring the occupier to vacate before 6 September 2016 was left at the property. On that notice coming to the attention of a director of the lessee, Mr Moss, he had a conversation with a solicitor employed by Kemp Strang, the lawyers for ANZ. In that conversation, which occurred on 11 August 2016, Mr Moss advised that he was the "owner" of the lessee company; that he had received the notice requiring it to vacate by 6 September 2016; that he had made a decision to vacate the premises; and that he had one outstanding paid booking of the property on 7 September 2016.
To allow the lessee to fulfil that commitment, a further notice was issued and left at the property requiring that it be vacated by 13 September 2016. There followed a second conversation between ANZ's solicitor and Mr Moss on 29 August 2016 in which he was advised of the rescheduled date for the vacation of the premises and responded that he was organising a truck to move the company's "equipment" by 9 September, and that it would "definitely" be gone by 13 September 2016.
At the hearing of the stay application Mr Weller informed the Court, without objection on the part of ANZ, that Mr Moss had told his client that whilst he was going to vacate the premises, he was prepared to lend "paintball equipment" to Mr Woollard so as to permit him to continue to conduct that commercial activity on the property. Mr Weller also informed the Court, again without objection, of his instructions that Mr Woollard had received an offer to purchase the property for $800,000 which he had "seriously contemplated accepting".
Finally, in his affidavit in support of his application for a stay, Mr Woollard says that if he is required to give possession of the premises to ANZ "it would cause myself and the lessee severe financial hardship, loss of business/income and stress".
As matters presently stand, ANZ has a judgment which entitles it to possession of the property. In my view there is no real prospect of the appeal producing an outcome other than that ANZ will remain entitled to a money judgment and to possession of the property. Although the value of the property is said to exceed significantly the amount due, Mr Woollard has taken no steps to raise funds to make any payment into Court or to ANZ in repayment of any of the amounts claimed.
If no stay order is made ANZ will proceed to obtain possession of the property and to exercise its power of sale. None of that will cause any hardship to the existing tenant who has or proposes to vacate the premises. There may be hardship to Mr Woollard to the extent that he no longer has possession of the property and faces its sale. However it would seem that he has, in any event, "seriously contemplated" selling the property.
In the circumstances there should not be any stay of execution. Mr Woollard has not demonstrated an appropriate case justifying a stay. Even if he was successful in relation to the challenge to the rejection of his claim for relief under the Contracts Review Act, he would not be entitled to prevent ANZ from proceeding to obtain possession of the property, at least in the absence of the payment into Court of the balance of the monies outstanding.

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Judgment (4 paragraphs)

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