"JUDGMENT fo. COT LBL... IN THE FEDERAL COURT OF AUSTRALIA GENERAL DIVISION ) ) NEW SOUTH WALES DISTRICT REGISTRY ) No. G583 of 1987 ) ) BETWEEN: JULIE SAAD AND NEVILLE SAAD Applicant AND: DEUTSCHE BANK (ASTA) A.G. (Formerly European Asian Bank A.G.) Respondent MINUTE OF ORDER JUDGE MAKING ORDER: BEAUMONT J. DATE OF ORDER: 25 NOVEMBER 1987 WHERE MADE: SYDNEY THE COURT ORDERS: 1. 2. 3. Note: Application for interim relief refused. Costs of this application to be the respondent's costs in the proceedings. Transfer the matter to the Supreme Court of New South Wales. Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. 2 SNOV 1987 \. FEDERAL COURT OF ON AUSTRALIA RINCIPAI HES NEW SOUTH WALES DISTRICT REGISTRY IN THE FEDERAL COURT OF AUSTRALIA No. G583 of 1987 GENERAL DIVISION BETWEEN: JULIE SAAD AND NEVILLE SAAD Applicant AND: DEUTSCHE BANK (ASIA) A.G, (Formerly European Asian Bank A.G.) Respondent CORAM: BEAUMONT J PLACE: SYDNEY DATE: 25 NOVEMBER, 1987 REASONS FOR JUDGMENT BEAUMONT J. The applicants, Mrs. Julie Saad and her husband, Mr. Neville Saad, have commenced proceedings against the respondent, Deutsche Bank (Asia) A.G. ("the Bank") seeking to restrain the exercise by the Bank of any power of sale conferred upon the Bank by a mortgage over property owned by Mr. and Mrs. Saad, being Units 1, 5, 6, 7, 9, 10, 12 and 14 at 60-64 Meehan Street, Granville; in the proceedings, the applicants also seek damages under s.82 of the Trade Practices Act 1974 ("the Act"); they further seek an order under s.87(2)(b) of the Act varying the terms of the mortgage. war oss asa mos The present application is for an interim injunction restraining any sale by the Bank pending the final hearing of the principal proceedings. In late 1981, Mr. Vincent Tanna, Mrs. Saad's brother, suggested to her that members of the family, including Mr. and Mrs. Saad, borrow a large amount from an overseas lender. This suggestion was acceptable to Mr. and Mrs. Saad and early un 1982, documentation was executed by Mr. and Mrs. Saad, the Bank and other parties which included a mortgage over the subject property. In 1983, Mr. Vincent Tanna told Mrs. Saad that he and his father wanted to borrow more funds. [In about October 1983, Mr. and Mrs. Saad and other members of the Tanna family and the Bank executed further documentation for this purpose. In about September 1985, Mr. and Mrs. Saad, and other members of the Tanna family, executed a supplementary loan agreement with the Bank. Subsequently, a dispute arose between the present parties as to the amount owed by Mr. and Mrs. Saad to the Bank. In essence, Mr. and Mrs. Saad contend that they are liable for their "proportion" only of the amount borrowed (which proportion they claim to have repaid or virtually repaid); the Bank, on the other hand, claims that Mr. and Mrs. Saad are liable for the full amount borrowed by the Tanna family, which is some millions of Swiss francs. It would appear that on the face of the documentation executed, Mr. and Mrs. Saad are liable to the Bank for the Soy ae ae, i in spc at nN eros full amount of the family borrowings. By cl.11.03 of the loan agreement dated 28 June 1982, the securities given (including the subject property) are expressed to be "collateral each one to the other for the repayment by the borrower to the lender of the loan and all monies owing from time to time by the borrower to the lender"; the supplementary loan agreements dated 4 November 1983 and 3 October 1985 do not appear to touch upon the point. But Mr. and Mrs. Saad now seek to avoid this liability on three principal grounds. In the first place, they claim that the transactions were void for mistake; secondly, they say that the transactions were unconscionable and therefore voidable in equity; and thirdly, they claim that their entry into the borrowing arrangements was induced by conduct of the Bank which was misleading and deceptive (see s.52 of the Act). Mr. and Mrs. Saad also allege further misleading conduct on the part of the Bank in November 1986. Mrs. Saad claims that she was then assured by Mr. Gleeson, an officer of the Bank, that because Mr. and Mrs. Saad had paid their debt to the Bank, their property would be the last of the several properties mortgaged to be sold. Before going to the evidence relied upon by Mr. and Mrs. Saad to support their claims for relief, reference should be made to the subsequent history of the matter. On about 7 September 1987, the Bank served on Mr. and Mrs. Saad statutory notices of default under their mortgage. Approximately six weeks ago, the Bank, by its real estate agent, Jones Lang ST pr tere re cre ee ee ee eee Wootton, commenced to advertise the auction of the subject property. The auction was advertised to take place at 12.30 p.m. on Thursday 19 November. Shortly before the auction date, at approximately 12 noon on Wednesday 18 November, Mr. and Mrs. Saad approached the Court seeking urgent interlocutory relief restraining the sale. I granted short leave for this purpose and made the matter returnabale at 3.00 p.m. on that day. When the matter was called on at 3.00 p.m. the solicitor for the Bank sought an adjournment on the ground that its counsel was engaged in associated proceedings then being heard by Young J. in the Supreme Court of New South Wales. I therefore stood the matter over to 10.15 a.m. on the following morning. On the morning of 19 ,November, the matter was heard. The parties on both sides of the record read lengthy affidavits; there were objections made and argued to many parts of the affidavit evidence; two deponents were cross-examined on their affidavits. Late in the morning, I was informed that the auction of the subject property would not occur until that afternoon. However, the matter still being part heard, I granted an interim injunction restraining the sale until the hearing of the matter was concluded. The matter was further argued in the afternoon of 19 November. Upon the conclusion of argument, because of the size of the affidavit material relied on by the parties, I indicated that I wished to reserve my decision in order that I would have an opportunity to consider that material. I therefore granted an interim injunction restraining the respondent from selling the subject property pending the delivery of judgment which I fixed for Wednesday 25 November. It was made clear that this --ee was a temporary injunction only and should not be seen as an indication of a view that a restraint pending a final hearing was appropriate. It is first necessary to determine whether the evidence discloses that there is a serious question to be tried. Mrs. Saad says that in late 1981 her brother, Mr. Vincent Tanna, approached her and said: "I can get cheap money at about 8% interest". She said: "How come?" He said: "If we borrow a large amount overseas we can get preferential rates. If all the family join in we would get a good deal." There were further discussions in late 1981 and early 1982 regarding a proposed loan from the respondent (then known as European Asian Bank A.G.). In early 1982, Mr. Vincent Tanna said to Mrs. Saad: "The loan has been approved...we should all use the one solicitor. I will make the arrangements." Subsequently, as has been said, the documentation was executed. In her affidavit, Mrs. Saad says: "6. I believed that my husband and I would be borrowing sufficient monies to discharge our existing liability to the Perpetual Trustee Company and that from the date of settlement thereafter we would be paying a reduced rate of interest and would therefore have more funds available for our own purposes. 7. At no time did any officer of the Bank or any other person explain to me or my husband the exact terms and conditions of the proposed loan. 8. I cannot read or write English but I am able to sign my name. My native language is Lebanese. I can understand simple English. 9. If the terms and conditions had been explained to me by an officer of the ape paw ie - owe prin e lo. ll. 12. 13. 14. Bank, I would have obtained the assistance of my son or other members of my family to explain the document or documents to me in Lebanese. In or about June, 1982 I recall that my brother Vincent contacted me and said words to the effect "The loan documents are ready. We have to go to Barwicks Office to sign them." In or about June, 1982 I, together with other members of the family travelled to Barwick & Co's office in the city. Present were Neville Saad, Vincent and Teresa Tanna, Kenneth Tanna, James Tanna and Mr Terry McCabe, Solicitor, and another employee of that firm whose name I do not remember. We were shown from the reception area into an office. Mr McCabe Solicitor said words to the effect of "You must all sign these forms which I show you". Each of us then signed the documents where we were told to sign. I do not now recall the title of such documents or the number or type of such documents. The nature and effect of the documents were not explained to us by McCabe or anyone at all. Each of us then signed on the documents where we were told to sign by Mr McCabe. I did not understand at that time the effect of the documents that I was signing other than they were something to do with the loan arrangements. I was aware that it involved the repayment of our. existing loan arrangement. At no time did Mr McCabe or the other member of his office staff who was present, whose name I do not recall, explain to us what the documents were. I believed that my husband and I were borrowing approximately three hundred and sixty one thousand ($361,000.00) which was sufficient to discharge our existing mortgage to the Perpetual Trustee Company and enough to cover some legal costs..." In my opinion, the evidence does not disclose a serious question to be tried on any of grounds suggested, that is to say, mistake, unconscionability or misleading conduct. The Bank and Mr. and Mrs. Saad were at arms' length; Mr. and Mrs. Saad had their own solicitor; the origins of the transactions may be traced to the actions of Mr. Vincent Tanna; he was not the Bank's agent in any sense; nor was the Bank guilty of any misrepresentation of any kind which could be seen as the foundation of a claim that it had engaged in misleading or deceptive conduct. I am not, of course, required to undertake a preliminary trial of the issues in the principal proceedings. On the other hand, before interim relief may be granted, I need to be satisfied that there is a question to be tried which is sufficiently serious to warrant the intervention of the Court at this stage. I will deal with each suggested head of claim in turn. As to mistake, the suggestion seems to be that Mrs. Saad had a particular understanding with respect to the operation of the loan documentation. But, if there were any misapprehension, it was unilateral and not induced by any conduct by or on behalf of the Bank; moreover, it appears to be a mistake as to the legal effect of the documents. [It is difficult to see any case for relief here (see Greig and Davis, The Law of Contract at pp.894-6). Nor, in my view, is there any serious question raised that the Bank has been guilty of unconscionable conduct (see Greig and Davis, op. cit. at pp.973-7). Mrs. Saad had eens aoNt tt any ste cer previously had some experience in property matters and there were perceived benefits in the transactions for all of the members of the Tanna family. There is no suggestion of any pressure by the Bank to enter into the arrangements. Finally, in my opinion, there is no serious reason advanced why it should be concluded that the Bank has engaged in misleading or deceptive conduct within the meaning of s.52 of the Act. Reliance is placed upon the conversation with Mr. Gleeson in November 1986. According to Mr. Gleeson, his reference to the subject property being last sold was made in the context of, and conditionally upon, execution of fresh documents by Mr. and Mrs. Saad, an event which it is common ground never occurred. In cross-examination, Mrs. Saad was disposed to agree that this was the context in which Mr. Gleeson's suggestion was made. In any event, it is hard to see how any such suggestion could have misled or deceived Mr. and Mrs. Saad in any relevant sense because they were already committed to the borrowings. However, even if I be wrong in concluding that there is no serious question to be tried, it would not be appropriate to grant interim relief because of the delay on the part of the applicants in instituting these proceedings. In Carlton and United Breweries (N.S.W.) Pty. Limited v. Bond Brewing New South Wales Ltd. (Full Federal Court, unreported, 19 November 1987) the Full Court said: "The grant of injunctive relief, interim or final, OT er re eee . et toe nagar .owe waa 1s, of course, discretionary. Delay by an applicant in instituting or in prosecuting a claim for an injunction may be a ground for refusing relief, even at a final hearing. Where an interim injunction is sought on the basis that the applicant need show only a "serious" question of fact or of law, delay in seeking that relief is an important discretionary consideration (see Meagher, Gummow and Lehane, Equity - Doctrines and Remedies, 2nd ed., para. 3606, p.758).' Mr. and Mrs. Saad sought, and obtained, legal advice in relation to these transactions as early as December 1986. As has been said, notices of default were given in early September 1987. The debt owed by Mr. and Mrs. Saad 1s payable in Swiss francs; and since early September 1987, the Australian dollar has depreciated significantly; there is a risk of further depreciation. If sale of the subject property were to be restrained pending a final hearing, it would be six months or longer before the Bank could exercise its power of sale. In that period, a margin of security could be lost elther because of a further depreciation of the Australian dollar or because of a fall in property prices in Sydney, or both. Given the delay on the part of Mr. and Mrs. Saad in making this application, it would be unjust now to grant them urgent interim relief. As Meagher, Gummow and Lehane, op. cit. say (at p.568): "Why should a court grant urgent relief when the plaintiff's tardiness in applying for it casts doubt on the reality of his alleged injury?" In my opinion, an interim injunction restraining sale pending a final hearing should not now be granted. Costs of this application should be the Bank's costs in the proceedings. wang mee ere 10. It is appropriate that these proceedings be heard in the same Court as the associated proceedings in the Supreme Court already mentioned. Counsel for Mr. and Mrs. Saad no longer oppose this course. I make the following orders: l. Application for interim relief refused. 2. Costs of this application to be the respondent's costs in the proceedings. 3. Transfer the matter to the Supreme Court of New South Wales. I certify this and the VE (4) preceding pages to be a true copy of the Reasons for Judgment of his Honour Mr. Justice Beaumont. Associate y.a.F<anwssav Dated: 25 Moverste , 19 PF emer ee ee pene ee eee Renee eee