Fase. AIRE WY a Pe snes = IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION No€215 of 1992 BETWEEN: JOSEPH WILLIAM LAWS (Applicant) AND: COMMONWEALTH BANK OF AUSTRALIA A.C.N. 123 123 124 (First Respondent ) AND: JOHN WILLIAM LESLIE MURRAY (Second Respondent ) AND: BRIAN G. STEVENS (Third Respondent ) AND: LOUISE McCARTHY (Fourth Respondent) AND: PETER DEITH | 2 (Fifth Respondent) AND: GEOFF BENNIE (Sixth Respondent) AND: MIKE HINDSON (Seventh Respondent) Coram: NORTHROP, RYAN and O'LOUGHLIN JJ Place: Melbourne Date: 17 JUNE 1993 EX TEMPORE REASONS FOR JUDGMENT RYAN J: This is an application for leave to appeal from an order of a single Judge of the Court made on 18 February 1993. By that order his Honour ordered that the applicant's amended statement of claim, filed on 11 November 1992, be struck out as having a tendency to cause prejudice, embarrassment and delay in the proceeding. His Honour also gave leave to file and serve a further amended statement of claim on or before 19 March 1993, The amended statement of claim, after alleging that the second, third, fourth, fifth, sixth and seventh respondents are and have at all material times been officers, employees, agents or servants of the first respondent ("the Bank"), continued: "4. The first respondent has at all material times held the applicant Joseph William Laws, together with his wife Geraldine Laws, personally responsible for and liable for the alleged first mortgage, dated 4 May 1989, and bearing the dealing number P272071H ("the First Mortgage"). This was originally approved as a book-entry credit facility totalling $60,000 by the second respondent. Joseph William Laws hereby demands the right to speak for his wife. 6. In or about November 1990 the applicant and his wife Geraldine Laws approached "the Bank" and entered into an agreement whereby "the Bank" would provide $25,000 for use by the applicant to provide Lawsprint Pty Ltd with an overdraft facility ("the Facility"). This was also approved as a book-entry credit facility and secured over the Property, Lawsprint Pty Ltd and held at the Shepparton branch of the Bank and bearing the Account number 811~8039-3667. Joseph William Laws hereby 7. That the second, third, fourth, fifth, sixth, seventh respondents have knowingly entered into a criminal conspiracy under the direction of the first respondent (the Bank) to defraud ana asset strip the applicant. The Banks' directors knew beforehand that it a mathematical impossibility for the average person to pay off debt without being credit in comparison with actual Australian currency. Book-entry credit so created is not legal in Australia, does not constitute proper consideration on the alleged contracts between the Parties and thus the alleged contracts should be struck out. 6s Further and in the alternative, the court finds that the first respondent is somehow entitled to Create cost-free book-entry credit and that cost-free book-entry credit is valid in law and in fact, then the applicant claims the same right. particulars. An examination of those sub~paragraphs reveals that they consist of tendentious assertions and references to authorities said to Support the applicant's contention that the "creation of credit", as it is Said, "out of nothing", is illegal and ineffective to Support mortgages to secure credit extended by the Bank. It is then pleaded in Paragraph 10: first respondent in exchange for legal tender cash currency of the - "Commonwealth of Australia from the applicant. Because of this, the forced sale of "the Property" has caused the applicant to suffer loss and damage to $16,375. The first respondent's contractual documents are therefore false and misleading, and should be struck out due to contravention of the Trade Practices Act (1974) and the Fair Trading Act (1985)." In paragraph 11 there is repeated the claim that if the Bank is entitled to create what is called "cost-free book-entry exedit", the applicant has the same entitlement. even the most generous reading of them, to allegations of fact which, if true, are capable in law of constituting fraud. It is then pleaded in Paragraph 13: "The "First Mortgage", "the Security" and "the Facility" Properly executed and should be struck out." Y creating credit at no cost to itself out of nothing, that is not proper consideration for the appellants' obligation to repay. This challenge to the enforceability of the mortgage is identical to that which has been made to bank mortgages but rejected in two other actions that have recently come before single judges of this court: Napier v National Australia Bank Limited, unreported, delivered by Spender J on 16 April 1992, and Fisher y Westpac Banking Corporation, unreported, delivered In Fisher's case, French J, at Page 13 said: and securities recording the loan in Such cases do not mislead or Their Honours concluded: "This is a correct statement of the position." Montgomery v Jerome Daly, (1968) County Court, Credit River, Minnesota, whether or not correctly decided under the law of Minnesota is not part of the law of Australia." For these reasons, in my view, the application for leave to appeal must be refused. In consequence, the related motion for expedition of the hearing of the appeal must also be refused. I would refuse both applications with costs. O'LOUGHLIN J: I agree. NORTHROP J: I also agree. Accordingly, the order of the Court is as follows: The motion for leave to appeal from the judgment made by Jenkinson J, of 18 February 1993, is refused. The other motion seeking expedition of the hearing of the appeal also is refused, and it is ordered that the applicant pay the respondents' costs of those motions. I certify that this and the preceding four (4) pages are a true copy of the ex tempore reasons for judgment of his Honour Mr Justice Ryan Associate: Qo Soh Date: (6 ay 1993 Applicant: Mr J W Laws in Person Counsel for the respondents: Mr R Shepherd Solicitor for the respondents: Mr I F Purbrick