C A T C H W O R D S PRACTICE AND PROCEDURE - application to strike out statement of claim - statement of claim misleading such as to be an abuse of process - application struck out. Contracts Review Act 1980 (NSW) Real Property Act 1900 (NSW) Bryant v Commonwealth Bank of Australia (Sackville J., unreported, 3 March 1995) JOSEPH HENRY PIANTA and LORNA MARY PIANTA v. NATIONAL AUSTRALIA BANK LTD (ACN 004 004 937) and DIBBS CROWTHER OSBORNE NG 528 of 1994 Davies J. Sydney 8 May 1995 IN THE FEDERAL COURT OF AUSTRALIA ) ) NEW SOUTH WALES DISTRICT REGISTRY ) NG 528 of 1994 ) GENERAL DIVISION ) BETWEEN: JOSEPH HENRY PIANTA First Applicant LORNA MARY PIANTA Second Applicant AND: NATIONAL AUSTRALIA BANK LTD (ACN 004 004 937) First Respondent DIBBS CROWTHER OSBORNE Second Respondent Coram: Davies J. Place: Sydney Date: 8 May 1995 MINUTES OF ORDER THE COURT ORDERS THAT: 1. The whole of the amended statement of claim filed 7 December 1994 be struck out. 2. The first and second applicants pay the costs of the motion of the first and second respondents. NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA ) ) NEW SOUTH WALES DISTRICT REGISTRY ) NG 528 of 1994 ) GENERAL DIVISION ) BETWEEN: JOSEPH HENRY PIANTA First Applicant LORNA MARY PIANTA Second Applicant AND: NATIONAL AUSTRALIA BANK LTD (ACN 004 004 937) First Respondent DIBBS CROWTHER OSBORNE Second Respondent Coram: Davies J. Place: Sydney Date: 8 May 1995 REASONS FOR JUDGMENT This is a motion brought on behalf of the respondents seeking an order that the amended statement of claim filed on 7 December 1994 be struck out. A copy of the statement of claim is attached marked "A". On 9 November 1994, I ordered that an earlier statement of claim, which had been filed on 22 August 1994, should be struck out as it was so misleading as to be an abuse of process. I said, inter alia:- "The statement of claim proceeds on the footing that the applicants were misled by the incorrect demands and that, acting in good faith upon the demands, they suffered damage. It is then said that the Bank took possession of the applicants' property. The statement of claim therefore suggests, as I read it, that demands were made which were incorrect, and that because the applicants stood back and relied upon the demands they suffered damage and lost their property. The facts before the Court show, however, that the validity of the mortgage and the Bank's right to take possession of the property were matters which were disputed in the Supreme Court of New South Wales in proceedings which were ultimately determined by Hodgson J on 2 September 1993. There was an application seeking leave to appeal from that judgment and that application was dismissed. It is not the case that Mr and Mrs Pianta simply stood back relying upon the demands and suffered loss." There is virtually no difference in substance between the amended statement of claim and the first which was struck out. The statement of claim alleges, inter alia:- "At all relevant times the Applicants relied on the said formal demand 20 March, 1991, the said formal demand dated 2 May 1991, and believed that the notices must have been correct and organised their financial affairs and their family affairs in accordance with the effect of the said First Respondent's demands and notices. ... By relying in good faith on the said demands and notices received by the First Applicant from the First and Second Respondents, the Applicants were misled by the First and Second Respondents and as a consequence the Applicants have suffered loss and damage." This allegation is an abuse of the Court's process for Mr and Mrs Pianta and their son, Justin Pianta, did not stand by and organise their affairs on the footing of the demands which the National Australia Bank made on them. As at 20 March 1991, there had been no repayment of any instalment of capital in relation to the fully drawn advance and the overdraft account stood at $80,000. The Bank sent formal demand requiring payment of $87,001.70 in relation to the overdraft and $114,175.48 in relation to the fully drawn advance. On 2 May 1991, the National Australia Bank sent a notice under s.57 of the Real Property Act 1900 (NSW) demanding payment of the moneys referred to in its demands of 20 March 1991. No payments were made thereafter. Late in 1991, in proceedings S11280 of 1991, the National Australia Bank sought possession of the land which had been the subject of the mortgage. Shortly thereafter, Mr Pianta and his son, Justin Pianta, who were parties to the mortgage, instituted proceedings against the National Australia Bank, those proceedings being S11311 of 1991. It appears that those proceedings were not continued but matters set out thereon were relied upon by way of cross-claim in proceedings S11280 of 1991. Those proceedings were commenced on 2 March 1992 and should be numbered 11280 of 1992. Mr Pianta and his son, Justin, claimed that the mortgage and associated agreements were harsh and unconscionable and they claimed a declaration that the mortgage agreement should be set aside under the Contracts Review Act 1980 (NSW) and they sought damages as against the National Australia Bank. Included amongst the complaints which were made, were complaints with respect to what was said by managers of the National Australia Bank with respect to the details of their obligations which the Piantas were given. The matter came on for hearing in 1993 before Hodgson J. In his reasons for judgment, his Honour said:- "The defendants submitted that they had little understanding of the terms of the mortgage, and in particular, that the terms of the thirteen page memorandum were never brought to their attention or explained to them. Next, they submitted that the Bank made charges which had not been disclosed to them; and that, contrary to the advice given to them by Mr Streeter, the interest rates went up to over 20%, and did not come down until October 1990<>. Furthermore, the Bank, as a large lender to the rural community, knew or ought or have known [sic] that wool prices would drop, so that the cash flow which the Bank adopted was unachievable." Hodgson J. also said:- "I accept that Mr Munday did say something to the defendants to the general effect that the Bank was a large lender to farmers, and that it could stand by clients and keep them going when things got tough. I also accept that the defendants asked Mr Streeter about a fixed interest rate, and that Mr Streeter said words to the general effect that they would probably be better off with variable rates. ... I accept that there was no more than a general explanation of the effect of the mortgage given to the defendants; but I consider that the defendants did sufficiently understand that they were giving the land as security for the loans they were taking, and that the Bank could exercise rights against the land, including obtaining possession and ultimately sale, if there was default in re-paying the loans. I do not think that the defendants are entitled to relief on the ground they were not give [sic] a detailed explanation of the practical effect of their being unable to make interest payments." Hodgson J. concluded that there was no ground for setting aside the mortgage and other agreements under the Contracts Review Act or on the basis that they were harsh and unconscionable save that his Honour concluded that, in the circumstances of the case, the provision in clause 1 of the memorandum, which provided for a certificate of debt to be conclusive evidence and the truth of its contents was harsh and unjust and should not be enforced. His Honour did not determine the precise sum outstanding but expressed the view that something over $190,000 was owing as at March 1991 and that no payments had been made since then. His Honour concluded that, as default had been proved, the National Australia Bank was entitled to judgment for possession. His Honour gave judgment for possession but suspended the execution until 30 November 1993 and reserved liberty to either party to apply in case a dispute should arise as to the amount properly owing. Thereafter, Mrs Pianta, who had not been a party to the proceedings, sought to be joined with a view to pursuing her claim that she had an equitable interest in the property the subject of the mortgage. That application was rejected by Studdert J. on 28 April 1994 on the ground that Mrs Pianta had no arguable defence to the Bank's claim for possession and that to permit her joinder would achieve no useful purpose. Mrs Pianta sought leave to appeal from that ruling. The application for leave was refused by Mahoney & Handley JJA, Kirby P. dissenting, on 23 May 1994. Shortly thereafter, Mrs Pianta issued a writ in the Supreme Court of New South Wales against the National Australia Bank. Mrs Pianta and Justin Pianta claimed relief similar to that which had been rejected by Studdert J. and the Court of Appeal. I take it that that writ did not proceed as a notice of motion was filed on behalf of the National Australia Bank seeking dismissal of the proceedings. Subsequently, Mr Pianta and Justin Pianta sought leave to appeal out of time against the judgment of Hodgson J. On 22 June 1994, Mahoney, Priestley & Clarke JJA dismissed the application for leave as it appeared that the National Australia Bank had a right to possession and that there was no prospect of success on appeal. In the light of that lengthy history of litigation, it is an abuse of process for Mr & Mrs Pianta now to allege that at all relevant times they relied upon the demands made by the Bank, organised their financial and family affairs in accordance therewith and were misled thereby. The fact of the matter is that, by early 1991, the Piantas were unable to make the payments of principal and interest which were due and thereafter they vigorously disputed in the Supreme Court of New South Wales the Bank's claim to the interest which it sought and the Bank's claim for possession. It is unnecessary for me to discuss the issues of estoppel with which I would have had to deal with had the proceedings not been an abuse of process for the reasons I have given. The principles of estoppel applicable to a case such as the present were recently enunciated by Sackville J. in Bryant v Commonwealth Bank of Australia (unreported, 3 March 1995), the circumstances in that case having many similarities with the present. I do not wish to rule that there will not be some matter as between Mr & Mrs Pianta and the National Australia Bank which could not properly be brought in this Court. However, I am not presently aware of any such matter. All issues which Mr & Mrs Pianta seek to raise seem to me to be issues which, if they were to be raised, should have been raised in the proceedings in the Supreme Court which were heard and determined by Hodgson J. Indeed, although in the Supreme Court proceedings no express claim was made based upon s.52 of the Trade Practices Act 1974 (Cth) or s.42 of the Fair Trading Act 1987 (NSW), the substance of the matters now relied on were put in the Supreme Court proceedings by reference to the principles of harsh and unconscionable conduct which ought to attract the operation of the Contracts Review Act and in respect of which damages should be awarded. The substance of the issues between Mr Pianta and National Australia Bank were dealt with by Hodgson J. Studdert J. heard and considered and rejected the additional claims by Mrs Pianta. Hodgson J. did not determine the precise amount due under the mortgages but he reserved liberty to apply in case there was a dispute between the parties. If that was the only issue between the parties, it would not be an appropriate matter for the institution of a proceedings in this Court. I need not discuss separately the claims made against the second respondents. The claims against them presently formulated are likewise unsatisfactory. I shall order that the statement of claim be struck out and I shall order that the applicants pay the costs of the motion. I certify that this and the 6 preceding pages are a true copy of the reasons for judgment herein of the Honourable Justice Davies. Associate: Date: 8 May 1995 For the applicants: The applicants in person. Counsel for the 1st & 2nd respondents: Mr M. Walton Solicitors for the 1st & 2nd respondents: Dibbs Crowther Osborne Date of hearing: 17 February 1995 Date of judgment: 8 May 1995