FEDERAL COURT OF AUSTRALIA Konings v Commonwealth Bank of Australia [2016] FCA 667 File number: WAD 203 of 2016 Judge: MCKERRACHER J Date of judgment: 2 June 2016 Legislation: Federal Court Rules 2011 (Cth) r 7.01 National Credit Code ss s 70, 72, 76, 77, 80 Date of hearing: 2 June 2016 Registry: Western Australia Division: General Division National Practice Area: Commercial and Corporations Sub-area: Regulator and Consumer Protection Category: No Catchwords Number of paragraphs: 17 Counsel for the Prospective Applicants: The Prospective Applicants appeared in person Counsel for the Prospective Respondent: Mr BC Smith Solicitor for the Prospective Respondent: Gadens ORDERS WAD 203 of 2016 BETWEEN: JAN LAURENS KONINGS First Prospective Applicant JULIE KONINGS Second Prospective Applicant AND: COMMONWEALTH BANK OF AUSTRALIA Prospective Respondent JUDGE: MCKERRACHER J DATE OF ORDER: 2 JUNE 2016 THE COURT ORDERS THAT: 1. The urgent application before start of a proceeding dated 20 May 2016 be dismissed. 2. The prospective applicants be relieved from their undertaking to commence the proceeding. 3. The prospective applicants pay the prospective respondent's costs of this application, to be assessed if not agreed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT REVISED FROM TRANSCRIPT MCKERRACHER J: 1 This is an urgent application under r 7.01 of the Federal Court Rules 2011 (Cth), which provides for injunctive relief before commencing proceedings. Usually, that injunctive relief is sought ex parte (that is, without notifying the other side). But, on this occasion, in light of the fact that there is a history of proceedings in the Supreme Court of Western Australia which are still current and to which the prospective applicants, Mr and Ms Konings referred in their supporting materials, I asked that the prospective respondent, the Commonwealth Bank of Australia, be served with the materials. The Bank has filed submissions in response, together with an affidavit and Mr Smith appears on behalf of the Bank. The Konings are self- represented. 2 In the urgent application before start of proceedings which Mr and Ms Konings pursued, they sought an injunction to stop the enforcement of a possession order granted summarily to the Bank in the Supreme Court on 22 March 2016. They applied for an order for preservation of the property concerned in Preston Settlement until such time as this Court made a final judgment regarding their prospective proceedings in this Court to seek orders to reopen a transaction, pursuant to s 76 and s 77 of the National Credit Code (Sch 1 to the National Consumer Credit Protection Act 2009 (Cth). They have explained in their supporting materials that their claim against the Bank is pursuant to the provisions of the National Credit Code, which I will refer to in a moment. Indeed, those provisions were also raised in argument to Master Sanderson in the Supreme Court and were addressed by the Master in his reasons for granting the Bank summary judgment. 3 Since events in this Court have unfolded, an affidavit for the Bank has been filed indicating that instructions have been given to their solicitors not to take any action pursuant to the summary judgment orders of Master Sanderson until 1 July 2016 and certainly, as I made clear to the prospective parties, I would expect that if there were to be any change in that position, that the Konings would be informed so that they could take appropriate steps. 4 The urgent application is supported by an affidavit of Mr Konings, which outlines the history of the transactions and the history of events in the Supreme Court. It is also supported by some written submissions which, amongst other things, refer to s 80 of the National Credit Code, which is a provision concerning time limits within which to bring an application. 5 It is necessary to say something about the proceedings in the Supreme Court. That has been addressed partly by the Konings, but also by an affidavit of Ms Strack, a solicitor engaged for the Bank. There is an outline of the events as they have occurred, both in the funds provided by the Bank initially, pursuant to a loan application which was for refinancing and other purposes, and securing repayment of an amount owing on another first registered mortgage over the property. Funds were paid out by the Bank. There is reference to default under the loan, a notice of default being issued and proceedings issuing in the Supreme Court, pursuant to the notice of default, culminating in an application for summary judgment on 29 October 2015. That, in turn, resulted in the application being heard and dealt with by Master Sanderson. 6 There were two affidavits relied on by the Konings in that summary judgment application and submissions were made. Oral reasons were given by the Master on the matters which had been raised by the Konings. The Master expressly referred to arguments raised by the Konings concerning the National Credit Code and the portion of the transcript relevant to that aspect of the argument and reasons has been provided to the Court. 7 I should say something briefly about National Credit Code before moving to the current position in the Supreme Court. The National Credit Code is contained in Sch 1 to the National Consumer Credit Protection Act 2009 (Cth). The provisions that Mr and Ms Konings seek to rely upon are set out in Div 3 dealing with changes on grounds of hardship and unjust transactions. There is provision under s 72 for a 'hardship notice' to be provided to a lender and consequential provisions relating to such a notice. But by s 76, there is provision for a court to reopen unjust transactions if the court is satisfied on the application of the debtor that the transaction was unjust for a variety of reasons. Matters which are to be considered by the court are the public interest and all the circumstances of the case. The court may have regard to quite a long, non-exhaustive list of possible factors, including matters such as whether or not the provisions were the subject of negotiation at the time, whether or not it was practicable for the applicant to negotiate for the alteration of provisions, whether there were unfair tactics and the like. 8 The Master was of the view in the Supreme Court that nothing had been raised before in evidence which pointed to anything or, in his words, would even hint of conduct which might fall within the provisions of the National Credit Code, particularly focusing in terms of misrepresentations or misleading conduct. Now, before me today, Mr Konings has made the point that the real thrust of the complaint is the fact that the Bank lent such a large sum of money to a person with a remaining working life which was very short, without questioning the capacity to meet the obligations under such a transaction. 9 It is not apparent to me whether those matters were raised before the Master but, in any event, the short point is that the Konings have sought to appeal the summary judgment decision of Master Sanderson and are in the process of preparing the necessary documentation in support of that application for leave to appeal, including an application to stay the effect of the judgment. The stay application has been adjourned by the Supreme Court of Appeal to 1 July 2016, which is the date the Bank has instructed its solicitors that no steps are to be taken pursuant to the summary judgment application until. 10 Today, the relief which the Konings seek is modified a little to seek an injunction until 1 July 2016, costs to be met by the Bank and for the Court to make a provision for pro bono counsel to be certified. In relation to the latter application, I treat this simply as an informal request because there is no provision for a litigant to apply as such for such a certificate. A certificate will generally only be granted in a circumstance where the Court is of the view that it would be appropriate in all the circumstances, but particularly having regard to the apparent prospects of some aspect at least of the particular litigation concerned. If there is a prospectively fatal defect in the litigation, it is improbable that a certificate would be granted. 11 As to the remainder of the relief, whichever way the matter is approached, it is necessary to consider the appropriate test for the granting of an injunction. Together with the interests of justice, the first question is whether the applicant has made out a prima facie case for relief and the second is whether the balance of convenience would favour granting the relief, pending the determination of the substantive proceedings or, in this case, substantive prospective proceedings. The balance of convenience alone would not be a sufficient basis for an injunction, although a strong prima facie case taken with a weak balance of convenience and vice versa might be sufficient. 12 But in this case, there is said by the Bank to be no evidence at all relevant to the first question as to the prima facie case, apart from an assertion that the Konings wish to make certain applications to this Court under the National Credit Code. The grounds on which that application would be made are not revealed in evidence or submissions in any of the Court papers and is simply made by reference to a statement from the bar table today in the course of the application by reference to the working life of presumably Mr Konings. The adequacy of proof to support an injunction is deficient. I also accept the submission from the Bank that the proposed substantive proceedings in this Court are, unless and until the Supreme Court judgment is set aside on appeal, inevitably bound to fail, as any rights that the Konings seek to exercise to reopen the transaction have merged in the judgment of Master Sanderson and no longer exist. That is the reason they are seeking to appeal the judgment. 13 As I have already pointed out, the Konings raised the National Credit Code in the Supreme Court in their pleadings, particularly in a counter-claim to set aside the transaction. The Master considered and referred to the claims under the National Credit Code in his reasons for decision. Whether the learned Master was right or wrong in that decision is a matter which the Konings wish to take up with the Court of Appeal. There is nothing, as counsel for the Bank points out, in s 76 of the National Credit Code which would suggest that there is jurisdiction now in this Court to reopen a transaction in a way which would disturb the common law position as to the operation of the doctrine of merger or which would confer upon the Court jurisdiction to disturb a transaction that has been the subject of a judgment. 14 The Konings refer to s 80 of the Code, but this is relevant only if there is an underlying right. The provisions in s 80 assume that the right to apply exists and has not been extinguished. There is no suggestion that s 80 would revive a right that has ceased to exist. 15 It is not open to this Court to deal with this matter in a way which would give rise to a fundamental inconsistency with the existing Supreme Court judgment and especially in circumstances where the Konings have exercised their right to apply to appeal that judgment and have made an application for a stay of the enforcement of the judgment. 16 There is no capacity for this Court to entertain the relief sought today. Indeed, to pursue even the prospective proceedings in this Court would appear most likely to me to constitute an abuse of process, especially while the application to appeal the decision of Master Sanderson is pending consideration in the Court of Appeal. 17 For those reasons, I am unable to accede to the requests of the Konings and the application will be dismissed with costs. The applicants will be released from their undertaking to commence proceedings. I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher. Associate: Dated: 3 June 2016