HEALEY v COMMONWEALTH BANK OF AUSTRALIA [1998] NSWCA 103

HEALEY v COMMONWEALTH BANK OF AUSTRALIA SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

MASON P, GILES JA and FITZGERALD AJA. 30 November 1998, 8 December 1998

[1998] NSWCA 103

Banker and customer — appropriation of payment — customer's liability for debt on credited account — liability as guarantor sufficient.

Practice — submissions in reply — raise unpleaded defence — not permitted — discretion.

Contract — agreement to negotiate in good faith — not made out on facts.

Mason P I agree with Giles JA.

Giles JA Mr Gregory Healey and Mr John Morrissey practised in partnership as solicitors. In addition to their professional activities they engaged in real estate and other business ventures, sometimes through companies and sometimes with co-venturers: the co-venturers included Mr Healey's then wife Mrs Donna Healey. Both the legal practice and the business activities were financed by Commonwealth Bank of Australia ("CBA"), with Mr Healey and Mr Morrissey having personal liability as borrowers and guarantors. CBA sued to recover some of the money for which they were liable, being the balances due on account 0029 2950 ("the partnership account") and account 0017 1032 ("the mortgage account") in their names at its Coogee branch after realisation of secured assets. The claim against Mr Morrissey was settled. The claim against Mr Healey was litigated, and on 19 March 1998 Rolfe J found him liable for the amount claimed plus interest, a figure of $3,857,838.14.

Mr Healey appealed. Most of the grounds of appeal were abandoned, and in the end he contended that Rolfe J had erred - (a) in holding that CBA was entitled to appropriate the proceeds of sale of one of the secured assets to reduction of account 0016 4684 ("the Healey account"), an account in the names of Mr Healey and Mrs Healey at the Coogee branch, rather than to the mortgage account; and