State Bank of NSW v Kerswell [1999] NSWSC 1023

New South Wales Supreme Court CITATION : State Bank of NSW v Kerswell [1999] NSWSC 1023 CURRENT JURISDICTION : Common Law FILE NUMBER(S) : 10365/1996 HEARING DATE(S) : 21-23 September 1999 JUDGMENT DATE : 12 October 1999

State Bank of New South Wales Limited (Plaintiff) PARTIES : v Kerry Gretton Kerswell (First Defendant) Sally Ann Kerswell (Second Defendant) JUDGMENT OF : Master Malpass

COUNSEL : Mr R Harper (Plaintiff) Mr T Alexis/Mr E White (Defendants) SOLICITORS : Garland Hawthorn Brahe (Plaintiff) Burt & Allen (Defendants) CATCHWORDS : Banker and customer; who owed the debit balances standing in two accounts; the persons in whose names the account stood or their deregistered company. ACTS CITED : N/A CASES CITED : N/A DECISION : See paragraph 27.

THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

MASTER MALPASS

TUESDAY 12 OCTOBER 1999

10365/1996 STATE BANK OF NEW SOUTH WALES LIMITED v KERRY GRETTON KERSWELL & ANOR JUDGMENT 1 These proceedings were commenced in January 1996. In the Statement of Claim, the plaintiff sought inter alia possession of a property known as 94 Mona Vale Road Pymble (the property) and a monetary judgment. 2 There have been two summary judgment applications. In July 1996, the plaintiff obtained summary judgment in respect of its claim for possession of the property. A later summary judgment application in respect of the monetary claim was unsuccessful. 3 The property was sold by the first mortgagee. There were no proceeds available to satisfy any part of the plaintiff's monetary claim. 4 The present dispute between the parties is restricted to the monetary claim. The defendants say that they are not liable for at least part of that claim (it is said that a company K G & S A Kerswell Pty Ltd had the liability for the rest of the claim). 5 This company was used in the conduct of a strata management business. The defendants were directors of that company. There was also another company (National Strata Management Pty Ltd). 6 The dispute concerns two accounts with the plaintiff. The first account was opened in December 1988 and was numbered 53002 - 00. The second was opened on 15 November 1989 and was numbered 53002 - 16. The first account was opened as a cheque or current account. It later became an overdraft account. The second account was opened for the purposes of a term loan facility. An advance of $38,000 was made. A second mortgage was given over the property. It contained an all moneys clause. 7 Generally speaking, both accounts had a troubled history (by at least early 1990). The company was deregistered on 27 February 1992. The two accounts were amalgamated on 16 March 1993. The debt standing in the second account was transferred to the first account. Thereafter, there was one account which continued under the number of the first account. 8 The hearing commenced on 21 September 1999 and occupied three days. The plaintiff read three affidavits (the deponents were Messrs Egan, Hanrahan & McCarthy). Mr McCarthy gave supplementary oral evidence and was cross-examined. Each of the defendants has sworn an affidavit. Both of them gave supplementary oral evidence and were cross-examined. Both parties tendered documentary material. 9 Before seeking to deal with other matters, I should digress at this stage to deal with one matter that cropped up during the trial. The plaintiff moved for dismissal of a claim for damages contained in a Cross-claim brought by the defendants. The claim for damages was mixed in nature being a combination apparently founded upon allegations of representations and failure to inform. The pleading was somewhat confusing and deficient in a number of respects. Apart from these problems, there were insurmountable evidentiary deficiencies. As the claim was clearly hopeless and doomed to failure, I granted the application for dismissal. The alternative would have led to the wasting of court time and a needless throwing away of costs. It seemed to me that the interests of justice were best served by the granting of the application. 10 In 1988, the defendants had banking arrangements with Westpac Banking Corporation (Westpac). Statements were sent to "The Secretary - K G & S A Kerswell" and the account stood in the name of "K G & S A Kerswell Pty Ltd Strata Management". There were also separate strata management accounts. It is said that the defendants were unhappy with the services provided by Westpac. An approach was made to the plaintiff. The defendants say that two conversations were had with officers of the plaintiff (including one officer who was understood to be the manager). 11 Paragraph 7 of the first defendant's affidavit deposes to the first conversation in the following terms:- "In or about December, 1988 I approached the State Bank ('The Bank') at its branch at 235 Clarence Street, Sydney with a view to doing all my banking with them and I spoke to an officer of the State Bank who I understood to be the manager of the branch, regarding the transfer of the Strata Management accounts and the other accounts from Westpac to the State Bank and generally about financial facilities that my business could expect to obtain. I recall having a conversation with this bank officer as follows:- I said 'I operate a Strata Management company KG & SA Kerswell Pty Limited. We have approximately 60 Strata Management accounts in our portfolio. We have a couple of very large managements such as the Neutral Bay Shopping Village and Pacific Towers in Coffs Harbour. A number of the accounts have relatively big budgets and they normally operate through a cheque account. As a result a bank with these types of accounts can do quite well because interest is not paid and normal bank charges are applied. Currently we are banking with Westpac but we're unhappy with their service and procedures. They don't know how to look after us. We are also looking for a facility from the bank to pay out a company loan from Westpac in due course. I am able to start an account with you by depositing $30,000.00. We want to use this account for company purposes'. The Bank Officer Said: 'That sounds good I'm sure the bank can service your needs'."