State Bank of New South Wales v Teese [2001] NSWSC 59

New South Wales Supreme Court

CITATION : State Bank of New South Wales v Teese [2001] NSWSC 59 CURRENT JURISDICTION: Civil FILE NUMBER(S) : SC 10174/89 HEARING DATE(S) : 1 February 2001, 2 February 2001, 5 February 2001 JUDGMENT DATE : 5 February 2001

PARTIES : State Bank of New South Wales (Plt) Ann-Carolyn Teese (Def) JUDGMENT OF : McClellan J

COUNSEL : L J Aitken (Plt) In person (Def) SOLICITORS : Abbott Tout (Plt) In person (Def) DECISION : See para 46

THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

McCLELLAN J

MONDAY, 5 FEBRUARY 2001

10174/89 - STATE BANK OF NEW SOUTH WALES v TEESE

JUDGMENT

1 HIS HONOUR: In this matter the plaintiff seeks orders in terms of paragraphs 1, 2(a) and 3 in the amended summons. 2 During the course of the hearing, the plaintiff sought to amend the sum claimed in paragraph 2(a) of the summons and substitute the sum of $359,128.34. I granted leave to amend the summons in those terms. However, subsequently, the plaintiff indicated that it no longer wished to pursue the amount claimed in that sum but was content for an order in the original sum of $258,267.16. 3 The defendant sought leave this morning to bring a cross-claim against the plaintiff claiming common law damages, exemplary damages, equitable damages, restitution and certain declarations. I granted leave for that cross-claim to be filed. It seems to me that the issues raised by that cross-claim are matters which Miss Teese has sought to agitate in defence to the plaintiff's amended summons. For this reason I decided that the issues arising on the cross-claim would be adequately disposed of in those proceedings without the necessity for any adjournment. 4 The original dispute arose many years ago. The summons which commenced the proceedings was filed by the plaintiff on 20 January 1989. Thereafter the matter was brought before the Court on a number of occasions but in the absence of an appearance from either party it was struck out by the Prothonotary in April 1992. Subsequently the matter was enlivened by the plaintiff, although it could not be said that either party moved to have it disposed of expeditiously. 5 During the course of proceedings in this Court, I understand there have been other proceedings brought by the plaintiff against Mr Fox and it has been suggested to me that the resolution of those proceedings was the occasion for the delay in the prosecution of the summons in this Court. It is unnecessary for me to pursue that aspect of the matter further. 6 The defendant has presented her case in person. She has given sworn oral testimony and this morning she sought leave to file a written document, having sworn to the truth of its contents. I allowed that document in the form of an affidavit to be filed and it has been read in these proceedings. 7 It would appear from the relevant material that the defendant purchased the property known as 3/39 Melrose Parade Clovelly, being the land in certificate of title volume 12147 folio 152, in 1978. She borrowed from the plaintiff, the borrowing being secured by a standard form of mortgage. It was an "all moneys mortgage" containing the usual clause. It also provided that the plaintiff could prove any indebtedness by a statement in writing, signed by a relevant person, including a duly authorised officer of the plaintiff. Although the funds were advanced upon the assumption that the defendant would be the occupier of the dwelling, this has subsequently changed. I am satisfied that she has not lived at the property for many years. 8 There appear to have been no difficulties between the plaintiff and the defendant in the early years. In 1983 she decided to invest in further real estate, having identified the property known as 262 and 264 Clovelly Road, Clovelly, as a suitable investment. That property as I understand the situation is comprised of four small residential units. 9 The records of the plaintiff record discussions in relation to the proposed investment which indicate that the units were being sold by the Public Trustee acting for a deceased estate. The defendant had apparently identified the likely price which would be sought for the property and she believed it would be an exceptional buy. 10 The auction was set for December 1983. The bank officer's note indicates that Mr Fox was an old family friend of Miss Teese and it was proposed that he would come into the deal on a 50/50 basis but would list his wife as tenant in common with Miss Teese for taxation purposes. It was intended that the arrangement be financed by the bank, with the defendant keeping some available cash for repairs, the rental income being proposed as the means of meeting the obligations under the proposed loan. 11 The memorandum continues, indicating that the defendant was intending to marry an overseas businessman, who was then living in France, it being proposed that upon their marriage the defendant would live with her husband in Australia. 12 Because the defendant was to travel, she left behind an authority dated 8 December 1983 for Mr Fox to act on her behalf with respect to negotiating the purchase of the property offered for sale at 262 and 264 Clovelly Road, Clovelly Beach. She signed that authority, indicating that it was to remain in force until further notice. 13 The property was sold, Mr Fox being successful at the auction. The contract was made out to Alfred Joseph Fox and Jacqueline Ann Maree Fox as tenants in common. The deposit was paid for by a cheque on the defendant's account, which was authorised by Mr Fox. Subsequently, the arrangement was altered and by 23 March 1984 Jacqueline Ann Maree Fox consented to the transfer of the property to Alfred Joseph Fox and the defendant as tenants in common in equal shares. 14 The plaintiff confirmed the offer of finance by letter dated 17 January 1984. From that letter it is plain that it was proposed that there be a commercial bill acceptance facility in the sum of $165,000, with the defendant providing mortgages over the property to be acquired and her property at Melrose Parade. Mr Fox was to provide a similar mortgage over the property to be acquired and a further mortgage over other property which he owned. The original facility contemplated was for the term of one year, subject to various standard conditions. The defendant executed the letter, indicating her acceptance. She tells me that she executed that document under duress. However, it is not plain to me how that duress can be said to arise. It is clear from the material before me that she always intended to acquire an interest in the property, proposed to do this with the assistance of finance from the plaintiff, and proposed that Mr Fox would join with her in the investment. In these circumstances, it is inevitable that the financial arrangement would be embodied in an offer from the plaintiff which, if the finance was to be forthcoming, must be accepted by the defendant. 15 The documentation before me also makes plain that the bank was hesitant about providing the loan facility. However, it appears that, notwithstanding any reservations, arrangements were put in place and the acquisition was settled on 18 May 1984. As I have indicated, the moneys to enable that settlement to occur were provided by the plaintiff, secured against the property acquired and further secured by a mortgage over the Melrose Parade property. 16 After the acquisition of this property the defendant returned to Australia. It appears that a dispute arose between the defendant and Mr Fox, which was reflected in a delay in the payments which the bank required under the relevant arrangements. The documents tendered before me include internal bank memoranda, which were in dispute between the defendant and Mr Fox, and concern by the bank as to the indebtedness. It is not necessary for me in these proceedings to investigate the difficulties between Mr Fox and the defendant beyond identifying that they are the apparent cause of the mortgage falling into default. 17 The bank, concerned about its debt, apparently determined to enter into possession and sell the property. In the ultimate the property was sold to the defendant, the agreed price being the sum of $280,000. The sale was settled on 16 February 1988, when the moneys were distributed to the bank and, thereafter, the moneys necessary to meet outstanding rates and charges on the property were dealt with by the plaintiff. 18 The defendant told me that the adjustments made by the plaintiff to her account for these matters were wrongly made, claiming that she had already made those payments herself. However, although I invited her to do so on more than one occasion, the defendant was unable to adduce any evidence which would displace the evidence available from the plaintiff's documents. Those documents include a document tendered by the defendant, which reveals the position of the joint facilities between Mr Fox and the defendant as at 16 February 1988 and describes how the various moneys were, thereafter, disposed of. I accept that account as an accurate statement of the payments which were made. 19 Although the defendant now says that she did not appreciate the position at the time, I am satisfied that the sum of $280,000 did not completely discharge the obligation to the bank in relation to the mortgage with respect to the Clovelly Road property. However, it is plain, notwithstanding the dispute between the defendant and Mr Fox, that she, with the assistance of her then solicitors, determined to acquire the property for the agreed sum. 20 The defendant tells me that it was her understanding that by agreeing to buy the property she would thereby discharge all her debts to the plaintiff, both in relation to the Clovelly Road property and in relation to Melrose Parade. Although she says this to me today, that understanding is contrary to communications forwarded by the plaintiff at the relevant time. Furthermore, the defendant's solicitors, Nicholas Winkler, when corresponding on behalf of Miss Teese, acknowledge that there will be an indebtedness beyond that which can be met by funds from the proposed sale. 21 It must also be borne in mind that, although the defendant now complains that in some way Mr Fox defrauded her in relation to the transaction and says that the plaintiff has been a party to that fraud, or at least has assisted Mr Fox in his alleged attempts to defraud her, she nevertheless agreed to purchase the property for the nominated sum and did not at that time, either herself or through her solicitors, make any complaint about the circumstances. 22 By letter dated 21 July 1988 the plaintiff indicated that, notwithstanding the settlement of the sale for 262 and 264 Clovelly Road, the bank had an outstanding balance of loan accounts. The relevant accounts were identified as 38052402, in debit $14,723.07; 90036600, in debit $18,353.13; 90036601, in debit $13,838.61; and 90036602, in debit $16,108. 23 I understand that the three accounts beginning with the number 9 are accounts exclusive to the defendant. 90036601 is the account in relation to the mortgage for Melrose Parade; 90036600 was the defendant's personal cheque account and 90036602 was opened in order to provide a facility for the banking of rental income obtained by the defendant. The account numbered 38052402 was the account for the mortgage which was jointly held between the defendant and Mr Fox. Accordingly, it would seem that, as at 21 July 1988, the defendant had an indebtedness to the plaintiff in the identified amounts. 24 In that letter the plaintiff also indicated that it was concerned in relation to the continuing indebtedness and asked the defendant to make satisfactory arrangements for the remaining debt or default notices would issue and the bank would instigate sales action. Presumably the action contemplated was in relation to the property Melrose Parade, the subject of the "all moneys" mortgage. 25 By notice dated 23 August 1988, the bank served notice on the defendant pursuant to s 57 (2) (b) of the Real Property Act requiring rectification of a default. A further notice under the Credit (Home Finance) Contracts Act was issued, also dated 23 August 1988. It would appear that, thereafter, negotiations ensued between the plaintiff and the defendant and, although some payments were made, the plaintiff being concerned in the matter commenced these proceedings. 26 A file note from the plaintiff records a telephone conversation, which occurred in March 1989, indicating that the defendant had paid $8,000 on account of arrears, and she asked that the possession action be withdrawn. There was a discussion as to the future monthly payments proposed by the defendant. In that conversation the defendant also indicated that Mr Fox had been the cause of her financial problems and had expressed a willingness to discuss the position with the bank's solicitors. 27 By letter dated 22 March 1989 the plaintiff responded to the telephone discussion and set out its position in the matter. It identified a continuing debt to the plaintiff. It enclosed a copy of the settlement statement in order that the defendant would understand how the moneys paid on the sale of the Clovelly Road properties had been disbursed. There was a note on the plaintiff's copy of the letter indicating that the defendant was distressed by the situation. 28 It would appear that since that time little, if any, moneys have been paid by the defendant on account of her indebtedness to the plaintiff. She, of course, has remained in possession of the Melrose Parade property, from which, as I understand the situation, she has been obtaining some rentals. 29 The plaintiff seeks to prove its case through the evidence of Mr Hanrahan, who has deposed to the continuing indebtedness on the relevant accounts. I accept his evidence, which discloses a total indebtedness, as at 29 January 2001, of $359,128.34. 30 As I have indicated, the defendant chose to represent herself during the course of the proceedings. She was given many opportunities to address the Court and bring forward material to assist in her arguments. Although she raised a number of matters which I shall address below, her constant claim was that she owed no money to the plaintiff and instead the plaintiff owed moneys to her. She claimed, notwithstanding the authority she had given, that Mr Fox was allowed by the bank to operate upon her accounts without authority. Further, she said that, as a consequence, Mr Fox had been allowed to deplete her assets. This allegation is, of course, inconsistent with the fact that the defendant, following the dispute with Mr Fox, determined to acquire the bank's interest in the property known as 262-264 Clovelly Road and, during the course of the negotiations and settlement of that transaction, her solicitor, Nicholas Winkler, accepted that there would be a continuing debt beyond the sale price of the property. 31 The original moneys for the purchase of the Clovelly Road property were provided by bank bill facility. The defendant complains that the commercial bill cannot now be found, and a copy has not been able to be provided to her by the defendant. I do not consider that there is any relevant issue in relation to this complaint, having regard to the fact that any difficulty in relation to the bill was removed by the ultimate sale of the Clovelly Road property to the defendant. Furthermore, I am satisfied, from the fact that she executed the letter of acceptance dated 17 January 1984, that the defendant intended that the purchase would be financed by a bill facility and that there would be a joint indebtedness of her and Mr Fox to the plaintiff. When the defendant ultimately purchased the property from the bank, she funded the acquisition with moneys from another lending institution. 32 The defendant also complains that Mr Fox manipulated her account, with the permission of the bank, and the bank allowed Mr Fox to draw moneys from her account without authority. It is complained that the transaction with Mr Fox for the purchase of the Clovelly Road property provided that they were tenants in common. Furthermore, it is complained that the indebtedness was incurred jointly and severally. 33 I have already indicated that when the defendant acquired the Clovelly Road property from the plaintiff, she made no complaints about the state of the account nor the level of indebtedness which had been identified by the plaintiff. There was never any suggestion that the indebtedness claimed by the bank in this letter of 21 July 1988 was other than appropriate. Certainly, she did not respond to that letter, nor did her solicitor. Accordingly, I cannot, in these proceedings, accept that as between the defendant and Mr Fox there is any matter which could impinge upon the defendant's obligations to the plaintiff. 34 The defendant also complains that a sum of $13,800 should have been credited to her account with respect to the Melrose Parade property but, by error, this did not occur. Thereby, she says her indebtedness to the plaintiff in relation to the Melrose Parade mortgage has been wrongly increased and the sum presently claimed is in error. 35 I am satisfied, from the document entitled "Narrative debit", which was tendered to me by the defendant, that the sum of $13,800 was appropriately credited to the joint account between the defendant and Mr Fox. These were moneys which were available from the settlement which occurred upon the acquisition of that property by Mr Fox and the defendant and which were intended, having regard to the contribution which the defendant had made, to be credited to the defendant's account. There is no suggestion in the material before me that it was ever intended that those moneys should be credited against the defendant's liability in relation to the mortgage for Melrose Parade. 36 The defendant also complains that the interest rate which has been charged for the loan for Melrose Parade was excessive and should have been at a residential rate. However, it is plain that the defendant, if she ever occupied Melrose Parade as her residence, ceased to do so many years ago, probably at the time that she went overseas, and, accordingly, I am satisfied that it was appropriate for the plaintiff during the relevant time to view the facility as one by way of an investment loan. 37 The defendant also says that the plaintiff's account shows a number of errors of an arithmetical nature. However, she has not been able to demonstrate to me that any error has occurred. Certainly, she has not demonstrated to me any error which would displace the evidence of Mr Hanrahan. 38 It is plain that there has been a major falling out, many years ago, between the defendant and Mr Fox. I accept that the defendant believes that Mr Fox has taken advantage of her and further believes that he may have obtained moneys to which she is entitled. However, the documents tendered to the Court clearly document a transaction in which the defendant and Mr Fox joined in accepting responsibility for the financial arrangements for the purchase of the Clovelly Road properties. The Court has no way, in the present proceedings, of determining whether or not the allegations which the plaintiff makes against Mr Fox have any substance. However, I am satisfied that whatever complaint the defendant may have against Mr Fox, she cannot sustain any action against the plaintiff. If the defendant is otherwise able, she may, presumably, pursue proceedings against Mr Fox claiming any relevant debt. 39 In these proceedings, I am satisfied that the bank has proved the debt, which has been identified in the amended summons. In these circumstances, I am satisfied that the plaintiff is entitled to the order in paragraph 1 of the summons. I am also satisfied that it is appropriate to make an order in terms of paragraph 2 (a) in its original form. The defendant fails in relation to the matters identified in her cross claim. 40 The plaintiff seeks an order for costs. The defendant says that she would be unable to pay an order if it is made but otherwise makes no submission which would indicate that I should do other than make an order in favour of the plaintiff, it having succeeded in the matter. 41 I should record that the defendant makes a further submission to me that the debt the subject of the proceedings, is one which she believes was incurred by Mr Fox and for which she has no part. I have dealt with that matter. Although she seeks to reagitate the matter in relation to the question of costs, in my view it is not appropriate to revisit those issues in relation to that limited matter. 42 In the circumstances, I am satisfied that it is appropriate that I order the defendant to pay the plaintiff's costs of the matter. 43 In the course of these proceedings, Miss Teese brought a notice of motion for contempt of court. Despite the form of the motion, in substance it is a complaint that the plaintiff failed to provide documents, either in answer to subpoenas or otherwise in response to its obligations in the matter. 44 In the course of the proceedings, I have received evidence from Mr Hanrahan, an officer of the bank, indicating the enquiries which have been made seeking relevant documents. As I have indicated, this matter commenced many years ago and has a long and difficult history. In the ordinary course, documents which may have been available in earlier years will have been filed or disposed of in accordance with the appropriate banking practice. I am satisfied that officers of the plaintiff have made adequate search for relevant documents and any which have not come to light cannot now reasonably be expected to be found. It is likely that they have, in the ordinary course, been destroyed. Accordingly, I am satisfied that the plaintiff has discharged its obligations to seek and produce documents relevant to the issues in these proceedings. 45 Accordingly, I dismiss the notice of motion and make no order as to costs in relation to that matter. 46 Accordingly, I make the following orders: 1. Order one in the amended summons. 2. Order 2(a) in the amended summons and for clarity, identify that the sum in respect of which I make that order is $258,267.16. 3. Order three in the amended summons. 4. The defendant's cross claim is dismissed. 5. Defendant to pay the plaintiff's costs