Fitzsimons v Commonwealth Bank of Australia [2009] NSWSC 1255

New South Wales Supreme Court

CITATION : Fitzsimons v Commonwealth Bank of Australia [2009] NSWSC 1255

HEARING DATE(S) : 6 November 2009

JUDGMENT DATE : 6 November 2009

JURISDICTION : Equity

JUDGMENT OF : White J

EX TEMPORE JUDGMENT DATE : 6 November 2009

DECISION : Refer to paras 21-23 of judgment.

CATCHWORDS : EQUITY - equitable remedies - injunctions - application to restrain mortgagee sale of property – no serious question to be tried that plaintiff would be entitled to final relief – inadequacy of undertaking as to damages – balance of convenience does not favour granting injunction – application dismissed

LEGISLATION CITED : Trade Practices Act 1974 (Cth) Contracts Review Act 1980 (NSW)

CATEGORY : Separate question

Henry v McWatters (1948) 49 SR (NSW) 173 CASES CITED : Inglis v Commonwealth Trading Bank of Australia (1972) 126 CLR 161 Parist Holdings Pty Ltd v Perpetual Nominees Ltd [2006] NSWSC 599; (2006) NSW ConvR 56-161

PARTIES : Plaintiff: Maria Angela Fitzsimons Defendant: Commonwealth Bank of Australia

FILE NUMBER(S) : SC 5170/09

COUNSEL : Plaintiff: M B Duncan Defendant: A G Bell SC with S Aspinall

SOLICITORS : Plaintiff: Lyons & Lyons Defendant: Henry Davis York

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

WHITE J

Friday, 6 November 2009

5170/09 Maria Angela Fitzsimons v Commonwealth Bank of Australia JUDGMENT 1 HIS HONOUR: This is an application to restrain a mortgagee sale of a property in Cairns. The registered proprietors of the property are the plaintiff and her daughter, Ms Louisa Fitzsimons. The defendant holds a registered mortgage over the property. It secures three debts, namely, a joint debt of the plaintiff and her former husband, Mr Christopher Fitzsimons, and two debts of Ms Louisa Fitzsimons guaranteed by the plaintiff. 2 The evidence of the defendant is that as at yesterday $526,712.06 was owed in respect of the first debt on the joint account and $433,235.89 and $368,625.78 were owed in respect of the two accounts in respect of which Ms Louisa Fitzsimons is the borrower. These amounts total $1,328,573.73. There is no issue that each debt is within the definition of "amount owing" secured by the mortgage. 3 There is something of a history to the dispute. On 1 February 2008 the defendant instituted proceedings in the Supreme Court of Queensland for possession of the Cairns property. At that time other proceedings were pending between the parties in relation to the defendant's enforcement of securities over various properties in New South Wales. The Queensland proceeding was transferred to this Court. 4 The plaintiff filed a cross-claim in the transferred proceeding. She alleged, amongst other things, that Mr Fitzsimons had a credit facility of $5,000 a week provided by the TAB. She alleged that the defendant and Westpac processed direct debit requests to the account of the TAB with Westpac. She pleaded that the debit requests were invalid as they were not authorised by all of the joint account holders. She alleged that the defendant was required to provide her with restitution of the moneys drawn from the joint account pursuant to a direct debit request signed by Mr Fitzsimons. 5 On 2 July 2008 the parties entered into an agreement for settlement of those proceedings. The plaintiff executed a deed by which she released the defendant from any cause of action in respect of or in any way related to the mortgage, the loan agreements secured by the mortgage, and the operation of the joint account from which the direct debits were made. In the deed she acknowledged that she had not entered into the deed in reliance on or as a result of any statement or conduct of any kind on behalf of the defendant, but had done so voluntarily on her own information and investigation, having obtained independent legal advice. 6 Judgment was given by consent for the various debts. Orders were made by consent entitling the defendant to recover possession of the Cairns property, although the time for enforcement of the orders was deferred such that the orders could not be enforced, relevantly, prior to 1 October 2008. 7 The plaintiff seeks to avoid the operation of the release by contending that it is unconscionable for the defendant to rely on the deed of release to resist her present claim. The final relief sought in the summons is a declaration that the defendant by relying on the strict terms of the consent orders and the deed of release would be and is acting unconscionably within the meaning of that term in the Trade Practices Act 1974 (Cth). The other declaration sought is that the defendant between 21 December 2005 and July 2006 breached an order of this Court by paying the moneys out of the joint account. 8 The order in question of 21 December 2005 was made on the application of the Law Society of New South Wales. Ms Jean Sayer was appointed as receiver to the practice of Mr Fitzsimons. He practised as a solicitor. An order was made that Mr Fitzsimons be restrained from removing or causing or permitted to be removed from New South Wales or otherwise dealing with any of his assets within New South Wales without first obtaining the leave of the plaintiff or of the Court to do so. 9 There is no evidence as to whether the defendant had notice of that order. These proceedings were commenced on 3 November 2009 when I made orders for short service bringing the matter back today. The reason for the urgency is that the auction is scheduled to be held on this weekend. The solicitor for the defendant has deposed to being informed by the relevant bank officer that within the time available she has not been able to ascertain if or when the bank was served with a copy of the "Law Society orders". 10 There is also a question, which is not necessary to decide, as to whether credit balances in the account kept with a branch of the defendant in Cairns would constitute property of Mr Fitzsimons in New South Wales in any event. 11 It is the plaintiff's position that the defendant ought not to have allowed the drawings from that account in favour of the TAB and that had it not done so, the credit balances in the account would be such that there would have been sufficient moneys in the account to repay the secured debts. There is no evidence that that would be so. The account as at 1 November 2005 had an opening credit balance of $4,729.30. It later went into debit and had a closing debit balance of $880.21. 12 During the period when there were transfers from the account to the TAB there were also substantial deposits made to the account. The source of those deposits is not always apparent but some of the credit items show payments from the TAB. It may well be that the amounts credited to the account, or a substantial part of those amounts, represented winnings. It is not to be presumed that had the defendant not permitted the debits from the account that the same credits would have been made to it. 13 On 23 October 2009 the plaintiff filed a notice of motion in the transferred proceeding seeking amongst other relief that the deed of release filed on 11 September be declared unjust in the circumstances at the time it was made under s 7 of the Contracts Review Act 1980 (NSW). As well as seeking relief under that Act, she also sought orders that the deed of release not be enforced in its entirety, and that it be declared void. 14 Subsequently orders were made by consent that that notice of motion be dismissed. 15 There is no evidence that the operation of the account caused the default in repayment of the loans. In any event no claim for final relief is made that the deed of release should be set aside. I do not understand in those circumstances why it would be unconscionable for the defendant to rely upon the terms of a deed of release entered into for the purpose, one would think, of avoiding just such a claim as is now made. I do not think that there is a serious question to be tried that the plaintiff would be entitled to final relief for which the present claim for an interlocutory injunction is said to be an adjunct. 16 There are other reasons why this application must fail. First, I am not satisfied as to the plaintiff's undertaking as to damages. She adduced no evidence as to her financial position in her own case. An affidavit she swore in the Supreme Court of Queensland in May this year disclosed that she is in receipt of an age pension from Centrelink. She also then expressed the opinion that the estimated current market value of the Cairns property is about $585,000, that is to say it is well short of the amount of the debts secured. 17 There is also the consideration that in the ordinary case if a mortgagor is to restrain the exercise of a mortgagee's power of sale, the mortgagor must pay into court the amount sworn to by the mortgagee as the amount owing, or a lesser amount if it appears from the terms of the mortgage instrument that the lesser amount is due (Harvey v McWatters (1948) 49 SR (NSW) 173; Inglis v Commonwealth Trading Bank of Australia (1972) 126 CLR 161 at 164 and 169). 18 An ordinary case is one where there is a dispute as to the amount due under the mortgage, or whether there is a challenge as to the way the mortgagee is exercising the power of sale. The present is an ordinary case within the operation of those principles. 19 It appears that on 3 June 2009 the plaintiff and Ms Louisa Fitzsimons entered into an agreement for the sale of the property for $595,000. It also appears that the time for settlement was 50 days from the date of contract. That time has long since passed. There is no evidence as to why the sale was not completed. The plaintiff says that were that sale completed the funds would be sufficient to discharge the debt she claims is payable to the defendant. But that would only be so if the plaintiff's claims otherwise succeeded. This is not a case in which the plaintiff is claiming that she can redeem the mortgage within a fairly short time by re-financing or selling the property and thereby raise a sufficient amount to pay the amount claimed by the mortgagee (compare Parist Holdings Pty Ltd v Perpetual Nominees Ltd [2006] NSWSC 599; (2006) NSW ConvR 56-161 at [17]). 20 The plaintiff is not in possession of the Cairns property. She applied in May this year to the Supreme Court of Queensland for a stay of execution on a writ for possession of the property but that application was dismissed. Interest continues to run on the mortgage debt. Even if there were a serious question to be tried as to the plaintiff's claim for final relief, the balance of convenience would not favour the grant of the injunction. Moreover, if the plaintiff is entitled to final relief, her claim presumably could be readily calculated in damages. 21 For these reasons I order that the claims for relief in paragraphs 3 and 5 of the summons be dismissed. Subject to hearing counsel I propose to order that the plaintiff pay the defendant's costs of the application for that relief.