Salvato v Commonwealth Bank of Australia (No 2) [2013] NSWSC 1374

Supreme Court New South Wales

Medium Neutral Citation: Salvato v Commonwealth Bank of Australia (No 2) [2013] NSWSC 1374 Hearing dates: 12/07/2013 and subsequent written submissions of 18/07/2013 Decision date: 19 September 2013 Jurisdiction: Common Law Before: Rothman J Decision: (1) Pursuant to Part 13, r 13.4 of the Uniform Civil Procedure Rules 2005, the proceedings are dismissed; (2) The plaintiff shall pay the defendant's costs of and incidental to the proceedings, as agreed or assessed; (3) The defendant's rights under any contractual entitlement are reserved to it. Catchwords: PRACTICE AND PROCEDURE - summary disposal - issue estoppel and release under deed - attempt to agitate issues subject to release - costs - contractual rights Legislation Cited: Civil Procedure Act 2005 Uniform Civil Procedure Rules 2005 Category: Principal judgment Parties: Mimmo Salvato (Plaintiff/Respondent) Commonwealth Bank of Australia (Defendant/Applicant) Representation: Counsel: A Busby (Plaintiff/Respondent) D A McLure (Defendant/Applicant) Solicitors: MacKellars Lawyers (Plaintiff/Respondent) Gadens Lawyers (Defendant/Applicant) File Number(s): 2013/117781 Publication restriction: None

Judgment 1HIS HONOUR: By motion on notice filed on 27 May 2013, the defendant, the Commonwealth Bank of Australia (hereinafter, "the Bank"), seeks orders pursuant to Part 14 r 14.28 of the Uniform Civil Procedure Rules 2005 (hereinafter, "UCPR") that each paragraph of the statement of cross-claim filed on 16 April 2013 be struck out and further orders pursuant to Part 13 r 13.4 of the UCPR that the proceedings on the statement of claim be dismissed. Lastly, the defendant seeks an order for costs of the motion and of the proceedings on an indemnity basis. 2The motion relates to a statement of claim in which the plaintiff, Mr Salvato, sues the Bank for misrepresentation in assessing the plaintiff's capacity to meet the requirements of a loan application, in providing a business as distinct from personal loan; for negligence in administering the said loan as a business loan; and alternatively, for breach of contract, including a breach of fiduciary relationship which the plaintiff asserts arises from the said contract. The motion alleges that the statement of claim is in a form that does not plead a cause of action, is embarrassing, and otherwise does not comply with the requirements of a statement of claim. 3The motion was set down for hearing on 12 July 2013. It was set down, by direction of the Registrar, over the objection of the plaintiff. 4The applicant on the motion relies upon the state of the pleadings (already mentioned); a deed of settlement in relation to this and other matters by which deed, the applicant claims, Mr Salvato could not commence these proceedings; and thirdly, estoppel being both issue estoppel and Anshun estoppel. 5At the initial hearing of the motion, Mr Salvato moved for an adjournment. The basis of the adjournment was the change in solicitor for the plaintiff. The new legal representative of the plaintiff appeared essentially as a matter of courtesy. The legal representative had not been briefed, even with the statement of claim in these proceedings. Further, the legal representative had not been briefed with the motion or the affidavit in support thereof. 6On 12 July 2013, the Court dealt with the adjournment application and refused it. I do not repeat the reasons for that refusal. Notwithstanding the refusal of the adjournment, the Court granted liberty to the legal representatives of Mr Salvato to provide a written short submission in answer to the submission prepared by the Bank in support of the motion. 7Mr Salvato's legal representative foreshadowed that instructions to consent to the orders may be forthcoming. On 18 July 2013, pursuant to the leave granted by the Court, the plaintiff replied to the submission of the Bank by seeking orders that the proceedings in relation to the statement of claim be dismissed and the plaintiff pay the defendant's costs as agreed or assessed. 8The Bank, by letter dated 19 July 2013, opposed the orders. 9The Bank sought orders, the terms of which provided that the grounds upon which the proceedings were dismissed were that "no reasonable cause of action is disclosed, further or alternatively, the proceedings are an abuse of the process of the Court". 10Further, the Bank sought that the defendant's costs be paid "without prejudice to the defendant's rights to rely on any contractual entitlement to recover costs from the plaintiff". 11On 25 July 2013, the Court, as presently constituted, made orders in chambers. Those orders were in the following terms: (1)Pursuant to Part 13, r 13.4 of the UCPR 2005, the proceedings are dismissed; (2)The plaintiff shall pay the defendant's costs of and incidental to the proceedings, as agreed or assessed; (3)The defendant's rights under any contractual entitlement are reserved to it. 12It is unnecessary to detail each of the submissions of the applicant on the motion (the Bank). It is sufficient to deal with one only. As earlier stated, these proceedings deal fundamentally with a loan said by the Bank to be a business loan, and referred to as a better business loan, the purpose of which was to refinance an existing loan facility and, further, a line of credit. The line of credit was for working capital requirements. Some of these allegations are disputed, or were disputed in original proceedings by Mr Salvato. The accuracy of the taxonomy or categorisation of the loans is irrelevant for present purposes. 13The loans were the subject of default. The Bank issued proceedings for remedies in relation to that default. The proceedings were settled by Deed during which the parties recited that the Bank maintained that the loan was for business purposes and that Mr Salvato maintained that the loan was represented to him as a home loan. The Deed recorded that the parties agreed to a number of mutual obligations, one of which was that Mr Salvato released the Bank from all claims whatsoever which Mr Salvato has or had against the Bank arising out of or in any way related to the two aforesaid loans. 14As is obvious from the recital of the issues raised in the statement of claim in these proceedings, they arise out of or are related to the two aforesaid loans. 15As a consequence the Deed releases the Bank and prevents Mr Salvato from proceeding with these claims. 16The terms of UCPR r 13.4 allow a court to dismiss proceedings if the proceedings appear to be frivolous or vexatious, disclose no reasonable cause of action or are an abuse of the process. The motion sought orders under r 13.4 of the UCPR. Those orders are granted, by consent. The motion does not seek an order of the kind that the defendant seeks in its letter of 19 July 2013. I do not make that order. 17As to the defendant's rights to rely on any contractual entitlement, they were reserved by the order. I hasten to add that the power to award costs derives from s 98 of the Civil Procedure Act 2005, and the inherent jurisdiction of the Court. By s 98(2) a party to proceedings may not recover costs from any other party otherwise than pursuant to an order of the Court. If there be a contractual right to obtain costs, it is reserved. If the contractual right to obtain costs has been subsumed in or overtaken by the order of the Court, so be it. The effect of orders 2 and 3 issued by the Court is in or to the effect of order 2 sought by the defendant. The orders there proposed to not seek indemnity costs. 18Further, these costs are compensatory for the need to defend. There is no attempt to seek or to obtain specific performance of any contractual right. 19The Bank has sought reasons for the orders that issued. The foregoing are the reasons for the orders that issued. 20In summary, order 1 issued by the Court on 25 July 2013 was the order sought on the motion. It was the subject of consent by the plaintiff. 21Orders 2 and 3 are, in effect, that which was sought by the defendant as its order 2 in its letter of 19 July 2013. 22For those reasons, the orders made on 25 July 2013 were made.