Supreme Court New South Wales Medium Neutral Citation: National Australia Bank v Sayed (No. 9) [2017] NSWSC 389 Hearing dates: 7 & 10 April 2017 Date of orders: 13 April 2017 Decision date: 13 April 2017 Jurisdiction: Common Law Before: Davies J Decision: (1) Leave is granted to the Cross-Claimant to amend the Further Amended Cross-Claim filed 25 October 2016 in the manner sought in the form of the cross-claim annexed to the affidavit of Bill Sayed sworn 28 March 2017 (to be entitled Second Further Amended Cross-Claim) in the following respects: (a) by omitting prayers 2, 4 and 5 in the section headed "Relief Claimed"; (b) by omitting paragraph 5; (c) by the addition of the words in paragraph 6; (d) by the substitution of the LPI number in paragraph 7; (e) by the addition of the words in paragraph 28; (f) by the addition of the words in paragraph 31; (g) by omitting paragraph 32; (h) by the addition of words to particular (c) under paragraph 33; (i) by the addition of the word "rejected" in particular (n) under paragraph 33; (j) by the substitution of the words in paragraphs 35, 36, 37 and 39. (2) The Second Further Amended Cross-Claim is to be filed and served by 28 April 2017. (3) The Cross-Claimant is to pay the costs thrown away by reason of the amendment. (4) The Cross-Claimant is to pay the costs of the Notice of Motion filed 28 March 2017. Catchwords: PROCEDURE – pleadings – amendment – possession proceedings – cross-claim by mortgagor for breach of mortgagee's duties – further application to amend cross-claim – whether cross-claimant estopped from pleading further claims – whether abuse of process PROCEDURE – pleadings – fraud – need for proper particularisation Legislation Cited: Australian Securities and Investments Commission Act 2001 (Cth) Uniform Civil Procedure Rules 2005 (NSW) Cases Cited: Commercial and General Acceptance Ltd v Nixon (1981) 152 CLR 491 Forsyth v Blundell (1973) 129 CLR 477 National Australia Bank Limited v Sayed (No 4) [2015] NSWSC 420 National Australia Bank v Sayed (No. 5) [2016] NSWSC 669 National Australia Bank v Sayed (No. 6) [2016] NSWSC 1253 National Australia Bank v Sayed (No. 8) [2017] NSWSC 89 Nominal Defendant v Manning (2000) 50 NSWLR 139; [2000] NSWCA 80 Redgrave v Hurd (1882) 20 Ch D 1 Sayed v National Australia Bank Limited [2013] NSWCA 304 Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507; [2015] HCA 28 Wentworth v Rogers (No 5) (1986) 6 NSWLR 534 Category: Procedural and other rulings Parties: National Australia Bank Ltd (Plaintiff/Cross-Defendant) Bilal Sayed (Cross-Claimant) Representation: Counsel: G Lucarelli (Plaintiff/Cross-Defendant) In person (Cross-Claimant) Solicitors: DibbsBarker (Plaintiff/Cross-Defendant) Self-represented (Cross-Claimant) File Number(s): 2010/135614 Judgment 1. The First Defendant/Cross-Claimant, Bill Sayed, applies by Motion filed 28 March 2017 to amend his cross-claim yet again. Many but not all of the proposed amendments are opposed but all of the substantive amendments are opposed. The background 1. The background is set out in my judgment National Australia Bank v Sayed (No. 5) [2016] NSWSC 669 at [2]-[26]. Briefly, the Bank brought possession proceedings in May 2010 against Mr Sayed and his wife seeking possession of one of two properties mortgaged to the Bank to secure two loans made at the same time. That property was their home at Woonona. The Bank had obtained possession of a development property at Corrimal consisting of two adjoining lots and sold it. Mr Sayed brought a cross-claim alleging, inter alia, breach of the Bank's duty as a mortgagee exercising its power if sale. The proceedings were ultimately settled but the Cross-Claim did not form part of the settlement. The issue in the present application, as in earlier ones, is what claims in the Cross-Claim remained to be determined after the settlement. 2. In Sayed (No. 5) which concerned an application to file a further amended cross-claim, I found relevantly for the present application that the reintroduction at that time of claims concerning the Woonona property and the cross-collaterisation should not be permitted. I did that by reason of the judgment of the Court of Appeal in Sayed v National Australia Bank Limited [2013] NSWCA 304 and the judgment of Harrison AsJ in National Australia Bank Limited v Sayed (No 4) [2015] NSWSC 420. 3. For other reasons I was not prepared to grant leave to Mr Sayed to file the proposed amended cross-claim. Accordingly, his Notice of Motion to do so was dismissed. 4. Subsequently, Mr Sayed sought leave to file a further amended cross-claim. I heard that application on 5 September 2016 and gave judgment on 13 September 2016: National Australia Bank v Sayed (No. 6) [2016] NSWSC 1253. 5. The issue on that application was whether Mr Sayed should be permitted to plead, as part of his claim for the sale of Corrimal at an undervalue, that the Bank wrongly treated the two lots making up the Corrimal land as landlocked. For the reasons I gave in that judgment I declined to permit Mr Sayed to add that pleading. I did, however, grant leave to him to file a further amended cross-claim in a form which I identified. 6. The prior iteration of the cross-claim, called Amended First Cross-Claim, was filed on 18 August 2015. The cross-claim for which I granted leave in Sayed (No. 6) was the Further Amended First Cross-Claim filed 25 October 2016. 7. At a directions hearing on 15 February 2017 Mr Lucarelli of counsel for the Bank drew my attention to two matters appearing in the Further Amended Cross-Claim which he submitted I had not permitted to be pleaded in Sayed (No. 5) and Sayed (No. 6). The first of these was a pleading in paragraph 32 which asserted that: NAB by its agent MERC proceeded on the false basis that Lot 42 was landlocked or alternatively failed to amend or to disregard an appraisal that had been made on that false basis. 1. The second was paragraph 42 under the heading "Unconscionable conduct – ASIC Act 2001": The cross-claimant repeats paragraphs 27 – 45, 47 and 49 of the first defendant's defence to amended statement of claim. 1. I heard argument in relation to the appropriateness of those two paragraphs or portions of paragraphs remaining in the further amended cross-claim in the light of my two earlier judgments. I then gave judgment striking out paragraphs 32, 42 and 43 of the cross-claim as well as the words in paragraph 33(k) "including MMJ's assumption of landlocking": National Australia Bank v Sayed (No. 8) [2017] NSWSC 89. 2. In that judgment I said this: [4] … In any event, paragraphs 42 and 43 should be struck out but Mr Sayed should be given leave to amend to plead whatever matters he wishes in support of the declaration of unconscionable conduct concerning the Corrimal property. and: [6] Paragraph 32 and the particulars to paragraph 33, that is particular (k), again appear to have been included in error. Mr Sayed said that he believed he was entitled to file the cross-claim containing those matters because specific objection had not been made to them when the issue of land-locking was debated. However the error arose, those paragraphs are inconsistent with the judgment I gave. Paragraph 32 must be struck out and the phrase, "including NMJ's assumption of land locking in particular (k) to paragraph 33 should similarly be struck out. [7] If Mr Sayed is making some other point in paragraph 32, and the drafting suggests that he might be, he should also be permitted to re-plead that paragraph but to exclude any reference to the land-locking. 1. I directed that any application to amend the cross-claim in relation to those two matters should be made by notice of motion filed 15 March 2017 and made returnable before me on 17 March with the time for service abridged. The parties were agreeable to that course. 2. On 7 March 2017 my Associate received an email from Mr Sayed asking for a two week extension of the time to file the notice of motion because of a death in the family. The Bank did not oppose that extension and it was granted. 3. The further amended first cross-claim that Mr Sayed sought leave to file contained amendments which went beyond those two areas that I had identified in Sayed (No. 8). However, the Bank took no objection to the amendments on that basis. 4. I will first note the amendments proposed by Mr Sayed to which the Bank did not object. (a) The omission of paragraph 5. (b) The addition of words to paragraph 6. (c) The substitution of an incorrect LPI number in paragraph 7. (d) The addition of certain words to paragraph 28. (e) The deletion of paragraph 32; (f) The addition of words to particular (c) under paragraph 33. (g) Amendments asserting the fair market value of Corrimal at a particular date and consequential amendments in paragraphs 35, 36, 37 and 39. 1. I will now deal with the proposed amendments to which the Bank objected. References to an existing paragraph or existing wording is a reference to the Further Amended Cross-Claim filed 25 October 2016. Paragraph 8 1. The existing wording of this paragraph was this: On 21 June 2006 the NAB advanced $500,000 to Mr Sayed and his wife Mrs Sayed purportedly secured by the Corrimal mortgage (the "Corrimal loan"). 1. Mr Sayed proposes to strike out the words "and his wife Mrs Sayed". The Bank objects because it says that the advance was demonstrably made to Mr and Mrs Sayed as the loan agreement makes clear. Mr Sayed informed me that he thought the words ought to be removed because on a previous occasion I had indicated that a reference to Mrs Sayed elsewhere in an earlier form of the cross-claim should be removed. However, the circumstances were different. In that earlier form of the cross-claim Mr Sayed (who is the sole cross-claimant) was purporting to assert that the interests of Mrs Sayed had been affected by some action on the Bank. 2. Paragraph 8 should not be amended. Paragraphs 17 and 26 1. Paragraph 17 in its existing form relevantly read: On about 1 June 2009 NAB by its agent Mortgage and Estate Realisation Company ("MERC") obtained recommendations for marketing … 1. Paragraph 26 in its existing form read: On 20 October 2009, NAB by its agent MERC appointed MMJ North Corrimal as its agent … 1. Mr Sayed seeks to amend by removing the reference to MERC being NAB's agent in each case. He says that that is because it is not necessary to assert that NAB carried out certain actions by its agent. The agent's acts will be the acts of NAB. The Bank opposes the amendments on the basis of a finding I made in Sayed (No. 6) at [4] that MERC was in fact NAB's agent. 2. In my opinion, the amendment should not be permitted. The position is not as straightforward as Mr Sayed asserts because of the particular nature of the agreement between NAB and MERC whereby MERC acted as a principal. Further, in other places in the existing cross-claim Mr Sayed refers to acts of MERC. So that the reader of the cross-claim can have an understanding of who MERC was in relation to NAB and how it was involved, the pleading in paragraph 17 should remain unamended. Paragraphs 31 and 33(n) 1. The existing form of paragraph 31 reads this way: On or about 19 February 2010 NAB sold Corrimal for $545,545.45 to Realta Enterprises Pty Ltd (ACN 090415919), which was a third party unrelated to Mr Sayed ("The Sale"). 1. Mr Sayed wishes to add the following words at the beginning of the paragraph: NAB after having rejected the tender offers and taking further steps to reassign Corrimal to an alternative principle (sic) agent. 1. Paragraph 33 asserts that the Bank wilfully and recklessly sacrificed Mr Sayed's interests as mortgagor. It then listed a number of particulars. Particular (n) in its existing form read: Accepting a tender bid and selling the property following that marketing failure for a price which was massively below the assessed and actual market value of the property. 1. Mr Sayed seeks to amend that particular by adding the word "rejected" before the words "tender bid". 2. The Bank objects to these amendments because it says Mr Sayed has served and identified all the evidence he is to rely on and that the evidence does not disclose that NAB rejected tender offers. The Bank objects to the allegation of reassigning the sale of the Corrimal property to an alternative agent on the basis of the relevance of the pleading. The Bank is apprehensive that if the amendment is allowed Mr Sayed will be able to ask for discovery in relation to all of the agents the Bank has appointed. The Bank accepts, however, that there may be evidence of the Bank appointing a new agent at some point in the process. 3. In my opinion, the Bank suffers no prejudice if Mr Sayed is allowed to make the amendments to paragraph 31 and the consequential amendment to particular (n) in paragraph 33. If there is no evidence of the Bank having rejected the tender offer as the Bank asserts then Mr Sayed will not be successful in relation to that allegation. I do not share the Bank's concern about the potential to use the amended paragraph as a basis for getting wide discovery. Paragraphs 32 A and B 1. Mr Sayed wishes to insert the following two paragraphs into the cross-claim: 32 A. NAB's Agent MMJ Greg Ellul proceeded on a fraudulent and deceptive basis, moreover engaged in collusive tendering with Realta Enterprises and Design Workshop Australia for the purpose of securing Corrimal for Reaita Enterprises well below its market value (a) Falsely described Lot 42 as 'Land Locked' (b) Falsely state that access between the Corrimal lots was only via a temporary wooden foot bridge (c) Deceive by stating that Wollongong City council would 'insist on a great deal of work to be undertaken on the creek' and then stating that the discovery of the completed Corrimal remedial works D/A "Third D/A" was a disadvantage rather than an advantage of considerable value to any prospective purchaser of Corrimal. (d) Provided a property appraisal lower than market value (e) Provided a false market estimate of the completed units with a net profit to be lower than 10% (f) Provided a false statement concerning the unit/land ratio value (g) Instructed Greg Truebody to provide a low property appraisal in line with his his own (h) Falsely stating that Lot 41 and Lot 42 could not be sold separately because it would cause Lot 42 to become Landlocked (i) Falsely stated that he had communicated with other potential buyers for Corrimal and then indicating that the developers have left the market (j) Purported that there were two (2) tender bidders (k) Purported that the Realta Enterprises tender bid was fair and reasonable when it was grossly under the market value (l) Concealed the close relationship between the tender bidders 32 B. NAB proceeded with gross negligence; (i) by not carefully assessing each piece of information received from its agents (ii) by not cross-referencing that information with its own independent file on Corrimal (iii) by accepting unqualified technical advice from its agents rather than obtaining independent expert advice when it was duly required (iv) by not carrying out any due diligence or risk assessments concerning the information received from its agents was on false, fraudulent and/or on a deceptive basis (v) by not assigning Corrimal to an experienced Commercial Property Development Agent after it was informed that Corrimal was identified as a large development property with current development approvals for 12 dwellings (v) by classifying Corrimal as a problem site and then accepting an offer it earlier rejected in order to close a protracted case file. Particulars Further particulars of the Sale will be provided after discovery. 1. Mr Sayed says that the time limitation problems in Sayed (No. 6) do not apply if the action is based on fraud and he pleads fraud in relation to the landlocked issue in these two paragraphs. Although he had said in 2016 that he did not rely on fraud in seeking to amend the cross-claim at that time, he said that he took that course to avoid wasting time so that the matter would be heard at the earliest opportunity. He said that, now that the Bank has reopened the matter by complaining about the inclusion of paragraphs 32, 42 and 43 that led to my judgment in Sayed (No. 8), he wishes to plead fraud. 2. Mr Sayed should not be allowed to include paragraphs 32A and 32B for a number of reasons. First, the courts take a strict view in relation to allegations of fraud. Criminality is being alleged. Rule 15.3 Uniform Civil Procedure Rules 2005 (NSW) says that the pleading must give particulars of any fraud that is pleaded. 3. In Wentworth v Rogers (No 5) (1986) 6 NSWLR 534 Kirby P (with whom Hope and Samuels JJA agreed) said (at 538) that particulars of the fraud claimed must be exactly given and the allegations must be established by the strict proof which such a charge requires. The pleading must specifically allege the acts involved and that they were done in a manner that involves fraud: Redgrave v Hurd (1882) 20 Ch D 1 at 12. Particulars of the knowledge of the falsity of the facts or representation would be necessary. A statement or representation may be wrong without being false. 4. What are purportedly particulars under these two paragraphs are simply assertions or conclusions. They are not particulars sufficient to plead fraud. 5. Secondly, the paragraphs roll up a number of potential causes of action including conspiracy, deceit and negligence. 6. Thirdly, paragraph 32B is misconceived not only because there is no concept of gross negligence in the civil law but because negligence has no place in a claim against a mortgagee for not properly exercising its power of sale: Forsyth v Blundell (1973) 129 CLR 477; Commercial and General Acceptance Ltd v Nixon (1981) 152 CLR 491. That fact had been recognised by the pleading in paragraph 33 of the cross-claim. 7. Fourthly, Mr Sayed is estopped from now attempting to plead the landlocking issue by assertions of fraud in the light of my judgment in Sayed (No. 6). Alternatively, it is an abuse of process for him to endeavour to do so: Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507; [2015] HCA 28 at [24]-[26]. In Sayed (No. 6) I held that Mr Sayed was not able to make the landlocking claim partly because he had not brought forward the claim in a timely fashion and partly because the Bank would be statute barred from making any claim against its agents as a result of Mr Sayed's claim against it. Neither of those matters has changed. 8. Fifthly, Mr Sayed did not rely on fraud when he applied to amend his cross-claim in 2016. I specifically noted that he did not do so (Sayed (No 6) at [36]) and he has given the explanation I have referred to earlier. 9. In Nominal Defendant v Manning (2000) 50 NSWLR 139; [2000] NSWCA 80 the Court of Appeal was considering a situation where an interlocutory application had been made and rejected and a subsequent application was made on evidence not presented in the earlier proceedings. The issue was whether it was an abuse of process for an applicant to do that in interlocutory proceedings. 10. The Court by majority rejected the view that an applicant making a second interlocutory application is guilty of an abuse of process unless the other party is guilty of fraud or the application rests on evidence which could not reasonably have been relied on before. However, Heydon JA (one of the judges in the majority) went on to say: [72] Nothing in the above reasoning rejecting the Nominal Defendant's submission is intended to encourage litigants to avoid putting their best cases forward in any interlocutory application. The deliberate non-tender of evidence for use in a second interlocutory application should the first fail, or for use in an interlocutory appeal from the interlocutory application, might of itself be fatal to success; and even the non-deliberate non-deliberate failure to tender evidence is extremely risky. The Nominal Defendant's proposition that no second interlocutory application can be entertained unless there is a change of circumstances or unless evidence is relied on which could not reasonably have been obtained earlier is too extreme, but a litigant bringing a second application where circumstances have not changed on evidence available earlier is facing serious and self-created risks of an adverse exercise of judicial discretion. The real evils to which Hayne JA referred in D A Christie Pty Ltd v Baker [1996] 2 VR 582 at 602-3 - the risk of conflicting decisions, the unnecessary vexing of respondents, judge-shopping and the diminution of certainty in the conduct by respondents of their affairs - and others - damaging public confidence in the integrity of judicial decisions, expending time and money on litigation unnecessarily - are evils which each court in its individual discretion will rightly strain to avoid. 1. Acting Justice Foster (the other judge in the majority) said at [123] that such a second application was a matter to be taken into account in the exercise of discretion. 2. A matter that weighs heavily in the exercise of that discretion in the present case is the length of time that these proceedings have been on foot and the circumstances that gave rise to them. The loans secured by the mortgages were made on 21 June 2006. Default took place in October 2008 and the proceedings commenced on 28 May 2010. I have otherwise traced the history of the matter in Sayed (No. 5). The significant recent matters are that after Harrison AsJ determined the matter of the In Principle Agreement an amended cross-claim was filed on 18 August 2015. A number of applications were made in 2016 to amend that cross-claim with the result that the present form of that pleading was filed on 23 October 2016. 3. Now, at a time eight and a half years after default occurred, more than seven years since the land was sold and almost seven years since the proceedings commenced Mr Sayed for the first time seeks to assert in a pleading that the Bank acted fraudulently in a manner not easy to discern from the pleading so that he can by a second means plead a cause of action that I rejected on one of his applications to amend in 2016. No satisfactory explanation has been given for the failure to bring this matter forward at an earlier time. It would undoubtedly have the effect of delaying further the hearing of the cross-claim which was otherwise at the point where a hearing date can be allocated. Paragraph 33 Particular (d) 1. This is one of the particulars to support the allegation that NAB wilfully and recklessly sacrificed Mr Sayed's interests as mortgagor. The particular originally read in this way: (d) Failure by NAB to have proper regard to the development approvals ("the DAs") in relation to Corrimal. 1. Mr Sayed seeks to amend the particular so that it reads: (d) Failure by NAB to have proper regard for Mr Sayed's interest's (sic) in the development approvals ("the DAs") by including Mr Sayed's D/A as an exhibit to the Corrimal sale contract. 1. The basis for this amendment is said by Mr Sayed to be that he owned the rights to and the intellectual property in the development approvals and that he would have been in a position to be able to sell them to the ultimate purchaser after the purchase, but by the Bank's including them in the contract of sale, no increased price was obtained by doing so. 2. In my opinion, this proposed amendment is misconceived. The development approval was in the public arena. Mr Sayed may have had a legitimate complaint if the Bank had failed to include with the contract the fact that there was a development approval. No basis is put forward for suggesting that the purchaser did not pay a figure taking into account the development approval. Further, it is not clear how Mr Sayed would have had the right to sell the rights to the development approval nor that a purchaser who had purchased the land would have had any interest in so doing because the purchaser already had the rights that came with the land. 3. This amendment should not be allowed. Paragraph 33 Particular (k) 1. This particular relevantly read: Assuming that the low appraisal of MMJ was to be preferred to the valuation of Kylie Ward without analysing and identifying the errors in the method used by MMJ for its estimate, including MMJ's assumption of landlocking, and … 1. Mr Sayed seeks to amend this particular to read relevantly: Assuming that the low appraisal of MMJ was to be preferred to the valuation of Kylie Ward without analysing and identifying the errors in the method used by MMJ for its estimate, including MMJ's assertion of access between the Corrimal Lots and … 1. It can be seen that this amendment concerns the issue of landlocking. Expressing the matter as "access between the Corrimal Lots" does not mean that it is not concerned with landlocking. Mr Sayed claimed the right to amend this particular on the basis that he wished to allege fraud concerning the landlocking issue. I have dealt with this in considering paragraphs 32A and 32B and have rejected his amendments there. This amendment falls with those. Paragraphs 42 and 43 1. These paragraphs in the existing claim read as follows: Unconscionable conduct – ASIC Act 2001 42. The cross claimant repeats paragraphs 27 – 45, 47 and 49 of the first defendant's defence to amended statement of claim. Corrimal loan and Corrimal mortgage 43. By reason of the matters pleaded at paragraphs 27-45 of the first defendant's defence to amended statement of claim, the plaintiff engaged in conduct that is unconscionable in breach of s 12CC of the ASIC Act. 1. Mr Sayed seeks to substitute for those two paragraphs the following: Unconscionable conduct – ASIC Act 2001 42A. In relation to the Corrimal loan and Corrimal mortgage, the cross claimant repeats paragraphs 27 – 45, 47 and 49 of the first defendant's defence to amended statement of claim filed 13 February 2012. 43A. In relation to the Corrimal loan and Corrimal mortgage by reason of the matters pleaded at paragraphs 27-45 of the first defendant's defence to amended statement of claim filed 13 February 2012, the plaintiff engaged in conduct that is unconscionable in breach of s 12CC of the ASIC Act. 1. Towards the end of the hearing of this application Mr Sayed handed to me a further form of the further amended first cross-claim which he said was the form of the pleading he wished to file. Mr Sayed said that in lieu of paragraphs 42A and 43A set out above he wished to plead the matter in this way: 42A. The cross-claimant repeats paragraphs 45 and 46 and of the first defendant's defence to amended statement of claim filed 13 February 2012. Corrimal Loan and Corrimal Mortgage 43A. By reason of the matters pleaded at paragraphs 45 and 46 of the first defendant's defence to amended statement of claim, the plaintiff engaged in conduct that is unconscionable in breach of section 12CC of the ASIC Act. 43B. Further, by reason of the matters pleaded at paragraphs 45 and 46 of the first defendants defence to the amended statement of claim, the plaintiff engaged in conduct that is unconscionabie in breach of section 12CB of the ASIC Act. 43C. In the premises the cross claimant is entitled to damages pursuant to section 12GF and/or 12GM of the ASIC Act. 43D. In the premises the cross claimant is entitled to an order pursuant to section 12GM of the ASIC act declaring the whole of the Corrimal Loan and the Corrimal Mortgage void 43E. Alternatively, such other order pursuant to section 12GM of the ASIC Act as the court thinks appropriate. 1. It is necessary to set out the paragraphs referred to from the Defence filed 13 February 2012: 27. At all material times, the NAB was a corporation acting in trade or commerce for the purposes of the Australian Securities and Investments Commission Act 2001 ("the ASIC Act"). 28. In or about April 2006 during a meeting between the first defendant, Richard Taylor and Ms Kylie Hancox ("Ms Hancox") of the plaintiff, the first defendant made a loan application to the plaintiff, which ultimately gave rise to the Corrimal Loan, the Woonona Home Loan, a mortgage over 267 to 273 Rothery Road, Corrimal, New South Wales, (formerly Folio ID 4/804963 and B/398475. and from about 28 December 2006, Folio ID 41/1106335 and 42/1106335) ("Corrimal"), being registered mortgage number AC481820 ("the Corrimal Mortgage") and the Woonona Mortgage ("the Loan Application") Particulars Further particulars of the Loan Application will be provided after discovery. 29. In or about April 2006, at the meeting between the first defendant, Richard Taylor and Ms Hancox of the plaintiff, the first defendant advised Ms Hancox that his income was $100,000. 30. In or about June 2006, Ms Hancox by telephone: (a) represented to the first defendant that his income was insufficient for the Loan Application to be approved; (b) represented to the first defendant that the bank would approve the loan if the first defendant stated in his application that his income was $120,000 rather than his actual income of $100,000; (c) invited the first defendant to state in his loan application that his income was $120,000; (d) represented to the first defendant that if he did state in his loan application that his income was $120,000 the plaintiff would process and treat the application as if his income was $120,000 even though it was in fact $100,000. 31. In reliance upon the representation referred to in paragraph 30 above, the first defendant attended the Corrimal branch of the plaintiff and signed a new income declaration showing income of $120,000, which was false ("the Income Declaration"). 32. The plaintiff was aware that the income referred to in the Income Declaration was not the first defendant's true amount of income. 33. In the premises, the plaintiff was aware that the first defendant's actual income adversely impacted on his ability to service and repay the Corrimal Loan and Woonona Home Loan, in the event of default or otherwise, leading to a high risk of default. 34. Further, the first defendant was unable to negotiate a term into the Corrimal Loan, the Woonona Home Loan, the Corrimal Mortgage or the Woonona Mortgage that would protect him in the event that his income was not $120,000 in any particular year. 35. In addition to the Corrimal Loan, the Woonona Home Loan and the Woonona Mortgage, the plaintiff and the defendant entered into the Corrimal Mortgage in or about June 2006. 36. The terms of the Corrimal Loan (and the First Home Loan pleaded by the plaintiff, which is not admitted), the Woonona Home Loan (and the Second Home Loan pleaded by the plaintiff, which is not admitted), the Corrimal Mortgage and the Woonona Mortgage have the effect of cross-collateralising the security taken by the plaintiff over Corrimal and Woonona, so that a default under the Corrimal Loan gave rise to a default under the Woonona Home Loan and vice versa ("the Cross-Collateralisation"). Asset lending 37. As a consequence of the Cross-Collateralisation and the matters pleaded in paragraphs 28 - 36 it can be inferred that the plaintiff provided financial accommodation to the first defendant pursuant to the terms of the Corrimal Loan (alternatively, the First Home Loan pleaded by the plaintiff, which is not admitted), the Woonona Home Loan (alternatively, the Second Home Loan pleaded by the plaintiff, which is not admitted), the Corrimal Mortgage and the Woonona Mortgage without regard to the ability of the first defendant to repay by instalments under the said terms, in the knowledge that adequate security would be available in the event of default. Particulars The value of Corrimal was at least $750,000 The value of Woonona will be further particularised. 38. As a consequence of the matters pleaded in paragraph 37 the financial accommodation to the first defendant pursuant to the terms of the Corrimal Loan (alternatively, the First Home Loan pleaded by the plaintiff, which is not admitted), the Woonona Home Loan (alternatively, the Second Home Loan pleaded by the plaintiff, which is not admitted), the Corrimal Mortgage and the Woonona Mortgage constituted asset lending. The Code of Banking Practice 39. The Code of Banking Practice ("the Code") is the banking industry's customer charter on best banking practice standards. 40. Clause 25 of the Code provides: Before we offer or give you a credit facility (or increase an existing credit facility), we will exercise the care and skill of a diligent and prudent banker in selecting and applying our credit assessment methods and in forming our opinion about your ability to repay it. 41. For the purposes of Section 12CC(11) of the Australian Securities and investments Commission Act 2001 ("the ASIC Act"), the Code is the plaintiffs applicable industry code. 42. The plaintiff failed to exercise the care and skill of a diligent and prudent banker in selecting and applying credit assessment methods and in forming its opinion about the first defendant's ability to repay it. Particulars The defendant repeats the matters pleaded at paragraphs 28 - 38 above. 43. By reason of the matters pleaded in paragraphs 39 to 42, the plaintiff contravened clause 25 (provision of credit) of the Code. Financial service 44. The Woonona Home Loan, the Woonona Mortgage, the Corrimal Loan and the Corrimal Mortgage were each financial products within the meaning of the ASIC Act. Unconscionable conduct- Corrimal Loan and Corrimal Mortgage 45. The negotiation for and provision of the Corrimal Loan and Corrimal Mortgage amounted to the supply or possible supply of a financial service for the purpose of section 12CC of the ASIC Act, being a supply of (scil.or) possible supply of a financial service to the defendant whose acquisition or possible acquisition of the financial service was or would have been for the purpose of trade or commerce. … Unconscionable conduct- Woonona Loan and Woonona Mortgage 47. The negotiation for and provision of the Woonona Home Loan and the Woonona Mortgage amounted to the supply of (scil.or) possible supply of a financial service of a kind ordinarily acquired for personal, domestic or household use. … 49. Further, or in the alternative, the negotiation for and provision of the Woonona Home Loan and the Woonona Mortgage amounted to the supply of (scil.or) possible supply of a financial service to the defendant whose acquisition or possible acquisition of the financial service was or would have been for the purpose of trade or commerce. 1. The Bank submitted that Mr Sayed was precluded from relying on unconscionability in relation to the Corrimal loan because there was a res judicata or an issue estoppel arising out of the judgment of Harrison AsJ in Sayed (No. 4). Alternatively, the Bank submitted that to plead what is contained in paragraphs 42A and 43A is an abuse of process because of what has been decided by Harrison AsJ. 2. Mr Sayed submitted that the effect of Harrison AsJ's judgment was that the Woonona matter was decided but the cross-claim had not been determined. He submitted that the cross-claim about Corrimal had always been about the loan and the sale. 3. In my opinion, Mr Sayed should not be given leave to amend in relation to paragraphs 42 and 43. In the first place, it should be noted that in Sayed (No. 8) I struck out paragraphs 42 and 43. It is therefore for Mr Sayed to justify why they should go back into the cross-claim in a different form. What Mr Sayed has attempted to do is to rely on the pleading in the Defence of 13 February 2012 but only for the purpose of the Corrimal loan and the Corrimal mortgage. The issue is, however, whether it can be relied upon to that limited extent or whether the judgment of Harrison AsJ in Sayed (No. 4) results in a res judicata or issue estoppel with regard to that pleading. 4. An examination of the Amended Statement of Claim filed 2 February 2011 and the Defence to that Amended Statement of Claim filed 13 February 2012 (the pleadings upon which the In Principle Agreement was based) demonstrates that what was in issue in the proceedings brought by the Bank and defended by Mr and Mrs Sayed was the making of the two loans secured over Woonona and Corrimal. They were made on the same day and in the same circumstances and the pleading in paragraphs 27 – 49 shows the inextricable link between them. The defences raised were raised to the making of both loans. Those defences were (a) a fraudulent misstatement of income; (b) an erroneous representation concerning cross-collateralisation or a failure to explain it; (c) asset lending; and (d) breach of the Banking Code of Conduct. The cross-claim extant at the time filed 13 February 2012 incorporated paragraphs 27-49 of the Defence in the way that the cross-claim now put forward by Mr Sayed endeavours to do. 5. In Sayed (No. 4) Harrison AsJ set out the background to the proceedings and the In Principle Agreement. In the course of so doing her Honour said this: [10] Mr Sayed has cross claimed against NAB and other parties. He seeks a declaration that the conduct of NAB in exercising a power of sale over land at Corrimal owned by him and Mrs Sayed, which also secured NAB's debt, involved a breach of NAB's duty to act in good faith. In essence, the cross claim alleges: From May 2009 to February 2010, NAB had control over the sale process of the Corrimal property as mortgagee exercising a power of sale; NAB owed an equitable duty to Mr Sayed to act in good faith in exercising its power of sale; On 19 February 2010, NAB sold the Corrimal property to Realta Enterprises Pty Ltd for $545,545.45; The fair market value of the Corrimal property on 19 February 2010 was $750,000 and the Corrimal property was sold at a gross undervalue. [11] It is common ground that this cross claim is extant. It does not form part of the In Principle Agreement and became the sticking point in the Settlement Agreement. 1. Her Honour ultimately ordered the performance of the In Principle Agreement and refused a stay pending Mr Sayed's cross-claim – see at [132]. 2. What thereafter happened was that solicitors then acting for Mr Sayed amended the cross-claim to remove any pleading except in relation to the claim that the Corrimal property had been sold at an undervalue and that the Bank had not acted appropriately in selling it. Significantly, paragraph 46 of the cross-claim was amended to remove the reference to paragraphs 27-45 of the Defence to the Amended Statement of Claim and to substitute for those paragraphs paragraphs 17-44 of the Amended Cross-Claim. Paragraphs 17-44 were headed "The undervalue sale of Corrimal" and dealt only with that matter. The assertion in paragraph 46 was that in acting in the way set out in paragraphs 17-44 the Plaintiff engaged in unconscionable conduct in breach of s 12CC of the Australian Securities and Investments Commission Act 2001 (Cth). That seems to be the reason that a declaration was sought in that Amended Cross-Claim that the Bank engaged in unconscionable conduct in contravention of that section. 3. Putting forward that form of the Amended Cross-Claim was a clear acceptance by Mr Sayed of the determination of Harrison AsJ that all that remained in issue between the Bank and Mr Sayed was the sale of Corrimal at an undervalue. The reason for that was that all other matters concerned with the making of the loans were covered by the In Principle Agreement. 4. In Tomlinson the joint judgment of French CJ, Bell, Gageler and Keane JJ said: [24] To explain contemporary adherence to the comparatively narrow principle in Ramsay v Pigram, it is appropriate also to explain the relationship between the doctrine of estoppel and the doctrine of abuse of process as it has since come to be recognised and applied in Australia. The doctrine of abuse of process is informed in part by similar considerations of finality and fairness. Applied to the assertion of rights or obligations, or to the raising of issues in successive proceedings, it overlaps with the doctrine of estoppel. Thus, the assertion of a right or obligation, or the raising of an issue of fact or law, in a subsequent proceeding can be simultaneously: (1) the subject of an estoppel which has resulted from a final judgment in an earlier proceeding; and (2) conduct which constitutes an abuse of process in the subsequent proceeding. [25] Abuse of process, which may be invoked in areas in which estoppels also apply, is inherently broader and more flexible than estoppel. Although insusceptible of a formulation which comprises closed categories, abuse of process is capable of application in any circumstances in which the use of a court's procedures would be unjustifiably oppressive to a party or would bring the administration of justice into disrepute. It can for that reason be available to relieve against injustice to a party or impairment to the system of administration of justice which might otherwise be occasioned in circumstances where a party to a subsequent proceeding is not bound by an estoppel. [26] Accordingly, it has been recognised that making a claim or raising an issue which was made or raised and determined in an earlier proceeding, or which ought reasonably to have been made or raised for determination in that earlier proceeding, can constitute an abuse of process even where the earlier proceeding might not have given rise to an estoppel. Similarly, it has been recognised that making such a claim or raising such an issue can constitute an abuse of process where the party seeking to make the claim or to raise the issue in the later proceeding was neither a party to that earlier proceeding, nor the privy of a party to that earlier proceeding, and therefore could not be precluded by an estoppel. 1. In my opinion, it would be an abuse of process for Mr Sayed to raise in an amended form of the cross-claim matters which had been in issue between the parties but which were finally settled in the In Principle Agreement in respect of which Harrison AsJ granted specific performance. Further, I held in Sayed (No 5) that the cross-collateralisation should not be permitted to be pleaded. That was because it fell within the In Principle Agreement. The loan in relation to Corrimal was inextricably linked to the cross-collateralisation and the other defences relating to the making of the loans. 2. It follows from the rejection of those paragraphs that there remains no basis for prayers 2, 4 and 5. Sections 12CB and 12CC of the ASIC Act are concerned with behaviour in the provision of financial services. Sections 12GF and 12GM provide remedies for breaches of sections such as 12CB and 12CC. None of those sections is relevant to any failure on the part of a mortgagee exercising a power of sale. In that regard I accept that I was in error in Sayed (No 8) when I said at [4] that Mr Sayed should be given leave to plead whatever matters he wished in support of prayer 2. There were in fact no such matters to plead because the concept of unconscionability, at least in the ASIC Act, has no relevance to a mortgagee's sale. 3. Mr Sayed sought to refine what he was seeking by a further form of the proposed cross-claim handed up in Court. Mr Lucarelli opposed that document being put forward because he had had no opportunity to consider what changes were contained in it from the proposed form of the amended cross-claim identified in the affidavit in support of the present Motion. It is not necessary to consider that objection further because, in substance, what is contained in that further document suffers the same fate as paragraphs 42A and 43A in the proposed cross-claim. 4. I consider that Mr Sayed was largely unsuccessful in his application. The bulk of the time was taken up with consideration of paragraphs 32A, 32B, 42A and 42B in respect of which leave was refused. In those circumstances Mr Sayed should pay the costs of his Notice of Motion. Conclusion 1. Accordingly, I make the following orders: 1. Leave is granted to the Cross-Claimant to amend the Further Amended Cross-Claim filed 25 October 2016 in the manner sought in the form of the cross-claim annexed to the affidavit of Bill Sayed sworn 28 March 2017 (to be entitled Second Further Amended Cross-Claim) in the following respects: 1. by omitting prayers 2, 4 and 5 in the section headed "Relief Claimed"; 2. by omitting paragraph 5; 3. by the addition of the words in paragraph 6; 4. by the substitution of the LPI number in paragraph 7; 5. by the addition of the words in paragraph 28; 6. by the addition of the words in paragraph 31; 7. by omitting paragraph 32; 8. by the addition of words to particular (c) under paragraph 33; 9. by the addition of the word "rejected" in particular (n) under paragraph 33; 10. by the substitution of the words in paragraphs 35, 36, 37 and 39. 1. The Second Further Amended Cross-Claim is to be filed and served by 28 April 2017. 2. The Cross-Claimant is to pay the costs thrown away by reason of the amendment. 3. The Cross-Claimant is to pay the costs of the Notice of Motion filed 28 March 2017. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 13 April 2017