White & Anor v State Bank of New South Wales S278/2002 [2002] HCATrans 665 (23 December 2002)

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No S278 of 2002

B e t w e e n -

LESLEIGH WHITE and D S & L WHITE CARRYING PTY LIMITED

Applicants

and

STATE BANK OF NEW SOUTH WALES

Respondent

Summons for a stay

GAUDRON J

(In Chambers)

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON MONDAY, 23 DECEMBER 2002, AT 9.31 AM

Copyright in the High Court of Australia

MR A.J. McQUILLEN: May it please the Court, I appear for the applicant. (instructed by McKells)

MR J.H. BARTROP: May it please the Court, I appear for the respondent. (of Abbott Tout)

HER HONOUR: Yes, Mr McQuillen.

MR McQUILLEN: Your Honour, the applicant seeks a stay from this Court pending a special leave application which was filed in August this year. Current indications from the Court Registry are that it is likely to come on, perhaps, in May 2003. The applicant recognises the extraordinary jurisdiction of this Court in granting stays and her application is based upon the premise that if a stay is not granted, the likelihood is, and the indications are, from the Bank that it will execute upon the judgment and effect a sale of the property which is the home of the applicant and her children and, therefore, the property which is at stake will be lost and she would not be able to be restored to the position - - -

HER HONOUR: Well, I think you can assume, as Justice Giles stated in the Court of Appeal, that the balance of convenience would favour the stay, subject to being, I should have thought, an arguable case for the grant of special leave.

MR McQUILLEN: Yes.

HER HONOUR: But I will hear Mr Bartrop on that in due course and if you need to attend further to the balance of convenience, we can hear you later.

MR McQUILLEN: Very well, your Honour.

HER HONOUR: Now, the arguable case. Unfortunately, as is common in these cases, there are no pleadings with the papers. I was wondering if you have any indication of how the unconscionability case was pleaded.

MR McQUILLEN: Yes. The general grounds of unconscionability were pleaded on the basis that - - -

HER HONOUR: You do not have the pleadings with you?

MR McQUILLEN: No, unfortunately I do not have the statement of claim with me.

HER HONOUR: Never come to this Court without your pleadings, Mr McQuillen.

MR McQUILLEN: Yes. I apologise, your Honour. It is something that I thought might have been in my papers, but I can certainly have them fetched, your Honour. That step could be taken, your Honour, to fetch those - - -

HER HONOUR: Well, how was the unconscionability case run?

MR McQUILLEN: In fairness to the respondent, I have to concede that Garcia's Case was not referred to. Amadio's Case was. It was run upon the basis that the conduct of the Bank was unconscionable in the sense that there was a mortgage followed by a series of - - -

HER HONOUR: We know the facts, but was it put on the basis that the Bank was acting, at least in significant part, to its own advantage in relation to the - - -

MR McQUILLEN: Yes, that was certainly put.

HER HONOUR: That was put.

MR McQUILLEN: Yes, and it was put that it was acting to its own advantage for the factual basis that it paid out an overdraft account that the third party to whom the moneys were transferred - - -

HER HONOUR: No, it did not pay it out entirely. It reduced - - -

MR McQUILLEN: Sorry, there was a partial release of the fixed-term deposit - - -

HER HONOUR: I know that.

MR McQUILLEN: - - - and it was transferred to a third party, who happened to be the brother of my client's husband, and that went to reduce an overdraft account that that person had with the State Bank.

HER HONOUR: In ordinary terms, it went to pay part of a debt to the Bank, that the Bank retrieved part of a debt owed to it.

MR McQUILLEN: Yes, correct.

HER HONOUR: And was that put?

MR McQUILLEN: Yes, most significantly, yes.

HER HONOUR: And was it put that in those circumstances it was unconscionable to rely on clause 501?

MR McQUILLEN: Clause 5.1, yes.

HER HONOUR: Clause 5.1.1, is it?

MR McQUILLEN: Yes, 5.1.2 I think it is.

HER HONOUR: Where is that dealt with in the judgments? I think it is 5.1.1 - I am sorry, you are probably right. You are much more familiar with this matter than I am.

MR McQUILLEN: I get confused with it too, your Honour, but it is referred to by his Honour Justice Giles as 5.1.2. It is the exclusion - - -

HER HONOUR: Well, the one I am looking at is the general "no alteration of liability by an act or omission", et cetera. Where will I find that?

MR McQUILLEN: Is your Honour referring to the specific clause itself?

HER HONOUR: Yes. Unfortunately the papers - - -

MR McQUILLEN: Does your Honour have the judgment of the Court of Appeal?

HER HONOUR: Well, I may have somewhere, yes.

MR McQUILLEN: It is at page 7 of that judgment and at paragraph 14 your Honour will see it at the bottom of the page 7.

HER HONOUR: Yes, I am sorry, it is 5.1.2.1 - 5.1.2.1.

MR McQUILLEN: Yes.

HER HONOUR: Was it said to be unconscionable to rely on that clause?

MR McQUILLEN: Yes, and where we were criticised - - -

HER HONOUR: Where is that dealt with in the judgments?

MR McQUILLEN: Specifically it is dealt with at page 31 of the Court of Appeal's judgment, paragraph 69, where the court there held "But for" that clause - - -

HER HONOUR: No, but that does not seem to deal with the question whether it was unconscionable for the Bank to rely on that clause in circumstances where it had acted to its own advantage.

MR McQUILLEN: Yes.

HER HONOUR: That just does not seem to be dealt with.

MR McQUILLEN: No, it is not dealt with and that was specifically put and the answer to it, given by his Honour the trial judge and effectively by the court below, was that because the plaintiff, my client, did not specifically plead in relation to that clause - we pleaded the general Contracts Review Act provisions - - -

HER HONOUR: No, forget about the Contracts Review Act for the moment, Mr McQuillen.

MR McQUILLEN: Yes. Unconscionability.

HER HONOUR: Unconscionability.

MR McQUILLEN: Yes. It was certainly run at the trial and in the Court of Appeal that that clause was, on the general grounds, unconscionable.

HER HONOUR: No.

MR McQUILLEN: I am sorry, your Honour.

HER HONOUR: That it was unconscionable for the Bank to rely on that clause. Was that put?

MR McQUILLEN: Yes, your Honour.

HER HONOUR: At first instance and on appeal?

MR McQUILLEN: Yes, and certainly at first instance, your Honour, and I believe it - - -

HER HONOUR: Now, you understand what I am meaning when I saying - - -

MR McQUILLEN: Yes.

HER HONOUR: I mean, in one respect unconscionability is simply - well, in some respects it can be likened to an estoppel - not entirely, but in some respects. What I am asking is, because it just does not seem to be dealt with, was it put that it was unconscionable for the Bank to rely on 5.1.2.1 in circumstances where it had paid itself out?

MR McQUILLEN: Yes, and I believe in part it was dealt with - and I am just quickly going to the judgment of the court below, paragraph 44, page 18, and 45. I do not know whether they are the best - - -

HER HONOUR: I am sorry, page 44 - - -

MR McQUILLEN: Paragraph 44, page 18.

HER HONOUR: No, that does not deal with the issue that I am - and what I am wondering is if you actually ran an unconscionability case along the lines I have said, because it just does not seem to have been dealt with.

MR McQUILLEN: Well, it is certainly not, your Honour, but it is touched upon also at paragraph - did I say 44? I did, your Honour, yes.

HER HONOUR: Yes.

MR McQUILLEN: That does not use the word "unconscionability" but certainly unconscionability in respect of both the clause and the mortgage and generally was run at trial and in respect of the whole transaction incorporating later transactions, which was the transfer of the funds in the circumstances.

HER HONOUR: There are references throughout the judgments to a claim of unconscionability but I do not see that particular aspect of it dealt with, or I did not see it, but I have only read it very quickly.

MR McQUILLEN: Yes. Can I say this, your Honour: maybe an explanation is that the finding of the trial judge was that the clause operated to take away any attack the applicant might have upon - - -

HER HONOUR: Yes, the construction point I understand. This is another point.

MR McQUILLEN: Yes. There is a reference at page 28, 29, paragraph 2 on page on 29.

HER HONOUR: Now, that is a summary of your argument in the Court of Appeal.

MR McQUILLEN: Yes.

HER HONOUR: But that does not seem to raise, I suppose, the nondisclosure. I suppose it might be the point that comes closest to it. Yes, "also relied upon unconscionability" you see at paragraph 67, but it does not seem to deal with what is concerning me.

MR McQUILLEN: Does your Honour have the judgment of the trial judge, Acting Justice Cooper?

HER HONOUR: I do.

MR McQUILLEN: At paragraph 74 is a reference to my claim and certainly - those are addresses, I appreciate that, but - - -

HER HONOUR: Page 12, sorry, paragraph - - -?

MR McQUILLEN: Page 13, paragraph 74. His Honour acknowledged that that was certainly part of the address, but - - -

HER HONOUR: Well, there would be no different evidence on this point, so you did, in fact, raise it in addresses.

MR McQUILLEN: Yes, your Honour.

HER HONOUR: And what was your argument in that regard?

MR McQUILLEN: There were two bases: firstly, Buckeridge v Mercantile Credits was run but, secondly, it was the unconscionability - - -

HER HONOUR: When are lawyers are going to learn you do not just say "Buckeridge was run"? There has to be a real point. What is the real point that you ran, because Buckeridge is not on all fours with this case?

MR McQUILLEN: No, your Honour. The point was raised, and it was run at trial, that it was unconscionable for the Bank to rely upon this clause in the circumstances which existed, namely the circumstances of the transfer of funds having regard to the events which intervened creating a security over a fixed-term deposit. So to understand the point - - -

HER HONOUR: Yes, I understand, but where then is that dealt with?

MR McQUILLEN: That is where in my written submissions I have said - - -

HER HONOUR: No, but where does the trial judge deal with it?

MR McQUILLEN: He does not effectively deal with this point in his judgment, except for a general reference to my attack upon the manner in which the Bank dealt with my client. That is covered quite extensively, both in the court below at paragraph 129, page 26 of the trial judge - and there is a reference to a number of events that took place. What we say is that - - -

HER HONOUR: Well, I think I understand. Now, where is that aspect of the case dealt with in your draft notice of appeal?

MR McQUILLEN: Can I just pause there - before I do, there is a reference at paragraph 97 of the trial judge's judgment also, but that is alternative to the claim under the Contracts Review Act.

HER HONOUR: I am terribly sorry. I cannot find your draft grounds of appeal. They are here somewhere.

MR McQUILLEN: I can provide a copy, if your Honour needs one, of my copy.

HER HONOUR: That would be of assistance, if you - - -

MR McQUILLEN: I am grateful to my friend. He has handed me a spare copy.

HER HONOUR: Thank you. I am sorry about this. They are there somewhere. I saw them earlier but - - -

MR McQUILLEN: Under the grounds (b)(i) and (ii) on page 2.

HER HONOUR: Yes, I see. Thank you.

MR McQUILLEN: Thank you.

HER HONOUR: I think I would be advantaged by hearing from Mr Bartrop at this stage.

MR McQUILLEN: Thank you.

MR BARTROP: Your Honour, unfortunately I was not at the trial, however, in relation to what was put to the trial, I note at paragraphs 93 and 94 of the trial judge's judgment - at 93 there are set out the submissions by our counsel as to what was not pleaded and then in paragraph 94 the judge says that he has no hesitation accepting the submissions. No attack was made on clause 5.1.2 and following in the pleadings or in addresses or in evidence until the final address after all evidence had been given.

HER HONOUR: But is that not in relation to the Contracts Review Act?

MR BARTROP: That is only in relation to the Contracts Review Act.

HER HONOUR: Yes. Whereas, the trial judge right at the beginning, they say, does note the unconscionability aspect, and it does not seem to have been dealt with.

MR BARTROP: I just cannot assist your Honour there.

HER HONOUR: Because if that issue has not been dealt with and it was a live issue, it is difficult to say that there is not an arguable case for special leave. I am not saying it would be granted, but I am saying it is difficult to say there is no arguable case if an issue was not dealt with.

MR BARTROP: I am just not sure that it was pleaded.

HER HONOUR: Right at the beginning Acting Justice Cooper says - I am looking at - it is paragraph 74 where his Honour says, "They should not be entitled to rely on them". Now, it seems to have been raised - "should not be entitled to rely on them in the circumstances."

MR BARTROP: I thought that that was put though on the basis of the Contracts Review case.

HER HONOUR: Yes, his Honour certainly did not allow the present applicant to rely on a Contracts Review case, but the question whether, having in effect paid itself this money - and that seems to be - - -

MR BARTROP: Well, as a factual matter, it did not pay itself money. What happened was that money was paid to a - it was allowed to draw down on the account and pay, I think, a relative of the applicant.

HER HONOUR: No, it was used, was it not, to reduce that relative's overdraft to your client? They were the facts as I understood them. The relative was indebted to your client Bank at Fairfield, I think it was, and so the account was moved from - I do not know - I forget where, to Fairfield and then ultimately what happened to the money was the relative's indebtedness to your Bank was then reduced.

MR BARTROP: But, in effect, what happened was there was a release of the money to the relative, which may have - - -

HER HONOUR: For a purpose.

MR BARTROP: Yes, which may have reduced indebtedness, but it was certainly well within the authority of - - -

HER HONOUR: Not the question. I mean, there is no doubt about authority of the husband to do it, I should not have thought. It just seems to me that there is this unconscionability argument that does not seem to have been dealt with. I mean, there may be nothing in it at the end of the day, but it just does not seem to have merited anyone's attention and would seem to be one of those things that - - -

MR BARTROP: But I think at the end of the day I think the court took the view that a clause such as 5.1.2 was settled as being accepted.

HER HONOUR: Yes, no doubt about that - no doubt about that. Question: whether unconscionable to rely on it when the money has ultimately been used to reduce an overdraft. If the relative had used this money to buy a new car or something, that might be one thing, I should think. Anyway, the problem is for me, Mr Bartrop, it just seems that at this stage I cannot say that the case for special leave is unarguable when what I would have thought was a significant point just does not find attention in the judgments.

MR BARTROP: It is difficult without the pleadings because, as the trial judge said in his judgment, no attack was made on clause 5.1.2 and following in the pleadings or in addresses or in evidence until final addresses. Yes, I just cannot help you with the unconscionable. I do not know. I do not know on the pleadings, but my understanding was that it was really the Contracts Review and the fact that the 5.1.2 was settled law, but I cannot assist your Honour otherwise.

HER HONOUR: Now, you accept, do you, that if I thought that it was an arguable case for special leave that the balance of convenience would favour the stay?

MR BARTROP: I do not think I could overcome what his Honour Justice Giles said.

HER HONOUR: Yes.

MR BARTROP: But we say that there is not an arguable special leave case.

HER HONOUR: Yes, and I think save for this one area, which does not seem to have been dealt with, you may be on good grounds.

MR BARTROP: I suppose if it has not been dealt with, then that is a problem - - -

HER HONOUR: The question is whether it was squarely raised.

MR BARTROP: That is right and I think the inference is that it was not fairly and squarely raised when you look at the judgments of the trial judge in the Court of Appeal.

HER HONOUR: Except that I keep seeing - you see, "not entitled to rely on it" would seem to be a reference to a - I mean, certainly unconscionable conduct was being - the words were being raised at various points. That much seems to be clear.

MR BARTROP: But what also, I think, seems to be clear is perhaps there was no evidence.

HER HONOUR: You would not need it, I should not have thought, for that argument.

MR BARTROP: I do not think I can add any more to what was or was not raised in relation to unconscionable conduct, your Honour.

HER HONOUR: Well, thank you, Mr Bartrop. Well, Mr McQuillen, I cannot say that there is not an arguable case and it is conceded that the balance of convenience would favour the stay if there is an arguable case. So I would propose to grant the stay in terms of the amended draft order that was filed today - is that right, is it?

MR McQUILLEN: Yes, I think it is - - -

HER HONOUR: I would propose that the costs of this application be costs in the special leave application. I would propose to order that the matter be heard in Sydney in April. There is a time available in April. The matter should not drag on unnecessarily. So it will be necessary, therefore, to get the application books in order - - -

MR McQUILLEN: I think there is an appointment on 13 January for that, your Honour, which should be sufficient.

HER HONOUR: Yes, and otherwise the only thing I would propose to do would be to certify for the attendance of counsel. Is there anything else I should say or do?

MR BARTROP: No, your Honour.

MR McQUILLEN: I do not think so, your Honour.

HER HONOUR: Very well. I will make orders accordingly and the Court will now adjourn. Thank you. Excuse me, bring your pleadings to Court on the special leave day.

MR McQUILLEN: I am sorry, your Honour. Thank you.

HER HONOUR: Thank you.

AT 10.02 AM THE MATTER WAS CONCLUDED