Ward v Westpac Banking Corporation Limited

These proceedings have reached a procedural point of complexity which far exceeds the underlying issues, which largely concern claims to ownership of two Torrens title properties, to which I shall refer as the Lovedale and Maitland properties.

The properties were the subject of alleged dealings by the late Mr David William Dixon, who was registered as their proprietor at his death. Ms Karen Cox is the administrator of Mr Dixon’s estate and, in that capacity, is now the registered proprietor of the properties.

Westpac Banking Corporation Limited is the registered mortgagee of both properties pursuant to arrangements entered into with Mr Dixon. It claims possession of the properties, an order not resisted by Ms Cox.

The complexity arises from claims made in relation to the properties (and some other matters) by Mr Roger Ward and Mr Peter Mahommed (plaintiffs). Whatever the details of their respective claims, each of them necessarily seeks to impeach Westpac’s otherwise indefeasible title as mortgagee by relying on the fraud exception in s 42 of the Real Property Act 1900 (NSW).

The plaintiffs sought to prosecute their claims by an Amended Statement of Claim (ASC) against, relevantly, Westpac and Ms Cox. Westpac asserts its rights by a Cross-Claim (CC) against Ms Cox, but to which Messrs Ward and Mahommed were subsequently joined. As might be expected, their defence to the CC sought to incorporate their claims in the ASC as an answer to Westpac’s claim.

Messrs Ward and Mahommed were ordered to provide security for costs of the ASC. They failed to do so and their ASC was struck out. It is this last step which has precipitated the debate (embodied in the present notices of motion filed by Ms Cox and Mr Mahommed) as to the extent to which (if at all) the plaintiffs should be entitled to rely on the allegations made in the ASC in defence to the CC, and what (if anything) should be done about Ms Cox’s role in the proceedings.

For the reasons which follow, the Court has decided that:

Mr L G Smits, solicitor, appeared for the plaintiffs. Mr D Allen of Counsel appeared for Ms Cox. To the extent it became necessary for Westpac to become involved, it was represented by Mr S Docker of Senior Counsel with Ms E Keynes of Counsel.

To begin this procedural history, I gratefully adopt this summary which appears in the judgment of Griffiths AJA (with whom Ward P and Adamson JA agreed) in Ward v Westpac Banking Corporation Ltd [2023] NSWCA 11 (Security Appeal). This was the decision of the Court of Appeal which dismissed the plaintiffs’ appeal against the security for costs orders made by Lindsay J (to which I return in [15] below). Griffiths AJA said:

The ASC included 50 prayers for relief, albeit some being expressed to be in the alternative. Those prayers included that there be judgment for possession of the Lovedale Property in favour of Mr Ward and of the Maitland Property in favour of Mr Mahommed. Having spent a considerable amount of time reviewing the ASC, I respectfully agree that descriptions of the ASC as prolix, opaque and oppressive are entirely apt. To these I would add almost impenetrable. However, giving effect to the “almost”, I also record that as Lindsay J did (as noted by Griffiths AJA at [67] of the Security Appeal), I have approached the matter on the basis that the plaintiffs’ case as pleaded in the ASC, while oppressive, presented at least an arguable case. For this reason, I do not make further reference to the extensive primary evidence relied on by Mr Smits going to demonstrate what he said was the strength of his clients’ case.

The CC was filed on 2 March 2021. In addition to claims for possession and debt, in paragraphs 23 to 38 and 57 to 67, Westpac pleaded alternative claims against Mr Dixon premised on the acceptance of allegations that had been pleaded by the plaintiffs concerning the validity of Westpac’s claims in relation to both properties. This manner of pleading invited a formal joinder between the plaintiffs and Westpac on the CC. This was taken up in what I record in [13] below.

Ms Cox filed her defence to the CC on 13 May 2021. While it contained some non-admissions, for all practical purposes it conceded Westpac’s claims and expressly admitted Westpac’s right to possession of the properties.

From a procedural perspective, a critical matter is, therefore, that on 31 May 2021, Darke J, sitting as Real Property List Judge, made orders by consent including that:

The plaintiffs’ defence to the CC was ultimately filed on 20 September 2021. It is the defence which is the subject of Ms Cox’s motion set out in [18] below. The defence pleaded numerous allegations to the effect of those in the ASC, including by expressly incorporating paragraphs of the ASC by reference.

On 4 April 2022, Lindsay J ordered that by 4 August 2022 the plaintiffs jointly provide security for Westpac’s costs in the sum of $150,000 and Ms Cox’s costs in the sum of $125,000. In doing so, his Honour expressly was exercising the inherent jurisdiction of the Court (see Security Appeal [44] to [47]). His Honour stayed the proceedings until such time as the security was provided. The time for providing the security for costs was extended twice, first to 2 December 2022 and then to 17 February 2023.

The Security Appeal was heard on 8 February 2023 and determined adversely to the plaintiffs on 15 February 2023.

This Court has heard two motions.

The first is a Further Amended Notice of Motion filed on 1 August 2023 by Ms Cox (Cox motion) for relief including:

The second is a Notice of Motion filed on 2 August 2023 (plaintiffs’ motion) for relief including:

These two motions came on for directions before me in the Applications List on 18 August 2023, together with a motion by Westpac that the ASC be dismissed for want of provision of the security. Mr Smits candidly accepted that he could not articulate any basis for opposing the dismissal of the ASC. I therefore made orders including:

To the extent a jurisdictional basis for the order dismissing the ASC should be specified, conformably with the basis on which Lindsay J made the security for costs order (and affirmed by the Court of Appeal) (see [15] above), the dismissal order was also made in the inherent jurisdiction of the Court.

Westpac was excused from the further hearing of the motions. During the hearing on 7 September 2023, Mr Smits submitted that his clients could defend the CC without relying on what might be termed the positive claims made in the now dismissed ASC. The parties accepted that the plaintiffs should be given an opportunity to propound such a defence in draft. This was done and at a subsequent hearing the parties agreed that the Court could determine the motions with further written submissions, including from Westpac which had an interest by reason of some of the amendments proposed in the draft defence.

In the course of those written submissions, the plaintiffs provided a further version of the draft defence attached to their submissions on 9 November 2023 (draft defence) and it is that document which became the focus of submissions. The round of written submissions concluded with submissions in reply from the plaintiffs on 7 December 2023.

Apart from specific pleading points raised by Westpac about some of the new matters included in the draft defence (as to which see [54] below), Mr Allen had the primary burden of the argument and his submissions may, without disrespect, be distilled to:

Before summarising Mr Smits’ submissions, it is convenient to deal with the first of Mr Allen’s contentions. “Standing” is a protean term. Whether a person has standing in law for the purposes of bringing proceedings will depend upon the juridical context and whether in that context the person has a legally cognisable interest in the subject matter, usually – but not always – manifested by being able to demonstrate that the person has a cause of action to advance or defend.

To the extent it is suggested that the plaintiffs no longer had an arguable claim which traversed Westpac’s claim in the CC, I do not agree (see [10] above). In any event, Mr Allen conceded for the purpose of these motions that the plaintiffs had an arguable case that the properties were trust property of respectively the Lovedale Ranch Unit Trust and the Greenhills Finance Trust, because he said (correctly as it turns out) that it made no difference to the outcome. However, if by “standing” it was contended that they no longer had a procedural right to have their claim adjudicated, I accept the submission. That acceptance is reached by applying the concept of abuse of process, which argument I consider below.

Mr Smits’ lengthy submissions may be summarised as:

I should also record that at various points in his submissions Mr Smits seemed to be suggesting that I had demonstrated bias (presumably implicit but that was not necessarily clear) in the conduct of the hearing of the motions. No application was made that I recuse myself. In the absence of any such application, I have disregarded those suggestions insofar as it appeared they were being made.

The starting point is to consider the effect of the dismissal of the ASC. This arises in the context of the submission made at various points by Ms Cox and Westpac that to permit the defence would be to permit an abuse of process by frustrating the order for payment of security and the consequential dismissal for want of payment of that security.

The plaintiffs rejected this argument on the basis that an analysis of s 91 of the Civil Procedure Act, 2005 (NSW) (CPA) demonstrates that they were not precluded from bringing further proceedings despite the dismissal of the ASC:

It was contended that dismissal of a claim under r 42.21(3) Uniform Civil Procedure Rules 2005 (NSW) (UCPR) does not involve a determination on the merits of the proceedings in accordance with s 91(2) of the CPA. I accept the same is true where (as here) the dismissal was in the inherent jurisdiction. The Court’s order on 18 August 2023 also did not contain any express restraints on the plaintiffs from commencing new proceedings on a claim pleaded in identical or similar terms to the dismissed ASC. Therefore, the plaintiffs submitted, one possible course of action available to them was to commence new proceedings for the same relief as in the ASC.

The consequence of this conclusion was said to be that to the extent Ms Cox and Westpac submitted that allowing elements of the ASC to be used as a defence would frustrate the effect of the dismissal and therefore undermine the function of r 42.21(3) UCPR to enforce payment of security, no such issue of principle arises. A dismissal for failure to provide security, without any further order, does not preclude the pleaded claims being relitigated in fresh proceedings.

In my opinion, even if the plaintiffs are correct about being able to commence fresh proceedings – in which they would necessarily be bringing an affirmative case with consequential declarations and orders – that does not say anything about what they can do in these proceedings, in circumstances where it is their ASC in these proceedings that has been dismissed.

Furthermore, the plaintiffs’ reliance on this argument leads to both circularity and a further independent difficulty. The circularity is that any fresh proceedings would presumably be met with another application for security for costs. Even before that occurred, the independent difficulty was identified by Westpac in its supplementary submissions: UCPR r 12.10 would hinder the plaintiffs from being able to prosecute fresh proceedings. This rule provides:

Given the history of these proceedings, it is difficult to see why the Court would not stay any fresh proceedings pending satisfaction of the costs order made on 18 August 2023. In any event, even just the prospect of further security for costs applications or a stay pending payment of existing costs orders demonstrates that the theoretical prospect of fresh proceedings is of no assistance (whether as a matter of principle or discretion) in determining what the plaintiffs are entitled to do in answer to the CC in these proceedings.

Alternatively, objection was raised to the inclusion of elements of the ASC in the defence and draft defence which are actually a claim which should properly be pleaded in a statement of claim or, perhaps more relevantly for present purposes, a cross-claim brought in conjunction with a defence. This issue turns on the distinction between what is properly considered a defence as opposed to a claim.

Rule 6.3 of the UCPR specifies when a statement of claim is required:

In accordance with r 1.2 UCPR, the definition for ‘claim for relief’ as defined in s 3 CPA must be read into UCPR r 6.3.

UCPR r 6.12(1) requires a statement of claim or summons specifically to state the relief claimed by the plaintiff. The dictionary of the UCPR notes that ‘relief’ includes remedy. It is clear that the rules intend that any pleading which requires a remedy in relation to the matters listed in r 6.3 should be outlined in a statement of claim and not a defence.

In my respectful opinion, whether something is a claim required to be in a statement of claim or is solely a matter for a defence is to be assessed as a matter of substance and not just form. This case is an example of why this must be so. Read as a whole the draft defence involves claims of debt, fraud, trust and possession of land (engaging r 6.3(a), (c), (e) and (f)) and would require relief including for possession and declarations of right (s 3(1)(a) and (d) CPA), but which are presented in the pleading as nothing more than assertions.

The vice in the plaintiffs’ position may be demonstrated by a simple thought experiment. If what they assert in the draft defence is correct, then they are entitled to possession of the properties (among other things). It would be inconceivable as a matter of law and practice for that conclusion to be reached without relief to give effect to that conclusion being sought and granted. Otherwise the true ownership of the properties would be left unresolved and, importantly, the register left in a state where it did not reflect the correct position as determined by the Court after a contested hearing. How, for example, could the plaintiffs then deal with the properties of which they had demonstrated they were the true owners? As it presently stands the draft defence could be aptly described by Alexander Pope’s phrase of being “willing to wound and yet afraid to strike” because to strike would demonstrate the true character of the defence as requiring positive relief to the effect of that sought in the ASC.

The clearest example of the phenomenon referred to in the preceding paragraphs is this part of the draft defence (I have included the deletions made by the plaintiffs – see [22] above):

The use of the expression in paragraphs 71, 72 and 73 of “for the purposes of this defence” cannot disguise the fundamentally positive claim being made of entitlement. Such a claim of right to property cannot just be made for a defence without some positive legal consequence. This may be contrasted with, for example, a defendant to a claim in trespass pleading a defence of licence from the owner. This may invite, but does not necessarily require, a cross-claim by the defendant seeking a declaration in relation to the licence.

Furthermore, the deletion, for example, in paragraph 72(d) of the references to the ASC demonstrates the ineffectiveness of such an approach which gives primacy to form over substance. What is left is a pleading liable to being struck out as a conclusion which is asserted without the material facts upon which it is based.

If the analysis in paragraphs [36] to [44] is correct, it forms part of the basis for the Court’s fundamental conclusion in the exercise of its inherent jurisdiction that to permit the defence or the draft defence to stand would be an abuse of process. However, that conclusion, to which I now turn, does not depend on the correctness of that analysis.

For the reasons which follow, the Court has concluded that for the plaintiffs to maintain their defence to the CC or to propound the draft defence would be an abuse of process insofar as it involves an assertion of an in rem claim to the properties superior to that of Westpac, including a claim to possession (including, presumably if it came to it, to the proceeds of sale of the properties), or otherwise seeks to defeat Westpac’s indefeasible position as registered mortgagee of the properties with a right to a money judgment and the proceeds of sale. The abuse is that to permit those claims would be to circumvent the Court’s process as given effect by both the making of the order for security for costs in respect of the ASC and its subsequent dismissal for failure to provide the security.

It is trite law that the categories of abuse of process are not closed. A party’s assertion of a claim may be an abuse of process even if that party has a prima facie case or must be assumed (or in this case has been assumed) to have a prima facie case: Williams v Spautz (1992) 174 CLR 509 at 522, 532; [1992] HCA 34. I respectfully adopt the approach set out by Gageler J (as the Chief Justice then was, and there considering the bringing of successive proceedings) derived from dicta of Lord Bingham that whether something is an abuse of process is ultimately a normative judgment in each case which requires a merits-based judgment which takes account of the public and private interests involved and also takes into account all the facts of the case, focusing attention on the crucial question whether, in all the circumstances, a party is misusing or abusing the process of the Court: UBS AG v Tyne (2018) 265 CLR 77 at [67] to [72].

In this case, the making of the security for costs order (based on an assessment that the ASC was oppressive) and the subsequent striking out of the ASC represent a determination by the Court that Westpac and Ms Cox should not be vexed by the plaintiffs’ allegations without the protection of security for costs. The private interest engaged is that to permit those allegations to be advanced through the defence would be to permit the oppression which the security for costs order sought to ameliorate. The public interest that would be defeated if the allegations are advanced through the defence or draft defence is that the timely and efficient administration of justice would be defeated by permitting the ventilation of allegations foreclosed to the plaintiffs by the dismissal of the ASC for failure to provide security: UBS at [72].

Even assuming (contrary to the conclusion expressed in [40] and [41] above) that the plaintiffs’ central allegations of entitlement to the properties against Westpac’s otherwise indefeasible rights could properly be brought in the defence or draft defence, to do so would for the reasons I have given be to misuse or abuse the right to maintain a defence in this case because it would circumvent the Court’s orders for security in respect, and dismissal, of the ASC. It would be to permit by the back door what has been forbidden through the front door.

I have already noted that the ASC is prolix and difficult to understand. The defence and draft defence are similarly not always easy to follow. I accept that some of the pleas and averments in the defence and draft defence are properly matters for a defence. However, in my view it is not practicable, or consistent with the Court’s conclusions or the overriding purpose under the CPA, to attempt to pick through the defence or draft defence to see what might survive as purely and properly defensive. The overall burden of the defence and draft defence is to seek to make out an in rem claim to the properties superior to that of Westpac, including a claim to possession (including, presumably if it came to it, to the proceeds of sale of the properties), or otherwise to defeat Westpac’s indefeasible position as registered mortgagee of the properties with a right to a money judgment and the proceeds of sale.

In the exercise of its inherent jurisdiction, the Court can be flexible in fashioning relief that does justice between the parties. For the reason identified in the previous paragraph, the only practical course is to strike out the entire defence and, insofar as it may be necessary, confirm that I would not grant leave to replead by filing the draft defence, or allow any further opportunity in that regard. However, I have been deliberate in how I have described what constitutes the abuse: to assert an in rem claim to the properties superior to that of Westpac, including a claim to possession (including, presumably if it came to it, to the proceeds of sale of the properties), or otherwise to defeat Westpac’s indefeasible position as registered mortgagee of the properties with a right to a money judgment and the proceeds of sale.

It may be that some of the claims in the ASC and the draft defence fall outside the abuse. The Court accepts that any such claims could, subject to the possibilities identified in [34] above, be the subject of fresh proceedings against the estate or Westpac. Whether the plaintiffs contend that there are such claims and wish to commence fresh proceedings in relation to them is a matter for the plaintiffs. For present purposes it is sufficient that the Court acknowledges the possibility, but it is not part of its present task to identify what they might be.

There are four matters which I should record for completeness.

First, there were a number of submissions (particularly by Westpac) addressed to whether the plaintiffs could maintain the claims sought to be added in paragraphs 74 to 84 of the draft defence. Because of the decision to which I have come, it is not necessary to determine whether the criticism of those claims is well made. It is sufficient to observe that, assuming they can do so conformably with these reasons, if the plaintiffs seek to assert any of those matters in any fresh proceedings, they would do well to give those criticisms close consideration.

Second, in relation to Mr Smits’ submission recorded in [27(2)] above, I do not accept Mr Smits’ submission that the Court can conclude by reference to Ms Cox’s statutory declaration of 26 May 2016 - and without more - that she has engaged in misleading conduct by admitting Westpac’s claim or by her affidavit of the estate’s assets not disclosing any trust property. In any event, I do not regard her conduct as relevant to the principal issue which the Court has had to determine.

Third, prayer 2a in the Cox motion (see [18] above) was not the subject of substantive argument. I therefore express no view in relation to it. It will be a matter for the parties to inform the Court whether it remains a live issue in the light of these reasons.

Fourth the plaintiffs’ motion (see [19] above) should be dismissed because it has been overtaken by these reasons. However, were it otherwise, in any event:

The defence will be struck out without leave to replead, and the plaintiffs’ motion dismissed. Subject to hearing the parties, my preliminary view is that costs should follow the event, so that the plaintiffs should pay the other parties’ costs of both motions. That will have the effect of ending the plaintiffs’ involvement in these proceedings.

Finally, having regard to the overriding purpose, I invite Westpac and the estate to consider whether the state of the remaining pleadings means that final orders can be made as between them. This would then determine the entirety of the proceedings.