National Australia Bank v Sayed (No. 5)

1. [1]

   The First Defendant, Bill Sayed, by a Notice of Motion filed 4 March 2016 seeks leave to file what in substance is a further amended cross-claim (“the proposed cross-claim”) and seeks the supply of unredacted versions of certain bank documents.

Background

1. [2]

   On 21 June 2006, NAB advanced two loans to Mr and Mrs Sayed. NAB took as security a first registered mortgage over a vacant property in Corrimal (“Corrimal property”) and a first registered mortgage over Mr and Mrs Sayed’s residential home at Woonona.

2. [3]

   On or about 1 October 2008, Mr and Mrs Sayed went into default under both loans. In May 2009, NAB took possession of the Corrimal property and subsequently sold it. The proceeds of the sale were insufficient to discharge the amount still outstanding on the secured debt.

3. [4]

   By a Statement of Claim filed 28 May 2010 and subsequently amended on 3 February 2011, NAB claimed judgment for possession of the Woonona property, leave to issue a writ of possession to enforce such judgment and judgment for the sum of $488,881.32, together with interest. NAB claims that Mr and Mrs Sayed entered into a mortgage on the Woonona property to secure moneys owing by them to it and that they were in default under the terms for repayment of the secured moneys.

4. [5]

   Mr Sayed has cross-claimed against NAB and other parties. Prior to the proposed pleading now sought to be filed the Amended First Cross-Claim filed 18 August 2015 sought declarations 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, and that NAB acted unconscionably in relation to the Corrimal Loan and Mortgage. Damages were sought in respect of these matters. In essence, the cross- claim alleges:

5. [6]

   In August 2012 negotiations took place between the parties and their lawyers to settle the proceedings. Those negotiations led to the signing of what was called an In Principle Agreement dated 23 August 2012.

6. [7]

   At the time the present Motion was filed Mr Sayed was acting for himself although the form of the proposed cross-claim suggested that he had had legal assistance. Nevertheless, the proposed cross-claim had a number of problems. The first was that some of the relief claimed was entirely inappropriate. For example, it sought an order setting aside a judgment of Harrison AsJ where her Honour determined that the In Principle Agreement should be specifically performed: National Australia Bank Limited v Sayed (No 4) [2015] NSWSC 420. Secondly, it sought to reintroduce into the proposed cross-claim a number of paragraphs which had been removed in the Amended First Cross-Claim filed 18 August 2015 to which reference has been made. That Amended Cross-Claim confined the claim to the sale at undervalue of the Corrimal property and expressly abandoned claims in relation to the cross-collateralisation of the Woonona property. Those claims appear to have been abandoned because of the judgment of Harrison AsJ in relation to the In Principle Agreement. Thirdly, it pleaded that NAB sacrificed Mrs Sayed’s interests in selling the Corrimal property when she was neither a mortgagor nor an owner of that property.

7. [8]

   At the hearing of the Notice of Motion Mr Hall SC appeared for Mr Sayed. Mr Hall made clear that, despite the alternative prayer in the Notice of Motion seeking leave to file a Notice of Appeal against the judgment of Harrison AsJ, Mr Sayed was seeking only (a) leave to file the proposed cross-claim and (b) to have copies of unredacted documents from NAB.

8. [9]

   Mr Hall accepted that there were pleading problems in relation to the proposed cross-claim that needed to be rectified. However, he made it clear that the inclusion of the matters relating to the Woonona property had not been by accident and that this was one of the two substantive changes that Mr Sayed sought in the proposed document. The other substantive matter concerned an issue about Lot 42 (one of the two lots of the Corrimal land) which was believed by NAB at the time of sale of the Corrimal land to be landlocked. The proposed cross-claim pleaded that information subsequently showed that Lot 42 was not landlocked.

9. [10]

   In one sense the claim concerning Lot 42 was simply another basis for suggesting that the Corrimal land was sold at an undervalue. NAB did not oppose that claim being added but took issue with the form of the pleading that introduced it.

10. [11]

    The second part of the Motion concerned nine documents which were said to contain legal advice in respect of which a claim for client legal privilege was made by the redaction of those parts of the documents containing the legal advice. These documents were identified in a schedule of privileged documents annexed to an affidavit of the Plaintiff’s solicitor Alexandra Kirby sworn 10 May 2016 being the documents numbered 19, 20, 29, 30, 31, 32, 36, 37 and 58. Mr Sayed did not dispute that in the first instance the material was privileged but asserted that privilege had been lost pursuant to s 122 of the Evidence Act 1995 (NSW) by the pleading and reliance on the legal advice contained in the documents.

Proposed amended cross-claim

1. [12]

   Subsequent to the hearing of the Motion Mr Hall SC provided a redrafted cross-claim which built not on the Amended First Cross-Claim filed 18 August 2015 but on the inadequately pleaded proposed cross-claim put forward by Mr Sayed before Mr Hall was retained to assist him. That is contrary to r 19.5 Uniform Civil Procedure Rules 2005 (NSW) which relevantly provides:

2. [13]

   Because the proposed cross-claim does not comply with that Rule and because in substance it leaves in place a number of unsatisfactorily pleaded matters drafted by Mr Sayed, the latest form of the proposed cross-claim will not be permitted to be filed.

3. [14]

   I am satisfied that the claim concerning Lot 42 should be permitted to be pleaded but that should be done properly either by building on or substituting for the matters pleaded in the Amended First Cross-Claim filed 18 August 2015.

4. [15]

   However, the reintroduction of the claim concerning the Woonona property and the cross-collateralisation should not be permitted for the reasons which follow. Some further background concerning the litigation is necessary.

5. [16]

   The whole of the proceedings between NAB and Mr Sayed were being heard by Adams J from 20 August 2012. Negotiations appear to have been conducted in the background to that litigation. Those negotiations led to the signing of the In Principle Agreement.

6. [17]

   Subsequently a draft deed of settlement was prepared by NAB’s solicitors. That draft deed of settlement included clause 7(a) which provided for releases to be given by Mr and Mrs Sayed for any claims that they may have had against NAB “in respect of the Woonona loan, Woonona mortgage, Corrimal loan, Corrimal mortgage, Corrimal sale and the Proceedings”.

7. [18]

   NAB claimed that the Deed of Settlement containing that clause was agreed to by Mr and Mrs Sayed. NAB sought specific performance of it and was successful before Rein J on 22 October 2012.

8. [19]

   Mr Sayed appealed to the Court of Appeal, and the Court of Appeal upheld his argument that there was no binding agreement in relation to the proposed deed containing clause 7(a): Sayed v National Australia Bank Limited [2013] NSWCA 304.

9. [20]

   NAB then sought specific performance of the In Principle Agreement. In a judgment given on 16 April 2015 Harrison AsJ ordered the parties to specifically perform the In Principle Agreement: National Australia Bank Limited v Sayed (No 4) [2015] NSWSC 420.

10. [21]

    What is very clear from the Court of Appeal’s judgment is that what was excluded from the In Principle Agreement was the claim that Mr Sayed was making in respect of the Corrimal property. What is equally clear is that the In Principle Agreement was a settlement of everything concerned with the Woonona property and the right of the Bank to possession of it. This is made clear in the Court of Appeal’s judgment as follows:

11. [22]

    The Court of Appeal summarised the effect of the In Principle Agreement at [22] as follows:

12. [23]

    The Court also made it clear that it was the release in proposed clause 7(a) of the Settlement Deed which was the sticking point and in respect of which no agreement was reached:

13. [24]

    In the proceedings that were heard by Adams J before the settlement that produced the In Principle Agreement Mr Sayed pleaded that the Bank acted unconscionably in relation to the Woonona home loan and the Woonona mortgage and acted in breach of the Code of Banking Practice. Particular complaint was made about the alleged behaviour of a representative of NAB in making representations to Mr Sayed that led to him restating his income in the loan application. That was said to impact on Mr Sayed’s ability to service and repay both the Corrimal loan and the Woonona home loan. In that context the defence pleaded as follows:

14. [25]

    Those matters were said to amount to unconscionable conduct in breach of ss 12CB and 12CC of the Australian Securities And Investments Commission Act 2001 (Cth) which in turn was said to mean that the Plaintiff was not entitled to possession of the property nor judgment against Mr Sayed and he was entitled to the relief in s 12GM of the ASIC Act.

15. [26]

    It is clear, therefore, that what was settled and formed part of the In Principle Agreement were complaints concerning the entry into the Woonona facility and mortgage and various acts of wrongdoing alleged on the part of NAB including the cross-collateralisation of the Woonona facility. Those matters are res judicata as a result of the judgment by Harrison AsJ in Sayed (No. 4).

16. [27]

    To the extent that the matters now pleaded as paragraphs 43A to 43C and 49 to 60 were not expressly raised in the Defence of 22 August 2011 they fall clearly within the principle from Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45; (1981) 147 CLR 589. The joint judgment said (at 602):

17. [28]

    It is apparent that success on the defences which I have identified would conflict with the judgment given by Harrison AsJ. In any event, the subject matter of those paragraphs were so relevant to the subject of the Defence to the Bank’s claim that it would have been unreasonable not to rely on it. No explanation has been offered for not having done so previously.

18. [29]

    It is clear from the Court of Appeal’s judgment that the only matter which lay outside the settlement of the proceedings was the cross-claim in relation to the Corrimal property.

19. [30]

    There is a further reason why the paragraphs concerning Woonona should not now be allowed to form part of the Cross-Claim. When the Amended First Cross-Claim was filed on 18 August 2015 the claims in relation to the Woonona property were expressly abandoned. Those paragraphs were paragraphs 5-10, 45 and 47-51. There is no evidence before me explaining why when those claims were abandoned in August 2015 they should now in a slightly different form be permitted to be revived. Such an approach to the litigation is entirely inconsistent with ss 56-58 of the Civil Procedure Act 1995 (NSW). The present proceedings have been foot since 28 May 2010. It is entirely unacceptable that a party should be seeking to revive an abandoned claim or to bring a new claim if that is its proper characterisation six years after proceedings have commenced with no explanation for why that is sought.

Privileged documents

1. [31]

   Mr Sayed sought access to the unredacted form of the documents identified at [11] above. The basis for the claim was to be found in s 122 of the Evidence Act 1995 (NSW) and the principle said to have been articulated in Council of the New South Wales Bar Association v Archer [2008] NSWCA 164; (2008) 72 NSWLR 236 at [48]. The principle is concerned with implied waiver of client legal privilege.

2. [32]

   Section 122 relevantly provides:

3. [33]

   The principle can be traced back to Attorney General (Northern Territory) v Maurice (1986) 161 CLR 475 and was restated in Mann v Carnell [1999] HCA 66; (1999) 201 CLR 1 at [29] as follows:

4. [34]

   In Archer Hodgson JA (with whom Campbell JA and Handley AJA generally agreed) said at [48]:

5. [35]

   The matter is put this way by Mr Sayed. Paragraph 31 of the Amended First Cross-Claim filed 18 August 2015 pleads:

6. [36]

   The Defence to that paragraph, being paragraph 23 of the Defence to Amended First Cross-Claim filed 9 October 2015, reads:

7. [37]

   Mr Sayed then points to the dates and descriptions of documents 29, 32 and 37 as follows:

8. [38]

   Mr Sayed argued that what was relied on was the constructive denial in paragraph 23 of the Defence that there was a breach of duty by the taking of those steps. He submitted that this amounted to a pleading that the Bank’s state of mind was informed by the advice and that this was the basis for the Bank not being negligent. Mr Sayed relied on the timing of the events, the description of the documents and from the fact that the Bank was aware at this stage that it was being pressed by Mr Sayed to comply strictly with its obligations as mortgagee in possession.

9. [39]

   As far as documents 19, 20 and 30 (and probably 31 although that was not mentioned by Mr Sayed’s counsel) those documents were said to be related to the issue of the landlocking of Lot 42.

10. [40]

    In relation to document 58 Senior Counsel for Mr Sayed frankly acknowledged that he had very little information as to the content of the document. The description is this:

11. [41]

    Senior Counsel suggested that there was a sufficient inference that the advice was relevant to the decision to proceed by a particular method, and that method of sale is what is attacked by Mr Sayed in his cross-claim and defended by the Bank in its Defence to the Cross-Claim.

12. [42]

    No reference was made to document 36 which might be thought to be in a similar category. The description of that document is:

13. [43]

    Counsel for NAB submitted that waiver occurs when there is a forensic deployment of legal advice or the receipt of legal advice by a party, rendering maintenance of the confidentiality of that advice inconsistent. He said that no state of mind was involved. There was simply a denial of a breach of legal duty without any reference to a state of mind.

14. [44]

    In Wayne Lawrence Pty. Limited v. Hunt & Ors. t/a Hunt Musgrave & Peach [1999] NSWSC 1044 Hodgson CJ in Eq (as his Honour then was) considered the decision of the majority of the Full Court of the Federal Court in Telstra Corporation Ltd. v. BT Australia Pty. Ltd. (1998) 85 FCR 152; 156 ALR 634. In that case a defendant pleaded that it undertook certain action in reliance on a certain representation. The majority of the Full Court held that the pleading thereby opened up as an element of the cause of action an issue which could not fairly be assessed without examination of the relevant legal advice. The majority considered that the party was taken to have waived reliance on the privilege. Hodgson CJ in Eq went on to say:

15. [45]

    In my opinion, the situation in the present matter is some distance removed from the cases where it has been held that a party has waived the privilege. It is not easy to discern from any pleading in the Defence to the Amended First Cross-Claim that the NAB is relying upon a state of mind or a belief, let alone that such state of mind or belief was informed by legal advice received. The thrust of NAB’s Defence, as paragraph [23] thereof demonstrates, is that NAB denies that it acted in breach of its responsibilities as a mortgagee. The fact that there are diary notes which predate the alleged rejection of an offer does not lead to an inference that the Bank formed a belief or a state of mind in rejecting the offer based on advice to which the diary note refers. I was not, for example, taken to any of the correspondence referred to in paragraph 31 of the Amended First Cross-Claim or paragraph 23 of the Defence to the Amended First Cross-Claim to demonstrate that the pleading in effect identified a belief or state of mind on the Bank’s part. Of course, as Hodgson CJ in Eq made clear in Wayne Lawrence, even if a belief or state of mind is asserted, that would not be sufficient in itself to amount to a waiver of the legal advice that may have brought that belief or state of mind about.

16. [46]

    The references in documents 19 and 20 to DA approval and the reference in document 30 to advice concerning right of carriageway between the lots is quite insufficient to lead to an inference that a denial of breach of duty resulted from a state of mind that was informed by the legal advice referred to.

17. [47]

    The legal advice identified in documents 36 and 58 is simply too speculative to draw an inference that it was a justification for the method of sale adopted by the Bank.

18. [48]

    Nothing in the Bank’s Defence to the Amended First Cross-Claim seems to me to involve inconsistency or unfairness by seeking to maintain the privilege on the documents concerned. In my opinion, the Bank should not be directed to discover unredacted copies of the documents concerned. That is not to say that when the evidence in relation to the Cross-Claim is complete the issue may not again be raised by what is said in the Bank‘s affidavits. My decision is based solely on the pleading in relation to the Cross-Claim.

Conclusion

1. [49]

   I make the following orders:

   1. (1)

      The First Defendant’s Notice of Motion filed 4 March 2016 is dismissed

   2. (2)

      The First Defendant is to pay the Plaintiff’s costs of the Motion.