ANZ v Ebsworth [2015] NSWSC 1456

The bank advanced money to an ex-wife to enable her to purchase a business previously owned by her husband. The purchase was part of a binding financial agreement entered into with her de facto which she was seeking to have set aside in the Family Court. To support the bank loan, her sister gave a limited guarantee but also mortgaged her house to secure the balance remaining unpaid by her sister. The borrower sought to have the bank’s possession proceedings transferred to the Family Court on the basis that the proceedings were linked. The borrowers raised unjustness, breach of contract and unconscionability defences, alleging that their accountant represented to them that the real estate business was viable and the accountant knew that neither had received independent financial advice and in addition, that the borrower had not received independent legal advice. The borrowers argued that the accountant’s knowledge could be imputed to the bank by reason of their communications.

The law is that the question of whether there exists single or multiple controversies in relation to both proceedings depends on an examination of the pleadings in both proceedings and the relevant factual substratum of each case. The court noted:

There are individual factors to be considered in this case which point strongly against there being one controversy:

(1) The two sets of proceedings concern two different transactions, entered into in close proximity to one another but not at the same time or in the same context.

(2) The two sets of proceedings concern different parties and relationships:

(a) The Family Court proceedings arise between [the borrower]and her former de facto partner who is not a party to the Supreme Court proceedings.

(b) The bank has been joined to the Family Court proceedings as second respondent but the issues in those proceedings are of no relevance to the bank.

(c) The proceedings in this Court are between bank, [the borrower] and [her sister]. The sister is not a party to the Family Court proceedings.

(d) The legal interests of the sister and the bank as two key parties in the Supreme Court proceedings, are unrelated to the Family Court proceedings.

(3) The two sets of proceedings are concerned with different property. The property the subject of the mortgage and possession claim is not the subject of the Family Court proceedings. As the sister is not a party to the Family Court proceedings, her property has no connection to the Family Court proceedings.

The court also said:

Whilst both sets of proceedings raise issues concerned with unconscionability principles and related conduct, they arise in the context of separate “matters” in particular involving the making of different agreements, which involved different parties, made at different times. This is not a case where there is an overlap between the issues. There is not one justiciable controversy, but two separate controversies. A determination in the Family Court proceedings of issues concerning the Binding Financial Agreement cannot determine or resolve any issue between [the bank] and [the borrower] or between [the bank] and [the borrower’s sister]. The proceedings in this Court concern later agreements for the loan facilities and security which did not involve [the borrower’s] former de facto partner. There was no property jointly owned by [the borrower] and [her de facto] provided as security to the bank loans.

If there had been possession proceedings concerning property of the de facto relationship, it could be more readily concluded that a single controversy existed. The Family Court does not have jurisdiction to hear and determine the rights between the bank and the borrower’s sister. In particular, the Family Court does not have power to make an order in respect of her property.

The court found that it was not more appropriate that the proceedings be determined by the Family Court given that it was seriously arguable that that Court did not have jurisdiction to make an order in respect of the property. Both claims do not arise out of common transactions and facts and do not arise from a common substratum of facts.

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