THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

MASTER GREENWOOD
TUESDAY 17 SEPTEMBER 1996
20680/96 - JOHN WILSON v ST GEORGE BANK LIMITED

JUDGEMENT

MASTER: On 22 August 1996 the defendant filed a motion seeking that the statement of claim be struck out pursuant to Pt 15 r 26, or that the proceedings be summarily dismissed under Pt 13 r 5 of the Supreme Court Rules.

I remind myself that in dealing with an application for summary disposal the onus is on the party seeking relief on a summary basis to satisfy the Court that the opponent has no plausible claim or defence.

Briefly, the facts of the relationship between the parties concern the borrowing by the paintiff of $150,000 from the defendant. The contract was referred to as a "Home Loan Plus".

The Loan Approval, which is Annexure A to the affidavit of David Singer, sworn on 21 August 1996, indicates that the loan was for a period of seven years with a five-year period of fixed interest at 10.9 per cent, reducing to 9.9 per cent for prompt payment.

The annexure to the loan approval document dealt with the remaining terms of the loan. It is headed "Fixed Interest Rate Loan - Fixed for 1, 2, 3 or 5 years". The relevant part of that document reads that the interest rate on the loan is fixed for a period of five years. It continues:

"On the 5th anniversary of the first advance of your
loan the above fixed interest rate will cease. At that
time , the following interest rate options will be available:
 (a) A further interest rate period at the rate applicable
 for St George's fixed rate residential loans at that time;

or

(b) St George's variable residential loan interest rate
applicable at that time."

The defendant publishes from time to time the interest rates for its various lendings, including the home loan interest rates. Annexed to Mr Singer's affidavit are two publications, one is a copy of a publication of the rates which is available in branches of the defendant's bank, the second (annexure E) is an example of a publication in the Sydney Morning Herald of Monday 29 July 1996. Mr Singer deposes that the rates are published in the Sydney Morning Herald on each Monday.

The plaintiff's statement of claim was filed on 4 July 1996. It recites in the first eight paragraphs details of the Home Loan Approval. It sets out information which the plaintiff says is relevant to his argument. The statement of claim then reads:

9. There is no certainty as to what 'the rate applicable for St George's fixed rate residential loans' will be "On the 5th anniversary of the first advance' and , therefore, what the monthly repayment figure will be.

10. There is no certainty as to what 'St George's variable residential loan interest rate' will be 'On the anniversary of the first advance' and,  similarly, what those monthly repayment figures will be.

 11. Variable interest rate loan contracts are contrary to Common Law which demands that 'certainty of terms' are an essential element for the creation of a contract.

 12. Variable interest rates contravene basic principles of economics applicable to the determination of 'The rate of interest charges for any particular transaction' (Ref Collins Dictionary of Economics. Second Edition) which will depend on such considerations as the purpose and duration, the amount borrowed, the collateral security (if any), and the creditworthiness of the borrower, all factors influencing the degree of perceived 'risk' involved in making the loan by the lender."

Part 13 r 5 of the Supreme Court Rules provides that where in any proceedings it appears to the Court that there is no reasonable cause of action disclosed, or the proceedings are frivolous or vexatious, or the proceedings are an abuse of the process of the Court, the Court may order that the proceedings be stayed or dismissed generally, or in relation to any claim for relief in the proceedings.

Part 15 r 26 provides that:

 "Where a pleading discloses no reasonable cause of action or defence or other case appropriate to the nature of the pleading, or has a tendency to cause prejudice, embarrassment or delay in the proceedings, or is otherwise an abuse of the process of the Court, the Court may ... order that the whole, or any part of the pleading be struck out."

The plaintiff's argument is quite simple and clear. He submits that under his contract with the defendant he does not know what rate of interest he will have to pay in five years when the fixed interest component of his loan expires and he, therefore, does not know what the loan will cost. Thus, the contract is uncertain and must be void for uncertainty.

In aid of this submission the plaintiff calls on the words of Viscount Maughan in Scammell and Nephew Limited v Outon (1941) AC 251 where the learned judge said:

 "There was no evidence to suggest that there are any of the well-known usual terms of such a contract, for instance, as to the interest payable."

The "terms" to which the judge was referring concern interest rates which were said to be "hire-purchase terms payable over two years" and in the circumstances this term was held to be void for uncertainty and therefore the contract was held to be void for uncertainty.

The question of the effect on a contract where the future interest rate is uncertain, although specified at the time when the contract was entered into, was considered by Smith J in the Supreme Court of Victoria in Tonelli v Komirra Pry Limited. It is reported at (1972) VR 7737. At page 741 the learned judge wrote:

 "The defendant's contention that the sale note was void by reason of uncertainty as to the rate of interest payable on outstanding purchase money was based on the fact that conditions 2 (A) and 2 (B) provided that the rate of interest should be one-quarter per cent above 'the current bank overdraft rate'. It was submitted that what these words referred to was a current rate which would have been charged by whatever bank the plaintiff might have approached for a loan of the amount of the outstanding purchase money. And it was pointed out that, according to the evidence,  the rate which each bank would have charged any customer upon any loan,  whatever the amount or purpose, would have been fixed by negotiation with the particular borrower; so that it was not possible to identify any rate as being that currently charged by banks for any particular size or class of loan.

 In my view, however, the conclusion that follows from this state of the evidence is not that the provision as to the rate of interest was void for uncertainty. It is that the provision does not refer to a rate of interest currently charged by banks for loans of a certain size or class, but refers to the only uniform rate that did exist, namely, the uniform maximum bank overdraft interest rate prescribed and published from time to time by the Reserve Bank with the approval of the Commonwealth Treasurer.  Accordingly, this third allegation of uncertainty, like those earlier discussed must be rejected."

Turning now to the terms of the loan approval which I have dealt with in greater detail earlier, the loan approval is for the period of seven years, the first five years of interest being fixed at 9.9 per cent, the remaining two years of interest on the loan would be set at one of the two options which were available: either the St George fixed residential rate applicable at that item; or the St George variable residential loan interest rate applicable at that time.

I am of the view that the contract which the parties entered into is not void for uncertainty. The agreement between the parties is that at the end of five years, the interest rate will be that prescribed and published by the bank for residential fixed interest rate loans, or the variable interest rate loans. Uncertainty does not lie in the terms of the contract which were agreed between the parties, but in what the rate will be applicable at the expiration of the five years. Thus whilst the amount of that future rate is uncertain, the rate itself is indeed certain. It has been defined as the rate that is applied in the circumstances which I have earlier set out.

It follows, therefore, that the plaintiff's pleading falls because the gravamen of his complaint, namely, that the contract is void for uncertainty, is not correct. The contract is certain, certain in its terms. It is the percentage of interest to be determined in an agreed way and payable in the sixth and seventh years of the contract which is unknown at this point in time. Now whilst the quantum of the future interest rate is uncertain, its method of determination is not.

As the basis of the plaintiff's claim is built upon the submission that the contract is void for uncertainty, it follows that the plaintiff's claim cannot stand. I, therefore, dismiss the statement of claim. The plaintiff is to pay the defendant's costs.

It follows from what I have said that the plaintiff's motion for summary judgement also cannot stand. I, therefore, dismiss that motion, the plaintiff to pay the defendant's costs.

I certify that this and the five preceding pages are a true copy of the reasons for judgement herein of Master Greenwood. 

S. Arundsen
Associate 
Dated 17th September, 1996

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

HAMILTON AJ
MONDAY 30 SEPTEMBER 1996
020680/96 - JOHN WILSON v ST GEORGE BANK LIMITED

JUDGMENT

PLAINTIFF: Shouldn't the terms of the contract be established when the contract is made?

HIS HONOUR: No, that is the problem. You see, that is not the law and that is the point of the maxim that I have given you, that the law regards as certain something which can be rendered certain provided there is some objective criterion or objective formula by which at some time you can obtain certainty. You cannot do it simply by saying in general terms, well, whatever one party to the contract does binds the other, but you may have a reference to either the decision of a third person or to the Consumer Price index - for instance, rents in leases are often fixed for the future by reference to the Consumer Price Index, which is published from time to time; so that if a formula is specified whereby in some objective way certainty can be obtained at the relevant time, then in one sense, of course, it is uncertain, but for legal purposes it is not uncertain.

 I have heard the submissions that have been made about this matter, I think there is not a great deal for me to say about the matter, save that Master Greenwood's judgment appears to me to be correct and indeed for the reasons given by the learned Master with which I agree. The appeal will therefore be dismissed.

I certify that this and the one preceding pages are a true copy of the reasons for judgment herein of The Honourable Mr. Acting Justice Hamilton. 
Associate
Dated 30^th September, 1996.

THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

CA 40593/96

CLARKE JA
ABADEE AJA

MONDAY 28 OCTOBER 1996

JOHN WILSON v ST GEORGE BANK LIMITED

JUDGEMENT

CLARKE JA:Mr John Wilson has filed a notice of appeal from the decision by Hamilton AJ on 30 September 1996 in which the learned judge dismissed an appeal by Mr. Wilson from a judgement of Master Greenwood given on 17 September 1996.

In the course of preparation for the hearing both parties seem to have directed their mind to the need to secure the leave of this court to bring the appeal. Quite unusually, St George Bank Limited, the opponent, has not sought, as I understand it, to strike out the appeal but in a gesture helpful to Mr Wilson has invited the Court to consider an assumed application by Mr Wilson for leave to appeal and to dismiss it.

The factual background is that Mr Wilson filed a statement of claim in the Supreme Court seeking a declaration that a loan that he has with the Bank is void; or, alternatively, the severance of part of what is described as a contract.

Without going into the detail of the statement of claim, my understanding is that Mr Wilson complains that a mortgage which he entered into with the St George Bank is void, or partly void because in one respect it is uncertain in its terms.

The mortgage provides for the payment of a fixed rate of interest for the first five years of its term and for the following two years makes the following provision (I am not quoting from the mortgage but the effect of the mortgage).

"On the fifth anniversary of the first advance of your loan the above fixed interest rate will cease. At that time the following interest rate options will be available:

(a)A further interest rate period at the rate applicable for St George's fixed rate residential loans at that time; 

or

(b)St George's variable residential loan interest rate applicable at that time."

The point is that at the end of five years the fixed interest rate ceases and there is an option available to Mr Wilson to determine whether, in the ensuing period of the mortgage, he will pay interest at the St George fixed interest rate for residential loans, or the St George variable interest rate for residential loans. His complaint is that the provision for interest during the final two years is not fixed, i,e., the interest rate payable in respect of those two years is not known at the time of the mortgage and accoringly there is uncertainty in the agreement between the parties which renders the agreement void or partly void.

The St George Bank, upon receipt of the statement of claim, moved to strike it out or, alternatively, secure an order that the proceedings be summarily dismissed on the ground that there was no arguable cause of action disclosed in the statement of claim. The argument of the St George Bank was that it was clear that there was no uncertainty in the terms of the mortgage and that the parties had expressly agreed upon the manner or mechanism by which the interest rate for the mortgage would be fixed in the last two years of its term. Accordingly, there was no substance at all in the complaints in the statement of claim and it should be struck out and the proceedings dismissed.

Master Greenwood heard the application and he on 17 September 1996, he ordered that Mr Wilson's claim be summarily dismissed. Mr Wilson thereupon appealed from that judgement and the appeal was, as I have earlier indicated, heard by Hamilton AJ and dismissed.

The Supreme Court Act in section 101 (2) (i) provided that an appeal shall not lie to this court, except by leave of the Court of Appeal, from a judgement or order of the court in a division on an application for summary judgement under the Rules. As I understand the motion considered by Master Greenwood, and upheld by him, it was an application for summary judgement. Accordingly, Mr Wilson can bring an appeal to this Court from Hamilton AJ's order only by leave of this Court and , despite the absence of a formal application by him, the Court is disposed in the circumstances to treat the present hearing as an
application for leave to appeal. Clearly, if Mr Wilson does not get leave to appeal he cannot seek any other orders from this court, which acts only on the basis of the existence of pending appeals.

The question then is whether Mr Wilson should be granted leave to appeal. In my opinion the material before the court demonstrates that there was no uncertainty in the terms agreed between the parties, and therefore no invalidity of the agreement. The uncertainty that exists is only as to what interest will be apayable by Mr Wilson for the last two years of the term. The parties have, however, in their contract provided an agreed mechanism for determining with certainty what that interest rate will be. Such a method of determination of interst rates and analogous payments is well known to the law and, provided that the
parties have agreed in terms that could be described as certain as to the mechanism which is to be applied in determining what the interest rate or other payment should be, the agreement does not fail for lack of
certainty.

I regard that proposition as such trite law as to need no authority for its support. It is well established and is applied as settled in the commercial law of this State on a regular basis. Although the decision in Tonelli v Komira Pty Limited (1972) VR 737 was somewhat different, it provides an example of the method by which the law upholds contracts as sufficiently certain where a mechanism is provided for determining interest rates payable in the future which have not been expressly agreed at the time of the contract.

In my opinion there is no substance at all in law in Mr Wilson's complaints and I would be disposed to dismiss the application with costs.

ABADEE AJA:I agree with the orders proposed by Clarke JA and his reasons for them.

CLARKE JA:The orders of the court will be that leave to appeal from the judgement of Hamilton AJ is refused with costs.

I certify that this and the preceding three pages are a true copy of the reasons for judgment herein of his Honour Mr. Justice Clarke and of the Court.

Associate
Dated 28th October, 1996

THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

No. 20589 of 1997

JUSTICE DAVID LEVINE

FRIDAY 25 JULY 1997


JOHN WILSON   (Plaintiff)
       v
ACP PUBLISHING PTY LIMITED  (Defendant) 

JUDGMENT

HIS HONOUR: By a Statement of Claim filed on 17 June 1997, Mr John Wilson complained about a publication in The Bulletin magazine said to be published by the defendant.

The statement of claim then relied upon by Mr Wilson was constituted by three pages including the heading page and the last page being the usual form of notice to a defendant. The middle (being the third) page purported to plead some case against the defendant arising from the publication. Some clue as to what Mr Wilson's complaint was about is to be found in another document in the court file being an affidavit sworn by Mr Wilson on 16 June 1997 to which is attached Mr McNicoll's Opinion Column from the relevant issue of The Bulletin in which there are four paragraphs referring to Mr Wilson.

The matter came before the court on 27 June. Mr O'Brien of Gilbert & Tobin appeared for the defendant. The matter was stood over to today in the following circumstances: the patent deficiencies in the statement of claim were such that Mr Wilson should be given an opportunity to file a document in compliance with the Rules of Court, an obligation on any litigant represented or unrepresented. The Associate's note of the proceedings coincides with the transcript in terms of my advising Mr Wilson to go to the Supreme Court Rules and in particular to look up Pt 67.

The document filed on 7 July 1997, being an amended statement of claim is one that is as eloquent in its articulation of what, no doubt, Mr Wilson sees as a just cause, as it is still totally deficient in compliance with the Rules of court.

PLAINTIFF: Would you elaborate on that please?

HIS HONOUR: On Friday 27 July 1997 I said, "I will give you an opportunity to put in order the publication, what you say it means, and that you claim damages and you should refer in paragraph 1 to the publication." I then made reference TO THE DESIRABILITY OF LOOKING AT Pt 67.

The first fundamental flaw in the amended statement of claim is that it does not plead the publication. The second fundamental flaw in the amended statement of claim is that it does not plead the imputations which are required and have been required since 1974 to be strictly formulated by litigants in person and unrepresented litigants.

It makes a claim, thirdly, for punitive damages which is prohibited by the law of this State and is otherwise a document which contains matters of argument rather than assertion of material facts conformable with the rules required for the pleading of a cause of action in defamation. It is embarrassing and vexatious and I strike it out with costs.

I CERTIFY THAT THIS AND THE 2 PRECEDINGS PAGES ARE A TRUE COPY OF THE REASONS FOR JUDGMENT/SUMMING UP HEREIN OF HIS HONOUR JUSTICE DAVID LEVINE.

A.ROGERS(?)
Associate
Date 25 July 1997