Queensland Court of Appeal rejects ‘IOU’ as payment for debt

31 March 2021
Barbara-Ann Sim, Partner, Brisbane

In Bayly v Westpac Banking Corporation[1], the Queensland Court of Appeal dismissed an appeal against a summary judgment granted in favour of Westpac Banking Corporation (Westpac).

Whilst there were broadly, two grounds of appeal, the appellant was self-represented and raised numerous issues and alleged errors of law and fact made by the primary Judge.

The facts

In August 2006, Dallas Henry Bayly obtained finance from St George Bank Limited (St George) for a total sum of $256,800. The loans were secured by a first registered mortgage over a unit at Broadbeach (Broadbeach Property).

In February 2010, APRA issued a Certificate of Transfer which recognised agreements between St George and Westpac for the voluntary transfer of St George’s business to Westpac. The effect of this is that from 1 March 2010, Westpac became the statutory successor in law to all of St George interests and liabilities.

Mr Bayly ceased making loan repayments in September 2016. As a result, Westpac’s solicitors issued a default notice to Mr Bayly in December 2018 which was not satisfied.

On 27 March 2019, Westpac commenced proceedings in the District Court of Queensland for the debt owing to it and for possession of the Broadbeach Property.

Mr Bayly defended the proceedings, filing three defences. Judge Koppenol presided over Westpac’s summary judgment application and made orders in favour of Westpac on 29 January 2020.

Grounds of Appeal

Mr Bayly’s appeal was based on two grounds:

    1. That the District Court of Queensland lacked jurisdiction to hear matters of fact and law concerning interpretation of Commonwealth Acts and the Constitution.
    2. That Judge Koppenol made errors of law and facts pertaining to Commonwealth legislation, errors of interpretation/misinterpretation of legal definitions of words and errors of fact and jurisdiction pertaining to valid cause of claim, valid claim and jurisdiction to proceed.

Court of Appeal’s Decision

Ultimately the Court held that both grounds of appeal had no merit and dismissed the appeal with costs. Mr Bayly represented himself with the assistance from a Mr Andrews, to whom the Court gave leave to appear and assist.

First Ground of Appeal

In his amended defence, Mr Bayly admitted that the District Court had jurisdiction to deal with the proceedings and he did not argue its lack of jurisdiction before Judge Koppenol.

The Court of Appeal held the first ground was unsupported and without merit.

Second Ground of Appeal

Mr Bayly and Mr Andrews made numerous submissions to support the second ground of appeal. Each submission was considered by the Court and ultimately found not to support any real prospect of Mr Bayly succeeding on his defence against Westpac’s proceedings.

Promissory Note

  • Much was made by Mr Bayly and Mr Andrew of a promissory note for $700,000 which was delivered to Westpac’s solicitors and redeemable at a tavern in the Crown Plaza Hotel to discharge Mr Bayly’s liability. It stated:

The Sum of Seven Hundred Thousand Dollars Australian Only

Redeemable at:

First Avenue Tavern, At the Crown Plaza Hotel, at the entrance to the First Avenue Entrance in First Avenue, Broadbeach, Queensland, Australia

At 10.30 am hours without; let, delay, hindrance or ado on The Fifth day of September, AD 2019′

  • It was further argued that as Westpac had never ‘presented’ the promissory note for payment, Mr Bayly was never liable to honour it.
  • Mr Andrews also relied on the statement of Lord Denning MR in Fielding & Platt Ltd v Najjar that “a bill of exchange or a promissory note is to be treated as cash”.[2] He went on further to state that the tender of the promissory note was the same as a payment of cash and that the silence between the delivery of the promissory note to Westpac’s solicitors and when Westpac’s solicitors wrote to Mr Bayly advising the promissory note was not accepted (a period of 20 days) constituted Westpac’s acceptance of the promissory note.
  • The Court disagreed and noted that the importance of the decision in Fielding & Platt v Najjar was that a person who draws a promissory note must honour it when it is due.
  • Further there was no agreement in the terms of the facilities and mortgage requiring Westpac to accept the promissory note in satisfaction of the debt owed.
  • Significantly, silence does not constitute acceptance and in fact, Westpac had expressly rejected the promissory note as any purported payment by Mr Bayly.

Westpac’s standing, proof of claim and, Judge Koppenol’s ‘obstruction’

Mr Bayly submitted that he had no contractual relationship with Westpac and that Westpac could not prove the advance of funds to him nor the source of those funds that were advanced to him. Westpac’s material clearly demonstrated that it was the statutory successor to St George and entitled to exercise all rights available under the facilities and mortgage. Its material also included a copy of loan account statements showing funds advanced to Mr Bayly and the Court considered it was irrelevant where a bank may source funds to advance to its customers.

Mr Bayly also complained of ‘obstruction’ by Judge Koppenol and appears to have taken His Honour’s rejection of various untenable arguments as his Honour having ‘avoided, ignored or circumvented taking into consideration’ what was said. After a review of the transcript of hearing before Judge Koppenol, the Court found His Honour to be courteous; allowing Mr Bayly and Mr Andrews the proper opportunity to present Mr Bayly’s case which ultimately, was based on legally and factually wrong principles.

Key takeaways

  • The mere delivery of a promissory note will not satisfy the debt or discharge the liability of a borrower, particularly in circumstances where:
    • the promissory note is not honoured or presented for payment; and
    • there is no agreement between the parties that a promissory note will be accepted as payment.
  • Without more, silence is not acceptance.
  • Example of the practical difficulties, delays and increased enforcement costs that can be experienced when self-represented litigants raise untenable arguments.


Authored by:

Barbara-Ann Sim, Partner
Caitlin Milligan, Lawyer



[1] [2020] QCA 148.

[2] [1969] 1 WLR 357 at 361B.

This update does not constitute legal advice and should not be relied upon as such. It is intended only to provide a summary and general overview on matters of interest and it is not intended to be comprehensive. You should seek legal or other professional advice before acting or relying on any of the content.

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