In Pavlomanolakos v National Australia Bank [1993] FCA 29, the applicant filed a document entitled “Notice of Constitutional Matters” claiming that “the creation of book-entry credits by Banks and other financial institutions” was unconstitutional, that a mortgage should not be enforced because its funds were “created by the (Bank) as a book-entry credit ‘out of thin air”, and did not represent valuable consideration. The applicant also sought declaratory orders that Magna Carta and the Bible were part of the law of Australia, in respect of guaranteeing the rights of the appellants to their matrimonial home. The court referred to earlier decisions to strike out the various pleadings, and leave was granted to the applicant to file and serve a further amended statement of claim in terms consistent with these reasons.
Pavlomanolakos v National Australia Bank [1993] FCA 222 was an application for leave to appeal from the orders striking certain paragraphs in the amended statement of claim. Leave to appeal was dismissed.
“It should by now be clear that howsoever it be pleaded, a case cannot be made out in Australia that mortgages are invalid on the ground that the operations of banks or finance companies in making loans involve the creation of credit. Particularly the decision in First National Bank of Montgomery v Jerome Daly (1968), County Court, Credit River, Minnesota, whether or not correctly decided under the law of Minnesota, is not part of the law of Australia. If the various matters sought to be argued in cases such as Arnold v State Bank of South Australia [1992] FCA 554 and Re Warner v Elders Rural Finance Limited [1992] FCA 473 are henceforth sought to be reargued in this Court, it is my view that the party seeking to reargue these matters may face an order for indemnity costs.”