Aktas v Westpac Banking Corporation Limited & Anor

[2009] HCATrans 326

[2009] HCATrans 326

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S48 of 2009

B e t w e e n -

PAUL UYSAL AKTAS

Applicant

and

WESTPAC BANKING CORPORATION LIMITED (ARBN 007 457 131)

First Respondent

HOMEWISE REALTY PTY LIMITED ACN 001 131 273 TRADING AS CENTURY 21 HOMEWISE REALTY

Second Respondent

Application for special leave to appeal

FRENCH CJ
HAYNE J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 11 DECEMBER 2009, AT 12.23 PM

Copyright in the High Court of Australia

MR T.S. HALE, SC:   If the Court please, I appear for the applicant with my learned friend, MR A.T.S. DAWSON.  (instructed by Penhall & Co Lawyers)

MR J.R. SACKAR, QC:   May it please the Court, I appear with MR K.P. SMARK, SC for the respondent.  (instructed by Mallesons Stephen Jaques)

FRENCH CJ:   I note a submitting appearance for the second respondent, save as to costs.  Mr Sackar, it might help us to hear from you first as to why special leave should not be granted.

MR SACKAR:   Your Honour, we submit that the Court of Appeal was correct.  If I can take your Honours to paragraph 70 at page 104 of the book?

HAYNE J:   Where in the Court of Appeal’s judgment do we find reference to the provisions of the Cheques Act?

MR SACKAR:   You do not.

HAYNE J:   Is that not the place to start?

MR SACKAR:   It is.

HAYNE J:   Where is the duty in the Cheques Act upon the paying bank to answer?

MR SACKAR: The duty arises in two respects. In section 67, when a cheque is presented the drawee institution, here Westpac, either has to pay or dishonour the cheque and in the words of section 67, “as soon as is reasonably practicable” and the ‑ ‑ ‑

HAYNE J:   Yes, and the bite in it is if they do not, they have to pay.

MR SACKAR:   Correct.

HAYNE J:   That is an interest.

MR SACKAR:   Yes.

HAYNE J:   A commercial interest in answering promptly.

MR SACKAR:   Well, your Honour inserts the word “properly”, but it is a commercial interest in ‑ ‑ ‑

HAYNE J:   An interest in answering promptly.

MR SACKAR:   Promptly, I am so sorry.  Yes, indeed, first.  Second, section 69, which is the definition of dishonour:

A cheque is dishonoured if the cheque is duly presented for payment and payment is refused by the drawee institution, being a refusal that is communicated by the drawee institution to the holder or the person who presented the cheque on the holder’s behalf.

What we say about the occasion is that in paragraph 70 of the Court of Appeal’s decision, pages 104 and 105 of the book, the Court properly addressed the balance using, we would say with great respect, the notion of the common convenience and welfare notion, which is but one of a number of formulas which have been used in the context of the qualified privilege analyses, correctly to identify, with great respect, that from the very moment that a cheque is presented to any institution a choice arises necessarily, the institution either pays or it dishonours, and the moment it makes the decision to dishonour, it must promptly notify those concerned, and here they were either the bank’s own customers or perhaps collecting banks who had presented on behalf of other customers.

One looks at the totality of the circumstances.  One does not focus, as we say our learned friends do impermissibly, on the error and work outwards from the error.  One looks at where commerce commences.  Where does the commercial discourse commence?  That is the context in which one then views whether it is the presentation of the cheque by a person to their bank for crediting, as might appear from Victorian decisions, or whether it is the presentation to the drawee bank for the payment or dishonouring or whether it is some other point in the spectrum of circumstances that will necessarily or may necessarily arise, because from the moment the commercial discourse commences, we say they are the circumstances that one looks at.

Now, here there was an error.  It was accepted by Westpac that there was an error, but qualified privilege applies necessarily, notwithstanding the fact that the imputation is false, and clearly it is no bar to the defence arising.  So the question is, if the discourse has commenced and if the relevant background or circumstances are already in play and the bank makes an error, it is not, as our learned friends propose or suggest by calling in a Justice Hilbery in the earlier case, that the bank, as it were, is exploiting its error to create the occasion, the circumstances have already commenced.

HAYNE J:   I understand that proposition, Mr Sackar, it may be right, it may be wrong, but is the notion of duty or obligation to communicate an important element in the argument in favour of qualified privilege?

MR SACKAR:   Yes.

HAYNE J:   Where lies the duty or obligation?  I observe in section 69 what on its face appears to be commercial interest in the paying bank to either pay or refuse to pay promptly, but I see no duty.  Where lies the duty?

MR SACKAR: Well, I can do no better than to point to sections 67 and 69 and say either there is a duty imposed by statute to promptly communicate the bank’s position. If I have to rely upon interest, I would rely upon interest because interest would be sufficient, in our respectful submission. If both sides have an interest, then it would be, in our submission, perfectly acceptable that both parties have a business and common business interest with each other, either bank to bank or bank to customer. So consequently the customers and/or the collecting banks need to know precisely the status of the cheque because they need to know the status of the funds represented by the chose in action by the cheque.

HAYNE J:   But the payee has an action against the paying bank unless there has been refusal to pay promptly, regardless of the position as between paying bank and its customer?

MR SACKAR:   Yes.

HAYNE J:   Yes.

MR SACKAR:   So therefore we say, with great respect, because the commercial discourse commences, as I have stated or suggested, there is we say a duty upon due presentation to promptly inform.  Now, that is a legal duty, we say.  It does not have to be a legal duty, it can be a moral duty, but here it seemed to us, with great respect, to be a legal duty given the consequences supposed in the Cheques Act, for example. If they do not reasonably practically advise the status of the cheque, then they may be placed in a position where they may not be able to dishonour it unless they detect some defect in title on the part of the holder. So that is part of section 67 of the Cheques Act.  So consequently we say that the duty comes directly from the statute, but at least there is a commercial and business interest between the parties for this to occur.

HAYNE J:   Just to be sure of this, do the Court of Appeal find the roots of the duty in the Cheques Act or elsewhere?

MR SACKAR:   No, they seem to find it in the Cheques Act.  If I can invite your Honours just briefly to go to paragraph 70, it is only 70, of pages 104 and 105 of the Court of Appeal’s judgment.  There Justice McClellan, who wrote the judgment, talks about the balancing of the two respective interests.  Then you will see at the top of page 105, about three lines from the top:

Against that proposition must be weighed the importance of efficient and effective communication of a bank’s dealing . . . If a mistake has occurred and the payee does not receive the relevant funds the logical step for the payee is to raise the matter with the drawer.  If a bank error is responsible for the communication it can be readily identified and remedied.  Although the drawer’s reputation may suffer, in most cases of error this will be transitory.  Greater damage may be done . . . Even if occasioned by the bank’s own mistake there are good reasons why the communication contemplated by the Cheques Act should be protected.

So it is there and we say, with respect, that is an important context in which to view what may be the occasion.  As I said, the occasion may vary, and there are two possibilities that are asserted in the Victorian cases and in the New South Wales cases.  There is another one which his Honour Justice McClellan identified in paragraph 81 at 111, last two lines:

The occasion, pleaded by the respondent, was the return of the cheque with the relevant endorsement.

Now, the reason the third possibility arose, at least theoretically in this case, or not so theoretically, was because the way in which the matter was pleaded, namely, the publication, which is when the person obviously comprehends the significance of “Refer to drawer”, so therefore a publication occurs at that point, it was pleaded in such a way that the defendants pleaded the occasion, namely, the return of the cheque, which is the way the plaintiff had put it in the pleading, although your Honours do not have a statement of claim before you.  So in short compass, that is the point.

HAYNE J:   If this Court were to take the matter and if it were to ultimately hold that there was not an occasion of qualified privilege – they are two rather large ifs – what would the consequence be for the litigation generally?

MR SACKAR:   Well, it would have consequences for Mr Aktas because it would preserve ‑ ‑ ‑

HAYNE J:   But would it go back for trial?

MR SACKAR:   No, no.

HAYNE J:   It would simply determine the litigation, would it?

MR SACKAR:   Yes.

FRENCH CJ:   There is an amount of judgment assessed, is there not, ‑ ‑ ‑

HAYNE J:   Yes.

MR SACKAR:   Her Honour prophylactically, if I may say so, determined Mr Aktas’ damages ‑ ‑ ‑

FRENCH CJ:   I am not sure “prophylactically” is the right word.  “Contingently”, perhaps.

MR SACKAR:   Well, I was desperate to say “wisely”, so now I will say what I should have said – wisely opted to determine the damages in the event that she was wrong, so there is an amount there.

HAYNE J:   The point therefore comes, Mr Sackar, is there anything that would make this an inappropriate vehicle to determine the question if the question is alive and otherwise of general importance?

MR SACKAR:   Well, no, I could not candidly say there would be anything in that way except to say the bleeding obvious, namely, that the Court of Appeal, in our view, was right.  They are our submissions.

FRENCH CJ:   Thank you, Mr Sackar.  There will be a grant of special leave in this matter.  What is the estimate?

MR SACKAR:   It could not exceed a day.

MR HALE:   I would agree with that.

FRENCH CJ:   Yes, half a day to a day, I imagine.  Yes, all right, thank you.

AT 12.35 PM THE MATTER WAS CONCLUDED