Blacker v National Australia Bank Ltd

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FEDERAL COURT OF AUSTRALIA

Blacker v National Australia Bank Ltd [2001] FCA 254

TRADE PRACTICES – borrowers induced to purchase dairy business by misrepresentations made by Bank – whether cause of action under s 82(1) of the Trade Practices Act 1974 (Cth) statute barred – when cause of action accrued – whether loss accrued only when purchasers ascertained that business was not viable.

DAMAGES –borrowers relying on Bank’s advice to purchase dairy business – whether damages for breach of duty include loss of borrowers’ “equity” – whether consequential losses compensable.

REMEDIES – s 87(1) of the Trade Practices Act 1974 (Cth) – whether loan transaction should be set aside.

Trade Practices Act 1974 (Cth), ss 51A, 52(1), 82(1), 82(2), 87(1), 87(1CA), 87(2).
Limitation Act 1969 (NSW), s 14.
Dairy Industry Act 2000 (NSW).

Wardley Australia Ltd v Western Australia (1992) 175 CLR 514, applied.
Hawkins v Clayton (1988) 164 CLR 539, cited.
Karedis Enterprises Pty Ltd v Antoniou (1995) 59 FCR 35, discussed.
Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494, applied.
Kenny & Good Pty Ltd v MGICA (1992) Ltd (1999) 199 CLR 413, cited.
Potts v Miller (1940) 64 CLR 282, cited.
Gould v Vaggelas (1985) 157 CLR 215, cited.
South Australia v Johnson (1982) 42 ALR 161, discussed.
Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1, cited.
Enzed Holdings Ltd v Wynthea Pty Ltd (1984) 57 ALR 167, cited.
Netaf Pty Ltd v Bikane Pty Ltd (1990) 26 FCR 305, applied.
Kenny & Good Pty Ltd v MGICA (1992) Ltd (1997) 77 FCR 307, cited.
Anema E Core Pty Ltd v Aromas Pty Ltd [1999] FCA 904, cited.
Doyle v Olby (Ironmongers) Ltd [1969] 2 QB 158, cited.

PETER RAYMOND BLACKER & ANOR v NATIONAL AUSTRALIA BANK LTD
N 723 OF 2000

WHITLAM, TAMBERLIN & SACKVILLE JJ
SYDNEY
19 MARCH 2001


IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

N 723 OF 2000

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:

PETER RAYMOND BLACKER and CHRISTINE BLACKER
APPELLANTS

AND:

NATIONAL AUSTRALIA BANK LTD
RESPONDENT

JUDGES:

WHITLAM, TAMBERLIN & SACKVILLE JJ

DATE OF ORDER:

19 MARCH 2001

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:

1.The appeal be dismissed.

2.The appellants pay the respondent’s costs.

Note:   Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.


IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

N 723 OF 2000

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:

PETER RAYMOND BLACKER and CHRISTINE BLACKER
APPELLANTS

AND:

NATIONAL AUSTRALIA BANK LTD
RESPONDENT

JUDGES:

WHITLAM, TAMBERLIN & SACKVILLE JJ

DATE:

19 MARCH 2001

PLACE:

SYDNEY

REASONS FOR JUDGMENT

THE COURT

THE PROCEEDINGS

  1. In this appeal it is not now in dispute that the appellants were induced to purchase a dairy farm and other assets by misrepresentations made by a branch manager of the…

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Details
Case
[2001] FCA 254
Decision Date

CaseChat Overview and Summary

The appeal in Blacker v National Australia Bank Ltd involved the appellants, Mr and Mrs Blacker, who were seeking relief under the Trade Practices Act for misrepresentations made by the respondent, National Australia Bank Ltd, which induced them to purchase a dairy business. The case was heard by the court of appeal, which needed to determine whether the appeal should be remitted to the primary judge or if the court should make the necessary findings and assess damages. The primary issues before the court included whether the bank contravened s 52(1) of the Trade Practices Act, breached its duty of care to the appellants, and whether the appellants were induced to purchase the dairy business based on the bank's misrepresentations.

The court of appeal held that the appeal must be dismissed. They noted that the bank did not challenge the primary judge's findings that it contravened s 52(1) of the Trade Practices Act, breached its duty of care to the appellants, and that the appellants were induced to purchase the dairy business based on the bank's misrepresentations. However, the court considered that the relief sought by the appellants under s 87(1) of the Trade Practices Act was framed by reference to the proceeds of the exercise of the bank's power of sale under various security instruments, which occurred after the primary judge delivered judgment. The court expressed no view on whether the appellants were entitled to invoke the powers conferred by s 87(1) of the Trade Practices Act, as this issue was not fully debated in the case.

The court ordered that the appeal be dismissed and that the appellants pay the respondent's costs. This decision concluded the appeal process, with the court finding that the bank was not liable for the relief sought by the appellants under the Trade Practices Act.

Orders

Orders of the court

1. The appeal be dismissed.

2. The appellants pay the respondent’s costs.

Background

Background to the litigation

Mr McGovern expressed a preference, should the appeal be allowed, for orders to be made remitting the proceedings to the primary Judge, rather than for this Court to make the necessary findings and to assess damages or grant other final relief. Although he did not explain precisely why this was the preferred course, Mr McGovern seemed to be influenced by the absence of findings on issues critical to his case and a recognition on his part that it would be difficult for an appeal to make findings which would depend on an assessment of the appellants’ credit. He may also have been influenced by the fact that the relief sought by the appellants under s 87(1) of the TP Act is framed by reference to the proceeds of the exercise of the Bank’s power of sale under various security instruments. Not only did the sales occur after the primary Judge delivered judgment, but there was no evidence (as distinct from incomplete assertions from the bar table) before this Court as to the results of the Bank’s exercise of its power of sale of various assets. Indeed, not once in the course of three days of argument on the appeal did either counsel refer, otherwise than in passing, to the refinancing arrangements that took place in 1995 and 1996.FURTHER BACKGROUNDEVENTS LEADING TO THE PURCHASE As has been pointed out, the Bank has not challenged the findings by the primary Judge that it contravened s 52(1) of the TP Act and that it breached its duty of care to the appellants. Nor is there any challenge to his Honour’s findings that the appellants were induced by the Bank’s misrepresentations to purchase the dairy business. Nonetheless, a brief account of the factual background and of the primary Judge’s reasoning on these issues is of assistance in understanding the issues on the appeal. The appellants were married in 1977. In about 1989, Mr Blacker began deer farming on a property he then owned, known as South Kanoona. By late 1992, the deer farming venture was proving unsuccessful. This difficulty prompted the appellants to consider purchasing a new business. The appellants became aware of a dairy business (comprising Springbrook, the milk quotas, dairy plant and the cattle herd) being on the market, at an asking price of $1.68 million. They informed their own accountant, Mr Munro, that they would pay for the business by selling South Kanoona (except for a small lot known as the “bush block”) and borrowing $1 million. Mr Munro prepared cash flow budgets for them, showing a positive net cash flow in each of the first three years of the business. Before deciding to purchase the dairy business, the appellants consulted the then manager of the Bank’s Bega branch, Mr Neagle. The evidence revealed that Mr Neagle had been subsequently dismissed by the Bank for what was described in evidence as “serious wrongdoing”, unrelated to the appellants’ transaction. Mr Neagle discussed the proposed purchase with the appellants, who had had no previous experience conducting a dairy business. He prepared three cash flow budgets relating to the business the appellants proposed to acquire, dated 12 May 1993, 25 May 1993 and 7 June 1993 respectively. His Honour devoted most attention to the accuracy of the first of these budgets, which predicted a positive cash flow in the first year of operations of some $64,000 and in the second year of about $17,000 (according to the budget) or $30,000 (according to the information conveyed by Mr Neagle directly to the appellants).

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Because we consider that the appeal must be dismissed, it is not necessary to consider whether the appellants were entitled to invoke the powers conferred by s 87(1) of the TP Act notwithstanding that their cause of action under s 82(1) was statute barred. Although this issue was raised in argument, it was not fully debated. In these circumstances we prefer to express no view on it.CONCLUSION The appeal should be dismissed. The appellants should pay the Bank’s costs.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.