Currabubula Holdings & Anor v State Bank of NSW

[2002] HCATrans 80

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S74 of 2001

B e t w e e n -

CURRABUBULA HOLDINGS PTY LIMITED

First Applicant

PAOLA HOLDINGS PTY L IMITED

Second Applicant

and

STATE BANK OF NEW SOUTH WALES

Respondent

Application for special leave to appeal

GLEESON CJ
CALLINAN J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 15 MARCH 2002, AT 11.43 AM

Copyright in the High Court of Australia

MR D.F. JACKSON, QC:   If the Court pleases, I appear with my learned friend, MR A.J. McINERNEY for the applicants. (instructed by Gadens Lawyers)

MR R.B.S. MACFARLAN, QC:   If the Court pleases, I appear with my learned friend, MR C.M. HARRIS for the respondent. (instructed by Mallesons Stephen Jaques)

GLEESON CJ:   Yes, Mr Jackson.

MR JACKSON:   Your Honours will see the application involves two issues, one relating to the case in contract, the other in defamation.  May I deal with them in that order?  First of all, dealing with the case in contract, we ‑ ‑ ‑

GLEESON CJ:   May I ask you a question of fact about that, just so that I get the issues clear.  There is reference in the evidence and in the judgments repeatedly to what is called “freezing” an account.  What exactly was the date of the freezing and what did the freezing consist of?

MR JACKSON:   May I answer the second first, your Honour.  The freezing was to forbid there to be any further use of the overdraft facility.  The overdraft facility was one whereby any of the companies in the Group could draw money from the Bank, in effect, provided that the total drawings of all the companies did not exceed the $8.5 million limit.  Now, your Honours, what ‑ ‑ ‑

GLEESON CJ:   The limited facility was $8.5 million?

MR JACKSON:   Yes, and, your Honours, there were some express limits upon the duration of the facility there referred to at page 413 in volume 2, but it was not repayable on demand.  The effect of the freezing was that, although at the time of the freezing it was overdrawn excessively.

GLEESON CJ:   That is what I wanted to ask you:  you said, “at the time of the freezing”.  What was the date?

MR JACKSON:   It was 15 February.

GLEESON CJ:   15 February.

CALLINAN J:   1990.

MR JACKSON:   1990.

GLEESON CJ:   And, as at 15 February 1990, the limit of the facility had been  exceeded?

MR JACKSON:   Yes.

GLEESON CJ:   What does it mean to “freeze” a facility, the limit of which has been exceeded?

MR JACKSON:   Well, your Honour, what it means is that when money is put in so that it becomes below the amount of the limit, then, in the ordinary course of events, if the facility had not been brought to an end the use of it could resume, but the freezing of it meant that it could not be operated at all after that.

GLEESON CJ:   The date was ‑ ‑ ‑?

MR JACKSON:   15 February 1990.

GLEESON CJ:   Thank you.

MR JACKSON:   Your Honours, the point I am seeking to make was that, if I could go to the facts for just a moment, the Court of Appeal set aside the judges decision on two bases.  Your Honours will see that at paragraph 84 of the Court of Appeal’s reasons at page 437 in volume 2, and the two bases were that he should not have found the term which he did and secondly, that the issue had not properly been before the court at first instance.  Your Honours, may I deal with those two things in that order.

The starting point was that it was an express term of the agreement that there was a facility up to the $8.5 million in toto, which could be utilised by any of the companies in the Group.  Your Honours, will see that referred to at page 413 in volume 2 commencing at the top of the page.  That meant, as I was submitting a moment ago, that any company could draw on the facility provided the total drawings did not exceed the $8.5 million.  The freezing of the facility and the requirement that each company thereafter operate from a separate No 2 account, to be kept in credit, was, prima facie, a breach of the agreed terms of the facility, from which at trial the respondent had sought to extricate itself.  Your Honours, that appears at page 218 in volume 1.

GLEESON CJ:   You just put it then as a breach of an express term.

MR JACKSON:   Yes, I did, your Honour; I put it as a breach of the term of the agreement, but meaning this, that the agreement was one which made no provision for it to be brought to an end in circumstances of the kind which occurred.  Your Honours, what I was saying was, that to do it ‑ and this was really the whole point of the case ‑ was that that was a breach of it.  Now whether it was a breach of it in an implied or expressed term it would necessarily, in a sense, be a breach of a term which was either one ‑ ‑ ‑

GLEESON CJ:   We had better be clear, was it a breach of an express or an implied term?

MR JACKSON:   Well, it was a breach of a term which was implied, but, your Honour, may I add a qualification to that, implied in this sense; either it was a term implied in the ordinary course of events or it was a term, which as a matter of interpretation, although not expressly stated, one would derive from the interpretation of the agreement.  Now, your Honour, what I was going to say was that it was apparent that, if one goes to two pages, at the start of volume 1, the issue essentially before the judge appears at the top of page 10, paragraph 4, where he said:

Essentially, the dispute concerns whether the Bank breached the terms of the facility by its conduct –

And then if I could go to the fourth line on that page:

The Bank, without prior notice, informed the Group that it had “frozen” all current accounts operated by Group Companies and that no further drawings would be allowed on the accounts.

And then a few pages further over, page 16, paragraph 26, his Honour said:

The issue therefore raised, is whether or not the freezing of the accounts was a breach of contract by the Bank.

And, your Honours, I was going to go from there then to page 218 where, in paragraph 761, his Honour having adverted to the fact that:

The Bank was plainly not obliged to honour cheques drawn beyond the limits –

went on to say:

That is not however, to say that the Bank was entitled to unilaterally vary the contract –

and your Honours will see the remainder of that paragraph.  The next point is this:  as your Honours will see from paragraph 762 on the same page, what the respondent went on to contend was that the Bank asserted:

that a term is to be implied into the subject contract that, providing the Bank’s requirements of a customer may be described as reasonable –

et cetera –

the customer will be obliged to comply with such requirements.

Now, your Honours, that proposition was then discussed by the primary judge.  If I could pause to say one thing, your Honours.  Your Honours will see - and this is relevant to the question whether further evidence might have been adduced - that a term, very close to, in effect, but a little more stringent than the term in relation to which the judge found for us, was one that the Bank itself was contending for.

Could I take your Honours then to page 219 where, after discussing the proposition, his Honour goes on to say in paragraph 765 that:

No evidence was adduced –

et cetera, and your Honours will see he is obviously there referring to that implied term, and he goes on to arrive at the view – and I am taking your Honours to about line 22 –

absent the Bank taking such action –

and your Honours will see it is action under an “express term” –

and in the absence of any express term dealing with such circumstances, the Bank may only achieve a variation of its customary mode of providing general Banking services or of providing a particular finance facility to a customer or Group, either by obtaining the customer’s consensus to the proposed variation, or by giving reasonable notice of the Bank’s determination to impose the variation –

Now, your Honours, one goes from there to page 221, paragraph 771, where his Honour adverts to the fact that the facility was not cancelled, it was not declared to be “immediately due and payable”, there had been no consensus and the Bank determined to act unilaterally and he then goes on in the next paragraph, paragraph 772, to advert to the fact that:

the Bank was in breach of the above described implied term –

to which he had adverted.

GLEESON CJ:   Where do we find the above description, “the above described implied term”?

MR JACKSON:   Your Honour, that is the one at page 219, line about line 26 to about line 32.  Your Honours will see the reference to “reasonable notice”.

GLEESON CJ:   That is the “implied term”, is it?

MR JACKSON:   Yes.  Could I say, your Honours, in relation to this, that the Court of Appeal said, in effect, all this term is far too vapid, in effect; one cannot identify what it means.  But, your Honours, one does have to bear in mind that the judge was not speaking completely in the abstract; what he was dealing with was the issue to which he had adverted at page 10 and page 16, where he was speaking about “whether or not the freezing of the accounts”, et cetera.  Your Honours will see that at paragraph 26.  Your Honours, he was not speaking of every trivial relationship, but the central aspect at the trial.

GLEESON CJ:   Well now one way of dealing with the situation within the implied term, it appears, from line 30 on page 219, is:

by giving reasonable notice of the Bank’s –

imposition of –

the variation, as for example by requiring the customer to open new current accounts.

Was it the failure to give reasonable notice that was the breach of this implied term?

MR JACKSON:   In the end, your Honour, yes.

GLEESON CJ:   Because that is what they actually did; they required the customer to open new current accounts.

MR JACKSON:   They did, your Honour, and the essence of it was, in a sense, that by freezing immediately, and in the particular circumstances that were involved, they brought about a situation where there could not be, if I could use an expression, an orderly transition to new accounts in circumstances where, in effect, a panic would not occur.  Your Honours, could I elaborate that by just giving your Honours where the judge described the effect of the events on the Group.  That is at page 230, about line 20, your Honours, to put it shortly; it is the whole of that paragraph 803, but effectively, if one goes to about line 20:

the Bank’s arrangements with the Group had been generally frozen –

and then at page 233 ‑ ‑ ‑

GLEESON CJ:   Well now you said, the Bank’s conduct induced a panic; who panicked?

MR JACKSON:   Your Honour, one looks at, for example, employees in the local community – that is at page 232, paragraph 806, the opening words of it:

the impression gained by employees within the Group and by those dealing in business with the Group and by the local community was that the Bank had withdrawn support for the entire Group which was likely to be no longer viable and may well fail.

And his Honour elaborates upon that.  If I could go to paragraph 809 at page 233 your Honour will see that described in that paragraph.

GLEESON CJ:   Just a minute.  The:

suppliers and creditors as had received cheques with ‘present again’ or ‘dishonour’ endorsements –

receive them because those cheques were written in excess of the limit that had been placed on the account, is that not so?

MR JACKSON:   Well, your Honour, may I say about that, that is strictly correct, your Honour.  They were in excess of the limit and ‑ ‑ ‑

GLEESON CJ:   There is no complaint, is there, that the Bank – if I may use this colloquialism – bounced cheques that were written in excess of the limit?

MR JACKSON:   Your Honour, we are not able to say that, no, as such, but what his Honour was saying, and he discusses this at some length, that in circumstances where that had happened and assume the Bank had simply done that and no more, then we were in a situation to be able to discuss with the creditors, and so on, matters and assuage any concerns, but if one added together the events that happened, including the “freezing”, that was not so.  There were also dishonoured cheques, your Honours, after a time when the accounts would have been in credit.

Your Honour, could I then come to what was done by the Court of Appeal, and that is in volume 2.  At page 418 it is suggested that the position was, in fact, unchanged.  Your Honours will see, for example, paragraph 63 on page 425 where it is suggested that the position was really, in effect, unchanged simply because the same amount of money was available and that is referred to also – it is the first reference I should have given – at page 408, paragraph 33, where perhaps it is put a little more directly.  Your Honours, what it does not reflect, in our submission, is the fact that the overall amount in the facility was one available to all companies and does not reflect the finding of the judge that the freezing of the accounts had a far broader effect than the mere inability to draw on them.

Your Honours, the second thing – and this is perhaps the essential aspect of the Court of Appeal’s reasoning – is the proposition that the term was too vague.  Your Honours will see that adverted to in paragraph 61 on page 424 and the term “the customary mode” is discussed and the possible ambit of it but, as I submitted a moment ago, the judge was speaking in a particular context, and I have taken your Honours to that, and also, when he first used the term, in response to a submission by the Bank as to the term to be implied.

Your Honours, the next thing we would seek to say about the Court of Appeal’s reasons is it deals with the question whether the issue was raised at trial.  May we seek to say two things:  the first is that a very narrow view of the issues was taken by the Court of Appeal; and the second is that the court seems to have left out of account in saying that other evidence might have been called by the Bank, that the Bank itself was trying to establish an implied term, which was a little larger, and one would have thought that any evidence relating to an implied term would have to be called in support of that proposition in any event.

Could I deal with the former matter.  Your Honours, I have taken the Court to two passages at pages 10 and 16 to seek to demonstrate that the actual dispute, or the nature of the actual dispute, before the judge was clear.  The summary of contentions at the trial, which appears relevantly at page 430, alleged a breach of the exact nature in question.  Paragraph 24 commences about line 22 on page 430.  It said:

The Defendant’s actions . . . so as to freeze all accounts . . . was in breach of the Facility Agreement in that ‑

and could I take your Honours to paragraphs (d) and (f) ‑

the Defendant acted unilaterally –

and then (f):

failed to give . . . any or reasonable notice of its intention so to vary the Facility Agreement;

Paragraph 4(c) referred to at page 428 said that:

the Defendant was obliged to give the Paola Group Companies reasonable notice of any intention –

et cetera.  The Court of Appeal, if I might say so with respect, seized on the opening words of that paragraph the words:

in the carrying out of the review –

and, your Honours, in doing so ‑ and it did that at paragraph 70 at page 429, saying:

It will be noted that the only implied term in relation to notice was first conditioned upon circumstances arising entitling a review of the facility and the carrying out of the review –

Your Honours, it then arrived at the conclusion, which is at page 432, paragraph 74, and your Honours will see at paragraph 74, to put it shortly, if one goes to line 26:

The structure and language of the summary of contentions had some infelicities, but it was clearly enough framed on the basis that the Bank was not entitled to dishonour cheques because the limit was exceeded.

Well, your Honour, that is far away from the case that the primary judge refers to at the very start of his reasons as being the matter that was argued before him and, your Honours, even in the outline of issues, which is referred to at page 4, paragraph 79, that is prior to the hearing, your Honours will see about line 35:

It was said:

“11.  The case therefore turns on whether or not the freezing of the accounts was a breach of contract by the Bank.  The Plaintiffs’ case is expounded upon in paragraph 24 of the summons.”

To which I have taken your Honours.

“the plaintiffs asserts that:

11.2  No notice was given;”

Your Honours, finally on this issue, the view that the Bank had been prevented from adducing possible evidence, which is at paragraph 83 on page 436, really does produce, in a sense, crocodile tears because if one goes back to the passage to which I took your Honours earlier at page 208, the Bank itself was asserting an implied term which covered the same subject matter.

Your Honours, our submission is one that does merit the grant of special leave, first of all because it raises the question about the entitlement of a bank or, I suppose, a lender, to alter arrangements of this kind; the second is because the way in which the matter was dealt with by the Court of Appeal, in our submission, did not give a proper hearing to the appeal.

Your Honours, could I come very briefly to the question of defamation, and I want principally to rely upon the submissions that we made in our written submissions.  Your Honours will have seen that the Bank’s statements were sent by a fax machine to an office at Tamworth; each Bank’s statement had on it the words “in liquidation”.  You will see that, for example, on page 482.  The Court of Appeal appears to have taken the view, which your Honours will see at page 451.  Your Honours, I see the time; may I ask your Honours’ indulgence for perhaps two minutes to complete this aspect of it.

GLEESON CJ:   Yes.

MR JACKSON:   Your Honours will see at page 451, paragraph 110, that the Bank said:

Still less could there be an inference of publication or republication of the Currabubula “in liq” bank statements to outsiders –

and, your Honours, could I just say in relation to that, true it is that there is no republication of the Bank’s statements, but the real question:  it was not republication of the statements, but republication of the imputation.

CALLINAN J:   Mr Jackson, does this mean that a business enterprise has to lock up its fax room, lock up the fax and deny entry to everybody except perhaps the Managing Director and Directors?

MR JACKSON:   No, it does not, your Honour.  Your Honours, tempting I know to put it in that way, in a sense, from the respondents.

CALLINAN J:   Irresistible almost, Mr Jackson.

MR JACKSON:   Well, some temptations should be resisted and may I say that this is one that falls into that category, because what one has is a situation where certainly the fax machine is one used as a means of communication, but, your Honour, it does not follow from that, that it is to be used as a means of communication for a defamatory imputation.  There is a limit; the limit being what is in the ordinary course of business in a sense and what one had in this case was something where it was not just a bank statement; it was a bank statement saying “in liquidation”.

Your Honour, the point I was trying to make a moment ago was that the question is one of republication or the imputations.  That was something that the primary judge understood.  Your Honours will see that at page 286, paragraphs 1017 to 1018 and, as he indicated at page 299 in paragraphs 1065 to 1072, it was part of a continuum and that is reflected in the way in which in which he approached it in the second judgment at page 366 in volume 2, paragraphs 27 to 37.  Your Honours, in our submission, there was no basis for taking away that award.  Those are our submissions, your Honours.

GLEESON CJ:   Yes, thank you, Mr Jackson.  Yes, Mr MacFarlan.

MR MACFARLAN:   If your Honours please.  Before coming to the argument on the contract issue, could I refer your Honours on the question of what occurred at application book page 408 in the second volume in the Court of Appeal’s judgment.  They said, at line 15:

In the result, the current accounts being at the limit of $8,5000,000 so that the Bank was entitled to dishonour cheques drawn on them, the Group companies had the same practical benefit of the operation of accounts with the Bank as it would have had if the current accounts had not been frozen.

GLEESON CJ:   Is that word “it” an error?  Should it be “they”?

MR MACFARLAN:   I think it should, your Honour.

GLEESON CJ:   Well now, Mr Jackson says that there was a difference; that if the account had been restored by depositing funds to produce the result that was then being operated within the limits, the difference was that all the companies in the Group had access to that account, whereas, under the new arrangements each individual company only had access to its own individual account.

MR MACFARLAN:   Under the previous arrangements, your Honour, each company only had access to its own accounts and then, both before and after the change, it was a matter for the companies in the Group as to which account further funds went into.

GLEESON CJ:   But is Mr Jackson right when he says that under the old arrangements, provided the account was operating within the limit, then any company in the Group could draw on the account?

MR MACFARLAN:   On any other company’s account, I believe not, your Honour.

GLEESON CJ:   I must have misunderstood what Mr Jackson said.

MR MACFARLAN:   If your Honours have a look at the previous page, 407, your Honours will see a description of what was allowed.  At line 40 – this is the arrangements that were made in conjunction with the opening of the new accounts:

Money banked to the credit of an existing account after it was frozen was transferred, initially on request and later under a general arrangements, to the credit of the appropriate No 2 account –

so it was open to the companies to say where they wanted the money to go and that could be drawn upon, of course, but it had the access to such moneys that might have been mistakenly or otherwise put into the old accounts and they, of course, had access to such moneys as were put into the new accounts and also any cheques that were drawn on the old accounts before the so-called “freezing” were allowed to be drawn from the new accounts, because the Bank invited the Group to identify what those cheques were that were outstanding and indicate that they would like them drawn from the new account, notwithstanding that in terms they were referable to the old account, and that appears ‑ ‑ ‑

GLEESON CJ:   Was the point that was being made by the Court of Appeal in paragraph 33, that the arrangements made following the freezing made no material difference to the financial facilities that were extended by the Bank to the Group?

MR MACFARLAN:   Yes, that is so.

CALLINAN J:   That there were just mechanical differences in the way in which it was used, in the last in paragraph 33?

MR MACFARLAN:   That is certainly so.

GLEESON CJ:   Now what was the relevance of that fact, if it be the fact, to the decision of the Court of Appeal?

MR MACFARLAN:   Well, both the trial judge and the applicant seemed to vacillate between the proposition that the facility was at some time denied to the applicants and at some stage it was not and the Court of Appeal was dealing with that proposition and making the point that the facility was at no time denied and that, in itself, was relevant to the implied term that was found by the trial judge, because if your Honours look at 477 of the application book, line 25, your Honours will see the form of the implied term quoted:

“give reasonable notice in the event that it determined to vary its customary mode of providing general banking services, and in particular the finance facility” –

and if your Honours would look to the previous page, or page 475, the posing of the special leave question, the Bank determined:

to vary in some fundamental way either the basis upon which it has agreed to provide banking services to the customer or the terms upon which it has agreed to provide those services.

Now, your Honours, what the Bank agreed was to provide a facility.  The Court of Appeal examined a possible argument - and it was not clear this argument was being put - that the facility was in some way denied and said, it was not.

CALLINAN J:   Mr MacFarlan, if that is right, what appears at the end of paragraph 33 on page 408, then does that mean that even if there were an implied term, no loss was suffered; that there was simply no damage, no loss?

MR MACFARLAN:   Yes it would and it does, your Honour.

CALLINAN J:   It would not matter on that basis whether there was an implied term or not, is that right?  Is there a finding by the Court of Appeal to that effect?

MR MACFARLAN:   That is the effect of the finding there; I think there is no more explicit finding of fact.

CALLINAN J:   No, but the Court of Appeal goes on to look at the implied term issue and makes an explicit finding that you could not imply such a term.

MR MACFARLAN:   It does, your Honour, yes.

CALLINAN J:   It does not go on to say that is in the alternative ‑ ‑ ‑

MR MACFARLAN:   Not in so many words, but that is the effect of the passage at 408, we say.  Your Honours will see, in the way the special leave question is framed, a recognition that there has to be some agreement from which there is a fundamental departure.  So we ask, rhetorically, what is the express or implied agreement from which there has been a fundamental departure?  There is a gap in the logic of the trial judge when he says, we had “to give reasonable notice” of a departure from the customary mode of providing the facility, because it seems to be implicit in that view that there was an agreement by the Bank to provide the facility in some fashion, some customary or other mode, but there is no finding of that and no such agreement is to be found anywhere in the facilities.  As the Court of Appeal said, if the facility was afforded, it did not matter how it was provided.  There was no agreement by the Bank to provide it in a particular way and, in particular, no agreement to provide it by access to particular accounts.

CALLINAN J:   How did the trial judge assess the damage then, the loss?

MR MACFARLAN:   Assess the loss.  Well, effectively ‑ ‑ ‑

CALLINAN J:   If the Court of Appeal is correct in saying that that there is merely this mechanical difference.

MR MACFARLAN:   The loss did not relate to some difficulty in drawing on the account; the loss seemed to relate to the trial judge’s view that word got out into the community that the company was having problems, the Group was having problems, causing a loss of reputation of the company and resulting in a lower sale price being obtained when the relevant business was sold, but there were a number of gaps in the logic in that process of reasoning.

CALLINAN J:   Where is the contention as to loss?  Is it in here?  What the applicants’ contention was as to the formulation of its loss claim?

MR MACFARLAN:   Yes, it is, but I will need to ask my learned junior to give the reference, your Honour.  I was just saying, in relation to 408 of the first application book, at the top of the page there is the reference by the Court of Appeal ‑ and this will require reference to the last line of the other page ‑ to compliance by the Bank with request “made by Mr Plante” of the Group:

to pay various cheques drawn on the current accounts prior to –

the “freezing” letter from the appropriate No 2 accounts.  Your Honours, that led to the position that Mr Paola, who was the Managing Director of the companies in the Group, saying in his evidence that he had no problem with the new arrangements.  If your Honours would look at page 409 in the second application book – this is in the evidence of Mr Paola – he was asked about whether he understood the various steps that were taken.  The third question:

Q.  And you understood by this letter that the Bank was saying that if you had any further funds coming in they could be put in fresh account and they could be drawn against?

A.  Yes, I understand that all debtors’ payments coming in from that day where to be banked in different accounts, yes.

Q.  And you understood that they could be drawn against?

A.  Well, with credit funds it’s not a matter of understanding, we could have banked those anywhere.

Q.  And there wasn’t any particular problem you saw in that procedure that was proposed by the Bank was there?

A.  There was no problem with that procedure no.

And the reality was there was not.

GLEESON CJ:   There seems to be a suggestion in part of the reasons of the Court of Appeal that this litigation was instituted and for a time conducted on the assumption that as at 15 February 1990 the limit of the facility had not been exceeded.  Is that right?

MR MACFARLAN:   Yes.  That was the original contention of the plaintiffs, your Honour, yes, and that was found not to be so.  In the course of the hearing I think the plaintiffs recognised that.  It did not take until the end of the hearing for that conclusion to be reached, but that was certainly the ultimate position.

GLEESON CJ:   I wondered whether that might be part of the explanation of the way the case was pleaded.

MR MACFARLAN:   Yes, it could indeed be.  Your Honours, I had better move on to the defamation point.  As to the other aspects of the contract issue, we rely upon what is put in our written submission.  Turning to the defamation question, your Honours, we say this is not a suitable vehicle for resolution of the question which has been posed.  In essence, the question in the context of this case is academic for a number of reasons. 

The first is this – and it relates to damages – that even if Currabubula were successful on the special leave question, in light of the Court of Appeal’s findings concerning the extent of publication, Currabubula would not be able to retain even the $15,000 that was awarded.  Now, that is so for this reason, that the trial judge seemingly awarded the damages that he did on the basis that publication of the supposed defamatory statement had been made outside the group and into the general community, to creditors, suppliers and the like. 

Now, he only awarded 15,000 in respect of that because it was only Currabubula, as distinct from other companies in the group, which sued for defamation and there had been bank statements of a similar character to the Currabubula ones issued in the preceding week.  So the judge seems to have taken the view that most, if not all, of the damage, if there was any, had been caused by the publication of statements issued the week before.  But, nevertheless, his finding appeared to be based upon the fact that word got out into the community as to the supposed defamatory statements.  But the Court of Appeal examined the factual basis for that finding and found that there was, in fact, no substance in the contention that the publication had become known outside the group.  If your Honours would look at 450, paragraph 108:

So far as his Honour found the Bank liable for publication or republication to outsiders – that is, to “creditors, suppliers and the community”, I consider that he was in error.  The evidence did not establish either publication or republication of “in liq” bank statements to outsiders.

Now, your Honours, even if that were sought to be challenged in this Court, it would not be the suitable subject matter of a grant of special leave.  It is a question of fact.  But that was the substratum for the judge’s award of damages.  He did not, at least in any explicit fashion, award damages because there was publication to an employee of the group.  Indeed, it would have been difficult indeed for that to be justified because it would seem, at least according to the Court of Appeal’s view, that publication to an employee of Currabubula’s bank statement – and it must be Currabubula as distinct from the other companies in the group to which attention is given – was only made to one employee.  If your Honours would look at 445, line 14, in the Court of Appeal’s judgment:

With the possible exception of the evidence of Ms Hamblin, there was no direct support for a finding that the Currabubula “in liq” bank statements, as distinct from “in liq” bank statements of other Group companies, were seen by anyone at the Tamworth office, let alone by employees other than those whose business it was to see them.

Now, Ms Hamblin was the assistant to the company secretary and, not surprisingly, she was a person who would have been likely to see these bank statements, but her evidence indicated that she knew that the companies were not in liquidation.  If your Honours would look in volume 1 of the application books, page 153, Ms Hamblin’s evidence is quoted in the middle of the page, line 34:

Q.   Because you knew the companies weren’t in liquidation didn’t you?

A.   Yes.

Q.   I suppose you asked either Mr Plante –

who was the company secretary –

or Mr Taylor did you?

A.   Mr Plante.

Q.   You asked Mr Plante and he said that the companies weren’t in liquidation?

A.   He appeared as confused as I.

Q.   He told you that the companies weren’t in liquidation didn’t he?

A.   Yes.

And the confusion was as to why the Bank would be saying this, but ‑ ‑ ‑

GLEESON CJ:   This, I presume, was the Bank’s way of recording that the account was in liquidation.

MR MACFARLAN:   Yes, that is so, and that is our second point, your Honours, that although the Court of Appeal did not express a final view about this, the preliminary view seemed to be that there was no defamatory imputation that arose and that view is expressed at 441 of the application book and they say in words that we would, with respect, adopt near the foot of the page, line 41:

The close proximity of the debit balance and the phrase “in liq” strongly suggests that the phrase is connected with the status of the debt rather than the status of Currabubula ‑ ‑ ‑

GLEESON CJ:   I think Justice Einstein pointed out that although people who are familiar with banking practice would be quick to conclude that those words on a bank statement mean that the account is in liquidation, the people who read it might not have been familiar with banking practice and might have drawn a different conclusion.

MR MACFARLAN:    Yes.

GLEESON CJ:   That gets you back to the question of who read it.

MR MACFARLAN:   Indeed, but one would not have to be familiar with banking practice because one looks at the statement and one sees the words there in conjunction with the balance, not in conjunction with the name at all.  If your Honours want to look at the statement, it is at 346 in volume 1.

GLEESON CJ:   Maybe this is answered by the evidence you just took us to, but in the case of Currabubula, who did read it?

MR MACFARLAN:    Well, according to the Court of Appeal, the direct evidence only supported Ms Hamblin and, as I sought to indicate, she knew that the companies were not in liquidation and she was, in any event, the assistant to the company secretary to whom the statements were addressed.  Your Honours would see that from 443 of the second volume at line 25:

Mr Plante was the company secretary of the companies in the Group, and he appears also to have had responsibilities as financial controller.

At the top of 444:

Ms Hamblin, who was the assistant to Mr Plante –

and that leads me on to the final point, your Honours, that if leave were granted, the question of qualified privilege would arise, that is, whether any publication that was made was made, in effect, to someone with an interest in circumstances that were reasonable.  In the Court of Appeal’s view, the only publication seems to have been at most to Ms Hamblin, the assistant to the company secretary to whom the statements were not surprisingly addressed in circumstances that the Court of Appeal appeared to regard as reasonable.  If your Honours would look at 464 of the second application book, line 35:

The Currabubula “in liq” bank statements were addressed to the secretary of Currabubula, and were sent by fax to the Tamworth office in the same manner as previous bank statements.

GLEESON CJ:   Yes, thank you, Mr MacFarlan.

MR MACFARLAN:    If the Court pleases.

GLEESON CJ:   Yes, Mr Jackson.

MR JACKSON:   Your Honours, in relation to the question of the ability to use one account or more, may I just say this:  the position was that whilst each company had its own bank account, the amount that might be drawn on any of the accounts was limited only by the total amount owed at any one time, so that if the total were $8.2 million, any one of the companies could have drawn up to .3.  Your Honours will see that from two references, page 413 at the top of the page and also at page 208 where the finding is made by the primary judge.

GLEESON CJ:   So where is the error in paragraph 33 on page 408?

MR JACKSON:   The error, your Honour, is this, that it is not the same because once the new arrangement came into being, each company could only draw on the amount in which its own account was in credit.

GLEESON CJ:   But I think Mr Paola said on the next page that the group could please itself which account amounts were banked to.

MR JACKSON:   It could, your Honour, but that is rather a different thing.

GLEESON CJ:   What is the effect of that evidence on page 409, line 25, when he said there was not any particular problem with the procedure proposed by the Bank?

MR JACKSON:   I would say two things about it, your Honour.  The first is that no doubt it is one which is capable of being worked, that is what he was saying, and your Honour will see that in the context of the answer immediately above that:

A. Well, with credit funds it’s not a matter of understanding, we could have banked those anywhere.

GLEESON CJ:   That is the point I was just making.  They could have been credited to any account.

MR JACKSON:   They could have been, your Honour, yes, but it did not allow there to be the drawing in relation to a particular account up to a limit without there having to be some special further arrangements made to effect that.  Your Honours, that is the first point.  The second point concerns the question of some matters in relation to defamation.

CALLINAN J:   Mr Jackson, I asked Mr MacFarlan about the basis upon which the loss was claimed.  Are you able to give me a reference to that?

MR JACKSON:   Yes.  Your Honour, I cannot give you the way in which it was initially claimed, I can give you the way in which it was found.

CALLINAN J:   Thank you.

MR JACKSON:   That I think your Honour will find around ‑ ‑ ‑

CALLINAN J:   Was it a loss on a sale, Mr Jackson?

MR JACKSON:   What happened, your Honour, was that the liability of our company to repay the Bank was greater because of the loss that had been sustained by a subsidiary company which on its sale had to pay all that was obtained for it to the Bank and more would have been obtained but for these events.  Your Honour will see that ‑ ‑ ‑

CALLINAN J:   That is a claim in contract?

MR JACKSON:   Yes, your Honour.  Your Honour will see that finally referred to at page 269 around line 25 and, without going to the whole of it, you will see a short discussion of it commencing at page 268, paragraph 942 - I am sorry, it has been clipped off a little - going through to the end of 943.

CALLINAN J:   Because it was not making as much profit when it was sold?

MR JACKSON:   Yes, NRS, which was Northern Rural Sales, was a company that engaged in selling rural items in northern New South Wales and because of what had happened, in effect, it was not doing as well and it was not worth as much, it is sold, the money goes to the Bank, less is obtained for it than otherwise would have been obtained ‑ ‑ ‑

CALLINAN J:   When you say it was sold, were the shares in it sold or its business sold?  How was the sale transacted.

MR JACKSON:   I am sorry, I just cannot give your Honour a quick answer to that.  My learned friend says sale of the business.  I think that is right, your Honour.  There is a reference to sale of the business at line 21 on page 269.  Yes, paragraph 41 on 268, “so-called fire sale of its businesses”.

CALLINAN J:   Was remoteness argued?

MR JACKSON:   Well, recoverability and standing to get it was certainly argued.  Your Honour will see ‑ ‑ ‑

CALLINAN J:   It looks as if it was from page 269, a reference to Hadley v Baxendale.

MR JACKSON:   Yes and, your Honour, the judge adverted to Gould v Vaggelas in this Court and the approach taken in relation to the shareholders and entitlement in that case.

Your Honours, may I just say something in relation to the damages in the defamation aspect of it, first of all, and that is this, that our learned friend refers to what was said by the Court of Appeal about the Bank statements not having been conveyed further.  Your Honours, that is, in our submission, where in paragraphs 108 and 110 the Court of Appeal was, we would submit with respect, in error because the question was not whether the Bank statements had been shown to other people; the question was whether the imputation contained in them, namely the companies were in liquidation, had been conveyed on in consequence of the original publication.  That is, in our submission, a matter in which the court was in error.

As to publication, the persons to whom in the first place the publications occurred, the passage to which my learned friend has taken your Honours refers to the person who gave the most direct evidence about doing it.  The judge was perfectly entitled to infer that the other persons to whom he referred had seen the statements.  The way in which the Court of Appeal deals with the matter is, in effect, to select ‑ ‑ ‑

CALLINAN J:   But why would the trial judge’s inferences be any better or stronger than the Court of Appeal’s inferences?

MR JACKSON:   Your Honour, because the trial judge saw a number of these people give evidence.

CALLINAN J:   They did not say they had seen them, the Bank statements, did they?

MR JACKSON:   I am sorry, your Honour, some said they had seen Bank statements and the question, of course, was whether they had seen, in a sense, the Currabubula ones.  They said they had seen Bank statements and so on.  The judge accepted their evidence and he was entitled to infer, we would submit, they had seen relevant ones.  Your Honours, those are our submissions.

GLEESON CJ:   Yes, we will adjourn for a short time to consider the course we will take in this matter.

AT 12.35 PM SHORT ADJOURNMENT

UPON RESUMING AT 12.39 PM:

GLEESON CJ:   In relation to the aspect of the case concerned with the claim for breach of contract in which there was a judgment at first instance in favour of the applicant in an amount in excess of $1,733,000, the Court is of the view that there are insufficient reasons to doubt the correctness of the decision of the Court of Appeal to warrant a grant of special leave to appeal.

In respect of the claim for defamation in respect of which there was an award at first instance of damages in an amount of $15,000, whilst the Court is of the view that the issues of law concerning the matter of publication which the applicant seeks to agitate could require reconsideration in an appropriate case, in the facts and circumstances of this particular case there are insufficient prospects of success of an appeal to warrant a grant of special leave and the application for special leave to appeal is refused with costs.

We will adjourn until 2 pm.

AT 12.42 PM THE MATTER WAS CONCLUDED