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European Bank Ltd v Evans

European Bank Ltd v Evans

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Case Copied 10 March 2010 16 min read

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HIGH COURT OF AUSTRALIA
FRENCH CJ,
GUMMOW, HAYNE, HEYDON AND KIEFEL JJ
EUROPEAN BANK LIMITED  APPELLANT
AND
ROBB EVANS OF ROBB EVANS & ASSOCIATES  RESPONDENT
European Bank Limited v Robb Evans of Robb Evans & Associates
[2010] HCA 6
10 March 2010
S272/2009
ORDER
1.        Appeal allowed with costs.
2.Set aside the orders of the Court of Appeal of the Supreme Court of New South Wales made on 2 April 2009 and, in their place, order that the appeal to that Court be dismissed with costs.

On appeal from the Supreme Court of New South Wales
Representation
R J Webb SC with D T Kell for the appellant (instructed by Baker & McKenzie)
A S Martin SC with G M Drew for the respondent (instructed by Norton Rose Australia)
Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.

FRENCH CJ, GUMMOW, HAYNE, HEYDON AND KIEFEL JJ. In litigation in the Equity Division of the Supreme Court of New South Wales[1], Gzell J ordered the present respondent ("Mr Evans") to pay to the appellant ("European Bank") the sum of A$1,251,088.33 as compensation pursuant to an undertaking as to damages which previously had been given by Mr Evans to the Court of Appeal. Thereafter, on appeal by Mr Evans, the Court of Appeal (Basten and Campbell JJA and Gyles AJA)[2] set aside the judgment and orders of Gzell J. On appeal to this Court, European Bank seeks the reinstatement of the orders made by the primary judge.
[1]Evans & Associates v Citibank Ltd [2007] NSWSC 1004.
[2](2009) 255 ALR 171 at 208.
The course of the litigation
Mr Evans had given the undertaking as to damages pending an application for special leave to appeal to the High Court. The litigation between the parties in the Supreme Court had begun in 1999. In that year Mr Evans instituted proceedings in the Equity Division alleging that, as receiver of Benford Limited ("Benford"), he was entitled to a United States dollar account held in the name of European Bank with Citibank Limited ("Citibank") in Sydney. Both Benford and European Bank are incorporated in Vanuatu.
Mr Evans had been appointed receiver of Benford and other persons and companies involved in alleged systematic and extensive credit card fraud practised by a resident of California, Mr Kenneth Taves, upon residents of the United States, in violation of the provisions of the Federal Trade Commission Act 1914[3]. The appointment as receiver was made by the United States District Court for the Central District of California on the application of the Federal Trade Commission.
[3]15 USC §§41‑58.
In the equity suit, Mr Evans contended (i) that a portion of the proceeds of the fraud (some US$7.5 million) had been transferred by indirect means from the United States to an interest‑bearing deposit account opened in Vanuatu by European Bank in the name of Benford; (ii) that several months later an amount equivalent to that held…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2010] HCA 6
Decision Date: 10 March 2010

CaseChat Overview and Summary

In *European Bank Ltd v Evans*, the High Court of Australia considered an appeal concerning the assessment of damages arising from an undertaking as to damages given by the respondent, Mr Evans, to the Supreme Court of New South Wales. The dispute centred on whether losses incurred by the appellant, European Bank Ltd, due to currency fluctuations and interest rate movements, were recoverable under this undertaking. The appellant had been ordered to pay money into court in United States dollars, and it contended that but for this order, it would have converted the funds to euros, thereby avoiding the alleged losses.

The High Court was required to determine the nature and scope of the "usual undertaking as to damages" as contemplated by the Supreme Court Rules 1970 (NSW), specifically in relation to the remoteness of losses claimed. The central legal issues were whether the losses claimed by the appellant flowed directly from the court's order requiring the funds to be held in United States dollars, and whether the *kind* of loss sustained could have been foreseen at the time the undertaking was given, drawing parallels with the principles of contractual remoteness established in *Hadley v Baxendale*.

The Court reasoned that the inquiry into foreseeability under an undertaking as to damages is not whether the specific loss suffered was foreseen, but rather whether the *kind* of loss could have been foreseen. It found that the primary judge had made findings that the loss directly flowed from the order and that the kind of loss could have been foreseen. The High Court concluded that these findings should not have been disturbed by the Court of Appeal.

Consequently, the High Court allowed the appeal with costs, setting aside the orders of the Court of Appeal and dismissing the appeal to that Court with costs.

Orders

Orders of the court

1. Appeal allowed with costs.

2. Set aside the orders of the Court of Appeal of the Supreme Court of New South Wales made on 2 April 2009 and, in their place, order that the appeal to that Court be dismissed with costs.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

FRENCH CJ, GUMMOW, HAYNE, HEYDON AND KIEFEL JJ

The references to speculation and betting were pejorative and distracted attention from the issues which had been presented on the evidence to the primary judge. Risk taking is an inevitable part of decision making to switch currencies.Conclusions The appropriate outcome in this case was to be reached by the following path. On the inquiry before Gzell J the first question was "What is the loss that is now alleged?", the second "Did that loss flow directly from the order of 18 May 2004?" and the third "Could the loss sustained have been foreseen at the time of that order?" The inquiry presented by the third question is an inquiry as to whether a loss of the kind actually sustained could have been foreseen. Contrary to the submission by the respondent, Mr Evans, the inquiry is not as to whether the actual loss suffered was foreseen at the time the undertaking was given. In the present case there was a finding by the primary judge, as indicated above, that the loss directly flowed from the order and his Honour further found that the loss could have been foreseen. That result should not have been disturbed.Orders The appeal should be allowed with costs, the orders of the Court of Appeal made on 2 April 2009 set aside, and in place thereof the appeal to that Court be dismissed with costs.

Ratio Decidendi

Legal Principle Established

Established by: FRENCH CJ, GUMMOW, HAYNE, HEYDON AND KIEFEL JJ

Full text does not contain this section.