Ferneyhough, H.W. v Westpac Banking Corporation

[1991] FCA 278

Re: HAROLD WILLIAM FERNEYHOUGH; NONI FERNEYHOUGH; JOHN ANTHONY McDONAGH and
JILL ANNE McDONAGH
And: WESTPAC BANKING CORPORATION
No. Q G105 of 1989
FED No. 278
Limitation of Actions

COURT

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
Pincus J.(1)

CATCHWORDS

Limitation of Actions - foreign exchange loans - s.52, Trade Practices Act - exercise of discretion in striking out part of pleading.

Trade Practices Act 1974, s.52

HEARING

BRISBANE

#DATE 23:5:1991

Counsel for the applicants: Mrs D. Mullins

Solicitors for the applicants: Gilshenan and Luton

Counsel for the respondent: Mr A.J.H. Morris

Solicitors for the respondent: Feez Ruthning

ORDER

The application to strike out parts of the pleading be refused.

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

JUDGE1

This is a foreign exchange case in which the respondent applies to strike out part of the application filed on 20 October 1989, on the basis that it makes claims which are statute-barred. In what follows, I shall give the parties the designations they have in the title of the proceedings.

1. In 1984, the applicants made an agreement with the respondent to borrow money in Swiss francs. The statement of claim asserts that the respondent said certain things to the applicants about that time, such as that what was proposed was a prudent course of action. These statements are alleged by the applicants to constitute part of a contract, to have been made negligently and to constitute misleading conduct under s.52 of the Trade Practices Act 1974. The statement of claim also alleges that on the occasion of each roll-over, the respondent advised the applicants to maintain the loan in Swiss francs and that on various occasions it advised against hedging. These advices, according to the particulars delivered in April last year, were given on various dates, most but not all of which were more than three years prior to the filing of the application in this Court (i.e. prior to 20 October 1989).

2. The statement of claim sets up that the respondent made certain statements to the applicants in November 1985 and July 1986. It also sets up, rather vaguely as it seems to me, that between November 1985 and November 1987, losses were incurred on foreign exchange dealings on behalf of the applicants. In addition to those losses, the applicants claim the difference between the amount required to pay out the Swiss franc loan when it was brought on shore on 26 November 1987 and the amount originally borrowed.

3. Mr. Morris, for the respondent, referred me to the decision in Thannhauser v. Westpac Banking Corporation (19 March 1991) and, while admitting that there are differences between that case and this, suggested that I should follow the course taken in Thannhauser.

4. Mrs. Mullins, on behalf of the applicants, argued that the principle that a cause of action accrues under s.52 of the Trade Practices Act when the first significant damage occurs, if properly applicable to s.52 cases, cannot apply to a case of the present sort. She argued that no damage occurred until the loss crystallised - i.e. in 1987.

5. It is true that, as Mrs. Mullins contended, one cannot be certain whether there will be any loss, on account of fluctuations in exchange rates, until the loan is paid out. But that is a characteristic a case of this sort shares with all those in which what is complained of is a change in financial position and the plaintiff or applicant's loss fluctuates in amount from time to time. I do not propose to say anything further on this point than was said in Thannhauser.

6. Mrs. Mullins also argued that, as a matter of discretion, the application should be refused. She pointed out that the allegations made under the Trade Practices Act are closely intertwined with those made in reliance on the general law; that is so. She argued that, therefore, acceding to the application would be unlikely to make much difference to the cost or length of the trial. Mrs. Mullins also pointed out that the case has reached an advanced stage and is practically ready for trial; so that interference with the pleading now might make little saving in the way of interlocutory steps.

7. Further, there is in favour of letting the pleading stand the circumstance that, as Mr. Morris very properly admitted, one could hardly justify striking out those parts of the statement of claim which rely upon allegations of misleading conduct occurring within three years prior to the commencement of the application; dissection of the pleading could not be done neatly, but would leave part of the s.52 claim standing.

8. The exercise of discretion in a case of this sort must be affected by the consideration that the High Court appears never to have considered the time limitation applicable in these foreign exchange cases, so far as they are brought under s.52 of the Trade Practices Act 1974. I am bound by the decision of the Full Court in Jobbins v. Capel Court Corporation Ltd. (1989) 91 ALR 314, which appears to me inconsistent with Mrs. Mullins' submission on the substantive point, but the possibility that some view different from that adopted in Jobbins might ultimately prove to be correct cannot be denied.

9. If I accede to Mr. Morris' application, then there will still be some elements of the Trade Practices Act claim to be tried. It seems to me desirable, in all the circumstances, to decline to strike out those parts of the pleading which are alleged to be statute-barred. I think it likely that those elements of the claim will fail but, in failing, they will add little to the length or cost of the trial. If in this or some other case, the view of the law which was adopted in Thannhauser is held to be incorrect, then these parties will have the advantage that all the evidence relevant to the s.52 case will be before the Court and perhaps there will be findings on it.

10. The application to strike out parts of the pleading will be refused and I shall hear the parties on costs.