Fisher, I.H. v Commonwealth Bank of Australia

[1990] FCA 286

Re: IAN HAMILTON FISHER and JOAN ROSEMARY FISHER
And: COMMONWEALTH BANK OF AUSTRALIA
No. G766 of 1988
FED No. 286
Evidence - Practice and Procedure

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Beaumont J.(1)

CATCHWORDS

Evidence - similar facts evidence

Practice and Procedure - whether evidence sought to be put in reply should have been led in chief - leave to re-open case in chief - discretion.

HEARING

SYDNEY

#DATE 11:4:1990

Counsel and solicitors R. McDougall and M. Windsor
for the applicants: instructed by Davies and Spicer

Counsel and solicitors D.M.J. Bennett QC
for the respondent: instructed by L.C. Hollis

ORDER

1. Refuse the application by the applicants for leave to re-open their case in order to tender the evidence M.F.I. "8".

2. Order that the applicants pay the respondent's costs of the application for leave to re-open.

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

JUDGE1

By their second further amended statement of claim, the applicants, Mr. and Mrs. Fisher, have sued the respondent Bank on several causes of action. The principal cause of action which is said to exist arises out of certain statements allegedly made by officers of the Bank in connection with a foreign currency loan which, it is said, were likely to mislead or deceive the applicants, contrary to s.52 of the Trade Practices Act 1974.

The relevant issues arising on the pleadings

1. For present purposes, it will suffice to summarise the allegations made in paras. 4 to 8 of the statement of claim as follows: (1) In August 1984, Mr. Fisher met with Mr. Terry Green, an officer of the Bank, at Taree (para.4). (2) Mr. Fisher informed Mr. Green that Mr. and Mrs. Fisher wished to borrow funds from the Bank, that they had "heard mention" of foreign currency loans and "that (they) knew nothing of" such loans (para.5). (3) Mr. Green showed Mr. Fisher a graph depicting the commercial interest rates applicable to borrowings in several countries including Switzerland and Australia for the preceding 12 months, showing, in the case of Switzerland, a rate of 6.5% (para.6). (4) Mr. Green also showed Mr. Fisher a graph depicting the movements in the relative value of the Swiss franc and the Australian dollar since December 1983, indicating a maximum variation of 10% (para.7). (5) Mr. Green then made the following representations to Mr. Fisher:
   

(a) a foreign currency loan in Swiss francs was safe;

(b) a foreign currency loan facility was the best facility for the applicants' needs;

(c) a Swiss franc loan facility was a cheaper form of finance than an Australian currency, or on-shore, loan;

(d) Swiss francs were the most stable currency to borrow in;

(e) a Swiss franc loan attracted an effective interest rate of 7.5% per annum being interest of six percent (6%) plus the Bank's lenders' margin of one and a half percent (1 1/2%);

(f) the value of the Swiss franc was most unlikely to fluctuate against the value of the Australian dollar by more than ten percent (10%) above or below the then existing level;

(g) the Swiss franc was so stable and fluctuated by such a small margin when compared to the Australian dollar that hedging of a Swiss franc loan was not worthwhile;

(gg) it was neither necessary nor desirable to hedge any foreign exchange risk because the cost of hedging would deprive the applicants of the benefit of the foreign currency loan and because of the protection offered by reason of the matters pleaded in subpara. (i) below;

(h) that the applicants would not need to know about edging if they were considering a Swiss franc loan;

(i) if the applicants entered a Swiss franc loan facility and the relative value of the Swiss franc at any time during the term of that loan increased by more than five percent (5%) of the value of the Australian dollar, cash parity adjustment could be made by the applicants or the Swiss franc loan would be converted to Australian dollars; and

(j) the term of the loan would be five (5) years and there would be no problem in renewing the term for a further five (5) years.

(See para.8 of the statement of claim.)

1. In its defence, the Bank has denied the allegations made in para.8 of the statement of claim.
   The course of the trial to date

2. By consent of the parties, the trial has been divided into three sections. The first section is the trial of the issues of fact which arise and submissions on those facts. The second section will be the hearing of the expert evidence and submissions on that evidence. The final section will be devoted to legal argument. The first section of the trial commenced on 19 March and is continuing.

3. In their case in the first section of the trial, Mr. and Mrs. Fisher and several of their witnesses were called. The applicants' case was closed. In its case in the first section of the trial, the Bank called several witnesses, including Mr. Green. In his evidence, Mr. Green disputed the substance of Mr. Fisher's version of their discussion in August 1984. The Bank's case in the first section is finished, except for one witness whose evidence is expected to be brief. I understand that the evidence of this witness will not deal, at least directly, with the discussion between Mr. Fisher and Mr. Green in August 1984.
   The present application

4. On behalf of Mr. and Mrs. Fisher, evidence is now sought to be tendered from three further witnesses, Mr. Lyons, Mr. Bignell and Mrs. Bignell. The evidence is sought to be tendered in reply. The Bank objects to the tender on several grounds. On behalf of the applicants, it is submitted that the evidence is admissible as "similar fact" evidence which tends to establish the truth of Mr. Fisher's version of his discussion with Mr. Green in August 1984. The Bank contends that the material is not admissible as similar facts evidence. The Bank further says that even if, contrary to its contention, the material did constitute similar fact evidence which might be received, it should have been led in chief, and does not arise in reply. The Bank further submits that leave should not now be given to the applicants to re-open their case.
   The nature of the evidence now sought to be tendered

5. In his affidavit, Mr. Lyons said that he was a customer of the Taree branch of the Bank and that, in March or April 1983, Mr. Green informed him that foreign currency loans were available "at very low interest rates". In March 1984, according to Mr. Lyons, the following discussion took place between him and Mr. Green:
   

"(Mr. Lyons:) 'Okay Terry tell me the details of the Swiss Loans you have been referring to. They sound too good to be true'.

(Mr. Green:) 'We've got Swiss loans available through our Singapore Branch, we've got the overseas facilities and the expertise that other banks just don't have to handle this sort of loan. Not many branches know about it but we have had quite a few people up here taking them out. (A)part from Sydney we do most of the loans in New South Wales. Sydney has been trying to get me to move down there as they need people who understand this stuff, I don't want to live down there though. The minimum amount of the loan is $500,000.00. (Y)ou pay the going Swiss rate of interest which is currently about 4.5% plus you pay 1.5% and the Government withholding tax and it all adds up to about 7%. You've got to be aware that these exchange rates fluctuate but it only matters when you roll over. If you owe more than 5% in excess of your original loan at roll over then you will be up for a parity adjustment but you would get that back of course when the currency rate comes back up about the 5% so there can be a bit of a risk in this. You can borrow in any currency but we recommend the Swiss because it's so stable and the rates are so low. You can only change currencies at roll over. Even if you lose a bit in parity adjustment the interest rates make up for it and if you win a bit it's not taxable income'.

(Mr. Lyons:) 'You say there is a bit of a risk just what sort of a risk is it Terry?'

(Mr. Green:) 'Now the dollar's floating there is not much of a risk at all'. At this stage Terry Green obtained some graphs, he said 'Look at these graphs see how the Yen and the U.S. dollar are up and down. The C.H.F. is much steadier, it dropped a bit there but it is back up here now. The Aussie dollar is floating now so its found its true level and is stable'. I can recall at this time that he was using the edge of his diary to dot a line on the graph. He then said, 'This line I've just drawn is about half way so you see it can be up or down about 10% at the outside'. (Mr. Lyons:) 'Didn't the Australian dollar drop against the U.S. dollar a few years back in the seventies?'

(Mr. Green:) 'Floating has changed all that. The dollar isn't rigged by the Government any more it's found its true level. Think about it, even if you lost 10% you would be no worse off than having onshore money. Some guys have made a lot with Swiss loans'. (Mr. Lyons:) 'Like Ray Stack?'

(Mr. Green:) 'Ah you would have to ask him that but sometimes you have to pay a bit more interest if the rate is up, sometimes a bit less, one of my customers had to pay about an extra $700,000 in interest once but that is nothing like what he is saving if you compared it with an onshore loan.'

(Mr. Lyons:) 'What if we couldn't meet a parity adjustment?'

(Mr. Green:) '5% is only $25,000.00 you could put that aside or you would sell something. We would pull you back onshore if you couldn't meet it, so then you have a normal onshore loan. That is the worst that could happen.'

(Mr. Lyons:) 'What happens at the end of the loan?' (Mr. Green:) 'We roll you over again if you want or you can stay in C.H.F. until you get the best rate'. (Mr. Lyons:) 'How would I go about getting a foreign loan?'

(Mr. Green:) 'To get a loan you have got to come up with some security worth about twice the amount of the loan and we would like to see an income of about 17% of the amount we lend, there's also a front end payment of about $3,000 bucks'.

(Mr. Lyons:) 'But the minimum is still $500,000.00?' (Mr. Green:) 'Yeah. Let's see, how much do you owe on your properties all together?'

(Mr. Lyons:) 'It sounds interesting, but I only owe about $100,000.00, less after I sell the home unit in Sydney. While we are getting about 20% on the factory there is no way we could get 17% on a property we purchased with your loan of $500,000.00, you know that. Could a syndicate get one of these loans? I know a couple of guys that might be interested in a syndicate to borrow some each'.

(Mr. Green:) 'It's a bit dicey but we look at it so long as there is no trust involved'. (Mr. Lyons:) 'I'll give it a bit of thought and get back to you'."

1. According to Mr. Lyons, in June 1984, at the time of execution of the loan documentation, he noticed that the Bank's letter enclosing the loan agreement mentioned methods of eliminating exchange risks. According to Mr. Lyons, he said to Mr. Green:
   

"What's this business here about hedging...?"

Mr. Green, Mr. Lyons said, replied:

"Oh] It's a sort of insurance. You don't have to worry about that. You couldn't afford it anyway. It's as dear as taking out an onshore loan."

1. In his affidavit, Mr. Bignell said that in October 1984 he approached Mr. Green to discuss the financing of the acquisition of a property. The matter was discussed on several occasions. On 25 October 1984, according to Mr. Bignell, Mr. Green said:
   

"I've got something here that will suit you down to the ground, the interest rate is only 6%. You can take the loan for five years with a possibility of taking it for a further five. The interest will be paid in arrears every six months. The minimum loan is $250,000.OO. These loans are called off shore loans which will mean that you will be borrowing Swiss Francs".

According to Mr. Bignell, he then replied:

"That sounds great. How long do they take to arrange, what's the next move? If possible I'm interested to put a hold on the property as quickly as possible, I know there have been other people interested in it."

Mr. Green, Mr. Bignell said, replied:

"You pay a deposit on the property and we will start things going from this end."

1. Mr. Bignell said that in November 1984 he discussed with Mr. Green a letter he had received from the Bank enclosing an application for a foreign currency loan. Reference was made to "hedging". Mr. Green, it is said, indicated that it was "not worth it". According to Mr. Bignell, Mr. Green then showed Mr. and Mrs. Bignell a graph which showed Swiss francs as "basically a level line...with only small variations up and down". According to Mr. Bignell, Mr. Green then said:
   

"If the Australian dollar varies by more than 5% you will have to make it up in Australian dollars as a parity adjustment. That's the only risk and it shouldn't happen."

In her affidavit, Mrs. Bignell said: "7. I can recall receiving a letter from the Commonwealth Bank dated 12th November 1984 which was an Application for a Foreign Currency Loan. I had a look at the Application and could not understand it. We took the letter to our accountant to ask him about it. I can recall our accountant making some pencil notes on a small piece of paper and giving that to us.

8. We took the said piece of paper to the Commonwealth Bank at Taree and saw Mr. Green somewhere about mid November, 1984. I can recall Terry writing on the bottom of the piece of paper 'not worth it' against the word written by our accountant, 'hedging'. Mr. Green also went ahead and did a number of calculations of our interest bill.

9. I can recall in the interview Mr. Green showing us a graph and at that time he said words to us to this effect 'Here is a graph of the Swiss Franc Australian Dollar exchange rate movement'. The graph had on it a line that went up and down a little bit and ended up at about the same level that it started. I was not given a copy of the graph.

10. I can recall Mr Terry Green saying words to this effect during the interview in relation to the graph 'It goes up and down a little bit but not enough to worry about.'"

1. As has been said, the applicants now seek to tender the evidence as "similar facts" which, they say, tend to establish the truth of Mr. Fisher's version of his discussion with Mr. Green in August 1984.
   Is the evidence now tendered admissible as "similar facts" evidence?

2. Although similar fact evidence can be received in criminal proceedings, it is now well established that such evidence is also admissible in civil proceedings (see Mood Music Publishing Co. Ltd. v. De Wolfe Ltd. (1976) Ch 119 at p 127). Lord Denning M.R. there said:
   

"In civil cases the courts will admit evidence of similar facts if it is logically probative, that is, if it is logically relevant in determining the matter which is in issue: provided that it is not oppressive or unfair to the other side: and also that the other side has fair notice of it and is able to deal with it."

(See also Aroutsidis v. Illawarra Nominees Pty. Ltd., 26 February 1990, unreported, per Hill J. at p 19).

1. In Sheldon v. Sun Alliance Ltd. (1988) 50 SASR 236, von Doussa J. referred to the qualification made in the observations of Lord Denning in Mood Music and said (at p 246):
   

"The application of judicial experience and common sense may at times lead to a decision in favour of admitting evidence in civil proceedings which might have been excluded had the same principal fact been in issue in a criminal trial where the liberty of the subject is at stake. This is not to say that the test to be applied is different. It is a case of the same test producing different results in its application in different trial settings."

With respect, I agree.

1. In Martin v. Osborne (1936) 55 CLR 367, the leading Australian authority in this general area, the defendant was charged with driving a commercial passenger vehicle without its being licensed by statute. In order to prove that the passengers on the day in question were being carried for reward, the informant tendered evidence of the conduct of the defendant in carrying passengers on the two preceding days. It was held that the evidence was admissible to show that the defendant was operating the car regularly for the carriage of passengers on that route. Dixon J. said (at p 375) that if an issue is to be proved by circumstantial evidence:
   

"...facts subsidiary to or connected with the main fact must be established from which the conclusion follows as a rational inference...The moral tendencies of persons, their proneness to acts or omissions of a particular description, their reputations and their associations are in general not matters which it is lawful to take into account, and evidence disclosing them, if not otherwise relevant, is rigidly excluded. But the class of acts and occurrences that may be considered includes circumstances whose relation to the fact in issue consists in the probability or increased probability, judged rationally upon common experience, that they would not be found unless the fact to be proved also existed."

1. In Thompson v. The Queen (1989) 63 ALJR 447, Gaudron J. (with the agreement of Deane J.) said (at p 463):
   

"The evidence has been described as 'similar fact' evidence, an expression which is descriptive of certain evidence which is admissible by reason of its probative value in 'admeasuring the probability or improbability of the fact or event in issue, if...given the fact or facts sought to be adduced in evidence'... The probative force, the criterion of the admissibility of what is referred to as 'similar fact' evidence, lies in the evidence revealing 'striking similarities', 'unusual features', 'underlying unity', 'system' or 'pattern'...It is sometimes convenient, but not essential, to identify points of similarity as a step in the evaluation of the probative force of the evidence sought to be adduced. In the present case the probative value lies not so much in 'striking similarity', 'system' or 'pattern', considerations which might necessitate identification of points of similarity, but in 'underlying unity'." In Thompson, Mason C.J. and Dawson J. said (at p 447): "But if the evidence of the other offence or offences goes beyond showing a mere disposition to commit crime or a particular kind of crime and points in some other way to the commission of the offence in question, then it will be admissible if its probative value for that purpose outweights or transcends its merely prejudical effect. The cases in which similar fact evidence may have sufficient additional relevance to make it admissible are not confined, but recognised instances occur where the evidence is relevant to prove intent or to disprove accident or mistake, to prove identity or to disprove innocent association:..."

1. The admissibility of alleged similar fact evidence in proceedings under s.52 of the Trade Practices Act has been considered in several cases in this Court, but no settled course of authority in this particular area has yet emerged (see, in admitting such evidence, Mister Figgins Pty. Ltd. v. Centrepoint Freeholds Pty. Ltd. (1981) 36 ALR 23 per Northrop J. at pp 28-3O; Gates v. City Mutual Life Assurance Society Ltd. (1982) 43 ALR 313 per Ellicott J. at pp 327-8; cf, in rejecting such evidence, H.W. Thompson Building Pty. Ltd. v. Allen Property Services Pty. Ltd. (1983) 48 ALR 667 per St.John J. at p 675; Boyce v. Cafrey Pty. Ltd. per Spender J. at p 371; Turner v. Jenolan Investments Pty. Ltd. (1985) ATPR 40-571 per Beaumont J. at pp 46,635-6; Aroutsidis, supra, per Hill J. at p 19).

2. In my opinion, the material now tendered is not admissible. It may be that the discussions between Mr. Green and third parties could be of some probative value as tending to establish the general tenor or thrust of discussions between Mr. Green and other customers, including Mr. Fisher. However, in my view, this material is not probative of the particular terms of the conversation that took place between Mr. Green and Mr. Fisher which are relied on as constituting the alleged misrepresentations.

1. For present purposes, it is essential to identify the issue of fact in respect of which the allegedly similar fact material is tendered. If, to take a hypothetical illustration, the issue were whether Mr. Green represented to Mr. Fisher, in general terms, that there were financial advantages accruing to borrowers in foreign currency loans, the present material may have been admissible. But the issue here is different. The issue is whether Mr. Green made express representations to Mr. Fisher in the specific terms alleged in each of the sub-paragraphs of para.8 of the statement of claim. Yet the evidence of the discussions with Mr. Lyons and with Mr. and Mrs. Bignell is not in these terms. On behalf of the applicants it is submitted that, by paraphrasing the material, it could be said that the discussion between Mr. Green and Mr. Fisher was along the same general lines as the discussions between Mr. Green and Mr. Lyons and Mr. and Mrs. Bignell. In my view, the circumstance that the conversations might have some general features in common (that is to say, that there are financial benefits accruing to borrowers in foreign currency loans), does not make the fresh material admissible. The case sought to be made by the applicants in para.8 of the statement of claim is not expressed at this level of generality. The express representations there alleged are of a more specific kind. It is not suggested, and could hardly be suggested, that the discussions with the other customers took place in the same terms, or even in the same context, as the conversation between Mr. Green and Mr. Fisher.

2. It must follow, in my opinion, that the facts now sought to be relied upon are not, in the relevant sense, "similar". They are not similar to the specific matters alleged in para.8 of the statement of claim and as Brennan J. and Dawson J. pointed out in Hoch v. The Queen (1988) 165 CLR 292 (at p 301):
   

"In assessing the probative force of evidence of similar facts, a judge must keep in mind the issue to which the evidence is relevant. How does the evidence tend to prove that issue?"

1. In my opinion, the present material is not admissible. It does not tend to prove the matters alleged in para.8 of the statement of claim (see also S v. The Queen (1989) 64 ALJR 126 at p 130 per Dawson J.; cf. Hollingham v. Head (1858) 4 CBNS 388).
   Is there a real chance of concoction?

2. There may be a further reason for holding that the material tendered is not admissible on a "similar fact" basis. In Hoch, it was held by Mason C.J., Wilson and Gaudron JJ. (at p 297) that such evidence is not admissible if:
   

"...in the light of common sense and experience, it is capable of reasonable explanation on the basis of concoction."

Brennan J. and Dawson J. said (at pp 3OO-1) that:

"...if there is a real chance that the evidence is a concoction born of a conspiracy, the trial judge can hardly be satisfied that it possesses the probative force which alone warrants its admission."

1. On behalf of the Bank, it is submitted that there was an opportunity for concoction here.

2. In my view, there is force in the Bank's submission. Mr. Lyons and Mr. and Mrs. Bignell have instituted their own proceedings against the Bank. Mr. Fisher was president of an association of borrowers known as the "Foreign Currency Borrowers Association" and Mr. Lyons was editor of its newsletter and acting secretary. Mr. Bignell was involved in the affairs of the Association. One of the principal objects of the Association was to exchange information obtained by members in the course of the conduct of their litigation against banks.

3. However, since I have already concluded that, for other reasons, the material is inadmissible, it is not necessary that I express a view, and I express no view, on the "possibility of concoction" submission put on behalf of the Bank.
   The other arguments advanced by the Bank

4. Although I have come to the conclusion that the material tendered does not qualify as similar fact evidence, I propose to express an opinion on the other matters argued on the present application. As has been noted, the Bank submits that, even if, contrary to its contention, the material did qualify as similar fact evidence, it does not arise properly in reply and should have been led, if at all, in chief; further, the Bank submits, the Court should refuse to allow the applicants now to re-open their case.
   Is the evidence now tendered evidence in reply?

5. I agree with the Bank's submission that the evidence now tendered should have been led in chief. The applicants seek to use this evidence to support Mr. Fisher's version of the discussion between Mr. Fisher and Mr. Green in August 1984 referred to in para.8 of the statement of claim. The evidence does not arise out of any special defence or out of fresh matter raised by the Bank in its case. It follows, in my view, that the evidence cannot be led in reply (see Cross on Evidence, 3rd Aust. Ed. at p 475).
   Leave to re-open?

6. Assuming, for the sake of argument, that the material was "similar facts" evidence, but does arise in reply, should the applicants now be given leave to re-open their case in chief?

7. It is clear that the Court has a discretion to allow a party's case to be re-opened. The discretion is to be exercised as the interests of justice require. Relevant considerations include possible prejudice to the party against whom it is sought to tender the additional evidence and the reasons, if any, why such evidence was not led in chief. The application of this particular discretion was considered in Barnes and Co. Limited v. Sharpe (1910) 11 CLR 462 at pp 481,490). In Joyce v. G.I.O. (N.S.W.) (1976) Ritchie's Supreme Court Procedure, Vol. 2, Practice Decision para.13,028, Sheppard J. described the width of the discretion.

8. In the present case, the applicants have not sought to offer any explanation why the material was not led in chief in the first instance. Even more important, the calling of evidence from Mr. Lyons and from Mr. and Mrs. Bignell is likely to lead to a lengthy and detailed examination of the facts of, and circumstances surrounding, their own borrowings. It may reasonably be anticipated that in the course of any inquiry into the discussions alleged between Mr. Green and Mr. Lyons and into the discussions alleged between Mr. Green and Mr. and Mrs. Bignell, there would be conflicts in the evidence, and in particular, as to the versions of the witnesses with respect to the material now sought to be relied on as similar fact evidence. Given the course of the evidence in the present trial, it must be accepted that, if Mr. Green were to be called to give evidence in answer to the testimony proposed to be given by Mr. Lyons and by Mr. and Mrs. Bignell, substantial collateral questions, including questions of credit, would arise. The resolution of these conflicts is likely to require considerable time and expense. It is not in the interests of justice, and not fair, in my opinion, to expose the Bank to this additional burden.

9. Generally speaking, the interests of justice require that the Court concentrate its attention on the real issues which arise as between the parties. As Willes J. said in Hollingham v. Head, above, (at p 391):
   

"No doubt, the rule as to confining the evidence to that which is relevant and pertinent to the issue, is one of great importance, not only as regards the particular case, but also with reference to saving the time of the court, and preventing the minds of the jury from being drawn away from the real point they have to decide."

1. In these circumstances, even if the material could have been received as similar facts evidence, there are strong discretionary reasons why the applicants should not, at this late stage, be allowed to re-open their case in chief.

2. Leave to re-open is refused, with costs.