GIO Australia Holdings Ltd v Marks - [1996] FCA 1006

TRADE PRACTICES - Alleged misleading conduct - Representation in promotional brochure that margin on finance facility fixed - Contract documents provided for variation of margin - Margin purportedly varied by financiers - Whether purported variation effective - Whether financiers contractually bound to adhere to margin stated in brochure - Whether there was a misrepresentation as to margin - Contract claim rejected - Finding that brochure constituted a misrepresentation - Relief available to borrowers - Damages - Variation of contracts by Court - No evidence that borrowers could or would have borrowed more cheaply elsewhere - Effect of rule in Gates v City Mutual.

Trade Practices Act 1974, s 52.
Fair Trading Act (NSW) 1978, S 42.

GIO AUSTRALIA HOLDINGS LIMITED, GIO GENERAL LIMITED, GIO FINANCE LIMITED, GIO BUILDING SOCIETY

v MICHAEL MARKS, JEREMY KINROSS, PAUL McCULLAGH and ALEXANDRA WILLIAMSON

NO. NG.168 of 1996

CORAM:    WILCOX, FOSTER and TAMBERLIN JJ
PLACE:    SYDNEY
DATE:     21 NOVEMBER 1996

IN THE FEDERAL COURT OF AUSTRALIA )
NEW SOUTH WALES DISTRICT REGISTRY ) NO. NG.168 OF 1996
GENERAL DIVISION )

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:GIO AUSTRALIA HOLDINGS LIMITED

First Appellant

GIO GENERAL LIMITED

Second Appellant

GIO FINANCE LIMITED

Third Appellant

GIO BUILDING SOCIETY

Fourth Appellant

AND:MICHAEL MARKS

First Respondent

JEREMY KINROSS

Second Respondent

PAUL McCULLAGH

Third Respondent

ALEXANDRA WILLIAMSON

Fourth Respondent

CORAM:    WILCOX, FOSTER and TAMBERLIN JJ
PLACE:    SYDNEY
DATE:     21 NOVEMBER 1996

MINUTES OF ORDER

THE COURT ORDERS THAT:

The appeal be allowed.

The orders made by Einfeld J be set aside and in lieu thereof it be ordered that the proceeding be dismissed except insofar as it relates to:

(i)the fourth respondent, Alexandra Williamson; and

(ii)the costs incurred at first instance.

The proceeding be remitted to Einfeld J for:

(i)determination of the issue concerning service of the letter of 21 April 1992 on Mrs Williamson and the making of such orders, consequential on that finding, as are appropriate; and

(ii)the making of such orders as he thinks appropriate in relation to the costs incurred at first instance.

The respondents pay the appellants' costs of the appeal.

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 ) NO. NG.168 OF 1996
GENERAL DIVISION )

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:GIO AUSTRALIA HOLDINGS LIMITED
First Appellant
GIO GENERAL LIMITED

Second Appellant
GIO FINANCE LIMITED
Third Appellant
GIO BUILDING SOCIETY

Fourth Appellant
AND:MICHAEL MARKS
First Respondent
JEREMY KINROSS
Second Respondent
PAUL McCULLAGH
Third Respondent

ALEXANDRA WILLIAMSON
Fourth Respondent

CORAM:    WILCOX, FOSTER and TAMBERLIN JJ
PLACE:    SYDNEY
DATE:     21 NOVEMBER 1996

REASONS FOR JUDGMENT

WILCOX and TAMBERLIN JJ: We have had the benefit of reading in draft form the reasons for judgment of Foster J. Except in relation to one point, we agree with him.

In particular, we agree with Foster J's conclusion that the decision of the High Court of Australia…

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: [1996] FCA 1006
Decision Date: 21 Nov 1996

CaseChat Overview and Summary

This case concerned a dispute between borrowers and GIO Australia Holdings Limited (GIO) over the terms of a loan facility known as the Asset Accumulator Account (AAA). The borrowers alleged that GIO had engaged in misleading and deceptive conduct under section 52 of the Trade Practices Act 1974 (Cth) and section 42 of the Fair Trading Act (NSW) 1978, as well as a breach of contract. The borrowers claimed that GIO had represented that the interest margin on the AAA facility would be fixed at 1.25% for the term of the facility, but subsequently increased the margin to 2.25%. The borrowers sought relief in the form of an order that GIO be bound by the fixed margin representation, or alternatively, damages for the breach of contract and misleading conduct.

The primary judge found in favour of the borrowers on both the contract and misrepresentation claims. He awarded damages to the borrowers based on the difference between the fixed margin of 1.25% and the increased margin of 2.25%. The borrowers also sought relief under section 87 of the Trade Practices Act and section 72 of the Fair Trading Act, but the primary judge declined to grant such relief, citing the decision in Gates v City Mutual Life Assurance Society Limited (1986) 160 CLR 1.

On appeal, the Full Court allowed the appeal and set aside the orders made by the primary judge. The Court held that the brochure and other promotional materials did not form part of the contractual documents between the parties. The contractual documents, namely the Letter of Offer, the Conditions of Use, and the Customer's Acknowledgment, clearly provided for GIO's power to vary the interest margin. The Court found that the borrowers had not proved that they could or would have borrowed more cheaply elsewhere, and therefore, they were not entitled to damages for lost expectations. The Court also held that relief under section 87 was not available to the borrowers as it would amount to enforcing the fixed margin representation as a contractual term, which was not permissible under the principles in Gates.

The appeal was allowed, and the proceeding was dismissed except insofar as it related to the fourth respondent, Alexandra Williamson, and the costs incurred at first instance. The case was remitted to the primary judge to determine the issue concerning the service of the letter of 21 April 1992 on Mrs. Williamson and to make appropriate orders in relation to the costs incurred at first instance. The respondents were ordered to pay the appellants' costs of the appeal.

Orders