Hamer, R.J. v Westpac Banking Corporation

[1987] FCA 364

C A T C H W O R D S

TRADE PRACTICES - s . 5 2 - state of mlnd and intention of

respondents - whether able to be misrepresented - whether

"reckless indifference" as to intention may constltute

misleading and deceptlve conduct.

PRACTICE AND PROCEDURE - appllcatlon to strike out statement of

claim - allegations of "reckless indlfference" to adherence

to promlse - pleading vague but allowed to stand.

Trade Practices Act 5.52

Rupert James Hamer & Anor.

v. Westpac Banklns Corporation

Qld G27 of 1987

PINCUS J.

BR I SBANE

9 JULY 1987

IN THE FEDERAL COURT OF AUSTRALIA	)
QUEENSLAND DISTRICT REGISTRY	) QLD G27 of 1987
GENERAL DIVISION	)

BETWEEN: RUPERT JAMES HAMER and BRIAN RICHARD GOLDSMITH

Appllcants

AND: WESTPAC BANKING CORPORATION

Respondent

MINUTES OF ORDER

JUDGE MAKING ORDER:	PINCUS J .
DATE OF ORDER:	9 JULY 1987
WHERE MADE:	BRISBANE
THE COURT ORDERS THAT:

1.	The applicatlon made to strlke out the statement	of
clam be dlsmlssed.
2.	The costs of the appllcation to strlke out be the

costs in the proceedings of Rupert James Hamer and

Brlan Rlchard Goldsmlth, the applicants in the principal proceedlngs.

m:

Settlement and entry of orders is dealt with in

Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA	)
PUEENSLAND DISTRICT REGISTRY	1 QLD G27 of 1987
GENERAL DIVISION	)

BEIWEEN: RUPERT JAMES HAMER and BRIAN RICHARD GOLDSMITH

Applicants

AND: WESTPAC BANKING CORPORATION

Respondent

PINCUS J. 9 JULY 1987

REASONS FOR JUDGMENT

This is an appllcatlon to strlke out the statement of

claim in proceedlngs brought In rellance upon 5.52 of the Trade Practlces Act 1974. The appllcation relates to misrepresentatlons

alleged to have been made In 1983. The representations, speaking

generally, constltute or Imply promises - i.e. they are "with

respect to any future matter'' wlthin the meaning of s.51A of the

Trade Practlces Act. However, that provision was not in force

when the cause of action (if any) arose. The case falls to be decided under 5 . 5 2 on the basis that the questlon is whether the respondent has engaged "in conduct that 1 s misleading or deceptlve

or is likely to mislead or deceive".

2 .

Since the dlsposition of a pleading point 1 s . at least

in part, a discretionary question, it should be noted that the

statement of claim attacked 1 s an amended version. When the

matter flrst came before me on 30 March 1987, objection was taken

on the part of the respondent to the form of the then pleading.

It was said that it did not disclose a case under 5.52 of the

Trade Practlces Act. On my lntlmatlng that I agreed with the

respondent's contentlon, counsel asked for leave to amend, which

was given. In its amended form, the statement of clalm alleges

that a company, Joloba Management Llmlted, had an account with the

respondent bank styled "Advance Commlsslon Account" which was

opened to pay advance commlssion to salesmen employed by the

company. The statement of clalm then alleges that a branch

manager of the respondent bank asked the appllcants to guarantee

the account, and In order to lnduce them to do s o , represented:

"(a)	The said guarantee was in respect	of and llmlted to the
Advance Commission Account.

(b)	The Advance Commlsslon Account would be utlllzed solely
for the purpose of paylng advanced commissions to

salesmen of Joloba.

(c) The Advance Commlsslon Account would be closed as soon

as a nll balance was achieved In the account.

(d) As soon as a nil balance was achieved In the Advance

Commission Account the guarantee aforesaid would

terminate.

3 .

(e) It would take too long to prepare a form of guarantee to

reflect the terms of the agreement and the respondent's

standard guarantee form could be slgned	as	a	mere
formality."

Then para.12A of the statement of clam, added by

amendment, alleges:

"The representatlons referred to in paragraph 12 herein

were made with a reckless Indifference to whether they would

be adhered to or not.

The pleadlng goes on to assert that the appllcants

entered Into a guarantee In rellance on the representatlons, that the account reached a rill balance on or about 26 July 1984, but was not closed and drawlngs were allowed on the account other than

for the purpose mentloned in representatlon (b); It 1 s sald that

the respondent knew or ought to have known of the clrcumstances

lust mentloned, but that it has demanded of the appllcants the

moneys wrongly drawn. The statement of clalm asserts that the

making of the representations constltuted conduct of the klnd

mentioned in s.52 of the Trade Practlces Act.

But, although representation (a) could be regarded as a

representation as to the content of the form of guarantee signed,

it is clear from the terms of allegation (e) and the course the

argument took that in fact the applicants do not intend to allege

that any of the limitations in paragraphs (a), (b), (c) or (d) were thought to be embodied in the documents signed. The case

4 .

intended to be made is solely that promises made orally with

respect to the use of, and scope of liability under, the guarantee

were not kept. Counsel for the respondent, Mr. McGill, says that

it is not enough to allege "reckless indifference to whether" the

promises "would be adhered to or not"; as set up In para.12A. He

urges further that the pleadlng should be struck out because there

is no reason to think it can usefully be amended.

Mr. McGill argues that the question is whether or not

the respondent made, by its agent, a true or untrue representatlon

as to Its then state of mind, and that one cannot be recklessly

indlfferent on that questlon. Mr. Wyvill Q.C., senlor counsel for

the applicants, argues that the applicants may succeed at the

trial on thelr pleadlng wlthout any flndlng of non-exlstence of an

approprlate state of mlnd.

The leading case on the toplc appears stlll to be the

decision of the Full Court in Global Sportsman Pty. Ltd. v. Mlrror

Newspapers Pty. Ltd. (1984) 2 F.C.R. 82. The applicants

complalned there was a publlcation of a statement of opinion and

It was for that reason that the questlon of the respondent's state

of mlnd came to be discussed. The Court sald, at p.88, that:

"The non-fulfilment of a promise when the tune for

performance arrives does not of itself establish

that the promisor did not intend to perform it when

it was made or that the promlsor's intention lacked any, or any adequate, foundation. Similarly, that

a prediction proves inaccurate does not of itself

establish that the maker of the prediction did not

believe that it would eventuate or that the belief

lacked any, or any adequate, foundation ...

Whether a statement is a statement of past or

present fact, a promise, a prediction, or an

expression of opinion, the making of it constitutes

5.

conduct which is misleading or deceptlve or llkely

to mislead or deceive If the statement contains or

conveys a misrepresentation."

Had it not been for those remarks, it mlght have seemed

an arguable questlon whether 5.52 was intended to provide any

remedy for broken promlses. In Parkdale Custom Built Furniture

Pty. Ltd. v. Puxu Ptv. Ltd. (149) C.L.R. 191, It was suggested

that 5.52 should not be "beneficially construed" (p.198) and that

some prlnciples developed by the common law apply under 5.52

(p.219). And there was certainly dlrect auchorlty under the

general law agalnst the view that promlses and representatlons of

intentlon could be relled on In actions for misrepresentatlon:

see for example The Civll Service CO-operatlve Socletv of Vlctorla Limlted v . Blyth (1913) 17 C.L.R. 601 at p.607 per Grlffith C.J. and Yorkshlre Insurance Company Llmited v. Cralne (1922) 2 A.C.

541 at 553. But the weight of authority was the other way.

Craine's case lust mentloned was decided by the High Court on the

basls that ' I . . . a presently existing lntentlon may be the exlstlng

factor" for the purposes of the law of estoppel by representatlon (1920) 28 C.L.R. 305 at p.324. Further, there 1 s a llne of authorlty in company law that false statements as to lntentlon m

a prospectus may constitute actlonable misrepresentations:

Edslnston v. Fitzmaurlce (1885) 29 Ch.D. 459 1 s a clear example,

as is Aaron's Reefs, Limited v. C18961 A.C. 273 at p.284.

Very few of such cases ever seem to have been brought, and perhaps

that is because of the difflculties of proof referred to m Clarke

and Lindsell on Torts (15th ed.) p.836: "The mere fact that the

intention which was represented to exist was not eventually

carried into effect is little or no evidence of the original

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non-existence of the Intention." In any event, it seems clear

that I should follow Global Sportsman dlcta as to promise,

according as they do wlth the general law.

That is not the end of the dlfficultles of the case

for Mr. McGlll says one cannot tell from the pleading precisely

what the mlsrepresentation was. The pleading does not make It

clear whether the applicants' case is that there was lndlfference

as to the maker's state of mind or indifference as to some other

matter bearlng on the likelihood of the promlse's belng kept.

Counsel referred me to Gardlner v. Suttons Motors

(Homebush) Pty. Ltd. (1983) 48 A.L.R. 142, in which a respondent

was held liable, by Inference from subsequent events, on the

ground of reckless indlfference to whether "representations" would

be adhered to or not, the representatlons belng statements as to

lntentlon; see the ~udgment of Sheppard J. at pp.152, 153.

Although the pleading has the dlrect support of the

language used In Gardlner's case at the place lust referred to,

the learned judge who declded that case was not concerned to

prescribe the correct form of a pleading. It has to be sald in

favour of the respondent that in a practical sense the pleading

contains little indication of the case desired to be made. Such

an allegation as is made could presumably	be pleaded in almost any
case of a broken promise.

It would seem to be futile to order particulars; plainly

the applicants could give none. All they claim to know, and all

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they say, 1 s that what was promised did not happen. They wlll ask that an inference of "reckless indlfference" as to some as yet

unspecified point should be drawn at the hearing. For example, If

the representatlons are found to have been made, but were not

i

noted by the manager in the bank's records, the applicants might

perhaps argue that the omission showed there 1s no intentlon of

ensurmg that the promises would be carried out.

Although there is reason to be somewhat uneasy about

doing so, it appears that the correct course 1 s to let the

pleading stand. Its real defect is Its vagueness, but the

applicant can hardly be expected at this stage to remedy that.

The applicatlon to strike out wlll therefore be dismissed. In the

clrcumstances, however, it seems to me fair to make the costs the

applicants' costs In the proceedlngs and that wlll be done.

Counsel for the appllcants:	Mr. L.F. Wyvill P.C.	wlth
Mr. S.M. Ure
Solicitors for the appllcants:	Messrs. Bowdens
Counsel for the respondent:	Mr. D.J. McGill

Solicitors for the respondent:

Messrs. Feez Ruthnmg &

Co.

Date of Hearing:

2 7 May 1987

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