James, K.F.D. v Australia & New Zealand Banking Group Ltd

[1985] FCA 167

Re: KINGSLEY FREDERICK DAVID JAMES; JILL MAXINE JAMES; DAVID MAXWELL JAMES;
PETER NORMAN JAMES; ANGUS KINGSLEY JAMES and YALLAMBEE PTY. LTD.
And: AUSTRALIA & NEW ZEALAND BANKING GROUP LIMITED; TAMAR MANAGEMENT PTY.
LTD.and JOHN WELLS
No. WA G106 of 1984
Trade Practices
(1985) ATPR para 40 - 567

COURT

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
Toohey J.

CATCHWORDS

Trade Practices - misleading and deceptive conduct - financial advice - effect upon claim for damages under s.82 of Trade Practices Act of 3 year limitation period in sub-s.82(2) - observations concerning date when cause of action arose - matters relevant to determination of the time when applicants suffered damage

Practice and Procedure - claim under Trade Practices Act and accrued jurisdiction - application to strike out paragraphs of statement of claim and for dismissal of action as disclosing no reasonable cause of action - consideration of test to be applied - observations concerning distinction between absence of a material plea and absence of particulars of a material plea - observations on question whether court can entertain pendant claim if claim under Trade Practices Act statute barred

Trade Practices Act 1974 ss. 52, 82, 87

Federal Court Rules Order 20, Rule 2

HEARING

PERTH
#DATE 26:4:1985

ORDER

1. The motion of the second and third respondents filed on 1 March 1985 be dismissed.

2. The costs of the motion be reserved.

JUDGE1

This application has had a somewhat checkered career. On 5 December 1984, on the application of the first respondent, I ordered that certain paragraphs of the statement of claim be struck out. In a judgment delivered on 8 February 1985, I upheld the objection of the second and third respondents to certain paragraphs of the statement of claim and ordered that those paragraphs be struck out.

1. In each case I gave the applicants leave to file an amended statement of claim and subsequently they did so. There have been other interlocutory applications at the instance of the respondents, largely directed to ensuring compliance with orders for further and better particulars and for discovery.

2. The second and third respondents have returned to the fray, this time with a motion that attacks certain paragraphs of the amended statement of claim but which also seeks to have the application dismissed against those respondents as disclosing no reasonable cause of action against them. I directed that the second and third respondents identify with particularity the basis of their contention that the application disclosed no reasonable cause of action against them. This they did with a written outline of their submissions, to which the applicants replied in writing. Counsel elaborated their written submissions orally.

3. In essence the second and third respondents contend that any claim the applicants may have against them is statute barred.

4. As I have said in the earlier judgments, the statement of claim is lengthy and the matters to which it relates are complex, both in fact and in law. Primarily this is a claim that the respondents engaged in conduct that was misleading or deceptive or likely to mislead or deceive, in contravention of sub-s.52(1) of the Trade Practices Act 1974. The applicants claim damages under sub-s.82(1) of that Act. Sub-section 82(2) requires that an action under sub-s.(1) be commenced "at any time within 3 years after the date on which the cause of action accrued". The second and third respondents contend that, on any view of the matter, any cause of action the applicants have against them accrued more than 3 years before 13 November 1984, the date on which the application was lodged. The applicants have joined a claim in negligence against the second respondent, though not against the third respondent. A question arises as to the fate of this cause of action if the argument of the second and third respondents is upheld.

5. Some reference to the matters pleaded in the statement of claim is unavoidable but I shall mention only such matters as are necessary to deal with the second and third respondents' motion.

6. The applicants are farmers and for nearly 40 years they have dealt with the first respondent, the Australia and New Zealand Banking Group Limited ("the Bank"), through its Katanning branch. In 1980, they claim, they sought the advice of the Bank in connection with a proposal to purchase a farm known as Bibiking for a price just in excess of $1,000,000. The Bank advised them that they should obtain a loan through the second respondent, Tamar Management Pty. Ltd. ("Tamar") and that Tamar could procure the necessary loan for them. The applicants proceeded to enter into a contract to buy Bibiking and over a period of some months the Bank assured them that a loan was forthcoming from Tamar. In or about October 1980 the Bank advised the applicants to apply to it for a loan of $1,500,000 pending the procurement of a loan by Tamar through its managing director, the third respondent John Wells ("Mr. Wells"). The applicants did so and as a result they executed mortgages over various properties. The statement of claim then pleads that by "its conduct as aforesaid" the Bank engaged in conduct in trade or commerce which was misleading and deceptive or likely to mislead or deceive contrary to sub-s.52(1) of the Trade Practices Act 1974. It is alleged against Tamar that in or about June 1980 Mr. Wells, acting on behalf of Tamar, represented to the applicants that Tamar was able to obtain for them a long term low interest rate loan which would enable them to finance the purchase of Bibiking. The statement of claim further pleads that between about 18 July 1980 and about January 1982 Mr. Wells made further representations to the applicants that Tamar was able to procure the loan. For various reasons, which it is unnecessary to detail here, the applicants allege that the conduct of Tamar as pleaded was misleading or deceptive in contravention of sub-s.52(1). The case against Mr. Wells under the Trade Practices Act is that he was directly or indirectly knowingly concerned in or a party to the contravention of the Act by Tamar.

7. It should be noted that the claim against Tamar and Mr. Wells is one in damages only. The claim against the Bank is for damages but in addition the applicants seek various declarations and an order setting aside a mortgage given by the applicants in favour of the Bank. The significance of the distinction for present purposes is that the claim against Tamar and Mr. Wells is made under sub-s.82(2) of the Trade Practices Act 1974 and no relief is sought against them by reason of sub-s.87(1A). Thus the question directly at issue in Fenech v. Sterling (1984) 57 ALR 98 does not arise here. The question of limitations is to be determined solely by reference to sub-s.82(2) of the Act.

8. The allegations against Tamar and Mr. Wells are to be found principally in paras 24-28B of the statement of claim. The dates identified in those paragraphs are "In or about June 1980" (para. 24), "On or about the 18th July 1980" (para. 24A), "Between about 18th July 1980 and about January 1982", "on or about 8th August 1980" and "between 8th and 30th August 1980" (all in para. 24B). Acknowledging that there is some flexibility in the dates pleaded, they are all earlier than 3 years before 13 November 1984 save for any relevant dates between November 1981 and January 1982.

9. The applicants' reply is that para. 24 of the statement of claim pleads that in or about June 1980 Mr. Wells, acting on behalf of Tamar, represented to the applicants that Tamar was able to obtain a long term low interest rate loan to finance the purchase of Bibiking. The applicants then say that in their written submissions Tamar and Mr. Wells admit that after February 1981 the applicants suffered serious consequences as a result of their inability to meet the commitments which they had undertaken in February 1981 to the Bank and a consequent sale of most of their properties. The date of the mortgagee's sale is not pleaded in the statement of claim but it may be inferred from para. 20 of that document that the sale took place shortly after 3 March 1983. In paras 29 and 30 of the statement of claim the applicants plead that they suffered loss by reason of the sale of their properties and the damages they claim are based on the difference between the position they would have been in as at 30 June 1984 had the representations not been made to them and their actual position. They contend that the loss or damage which they have suffered as a result of the sale of the properties is identifiable as a loss suffered in 1983 through the conduct of Tamar as pleaded in paras 24, 24A and 24B of the statement of claim, being misleading or deceptive conduct in contravention of sub-s.52(1).

10. The significance of that reply is that, in the applicants' submission, a cause of action under s.82 accrued, not when there was a contravention of s.52, but when loss or damage was suffered in consequence. In support of that submission they rely upon my decision in Arcadi v. Colonial Mutual Life Assurance Society Ltd. (1984) ATPR 40-473. I quote one paragraph from that judgment at p 45,454:
    
    

"A cause of action means 'every fact which it would be necessary for the plaintiff to prove, if traversed, in order to support his right to the judgment of the Court' Cooke v. Gill (1873) LR 8 C.P. 107 at p.116; see also Read v. Brown (1888) 22 QBD 128 at p 131, Patterson v. Richards (1963) VR 179 at pp 186-187, Do Carmo v. Ford Excavations Pty. Ltd. (1984) 52 ALR 231 at p 240. The cause of action established by sub-s.82(1) has particular elements - conduct by a person in contravention of a provision of Part VI or V of the Act and the suffering of loss or damage by reason of that conduct. Therefore, a cause of action under s.82 accrues, not when there is a contravention of s.52, but when loss or damage is suffered in consequence. Loss or damage may not be suffered until some time after contravention. For instance the learned author of the Australian Trade Practices Reporter Vol. 1 p.13,453 comments:

'Clearly there may be cases where the applicant does not commence to suffer loss or damage, for instance in the case of anti-competitive contracts or exclusive dealing, until the effect of that conduct has worked its way through the market'.

There may be several distinct losses, flowing from conduct in contravention of the Act and the cause of action is not complete until those losses have occurred. Thus, it was said, the sequence of refusals by prospective purchasers between February 1980 and October 1981 constitutes a loss which is an element in the cause of action. Furthermore, when the conduct complained of is promissory in character, the Court should not be constrained by analogies derived from tortious actions. Actions in contract provide a more apt analogy but in any event, as a matter of statutory construction, it is not until the promises have been broken and loss or damage has been suffered thereby that a cause of action based upon those promises can be said to be complete".

1. The applicants submit that it was not until the mortgagee's sale of their property that they suffered damage, hence that it was not until 1983 that they suffered loss or damage in consequence of the actions of Tamar and Mr. Wells. In addition they say that the conduct complained of includes conduct of Tamar continuing until January 1982 which is within a period of 3 years from the commencement of the proceedings.

2. In my view, the allegation of conduct continuing until January 1982 provides no answer to the case presented on behalf of Tamar and Mr. Wells. The nature of that conduct is not pleaded with any particularity and one can only speculate as to the basis upon which the conduct might be said to constitute a cause of action on the part of the applicants. I find more difficult the question whether the fact that no loss was suffered by the applicants until the sale of their property means that time did not begin to run against them until that date.

3. As to the relevant principles, there is nothing I would add to what was said in Arcadi. The motion before the Court is one to dismiss the application as disclosing no reasonable cause of action. Before that step can be taken, it is necessary to be satisfied that "the case of the plaintiff is so clearly untenable that it cannot possibly succeed". (Barwick C.J. in General Steel Industries Inc. v. Commissioner for Railways (NSW) (1964) 112 CLR 125 at 130. See also Bill Acceptance Corporation Ltd v. GWA Ltd (1983) 50 ALR 242. That is not to say that the Court should not hear argument, even of an extensive kind, aimed at demonstrating that the applicants' case is clearly untenable. But where the answer to the question posed depends not only on the resolution of matters of law but a consideration of matters of fact, it is the less likely that the Court will exercise its power under Order 20 Rule 2. In the present case there are difficult questions of fact, questions which are not made any easier by the way in which the statement of claim is formulated. For instance there is an issue - whether the applicants' claim is for a continuing loss culminating in the mortgagee's sale or whether the loss or damage was suffered when the sale took place. Having regard to what I perceive to be the relevant principle to apply, I am not persuaded that the applicants' cause of action against Tamar and Mr. Wells under the provisions of the Trade Practices Act 1974 is clearly out of time.

4. The respondents' motion also attacks particular paragraphs of the statement of claim. I shall deal with those attacks.

5. It is said that the pleading in para. 24 of the statement of claim alleges a representation made by Mr. Wells on behalf of Tamar, not to the applicants but to Mr. Parker, the manager of the Katanning branch of the Bank. Hence, it is said, the paragraph contains no allegation against the respondents. In that regard I accept the answer of the applicants that the paragraph pleads a representation made to Mr. Parker "after he had advised the third respondent therein that he was acting for the Bank on behalf of the Applicants". The content of the paragraph provides a sufficient nexus between Tamar and Mr. Wells on the one hand and the applicants on the other.

6. The respondents further complain that although the applicants plead the execution of a contract on 16 July 1980, the statement of claim does not plead that the applicants did so in reliance upon any representation made by Tamar to the Bank. Again, it is sufficiently clear from the particulars in para. 25 of the statement of claim that the applicants claim to have required a loan in order to purchase Bibiking and that they relied on Tamar to procure the loan. It may be inferred that the applicants relied on the representations made by Tamar to Mr. Parker; indeed this fact is expressly pleaded in para. 25.

7. Next the respondents contend that the statement of claim does not disclose that any cause of action in favour of the applicants, other than David Maxwell James and Peter Norman James, arose from negligent mis-statements made prior to those applicants becoming purchasing parties in February 1981. The applicants concede that Angus Kingsley James should not be a party to the proceedings. Leave was given to delete his name from the title of the action and to make corresponding amendments to the statement of claim. But I think it is sufficiently pleaded in para. 24 of the statement of claim that negligent mis-statements were made to the remaining applicants.

8. Paragraph 24A of the statement of claim pleads that on or about 18 July 1980 Mr. Wells, acting on behalf of Tamar, represented to the applicants that Tamar was a finance broker, that it was able to procure a loan of 1.6 million dollars at an interest rate of between 12% and 14% per annum for a term of 7 years and that the loan would be approved within 14 days. The respondents argue that, if such a representation was made, it would have been open to the applicants to withdraw from the contract on 1 August 1980. They did not do so, it is said, and so the representation could not have caused the applicants any loss or damage. But para. 24B of the statement of claim pleads that the representation in question was repeated on numerous occasions between 18 July 1980 and January 1982. Paragraph 25 of the statement of claim pleads that the applicants relied upon all the representations pleaded in paras 24A and 24B. I agree with the respondents' counsel that this allegation provides a sufficient answer to the respondents' objection.

9. Paragraph 24B pleads that between about 18 July 1980 and about January 1982 Mr. Wells, acting on behalf of Tamar, represented to the applicants that Tamar was able to procure a loan of the type pleaded in the preceding paragraph. The respondents contend that the applicants could not have relied on representations made between 18 July 1980 and January 1982 for the characteristics of such a loan included approval within 14 days of application. Again, I accept the submission of the applicants that the word "type" is intended to refer to the characteristics of the loan generally and that an approval period of 14 days is not necessarily a characteristic of the loan referred to in para. 24B.

10. Next the respondents claim that the applicants have not pleaded that they executed the contract on 16 July 1980 in reliance upon the representations pleaded in para. 24. They then ask rhetorically - what would the applicants' position have been if the representation had not been made? It is said that they would have had two options, the first to pay the instalments in any event and proceed with the contract and the other to withdraw from the contract up to 31 August 1980. It is said that the applicants should have pleaded expressly that by reason of the representations made by Mr. Wells on 18 July 1980 and thereafter up to 31 August 1980, they acted to their detriment in not withdrawing from the contract. But the answer is, as appears from the particulars in paras 29 and 30 of the statement of claim, that the applicants would not have attempted to buy Bibiking.

11. There is a further question, to which I have already referred. It is the position of the claim of negligent mis-statement against Tamar. The question of the court's jurisdiction to entertain that claim only arises in the event that the claim against Tamar and Mr. Wells under the Trade Practices Act is statute barred. As I have held that the claim is not statute barred or, more accurately, that the respondents have not demonstrated to my satisfaction that there is no reasonable cause of action in this regard, the question of jurisdiction in regard to the claim in negligence against Tamar does not arise. The claim under the Trade Practices Act remains on the pleadings, not only against the Bank but against Tamar and Mr. Wells. Thus there is before the Court a claim under the Trade Practices Act against all respondents, a claim which must be taken to be bona fide and not merely colourable. It is therefore unnecessary at this stage to consider the jurisdiction of the Court in regard to the common law cause of action against Tamar. The question is not one of the discretion of the Court to deal with a claim in its accrued jurisdiction (Stack v. Coast Securities (No. 9) Pty. Ltd. (1983) 57 ALJR 731); it is whether jurisdiction exists.

1. As appears from what has been said in these reasons for judgment, I am not persuaded that the statement of claim should be struck out as against the second and third respondents. Nor am I persuaded that any of the particular paragraphs to which I have referred should be struck out as disclosing no reasonable cause of action against those respondents. Mention has already been made of certain orders striking out particular paragraphs and of their reformulation in the amended statement of claim. Nothing said in these reasons is intended to suggest that the statement of claim as reformulated is free from difficulties or that it does not require clarification. But it seems to me that the stage has been reached where that clarification must come in the form of a request for further and better particulars if sufficient clarification is not to be found in the particulars already filed. Alternatively the respondents may be content that the matter proceed to trial on the statement of claim as presently formulated.

2. The motion will be dismissed. I shall hear from counsel as to the appropriate order by way of costs.