HIGH COURT OF AUSTRALIA
GAUDRON, McHUGH, GUMMOW, KIRBY, HAYNE AND CALLINAN JJ
MICHAEL MARKS in a representative capacity
on behalf of nominated borrowers under the
Asset Accumulator Account (AAA) of
GIO AUSTRALIA HOLDINGS LIMITED FIRST APPELLANT
PAUL McCULLAGH SECOND APPELLANT
ALEXANDRA WILLIAMSON THIRD APPELLANT
AND
GIO AUSTRALIA HOLDINGS LIMITED FIRST RESPONDENT
GIO GENERAL LIMITED SECOND RESPONDENT
GIO FINANCE LIMITED THIRD RESPONDENT
GIO BUILDING SOCIETY LIMITED FOURTH RESPONDENT
Marks v GIO Australia Holdings Limited (S37-1997) [1998] HCA 69
11 November 1998
ORDER
Appeal dismissed with costs.
On appeal from the Federal Court of Australia
Representation:
S G Finch SC for the appellants (instructed by Cashman & Partners)
D M J Bennett QC with S D Kalfas for the respondents (instructed by Phillips Fox)
Notice: This copy of the Court’s Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.
CATCHWORDS
Michael Marks & Ors v GIO Australia Holdings Limited & Ors
Trade Practices – Misleading or deceptive conduct – Damages – Measure of damages – Whether analogous with damages in tort or contract – Distinction between "expectation" and "reliance" loss – Whether loss or damage suffered or likely to be suffered – Whether damage caused "by conduct of" defendant.
Words and Phrases – "loss or damage", "injury", "likely to suffer".
Trade Practices Act 1974 (Cth) – ss 4K, 52, 82, 87.
GAUDRON J. The facts are set out in other judgments. I shall repeat them only to the extent necessary to make clear my reasons for concluding that this appeal should be dismissed.
The appellants entered into loan agreements with the respondents (collectively referred to as the "GIO") in the belief that interest was to be charged at a specified base rate plus a fixed margin of 1.25%, as the GIO had represented to them. The contracts provided for interest as represented, but allowed for variation of the margin. The margin was subsequently increased from 1.25% to 2.25%.
The loans were for various different terms as required by individual appellants. Provision was made for an establishment fee of $4,600 which was to be deferred and, ultimately, waived if the loan was maintained for 10 years. In April 1992, the GIO notified the appellants that the margin would be increased from 1.25% to 2.25% with effect from 1 August 1992. At the same time, it informed them that, if they wished to refinance before 1 August 1992, they would not be penalised. They were also informed that the "10 year cost recovery [would] be waived" if they notified the GIO of their intention to refinance before 30 June 1992.
The appellants elected not to refinance. Instead, they commenced proceedings in the Federal Court seeking to hold the GIO to the margin of 1.25% as a matter of contract law or to obtain relief under the Fair Trading Act 1987 (NSW) or, in the case of the first appellant and the borrowers represented by him, the Trade Practices Act 1974 (Cth) ("the Act")[1]. The appellants concede…
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- Case
- [1998] HCA 69
- Decision Date
CaseChat Overview and Summary
The High Court was required to determine the appropriate measure of damages or relief available to the borrowers under sections 82 and 87 of the *Trade Practices Act 1974*. Specifically, the Court had to consider whether the relief available under section 87 was broader than that under section 82, and whether the analogy to common law tortious damages, as discussed in previous cases, was appropriate for construing the remedial provisions of the Act. The Court also had to assess whether the specific relief sought by the borrowers, in light of their subsequent choices, constituted a proper exercise of the court's discretion under section 87.
The Court reasoned that the *Trade Practices Act 1974*, being remedial legislation designed to protect consumers and promote fair trading, should be construed broadly to achieve its intended objectives. It distinguished section 87 from section 82, noting that section 87 provides for a wider range of orders and can apply not only where loss has been suffered but also where it is likely to be suffered. The Court found that the analogy to tortious damages, while potentially relevant to section 82, was not an appropriate or exhaustive guide for interpreting the expansive remedial powers granted by section 87. The Court concluded that the borrowers had not established a case for relief under either section 82 or section 87, as the increased contractual liability they faced was a result of their own exercise of choice rather than solely GIO's conduct.
The appeal was dismissed with costs. However, a special order made by the Full Federal Court in relation to one borrower, Mrs Alexandra Williamson, concerning the service of a notice and its impact on interest rates, was to stand for determination by the primary judge.
Orders
Orders of the court
Appeal dismissed with costs.
Background
Background to the litigation
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Ratio Decidendi
Legal Principle Established
Established by: GAUDRON J, HUGH, HAYNE AND CALLINAN JJ, KIRBY J
It is appropriate to make a few general observations about s 87 of the TP Act upon which the borrowers principally relied. As was recognised in the Full Court, Gates was not a case which could provide a binding rule on the application of s 87. Although reference was made in passing to that section, its scope was not before this Court in Gates. This was because relief had not been sought under its provisions. Therefore, as a matter of binding authority, the point in issue in these proceedings was not decided in a way binding on the Federal Court. Accordingly, it fell to the Federal Court to reach its own conclusion, doubtless drawing by analogy upon any treatment of issues common to s 82 (there in issue) and s 87 and seeking to draw any available inferences from the treatment of one for the meaning of the other. For the elucidation of the present appeal, it is not necessary for this Court to overrule Gates if it considers that the appropriate relief available to the borrowers is, as they claim, under s 87, not s 82 of the TP Act.The operation of s 87 is much broader than s 82 There are material differences between the relatively narrow provisions for the relief in s 82 of the TP Act and those provided under s 87. In terms, s 87 is expressed much more broadly than s 82. Section 82 is confined to the recovery of "the amount of the loss or damage". That phrase postulates that an amount is ascertainable. The section contemplates that "loss or damage" has already been suffered. It is concerned with conduct in contravention of a provision of Part IV or V. Section 87, on the other hand, in both sub-ss (1) and (1A), provides for orders as the court thinks appropriate. It does so not only where a person who is a party to the proceedings "has suffered" the requisite "loss or damage" but where it is found that that person "is likely to suffer" such loss or damage. In the case of both sub-sections, reference is made to contraventions of a provision of Pt V of the TP Act. This is the Part of the Act dealing with consumer protection, within which s 52 appears amongst the various "Unfair Practices" which the Act is designed to sanction and remedy. Whereas s 87(1) also refers to Pts IV and IVA, s 87(1A) only refers to contravention of a provision of Part IVA and not Pt IV[177]. [177]Pt IVA was added to s 87(1A), with effect from 21 January 1993, by s 19 of the Trade Practices Legislation Amendment Act 1992 (Cth). The range of orders which may be made, as contemplated by sub-ss (1) and (1A) of s 87 includes the payment "to the person who suffered the loss or damage" of the "amount of the loss or damage": language which exactly parallels that in s 82(1). The interrelationship between the two remedies, and the possibility that orders will be made both under s 82 and s 87, is made clear by the express language of s 87(1). But the other remedies, contemplated in s 87(2), travel far beyond those available by the law of tort to whose analogy Gates referred in the context of s 82. Not only do the remedies (apart from that in s 87(2)(d) and perhaps (c)) proceed much further than the traditional tort remedy of damages, but the variety of persons who might be affected by the orders exceeds even the extended ambit provided by s 82(1) which, in its turn, expanded the reach of a traditional action in tort. Thus, the power by order to declare that a contract or collateral arrangement was void ab initio[178] or to vary such a contract or arrangement[179] clearly has the potential to affect strangers to the contravention of the TP Act which enlivens the discretion to make orders under s 87. At this stage of the analysis, the analogy of s 87 to the traditional remedies in tort is looking rather thin.[178]TP Act, s 87(2)(a).[179]TP Act, s 87(2)(b).The wide ambit of s 87 suggests large remedial powers