National Australia Bank Ltd v Meeke
[2003] WASC 235
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: NATIONAL AUSTRALIA BANK LTD -v- MEEKE & ANOR [2003] WASC 235
CORAM: MASTER SANDERSON
HEARD: 12 NOVEMBER 2003
DELIVERED : 19 NOVEMBER 2003
FILE NO/S: CIV 2973 of 2001
BETWEEN: NATIONAL AUSTRALIA BANK LTD (ACN 004 044 937)
Plaintiff
AND
WILLIAM JOHN MEEKE
First DefendantCATHERINE ELIZABETH MEEKE
Second DefendantPULLINGER SANDERSON AND WORKMAN (A FIRM)
First Third PartyPULLINGER STEWART (A FIRM)
Second Third PartyPULLINGER REDHEAD STEWART (A FIRM)
Third Third Party(BY ORIGINAL ACTION)
WILLIAM JOHN MEEKE
First PlaintiffCATHERINE ELIZABETH MEEKE
Second PlaintiffAND
NATIONAL AUSTRALIA BANK LTD (004 044 937)
First DefendantCHRIS KLAASSEN
Second DefendantDAVID STAFFORD
Third DefendantPETER MORRIS
Fourth DefendantRICHARD SOLAR
Fifth DefendantRICHARD JOHN LORRAWAY
Sixth DefendantMARK RICHARD RAYNER
Seventh Defendant(BY COUNTERCLAIM)
Catchwords:
Practice and procedure - Application for leave to amend counterclaim - Turns on own facts
Legislation:
Corporations Law, s 1324(10)
Result:
Leave granted
Category: B
Representation:
Original Action
Counsel:
Plaintiff: Mr M G Lundberg
First Defendant : No appearance
Second Defendant : No appearance
First Third Party : No appearance
Second Third Party : No appearance
Third Third Party : No appearance
Solicitors:
Plaintiff: Mallesons Stephen Jaques
First Defendant : No appearance
Second Defendant : No appearance
First Third Party : No appearance
Second Third Party : No appearance
Third Third Party : No appearance
Counterclaim
Counsel:
First Plaintiff : Mr R E Birmingham QC &
Mr B W Ashdown
Second Plaintiff : Mr R E Birmingham QC &
Mr B W Ashdown
First Defendant : No appearance
Second Defendant : Ms P E Cahill
Third Defendant : No appearance
Fourth Defendant : No appearance
Fifth Defendant : No appearance
Sixth Defendant : No appearance
Seventh Defendant : No appearance
Solicitors:
First Plaintiff : B W Ashdown
Second Plaintiff : B W Ashdown
First Defendant : No appearance
Second Defendant : Jackson McDonald
Third Defendant : No appearance
Fourth Defendant : No appearance
Fifth Defendant : No appearance
Sixth Defendant : No appearance
Seventh Defendant : No appearance
Case(s) referred to in judgment(s):
Allen v Atalay (1993) 11 ACSR 753
Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No 1) (1988) 39 FCR 546
Rhone‑Poulenc Agrochimie SA v UIM Chemical Services Pty Ltd (1986) 12 FCR 477
Waterhouse v Waterhouse (1999) 46 NSWLR 449
Webster v Lampard (1993) 177 CLR 598
Case(s) also cited:
ACCC v Giraffe World Australia Pty Ltd (No 2) (1999) 95 FCR 302
Ashbury v Reid [1961] WAR 49
Bartley v Meyers [2002] SASC 24
Commonwealth Bank of Australia v Mehta (1991) 23 NSWLR 84
Compaq Computer Australia Pty Ltd v Merry (1998) 157 ALR 1
Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31
Dey v Victorian Railways Commissioners (1949) 78 CLR 62
Fraser v NRMA Holdings Ltd (1995) 55 FCR 452
Hampic Pty Ltd v Adams [1999] NSWCA 455
Horton v Jones (No 2) (1939) 39 SR (NSW) 305
Janssen-Gilag Pty Ltd v Pfizer Pty Ltd (1992) 37 FCR 526
King v GIO Australia Holdings Ltd (2001) 184 ALR 98
Nation Wide News Pty Ltd v Wiese (1990) 4 WAR 263
Niven v Grant (1903) 29 VLR 102
TPC v Australia Meat Holdings Pty Ltd (1988) ATPR 40-876
Wheeler v Grace & Pierucci v Wright (1989) ATPR 40-940
Winterton Constructions Pty Ltd v Hambros Australia Ltd (1992) 39 FCR 97
Yorke v Lucas (1983) 68 FLR 268
Yorke v Lucas (1985) 158 CLR 661
Yorke v Ross Lucas Pty Ltd (1983) 49 ALR 672
MASTER SANDERSON: On 14 August 2003 I struck out the defendants' (plaintiffs by counterclaim) counterclaim in these proceedings. For the sake of convenience, throughout these reasons I will refer to the plaintiff (first defendant by counterclaim) as "NAB". I will refer to the defendants (plaintiffs by counterclaim) as "the Meekes" and when I refer to the first‑named of the defendants, I will refer to him as "Mr Meeke". I will refer to the second defendant by counterclaim as "Klaassen".
I gave the Meekes leave to replead their counterclaim. This they did and the minute of substituted counterclaim is dated 14 August 2003. The NAB took exception to the terms of this minute and the matter came back in chambers on 2 September 2003. It was then programmed for a special appointment which was, in effect, an application by the Meekes for leave to amend in terms of the minute.
At the hearing of the application, counsel for Klaassen pointed out that on 2 September she had reserved Klaassen's right not only to object to the terms of the minute - that is, to take a number of pleading points - but she had also sought to raise what was, in effect, an application under O 16 of the Rules of the Supreme Court 1971. There was some confusion as to whether or not such reservation had been made. Counsel for the Meekes was not fully instructed on this issue. The matter proceeded on the basis that counsel could argue both matters. Counsel for NAB appeared and indicated while they did not consent to amendment of the counterclaim in terms of the minute, they did not intend to raise any objection to the amendment or to make submissions.
To understand the nature of the counterclaim and the objection taken by Klaassen, it is necessary to say something of the facts both with respect to the original action and with respect to the counterclaim. So far as the original action is concerned, it is relatively straightforward. The NAB says it lent money to a company of which the Meekes were directors. These advances were secured by guarantee. The company has gone into liquidation and NAB has called upon the Meekes to make payment under the guarantee. The Meekes have alleged that they entered into the guarantee as a consequence of misleading and deceptive conduct on the part of NAB, or alternatively, that because of the circumstances in which they entered into the guarantee, it is now unconscionable for the NAB to seek to enforce its terms. That brief summary of the action is all that is required to put the counterclaim in context.
The minute of substituted counterclaim raises no new facts against NAB. It is largely directed at Klaassen. It is pleaded that Klaassen was employed by Janalyn Pty Ltd ("Janalyn"), (the Meekes' company and the entity which was the primary borrower) as office manager and financial controller. It is said that Klaassen was not authorised to enter into any "transactions, agreements or dealings" on behalf of Janalyn with NAB. It is pleaded that during the course of his employment with Janalyn, Klaassen acquired knowledge as to the foreign exchange transactions and then entered into certain foreign exchange transactions on behalf of Janalyn with NAB. The matters to which I have referred so far are pleaded in par 70 through to 73 of the proposed amended counterclaim.
By par 73 of the proposed counterclaim, it is pleaded that between June and September 1999 Mr Meeke asked Klaassen to investigate the accounts and records of Janalyn with respect to an increase in bank fees and charges being levied by NAB. It is then pleaded (par 74) that Klaassen failed to investigate the accounts and failed to bring to the attention of Mr Meeke the foreign exchange transactions. It is then said (by par 75) that these actions of Klaassen breached certain provisions of the Corporations Law and caused detriment to Janalyn. This detriment is said to be "loss and damage being the obligations under the guarantee and indemnity". This detriment is then particularised. The particulars include NAB entering into the foreign exchange transactions, fees incurred on these transactions, default by Janalyn of its obligations to NAB and ultimately the appointment of an administrator to Janalyn.
Paragraphs 76 and 77 plead that the NAB, by virtue of certain paragraphs of the defence, was knowingly concerned in a contravention by Klaassen of provisions of the Corporations Law and that the Meekes have suffered loss and damage as a consequence of the NAB relying upon the guarantee. These paragraphs relate to NAB and are not presently relevant. (I note in passing that par 77 is somewhat obscure. I have assumed that it draws NAB into the breaches of the Corporations Law largely because of its location in the pleading. Neither NAB nor Klaassen objected to the terms of the paragraph. Nonetheless, counsel may wish to give some consideration to the terms of the plea to clarify against which party it is directed.)
By par 78 and 79 the Meekes plead against Klaassen a claim in misleading and deceptive conduct. There are said to be two separate and distinct representations. The first relates to Klaassen's alleged failure to report to Mr Meeke on the banking arrangements of Janalyn after he was requested to do so. These are the matters I have referred to earlier and which are pleaded in par 70 to 75. The second representation is said to relate to a series of foreign exchange transactions which were arranged by Klaassen and which, it is alleged, were not disclosed to the Meekes. In essence, it is said that Klaassen was under a duty to disclose these transactions to the Meekes and his failure to do so was a representation by silence which was misleading and deceptive. Paragraph 80 falsifies the representations.
By par 81 the continuing nature of the two representations as pleaded and it is also acknowledged that the Meekes became aware of the partial falsity of both representations in October 1999. It is pleaded that it was not until March 2001 that the Meekes became aware of the alleged complete falsity of the representations. By par 82 it is pleaded that relying upon the representations, the Meekes entered into the guarantee and indemnity. This was done in October 2000. It is to be remembered that Klaassen's employment ceased on 10 September 1999 - 13 months before the guarantee was entered into by the Meekes. The remainder of the pleading refers to various provisions of the Fair Trading Act and alleges that NAB was knowingly concerned in Klaassen's breach of that Act. Further, and importantly for the purposes of this application, the prayer for relief seeks damages against Klaassen for alleged breach of s 1324(10) of the Corporations Law.
The first attack mounted by counsel for Klaassen was really in the nature of an O 16 application. It was submitted that an analysis of the foreign exchange transactions undertaken by Janalyn for the period 7 January 1999 to 30 June 1999 indicated that over 68 per cent of Janalyn's payments to overseas suppliers had been made through foreign exchange contracts with NAB. The relevant material is gathered together and analysed in an affidavit of Chih Kean Khoh sworn 23 October 2003. That being the case, it was said it was simply unbelievable to suggest as is pleaded that the Meekes did not know and did not approve of Klaassen entering into foreign exchange transactions on behalf of Janalyn.
The fact is that in his affidavit of 31 October 2003, Mr Meeke says precisely that. He says he was not aware of these transactions being undertaken by Klaassen and that Klaassen was not authorised to enter into such transactions on behalf of Janalyn. That being the case, there is a conflict on the evidence and Klaassen is not entitled to summary judgment. I accept, as counsel for Klaassen submitted, that not all evidence on a summary judgment application must be accepted uncritically: see Webster v Lampard (1993) 177 CLR 598. But here the evidence is complex and while the evidence put on behalf of Klaassen is persuasive, it is not sufficient to allow me to conclude that there is not a serious question to be tried.
The second complaint raised by Klaassen has to do with the way in which the claim for misleading and deceptive conduct is pleaded. Essentially it is said that the conduct complained of - that is, the two distinct representations - was conduct which took place during the course of Klaassen's employment. That employment ceased in September 1999. Yet, it is said, it is these representations which the Meekes say led them to enter into the guarantee in October 2000. It is said on behalf of Klaassen that this plea is untenable.
There are two answers to that complaint. The first has to do with the representations themselves. It is well settled that silence can amount to an actionable representation under the Fair Trading Act: see Rhone‑Poulenc Agrochimie SA v UIM Chemical Services Pty Ltd (1986) 12 FCR 477. Generally speaking (and I acknowledge that there are exceptions to this general rule) silence alone is not misleading: there must ordinarily be a duty at common law or in equity to disclose the information: see Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No 1) (1988) 39 FCR 546 per Lockhart J at 557. Here that duty is pleaded. It is said to arise by reason of the relationship of employer and employee. Further, it is said that the obligation is a continuing one. I accept that given the lengthy period between the termination of Klaassen's employment and the Meekes entering into the guarantee, there may be an argument as to whether or not the representation was, as at the date of signing the guarantee, a factor upon which the Meekes relied. But that is a question of fact for trial. In my view, the plea is not so untenable as to require me to refuse leave to plead.
Finally, on behalf of Klaassen, it is said that s 1324(10) of the Corporations Law cannot found a claim in damages. In support of that proposition, counsel for Klaassen relies on a number of cases, including Allen v Atalay (1993) 11 ACSR 753 (a decision of Hayne J of the Supreme Court of Victoria) and Waterhouse v Waterhouse (1999) 46 NSWLR 449 (a decision of Windeyer J of the New South Wales Supreme Court). I accept that these and other authorities are against a claim for damages being open to the Meekes under s 1324(10) of the Corporations Law. If this were the sole plea or if this claim for relief involved proof of facts beyond those facts pleaded with respect to other causes of action, I would have been prepared to strike out the claim for relief. But the fact is that the counterclaim must go off to trial and it is proper for the question of the application of s 1324(10) to be left to the trial Judge to decide after all the facts have been determined. On that basis I would decline to strike out the reference to s 1324(10) of the Corporations Law.
In all the circumstances then I am satisfied that the Meekes should have leave to amend their counterclaim in terms of the minute. I will hear the parties as to the precise form of orders and as to costs.
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