Northern Metals Pty Ltd v Westpac Banking Corporation

[1988] FCA 643

C A T C H W O R D S

TRADE PRACTICES - misleading public as to nature etc. of services

- whether individual may get damages	for conduct misleading
public.

Trade Practices Act 1974,	ss.52, 55A
Northern Metals Pty Ltd

v.    Westpac Banking Corporation

Qld m 4	of 1988
PINCUS J. BRISBANE

21 OCTOBER 1988

IN THE FEDERAL COURT OF AUSTRALIA 1

QUEENSLAND DISTRICT REGISTRY	1	QLD	G254	of 1988
GENERAL DIVISION	)

BETWEEN: NORTHERN METALS PTY LTD

Applicant

AND:  WESTPAC BANKING CORPORATION

Respondent

MINUTES OF ORDER

PINCUS ORDER: MAKIN JUDGE J.

DATE OF ORDER:  27 OCTOBER 1988

BRISBANE WHERE MADE:
THE COURT ORDERS THAT:

1. the respondent's notice of motion filed on 23

September 1988 be dismissed;

2. the respondent pay the applicant's costs of and

incidental to the application made by that notice

of motion, to be taxed.

NOTE :  Settlement and entry of orders is dealt with in
Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA 1

QUEENSLAND DISTRICT REGISTRY	1	QLD	G254	Of 1988
GENERAL DIVISION	1

BETWEEN:  NORTHERN METALS PTY LTD

Applicant

AND:  WESTPAC BANKING CORPORATION

Respondent

PINCUS J. 27 OCTOBER 1988

REASONS FOR JUDGMENT

This is an application by the respondent bank to strike

out certain parts of the statement of claim which are said not to

disclose a reasonable cause of actlon: 0.11 r.16.

The case concerns aloan to the applicant of a

substantial sum originally in Japanese yen, made in 1982. Because

of exchange rate fluctuations, the acceptance of the loan in yen

has, with subsequent events, caused a great loss to the applicant,

which it claims to recover, asserting that the respondent was

negligent and matters of that sort.

The applicant's complaints relate not merely to the

making of the loan, but to subsequent events	- the "management" of
the loan.

. .

'1 I.

The respondent attacks paras.23 - 33 inclusive of the

statement of claim. These form a group whose basis is s.55A of

the Trade Practices Act 1974. The pleading alleges that there was

a breach of that provision in that the respondent (in substance)

misleadingly held out that it had employees who were skilled in

foreign currency matters.

Section 55A reads as follows:

"A corporation	shall	not,	in	rade	commerce,	or
engage	in	conduct	that is liable	to	mislead	the
public	as	to	the nature,	the	characteristics,	the

suitability for their purpose or the quantity of

any services."

The expression "services" is defined in s.4(1) in such a

way as, prima facie, to include the matters at issue in this case.

The respondent's point is that it cannot matter to the

applicant whether the respondent misled the public and that the

applicant's only concern must be with whether it was itself

misled. The respondent partrcularly objects to the applicant's

having claimed a declaration to the effect that the respondent

contravened s.55A and asks that that claim be struck out also.

On the pleadings as they stand, s.55A is made relevant

in three ways:

I

(i) the claim for a declaration just mentioned;

(ii) a claim for damages for the alleged contravention of

(iii) a defence respondent's the to cross-claim

(2,111,958.98 Malaysian ringgit).

It is difficult to see the point of the claim for

declaratory relief; if the applicant is not entitled to any

substantive relief as a result of the alleged breach of s.55A and

not entitled to use that breach as a defence against the

cross-claim, a declaration would be a futility. However, I would

not strike out that	claim if	the	pleading	were	otherwise
defensible.

To move to the second aspect, the claim for damages, it

has to be admitted that it is not easy to see why the respondent's

having engaged in conduct liable to mislead people other than

the applicant should give rise to r be relevant o the

applicant's loss. But 5 .82 allows a claim for loss or damage by

conduct in contravention of provisions including s .55A; so that,

prima facie, an applicant is entitled to plead	a breach of that
section as a basis of a damages claim.

If the applicant is right in its contentlons, then it

can	succeed by showing firstly conduct liable	to mislead the
public, and secondly that the conduct damaged	the	applicant,

presumably by misleading it.	If an applkant can prove these two
points, then one would think it would	be entitled to succeed under

s.52 of the same Act, unless the word "likely" used in s.52

creates a greater obstacle for an applicant than does "liable' in

. .

s.55A. But the applicant is not obliged to sue only on the

provision which is easier for it. If it chooses to undertake the

burden of showing not merely that the conduct complained of was
misleading or likely to mislead, but that it misled the public, it

is entitled to do so.

Unless it is possible to read the right of action for

damages given by s.82 as implicitly excluding clalms based on

s.55A,	in	my opinion the relevant paragraphs must stand.	In
Director-General	of	Education	(N.S.W.) v. Suttlinq (1987) 61

A.L.J.R.	117 at 119, it was said that:
"Words hould not be added by implication to the

language of a statute unless they are needed in

order to give sense and meaning to a provision

construed in its context ..."

No such implication is necessary here, but perhaps	an impllcation
may also be necessary if there would otherwise be absurdity.	In
view of the presence in the statute of	s.52, the glvlng of a cause

of action for damages for breach of s.55A may be thought

superfluous, but hardly absurd.

As a practical matter, the question whether it is

appropriate to strike out a distinct claim at an interlocutory stage is likely to depend upon a number of considerations - for example, the extent to which leaving the claim attacked s part of the suit would increase the cost and complexity of the litigation,

by introducing factual questions which would not otherwise need	to
be canvassed.

In General Steel Industries Inc. v. Commissioner for

Railways (N.S.W.) (1964) 112 C.L.R. 125 at p.129, Barwick C.J. mentions a number of ways of expressing the tests to be applied in

such a case as this.

Not all the tests mentioned in the General Steel case

are consistent: in particular "so manifestly faulty that it does

not admit of argument" (at p.129) is a description which does not

cover such an application as is postulated at p.130, in which

extensive argument is necessary to demonstrate the untenability of

the case. There is, however, no need here to choose between

tests, for it is my opinion that the	applicant's	argument is
correct, on the proper construction of the	Act.	A breach of s.55A
gives a cause of action to each individual	who	can show that he

suffered loss and damage thereby. Although some may think it inconvenient, the result is that such an applicant as the present applicant may take upon itself the burden of proving conduct

liable to mislead the public.

It should be added that the respondent dld not attack

the details of the drafting	of the paragraphs in question, but
raised only the questions	of principle I have dealt with.

The respondent's motion must be dismissed with costs.

f certify that this and the ' k preceding

pages are a true copy of the reasons for

judgment hcrein of His Honour

Mr. Justice Pincus /Ly?,oJ&bu--a

AssociatQ