Potts and Potts v Westpac Banking Corporation

[1993] QCA 47

IN THE COURT OF APPEAL	[1993] QCA 047
SUPREME COURT OF QUEENSLAND

Appeal No. 176 of

1992

BETWEEN:

LIONEL JAMES POTTS and DAVINA LUCY POTTS

Plaintiffs/Appellants

AND:

WESTPAC BANKING CORPORATION

Defendant/Respondent

JUDGMENT OF THE COURT

Delivered the Tenth day of March 1993

The notice of appeal seeks an order that a judgment of the Full Court given last year be set aside and a new trial ordered. The case is one in which the appellants, as plaintiffs, succeeded before the primary judge, Mackenzie J., but his Honour's judgment in their favour was reversed in the Full Court of the Supreme Court and an attempt to obtain special leave to appeal to the High Court failed.

The case is now before this Court, which has and exercises the jurisdiction which the Full Court of the Supreme Court formerly had; s.29 of the Supreme Court of Queensland Act 1991. What the appellants desire is to have the Full Court's decision reversed by this Court, not with a view to restoring the judgment in their favour given by Mackenzie J., but to obtain a new trial.

The grounds argued by Mr. Potts for the appellants included challenges to the reasons of the Full Court and, indeed, to the grounds upon which special leave to appeal to the High Court was refused. Mr. Potts, who despite his lack of legal training argued the matter ably and with restraint, also contended that there should be a new trial because many documents were discovered late and one or more relevant documents not discovered at all. He said that some matters which should have been investigated at the trial, but were not, could be looked into if a new trial were granted.

Counsel for the respondent bank objected to much of the material which Mr. Potts relied on in support of the appeal, but there was no extensive discussion of the nature of the Court's jurisdiction to entertain proceedings of this kind, a subject which is further mentioned below.

As pleaded, the appellants' suit made a variety of allegations of unlawful conduct on the part of the respondent; its essence was that the respondent had, by its officers, given the appellants bad advice concerning a loan which they obtained denominated in foreign currency, namely Japanese yen. The appellants' case was that they were induced to borrow about $A0.5m, but because of the decline in value in the Australian dollar relative to certain overseas currencies during the period before the loan was repaid, the liability had to be discharged by paying about $A1.8m. The transaction, or series of transactions, proved to be financially disastrous for the appellants. At first instance, they obtained a judgment in their favour from Mackenzie J. in a sum of over $600,000 and costs. On appeal, a majority of the Full Court (de Jersey and Dowsett JJ.) held that Mackenzie J. had been in error in holding the bank to be liable and set aside his Honour's judgment against the bank. Macrossan C.J. dissented on the question of liability, holding that there was no justification for interfering with the conclusions of Mackenzie J. on that subject. However, Macrossan C.J. was of opinion that the damages were assessed at too high a figure and would, had his Honour's view on the question of liability prevailed, have reduced them to the sum of a little over $200,000.

It does not appear to be necessary to analyse the allegations which were made in the statement of claim in detail, but we think it desirable to explain the views of the appellants' case which were expressed by Mackenzie J. at first instance and by the judges who comprised the Full Court.

A Mr. Neville Imhoff, then the bank's Manager of International Business for this State, was held to have advised Mr. Potts (who acted in the matter for himself and his wife) about the loan in question, one of ¥130m for two years, drawn down on 31 May 1982. Mackenzie J. held that in April and May 1982, in the course of discussions between Mr. Potts and Mr. Imhoff, negligent advice on the subject of the then proposed loan was given by Mr. Imhoff. His Honour identified two aspects of Mr. Imhoff's advice as negligent.

First, his Honour held that Mr. Imhoff said that devaluation of the Australian dollar of 10% during the two year term of the loan was "unlikely and excessive". The judge said that while this expression of opinion was not itself negligent, when combined with certain documents Mr. Potts was shown, it formed a combination "such as to lead to a reasonable inference that there were no features that were likely to falsify the information or prediction conveyed".

His Honour's opinion was that there were such features, the principal one being, as we understand the reasons, that at times, the relative value of the currencies in question (the Australian dollar and the Japanese yen) changed at a rate much quicker than 10% per two years. His Honour held that figures in respect of the few years before the beginning of those which Mr. Imhoff showed Mr. Potts "would have demonstrated the substantial risk associated with overseas loans". The second aspect of the negligent advice was that, in his Honour's view, Mr. Potts was inadequately advised about management of the loan. This explanation was "restricted to a very elementary level" and "fell substantially short of a satisfactory explanation that careful management of such loans was essential".

In essence, his Honour's view was that while what was told to Mr. Potts was true as far as it went, it conveyed a substantially incomplete picture, both as to the risks associated with the loan and the difficulty of managing it.

In the Full Court, the judges constituting the majority (de Jersey and Dowsett JJ.) expressed views on these subjects differing from those of Mackenzie J. de Jersey J. said the risks associated with the volatility of the currencies were obvious and that Mr. Potts knew "generally how to manage those risks". Before us, Mr. Potts challenged both these findings and particularly the latter, saying in effect that there was no evidence to support it. It is plain that this Court could not grant a new trial on the basis that it holds an opinion on these subjects in accordance with that of the primary judge.

Dowsett J. expressed uncertainty as to what was meant by the primary judge's finding that Mr. Imhoff's opinion "was such as to lead to a reasonable inference that there were no features that were likely to falsify the information or prediction conveyed". His Honour thought that it was "difficult to know what else Mr. Imhoff should have said to Mr. Potts in order to discharge his duty of care". Further, his Honour held that, to the extent that there was extrinsic information likely to cause doubts about Mr. Imhoff's expressed opinion concerning the 10%, it was sufficiently communicated to Mr. Potts by the documents he was given as to managing the loan. To put it shortly, Dowsett J. expressed disagreement with the view of Mackenzie J. that Mr. Imhoff's advice was negligent.

Macrossan C.J., on the other hand, was not prepared to disturb the primary judge's views on these issues.

On the application for the special leave to appeal to the High Court, counsel for the applicants, now appellants, put forward as his primary submission that the majority in the Full Court had, contrary to principle, interfered with the factual findings of Mackenzie J. without sufficient justification. It must seem to the applicants an unsatisfactory result that they failed in the Supreme Court of Queensland although the judges who considered the question just discussed were, in a sense, evenly divided in their respective opinions. It is, however, plain that this Court cannot interfere with the result on that basis. The question whether documents discovered late, or new evidence which Mr. Potts says could be called in a new trial, bear upon the findings of negligence is discussed below.

The primary judge also considered the statements made by Mr. Imhoff which he held to be negligent from the point of view of a claim that they constituted conduct proscribed by s.52 of the Trade Practices Act 1974. His Honour arrived at the opinion, in reliance on decisions such as Jobbins v. Capel Court Corporation Ltd. (1989) 91 A.L.R. 314, that the s.52 case was statute-barred. The relevant law appears to have been in a fluid state and was settled after Mackenzie J.'s judgment was given. Jobbins' case was not accepted by a differently constituted Full Court of the Federal Court in Western Australian v. Wardley Australian Ltd. 30 F.C.R. 245. The latter decision, given on 17 July 1991, was approved by the High Court on 28 October 1992: see 66 A.L.J.R. 839.

It is now clear that the effect of the time limitation on claims for damages based on breaches of s.52 of the Trade Practices Act 1974 is less restrictive than was thought at the time when Mackenzie J. gave his decision. It was held in the High Court in Wardley's case that if, as a result of misleading conduct, a person makes a promise to pay the "net loss" incurred by another, even the circumstance that there was a "likelihood, perhaps the virtual certainty (that there would be a loss)" in the light of the actual facts at the time of the indemnity "did not transform the liability into an actual or present liability at that time" (842). Hence, the Court held there was no cause of action when the indemnity was given. That conclusion might well have a bearing upon fixation of the point of time at which the cause of action arises in a case of this sort. Here, the appellants' liability to the bank was discharged in May and August 1987 and the appellants' ultimate loss became fixed then; the writ was issued on 25 February 1988. Mackenzie J. held that the loss was suffered not later than 30 November 1982, well over three years before the issue of the writ. The decision in Wardley's case was given before that of the Full Court of the Supreme Court in the present case.

It could have been, but was not, relied on there; one can think of practical reasons for that course being taken. Had Mackenzie J. reached the opinion that the cause of action under s.52 of the Trade Practices Act was not statute- barred, his Honour must surely have held Mr. Imhoff's statements, which he found to have been negligent, also to have been misleading. By no means all of what was said by the majority in the Full Court against the conclusions of Mackenzie J. on the issue of negligence would have been applicable with respect to a Trade Practices Act claim.

It seems to us, however, that the legal developments to which we have referred, occurring after Mackenzie J.'s judgment, are not a ground for a new trial. Putting the matter broadly, the opinion of the majority of the Full Court was that Mackenzie J. was wrong in holding that Mr. Imhoff's advice was deficient or fell short of what the circumstances required. There is no sufficient reason to think that had a claim based on an allegation of misleading conduct been before the Full Court, the result in that Court would have been otherwise.

It is necessary to deal with two other aspects of the reasons of Mackenzie J.

His Honour decided the case on the basis that there was a duty of care on the bank, of such scope as to make Mr. Imhoff's statements negligent. The nature of the bank's duty was, no doubt, partly a factual question and partly a legal one. In the Full Court, de Jersey J. held in effect that the scope of the bank's duty was no wider than to be accurate in what it said to the appellants on the subject, the implication being that the duty was not such as to make actionable the omissions of which complaint was made.

Although Mr. Potts addressed on this subject, we think it necessary to say about it only that none of the additional material relied on by the appellants appears to have much significance with respect to the scope of the duty of care;

that was not, in the event, a decisive issue in the Full

Court.

Mackenzie J. referred to the evidence of one Look, who had succeeded Mr. Imhoff and who, according to his Honour's finding, told Mr. Potts "to let the loan run because the AUD would bounce back, or words to that effect"; that advice was given in May 1983 and was alleged in the statement of claim to have been negligently given. There was no finding of negligence in that respect and it appears to us that his Honour made his finding (contrary to the evidence of Mr. Look) as being relevant to the question of causation of loss. When the case went to the Full Court, so far as one can tell from the synopsis of submissions which is in the record, nothing further was sought to be made of that. The point assumes significance only because one of the bases of Mr. Potts' argument was that the bank's discovery with respect to the nature of Mr. Look's tasks was incomplete.

In our view, documents of that kind could not have affected the result of the proceedings to date, nor would we think them likely to have any significant bearing upon the outcome of a new trial if one were granted.

We now turn to the subject mentioned above, this Court's jurisdiction in this appeal. Plainly, it is the appellate jurisdiction of the Court which is invoked and, as we have pointed out, the notice of appeal seeks an order that the judgment of the Full Court given last year be set aside and a new trial ordered. This Court has inherited the appellate jurisdiction of the Full Court, the nature and history of which are sufficiently explained in "The Supreme Court of Queensland Act 1859-1960, History Jurisdiction and Procedure" by Mr. Justice McPherson at pp.173-175 and 200- 208. It is unnecessary to discuss the provisions there mentioned in detail and enough for present purposes to say that none of them is so expressed as to suggest that the Full Court had, having disposed of an appeal from a judge of the Supreme Court, jurisdiction to hear a second appeal;

nor do any of the rules relating to appeals set out in O.70
of the Rules of the Supreme Court give such jurisdiction.
In Bailey v. Marinoff (1971) 125 C.L.R. 529, an appeal to
the New South Wales Court of Appeal was dismissed for want
of prosecution and the High Court held that, having finally
disposed of the proceeding, the Court of Appeal did not have
inherent jurisdiction to "revive by a subsequent order an
appeal which has been dismissed" (535). The New South Wales
Court of Appeal applied Bailey v. Marinoff in Gamser v. The
Nominal Defendant [1976] 1 N.S.W.L.R. 520. There, the
plaintiff in a personal injury case was awarded $160,000
damages by the primary judge, but on appeal to the Court of
Appeal that was reduced to $125,000. On the ground that
after the appeal was disposed of, events had occurred which
had complicated and worsened his condition, the plaintiff
approached the Court of Appeal again, seeking an order of
the kind which Mr. Potts asked us to make: that the first
judgment of the Court of Appeal be set aside and that there
be a new trial or alternatively a reassessment of damages in
the Court of Appeal.

The Court of Appeal, in a decision approved by the High Court: (1976) 136 C.L.R. 145, held that there was no power to make the orders sought. It considered the New South Wales provisions corresponding to O.70 r.10 of the Queensland Rules permitting the Court to receive further evidence and concluded that those provisions did not enable the Court to receive "evidence after the appeal has been determined and finally disposed of by the entry of judgment" (522). Secondly, the Court construed Part 40 r.9(4) of the New South Wales Supreme Court Rules of 1970, which appears to have no counterpart in the Queensland Supreme Court Rules.

The third provision the Court considered was a New South Wales rule, Pt. 42, r.12(1), having some resemblance to O.45 r.1 of the Queensland Rules; the latter rule was relied on by Mr. Potts. The New South Wales Pt. 42 r.12(1) is not sufficiently similar to O.45 r.1 to make it safe to rely upon the authority of Gamser's case, in determining the application of O.45 r.1 to the present facts. The Queensland rule reads as follows:

"When facts arise after the giving of a judgment or making of an order which entitle the person against whom the judgment or order is given or made to be relieved from it, or when facts are discovered after the giving of a judgment or making of an order which, if discovered in time, would have entitled the party against whom the judgment or order is given or made to a judgment or decision in his favour, or to a different judgment or order, he may apply to the Court or a Judge for a stay of execution or other appropriate relief; and the Court or a Judge may grant such relief, and for that purpose may direct such proceedings to be taken, and such questions or issue of fact to be tried or determined, and such inquiries to be made, as may be just".

In K.G.K. Constructions Pty. Ltd. v. East Coast Earthmoving Pty. Ltd. [1985] 2 Qd.R. 13, it was pointed out that the rule is peculiar to the Queensland Rules of the Supreme Court (19) and the Court was there willing to treat an appeal which had been brought before it as an application under O.45 (21). The Court held the rule to be available as a basis on which a judgment given in default of defence could be set aside (20, 21). The difference between that case and this is that, here, there has already been a Full Court appeal, heard and determined. There may be a question whether O.45 r.1 enables this Court to set aside a judgment it has given, or one given by the Full Court, on the grounds mentioned in it. We are inclined to think, although the matter was not argued, that the rule should be so read.

Still, the appellants have the difficulty that the judgment against which relief is sought must be that of the Full Court; only facts arising or discovered after the giving of that judgment can be relevant for present purposes.

We have been unable to find any facts in the material before us which could form the foundation of an order in favour of the appellants based on O.45 r.1.

Apart from the matters already referred to, Mr. Potts brought forward a number of contentions which were, or might possibly have been intended to be, based on facts arising or discovered since the Full Court's judgment. He contended that documents were available relevant to what he described as the taking of "points"; that was a reference to an allegation, not covered by the appellants' pleading, that the bank had treated the results of foreign currency transactions involving the appellants as having results slightly less favourable than they had in truth produced.

He candidly explained to the Court that his side had been aware of the point at the trial, but, moved by a desire to keep proceedings cheap and simple, had not raised the matter. It appears to us plain that an order for a new trial could not be founded on the appellants' change of mind about the desirability of raising that issue. Then, Mr. Potts argued that documents had been discovered relevant to the question of hedging - transactions designed to lessen the ill-effect of adverse movements in exchange rates - immediately before the Full Court hearing and, as we understood the argument, too late to enable proper advantage to be taken of them. The answer made, in an affidavit filed on behalf of the bank, is that the appellants' counsel conceded before the Full Court that the documents discovered late were not relevant to the appeal. Mr. Potts did not contest the statement in the affidavit, but said he could not remember that being said. In any event, those documents are not matters discovered or arising since the Full Court's judgment.

Next, Mr. Potts said there were new documents available showing that it was to the bank's advantage not to have their borrowers hedge. If that were so, it could not found a new trial because, as we have explained, the reason for the appellants' lack of success on this issue in the Full Court was that it was held that the advice given by the bank on the subject was not culpably deficient; to show that the bank had a motive for giving bad advice about hedging could not have helped.

More generally, Mr. Potts said that if there were a new trial he wished to raise many other issues and "get to the bottom of the matter". He described the whole course of proceedings as a miscarriage of justice and said that documents such as confidential exhibits tendered at a Senate Inquiry into matters concerning banking could be subpoenaed in an endeavour to help the appellants' case, if a new trial were granted.

Lord Atkin said for the Privy Council in Ras Behari Lal v. The King-Emperor (1933) 50 T.L.R. 1:

"Finality is a good thing, but justice is
a better".

That principle cannot lead to a new trial on foundations of the kind Mr. Potts has placed before us. In our view, finality has been reached in this case; none of the matters raised constitutes, in our opinion, a ground for setting aside the Full Court's judgment.

In the course of preparing these reasons, we were informed that the Registry had received from the appellants a 27-page document which the Registrar described as "essentially a synopsis" of the case Mr. Potts put to the Court. The solicitors for the respondent delivered to the Registrar a written objection to the document being put before the Court. We have decided not to examine the document.

The appeal must be dismissed, with costs.

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

Appeal No. 176 of

1992

BETWEEN:

LIONEL JAMES POTTS and DAVINA LUCY POTTS

Plaintiffs/Appellants

AND:

WESTPAC BANKING CORPORATION

Defendant/Respondent

_______________________________________________

Mr. Justice Pincus Mr. Justice Davies Mr. Justice McPherson

_______________________________________________

Judgment of the Court delivered on 10th

March, 1993.

_______________________________________________

APPEAL DISMISSED, WITH COSTS.

_______________________________________________

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

Appeal No. 176 of

1992

Before the Court of Appeal
Mr. Justice Pincus
Mr. Justice Davies

Mr. Justice McPherson

BETWEEN:

LIONEL JAMES POTTS and DAVINA LUCY POTTS

Plaintiffs/Appellants

AND:

WESTPAC BANKING CORPORATION

Defendant/Respondent

JUDGMENT OF THE COURT

Delivered the Tenth day of March 1993

MINUTE OF ORDER:	APPEAL DISMISSED, WITH COSTS.
CATCHWORDS:	NEGLIGENCE - MISSTATEMENT - OFF-SHORE LOANS - "Adequate" explanation of off- shore loan transactions - duty of care.
NEW TRIAL - JURISDICTION - Appeal from Full Court decision to Court of Appeal - new documents - RSC O.45 r.1
s.52 Trade Practices Act - time limitations.
Counsel:	L.J. Potts appeared in person R. Chesterman Q.C., with him B. O'Donnell

for the Respondent

Solicitors:	Feez Ruthning for the Respondent
Hearing Date(s):	10 February 1993