St George Building Society Ltd v National Australia Bank Ltd

[1991] FCA 482

CATCHWORDS

TRADE PRACTICES - misleading conduct -

application for interim injunction	-	rival lending
bodies - application refused
v	ONAr . AUS-	BANK LIMITED

No. G418 of 1991

Morling J

30 July 1991

Sydney FEDERAL COURT OF

PRINCIPAL

REQISTFIY f'

DRAFT 6 AUGUST 1991

1)

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m	SOUTH	D I S W C T RE-	)	No. NG 418 of 1991
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- )

BETWEEN: ST CFQBLiE BUILDING SOCIETY LIMITED

Applicant

AND

Respondent

-	: Morling, J
Q€uAuUm	:  30 July 1991
IwwLwx	:  Sydney

m COURT ORDERS AS FOLLOWS:

1.    Application for interim injunction refused.

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

DRAFT 6 AUGUST 1991

THE F	-	D	E	)
1

m T C I - O S REGISTRY ) No. NG 418 of 1991

1 1

BETWEEN: ST CFpBEE BUILDING S - O

Applicant

AND

Respondent

Morling J 30 July 1991

FOR JUD-

This is an application for interlocutory relief

proceedings in which the St George Building Society Limited

claims that the National Australia Bank Limited has engaged

in misleading and deceptive conduct. The conduct

complained of is of two kinds. First it is alleged that in

which it offers home loans to borrowers with the terms upon	the St George and Sutherland Shire Leader of 18 July 1991 the bank published an advertisement comparing the terms upon
which the St George Building Society offers home loans to borrowers in such a way as to misstate the building
society's terms of loan.

DRAFT 6 AUGUST 1991

What the advertisement does is to pose ten

questions called "The top 10 home loan questions." The

advertisement gives answers to each of those questions on

behalf of the bank. The first question is:

" I s the home loan demigned t o help me pay it o f f as soon a s

poemible with a minimum of fums?"

The bank's answer to that question is denoted by a tick.

Nine other questions of interest to borrowers are asked, and

in each case the question is answered favourably to the

bank, again by the putting of a tick in the appropriate box.

Under the heading of "St George" (obviously

referring to the applicant), there is a column containing a

number of blank spaces. No answers, positive or negative,

are given in these spaces to the questions insofar as they

relate to the applicant's loans. However, at the foot of

the advertisement these words appear:

DRAFT 6 AUGUST 1991

"St George may claim to offer flexible home loans too. But

if they're truly flexible they shouldn't mind anewering

these queetione for you.'

Mr Broun Q.C., senior counsel for the applicant,

claims that those words which I have just quoted convey that

the answer8 to the questions would be in the negative. I

do not think that that is the case. I think what the

advertisement does is to invite interested persons to

compare the terms of the bank's loans with the terms of

loans offered by the applicant. I do not think that a

person reading the advertisement would be misled by it. I

think what he would do, if he were interested to obtain a

home loan, would be to approach the applicant and seek

answers to the various questions. Having obtained answers, I think he would make his own decision. I therefore do not

think that any relief should be granted in respect of the

advertisement.

DRAFT 6 AUGUST 1991

The second basis for the application is the

dissemination by the bank to relevant members of its staff

of a table headed: The National Flexible Home Loan Compared

With Other Home Loans. This document poses 10 questions,

all of which are answered favourably to the bank by the

placing of a tick in the column headed: National Australia

Bank. Question 6 reads as follows:

"Will I b. charged interest in arrears, rather than in
advance, so my home loan reducee faster?"

To that question there is a tick referable to the National Australia Bank and there is a cross referable to the applicant. The next question is:

"Ia intereat calculated daily rather than monthly to minimise

my intereat coats?

Again there is a tick in the column relating to the bank and
a cross in the column relating to the applicant.	There is

evidence before me showing that it is wrong to answer those

two questions negatively to the applicant. Were I

persuaded that the bank was intending to disseminate
DRAPT 6 AUGUST 1991

statements of that kind - that is to say of the kind

referred to in answers 6 and 7 in the last mentioned

document, I would be disposed to grant an interlocutory

order restraining the dissemination of that class of

statement.

However, quite apart from an undertaking proffered

by counsel for the bank that the statements will not be

repeated, there ie evidence contained in a letter of 29 July

written by the bank's eolicitore to the applicant's solicitors, that the relevant document (which is an internal staf f information chart) is to be withdrawn. Under those circumstancee, I do not think any injunction is called for.

I do not think that there is a serious question to

be tried in respect of the advertisement. I do think there

would have been a very serious question to be tried in respect of the internal staff memorandum had the applicant

been able to show that it was intended by the bank to
DRAFT 6 AUGUST 1991
disseminate statements of the kind referred to in the

answers to paras. 6 and 7 of the memorandum. But that is

not the evidence and under those circumstances I do not

think that I should grant the relief.

On the question of the balance of convenience, I

do not think the balance lies in favour of the applicant at

this stage. For those reasons I refuse this application.

I stand the matter over for further directions on a day to

be fixed.

copy of the Reaaons for Judgment herein of H i s Honour Mr	I c e r t i f y that t h i s and the preceding <> pages are a true
Just ice T.R. Horling.

a)	1
PEW SOUTH WALES DISTRICT REGISTRY	) NO. NG 418 of 1991 )
= N E W DIVISION	)

BETWEEN: ST GEORGE BUILDING SOCIETY LIMITED

Applicant

AND NATIONAL AUSTRALIA BANK LIMITED

Respondent

Morling J 2 August 1991

EX TEMPORE JUDGMENT ON

APPLICATION FOR INTERLOCUTORY RELIEF

The parties to these proceedings are two
substantial financial institutions. They are both engaged
in the business of inter alia lending money to borrowers who

desire to purchase their own homes. The applicant claims interim relief as set out in its application dated 30 July

1991. I have already ruled on an earlier occasion that there is not a serious question to be tried as to the allegation that the publication of the document which is

annexure A to the affidavit of Antonella Beluzz of 30 July	1991 amounts to conduct in breach of 8.52 of the Trade
Practices Act. I need not repeat what I have already said
in respect of that part of the case.
Since I gave that ruling the applicant has filed further evidence which, in my opinion, justifies an interim finding that statements of the kind referred to in paras. 5, 6 and 7 of the Application have recently been made. I accept the evidence tendered on behalf of the bank that the
document which is annexure B to Miss Beluzz's affidavit has been withdrawn from circulation to bank officers. Nevertheless it does seem to me that, as the evidence presently stands, there is sufficient evidence to make out a prima facie case that statements of the kind referred to in paras. 5, 6 and 7 might well be made in the future unless some injunctive relief is granted.
As to paras. 4 , 8 and 12, I am not satisfied that the evidence warrants the granting of any relief. I think that the allegations in those paragraphs are of a more general kind. With respect to para. 8, I do not think the evidence establishes that statements of the kind therein referred to are in fact being made.
So that on the question of whether there is a serious question to be tried, I am satisfied that there is a serious question to be tried in respect of the allegations made in paras. 5, 6 and 7. It may well be (and I express no view about this) that by the time the matter gets to trial there will also be serious questions to be tried, in
paras. 4, 8 and 12. the light of the evidence as it then exists, in respect of The question of the balance of convenience is not free from difficulty. I am quite persuaded that both parties are financially powerful and are well able to advertise to members of the public the terms on which they offer loans. It seems to me that it would be well within
the competence of the applicant to include in its advertising statements which interested home borrowers would be likely to read and which would clearly state the terms of its loans. It is a serious matter, from the applicant's point of view, that the terms of its loans should be misrepresented. It would be almost impossible for the applicant to prove that any intending borrowers have been dissuaded from approaching the applicant for finance by reason of the statements of the kind made in paras. 5, 6 and
7 because it would be virtually impossible to identify such
intending borrowers. Hence, I can see that the refusal of
any relief could be productive of considerable inconvenience to the applicant.
On the other hand I do not think that the grant of an injunction restraining conduct of the kind referred to in paras. 5, 6 and 7 would cause any hardship to the bank.
In those circumstances I think the balance of convenience lies in favour of granting relief in terms of paras. 5, 6 and 7.
Accordingly, upon the applicant giving the usual undertaking as to damages I make orders restraining the respondent until further order from engaging in conduct of the kind referred to in paras. 5, 6 and 7 of the Application dated 30 July 1991. The costs of today will be costs in the cause.

I certify that the preceding three (3) pages are a true
copy of the ex tempore Judgment on Application for
Interlocutory Relief herein of His Honour Mr Justice T.R.

Morling.

Associate:  ' l 7 &'S'*

Date:  ? .? 41 .