Stanley Drilling Company Pty Ltd v Australia and New Zealand Banking Group Ltd
[2003] WASC 130
•1 JULY 2003
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: STANLEY DRILLING COMPANY PTY LTD -v- AUSTRALIA AND NEW ZEALAND BANKING GROUP LTD [2003] WASC 130
CORAM: MASTER SANDERSON
HEARD: 23 JUNE 2003
DELIVERED : 1 JULY 2003
FILE NO/S: CIV 1657 of 2002
BETWEEN: STANLEY DRILLING COMPANY PTY LTD (ACN 008 934 816)
Plaintiff
AND
AUSTRALIA AND NEW ZEALAND BANKING GROUP LTD (ACN 005 357 522)
DefendantCENTURY DRILLING LTD (ACN 002 975 439)
Third Party
Catchwords:
Practice and procedure - Application for leave to amend statement of claim - Turns on own facts
Legislation:
Nil
Result:
Leave refused
Leave to replead granted
Category: B
Representation:
Counsel:
Plaintiff: Mr P S Bates
Defendant: Ms K J Levy
Third Party : No appearance
Solicitors:
Plaintiff: Eley Palmer
Defendant: Freehills
Third Party : No appearance
Case(s) referred to in judgment(s):
Breen v Williams (1996) 186 CLR 71
Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41
Stanley Drilling Co Pty Ltd v Australian and New Zealand Banking Group [2003] WASC 63
The Wik Peoples v The State of Queensland (1996) 187 CLR 1
Case(s) also cited:
Beyne v Irving Trust Co 762 F2d 4
Bond Corporation Pty Ltd v Thiess Contractors Pty Ltd & Ors (1987) 14 FCR 215
Bruce v Odhams Press Ltd [1936] 1 KB 697
Commonwealth Bank of Australia v Grubic, unreported; FCt SCt of WA; 27 August 1993
Commonwealth Bank of Australia v Smith (1991) 102 ALR 453
Dalgety Australia Ltd v Rubin & Ors, unreported; FCt SCt of WA; Library No 5485; 24 August 1984
Edward Owen Engineering Ltd v Barclay Bank International Ltd (1977) 3 WLR 764
Elliott v Seymour (2001) 116 FCR 100
Equitable Trust Co of New York v Dawson Partners Ltd (1927) 27 Lloyd's Law Rep 49
Esal (Commodities) Ltd v Oriental Credit Ltd [1985] 2 Lloyd's Rep 546
Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (1977) 188 CLR 241
General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125
Golby v Commonwealth Bank of Australia (1996) 72 FCR 134
H 1976 Nominees Pty Ltd v Galic & Apex Quarries Ltd (1970) 30 ALR 181
Hall Chadwick Corporate Finance (WA) Pty Ltd v Axiom Properties Ltd [2002] WASC 179
Hospitals Contribution Fund of Australia v Hunt (1982) 44 ALR 365
Howe Richardson Scale Co Ltd v Polimex-Cekop and National Westminster Bank [1978] 1 Lloyd's Law Rep 161
James v Australia and New Zealand Banking Group Ltd (1985) 64 ALR 347
Knowles v Roberts (1888) 38 Ch D 263
Lyons v Kern Constructions (Townsville) Pty Ltd (1983) 47 ALR 114
McKellar & Anor v Container Terminal Management Service Ltd & Ors (1999) 165 ALR 409
Modbury Triangle Shopping Centre Pty Ltd v Anzil [2000] HCA 61
News Ltd v Australian Rugby Football League (1996) 139 ALR 193
Pancontinental Mining Ltd v Posgold Investments Pty Ltd (1994) 121 ALR 405
Peruvian Guano Co v Bockwoldt (1883) 23 Ch D 225
Philip Morris (Australia) Ltd v Nixon (2000) 170 ALR 487
Queensland v Pioneer Concrete (Qld) Pty Ltd (1999) ATPR 41-691
RD Harbottle (Mercantile) Ltd v National Westminster Bank Ltd [1977] 3 WLR 752
Trau v University of Sydney [1989] 34 IR 466
United City Merchants Inc v Royal Bank of Canada (1982) 2 Lloyd's Rep 1
Williams and Glyn's Bank Ltd v Barnes [1981] Com LR 205
Woods v Martins Bank [1959] 1 QB 55
Young v Holloway [1895] P 87
MASTER SANDERSON: On 28 March 2003 I struck out the plaintiff's statement of claim in this matter and published reasons for doing so: see Stanley Drilling Co Pty Ltd v Australian and New Zealand Banking Group [2003] WASC 63. The plaintiff has since made a number of attempts to replead its cause of action culminating in a Minute of Substituted Statement of Claim dated 26 May 2003. This version of the statement of claim differs substantially from the original version which was struck out. Nonetheless, the defendant says the pleading is still inadequate and should not be allowed to stand. Further, the defendant says that leave to replead should not be granted and that judgment should be entered in favour of the defendant. Properly considered then, this present application is an application for leave to amend in terms of the Minute of Substituted Statement of Claim (which, for convenience, I will simply refer to as the statement of claim). That is the way the matter proceeded.
Paragraphs 1 and 2 of the statement of claim identify the parties. Paragraph 3 pleads a written agreement made between the plaintiff and the third party on 27 September 2000, pursuant to which the plaintiff was to sell to a third party a drilling rig. Paragraph 4 pleads certain terms of the written agreement. In particular, reference is made to cl 3.2 of the agreement. Pursuant to this clause, the third party was to arrange for a bank guarantee to be provided by the defendant to the plaintiff. The guarantee was to be called upon if certain progress payments anticipated by the agreement were not made. Paragraph 5 pleads provision of the guarantee by the defendant to the plaintiff and par 6 pleads certain express terms of the guarantee.
By par 7 the plaintiff says that the final instalment of the purchase price pursuant to the agreement was to be paid by 24 March 2001. That day was a Saturday. The plaintiff says as the defendant was not open for business on that day, the final date for payment was close of business on Monday 26 March 2001. By implication it is said then that the guarantee which referred to 24 March 2001 did not expire on that day but on the close of business on Monday 26 March 2001.
Par 7 is crucial to the plaintiff's claim. If the guarantee expired on 24 March 2001 then much of what follows in the statement of claim is of no consequence. The guarantee expired before certain representations were made and whether or not those representations were false and misleading or negligently made could not alter the plaintiff's position. The guarantee was gone and that was the end of the matter.
In its submissions the plaintiff refers to the Uniform Customs and Practice for Documentary Credits ("UPC"), and in particular article 44(a) of that document. For its part, the defendant says that UPC applies only to documentary credits as is made plain by article 1 of the document. It is said that this is a demand guarantee and therefore the UPC has no application. Furthermore, it is said that the guarantee makes no reference to the UCP and therefore under article 1 of the UCP it does not apply to the guarantee.
As I understand the submissions put on behalf of the plaintiff, it is not suggested that the UCP is applicable to this case. It is not mentioned in the pleading. Rather, what is being said is that it applies by analogy. Whatever the merits of that submission, it seems to me at least arguable that when a guarantee expires on a day on which a banking institution is closed, the expiry date will be extended until close of business on the next business day. Counsel's researches have not thrown up any case directly on point. That being so, par 7 ought be allowed to stand.
Once that conclusion is reached, the bulk of the defendant's complaints fall away. What is left is the question of whether or not the plaintiff's claim, based on a breach of fiduciary duty, can stand.
The matters which the plaintiff says give rise to a fiduciary duty between the plaintiff and the defendant are pleaded in par 8 and 9 of the statement of claim. By par 8 it is pleaded that both the plaintiff and the third party were customers of the defendant. It was conceded by counsel for the plaintiff during the course of his submissions that the mere fact of banker‑customer relationship did not in and of itself give rise to a fiduciary duty. Something more was required. Paragraph 9 then states as a conclusion that a fiduciary duty was owed by the defendant to the plaintiff and sets out what obligations arose pursuant to that fiduciary duty. Particulars are then provided. With respect, pars 9.1 and 9.2, despite their description as particulars, are not particulars at all. In fact there is no material fact pleaded in par 9 so that there is no way any particulars could be provided. The way to approach this matter is to assume that par 9.1 and 9.2 are pleadings of material fact and then ask whether or not, given these pleas of material fact, it is arguable there was a fiduciary relationship between the plaintiff and the defendant.
The circumstances in which a fiduciary obligation will arise have been considered by the High Court in a number of cases. In TheWik Peoples v The State of Queensland (1996) 187 CLR 1, Brennan CJ put the position as follows (at 95‑96):
"It is necessary to identify some action or function the doing or performance of which attracts the supposed fiduciary duty to be observed. The doing of the action or the performance of the function must be capable of affecting the interests of the beneficiary and the fiduciary must have so acted that it is reasonable for the beneficiary to believe and expect that the fiduciary will act in the interests of the beneficiary (or, in the case of a partnership or joint venture, in the common interests of the beneficiary and the fiduciary) to the exclusion of the interest of any other person or the separate interest of the beneficiary."
The act in question in this case is the drawing of the guarantee. The drawing of this document was clearly a function which was capable of affecting the interests of the beneficiary. The question then is whether the fiduciary so acted that it was reasonable for the beneficiary to believe and expect that the fiduciary would act in the interests of the beneficiary. In the circumstances of this case, I would accept that the mere fact that the fiduciary (the defendant) drew the guarantee made it reasonable for the beneficiary (the plaintiff) to believe and expect that the fiduciary would act in its, the plaintiff's, interests. I would also accept that it was reasonable for the plaintiff to conclude that when the fiduciary was acting, it would act to the exclusion of the interests of any other person, despite the fact that the third party was a customer of the defendant and it was the third party who had issued the instructions to the defendant to draw the guarantee. In other words, although the plea in par 9 is, in my view, inadequate, I would accept that it is open to a plaintiff to plead, based upon material facts found elsewhere in the statement of claim, that there was a fiduciary duty owed by the defendant to the plaintiff.
Having reached that point, it is necessary to determine the content of the fiduciary duty. As Mason J said in Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 102:
"… it is now acknowledged generally that the scope of the fiduciary duty must be moulded according to the nature of the relationship and the facts of the case."
Some elements of a fiduciary relationship are well understood and have been clearly articulated. They arise in all cases where a fiduciary relationship exists. For instance, the obligation not to prefer the fiduciary's position to that of the beneficiary. One common attribute of all fiduciary obligations is that they are proscriptive. They do not create a positive duty to act. This principle emerges clearly from the various judgments in Breen v Williams (1996) 186 CLR 71. That being so, the fiduciary duty pleaded as a conclusion in par 9 of the statement of claim cannot arise. The fundamental problem found in par 9 affects par 10 through to 16 and the plea in relation to fiduciary duty generally. I would not give leave to the plaintiff to amend in terms of pars 9 through to 16.
Having said that, I am satisfied that it is arguable there was, in the circumstances of this case, a fiduciary relationship between the plaintiff and the defendant. I am satisfied the plaintiff should be given the opportunity to plead what the contents of that duty might have been, relevant to this case, and how, if at all, the duty was breached. If this aspect of the plaintiff's claim is to be maintained, an appropriately amended pleading should be available in a short space of time. I will hear the parties as to a precise timetable.
Otherwise I would grant leave to amend in terms of the minute. The plaintiff should pay the costs of the application for leave to amend, including the reserved costs.
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