Stanley Drilling Company Pty Ltd v Australia and New Zealand Banking Group Ltd
[2003] WASC 63
STANLEY DRILLING COMPANY PTY LTD -v- AUSTRALIA AND NEW ZEALAND BANKING GROUP LTD [2003] WASC 63
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2003] WASC 63 | |
| Case No: | CIV:1657/2002 | 14 MARCH 2003 | |
| Coram: | MASTER SANDERSON | 28/03/03 | |
| 9 | Judgment Part: | 1 of 1 | |
| Result: | Statement of claim struck out | ||
| B | |||
| PDF Version |
| Parties: | STANLEY DRILLING COMPANY PTY LTD (ACN 008 934 816) AUSTRALIA AND NEW ZEALAND BANKING GROUP LTD (ACN 005 357 522) CENTURY DRILLING LTD (ACN 002 975 439) |
Catchwords: | Practice and procedure Application to strike out statement of claim Turns on own facts |
Legislation: | Nil |
Case References: | Bryan v Maloney (1995) 182 CLR 609 Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (1997) 188 CLR 241 Williams and Glyn's Bank Ltd v Barnes (1981) Com LR 205 Brailsford v Tobie (1889) 10 ALT 194 Bruce v Odhams Press Ltd [1936] 1 KB 697 Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 Foley v Hill (1848) 2 HC 28 Frobisher (Second Investments) Ltd v Kiloran Trust Co Ltd [1980] 1 WLR 425 Knowles v Roberts (1888) 38 Ch D 263 Modbury Triangle Shopping Centre Pty Ltd v Anzil [2000] HCA 61 Pancontinental Mining Ltd v Posgold Investments Pty Ltd (1994) 121 ALR 405 Peruvian Guano Co v Brockwoldt (1883) 23 Ch D 225 Pyrenees Shire Council v Day (1998) 192 CLR 330 Queensland v Pioneer Concrete (Qld) Pty Ltd (1999) ATPR 41-691 Tallerman & Co Pty Ltd v Nathan's Merchandise (Victoria) Pty Ltd (1957) 98 CLR 93 Tournier v National Provincial and Union Bank of England [1924] 1 KB 461 Woods v Martins Bank Ltd [1959] 1 QB 55 Young v Holloway [1895] P 87 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
AUSTRALIA AND NEW ZEALAND BANKING GROUP LTD (ACN 005 357 522)
Defendant
CENTURY DRILLING LTD (ACN 002 975 439)
Third Party
Catchwords:
Practice and procedure - Application to strike out statement of claim - Turns on own facts
Legislation:
Nil
(Page 2)
Result:
Statement of claim struck out
Category: B
Representation:
Counsel:
Plaintiff : Mr D E Eley
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):
Bryan v Maloney (1995) 182 CLR 609
Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (1997) 188 CLR 241
Williams and Glyn's Bank Ltd v Barnes (1981) Com LR 205
Case(s) also cited:
Brailsford v Tobie (1889) 10 ALT 194
Bruce v Odhams Press Ltd [1936] 1 KB 697
Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337
Foley v Hill (1848) 2 HC 28
Frobisher (Second Investments) Ltd v Kiloran Trust Co Ltd [1980] 1 WLR 425
Knowles v Roberts (1888) 38 Ch D 263
Modbury Triangle Shopping Centre Pty Ltd v Anzil [2000] HCA 61
Pancontinental Mining Ltd v Posgold Investments Pty Ltd (1994) 121 ALR 405
Peruvian Guano Co v Brockwoldt (1883) 23 Ch D 225
(Page 3)
Pyrenees Shire Council v Day (1998) 192 CLR 330
Queensland v Pioneer Concrete (Qld) Pty Ltd (1999) ATPR 41-691
Tallerman & Co Pty Ltd v Nathan's Merchandise (Victoria) Pty Ltd (1957) 98 CLR 93
Tournier v National Provincial and Union Bank of England [1924] 1 KB 461
Woods v Martins Bank Ltd [1959] 1 QB 55
Young v Holloway [1895] P 87
(Page 4)
1 MASTER SANDERSON: This is the defendant's application to strike out the amended statement of claim. On 25 October 2002 I struck out an earlier version of the statement of claim and gave the plaintiff 28 days to file and serve a substituted statement of claim. In fact the substituted statement of claim was not filed until 20 December 2002. It is this pleading which the defendant attacks.
2 As a background to the application, it is necessary to provide a brief summary of the dispute between the parties. By par 3 of the amended statement of claim (which I will simply refer to as the statement of claim), the plaintiff pleads that it has been engaged in a customer/banker relationship with the defendant since in or about 1960. The nature of this relationship and what flows from it are central to this application and I will return to par 3 and the related par 3A below. By par 4 of the statement of claim the plaintiff pleads that it entered into a sale and purchase agreement with the third party in relation to a drilling rig in or about September 2000. The agreement was in writing. Certain terms of the agreement are pleaded in par 5. The agreement provided that to secure the third party's due and punctual performance of its obligations on purchase of the drilling rig, the defendant would enter into a guarantee in favour of the plaintiff in an amount of $381,000. By par 7 it is pleaded the guarantee was prepared by the defendant and there is a plea as to the terms of the guarantee. Relevantly, for the purposes of the action, the defendant guaranteed a payment by the third party to the plaintiff of an amount of $116,000 during the period 25 February 2001 to 24 March 2001.
3 By par 8 the plaintiff pleads that in preparing the guarantee and providing it to the plaintiff, the defendant represented that it would comply with the terms of the guarantee. By par 9 the plaintiff pleads that in reliance upon this representation (the paragraph refers to "the Guarantee" but clearly that should be a reference to the representation pleaded in par 8), it allowed title to the drill rig to pass to the third party. By par 11 it is pleaded that the third party failed to make the final payment of $116,000. That the third party failed to make the final payment is common ground between the parties.
4 What the plaintiff then says is that the plaintiff relied upon the defendant as the plaintiff's banker to inform the plaintiff whether the third party had made payments pursuant to the sale agreement on time or not: see par 12. Paragraphs 13 through to 18 then plead a mish-mash of material fact and evidence in a form which is impermissible. What emerges from these paragraphs is that a representative of the plaintiff
(Page 5)
- contacted the defendant on 26 March 2001 and advised the third party had not made the final payment. An attempt was made to call on the guarantee and the plaintiff was advised the guarantee had expired on 24 March 2001. The defendant refused to make any payment.
5 By par 20, 21 and 22 the plaintiff pleads that the guarantee was a financial service under the provisions of the Australian Securities and Investments Commission Act 1989 (the"ASIC Act").
6 By par 23 the plaintiff pleads that the failure to pay the $116,000 was a breach of the defendant's undertaking pursuant to the guarantee. Presumably this is an allegation that as the guarantee expired on 24 March 2001 which was a Saturday, the plaintiff was entitled to call upon the guarantee until close of business on Monday 26 March. By par 34 and 35 of the statement of claim, there is a plea that there was an implied term in the guarantee that it would not expire until the close of business on 26 March 2001, the next working day after 24 March 2001. I will deal with the difficulties with that plea further below. There is nothing in the pleading linking par 34 and 35 with par 23. I mention them together because par 23 standing alone is inconsistent with the terms of the pleaded agreement. The plaintiff pleads that the guarantee expired on 24 March 2001. It cannot then be said that in refusing to make payment pursuant to the guarantee after that date, the defendant is in breach of contract. If then par 23 is not linked with par 34 and 35, it is obvious that it is embarrassing and must be struck out.
7 Paragraphs 24 and 25 plead a cause of action under the ASIC Act. Essentially it is said that there were warranties implied into the guarantee and that the defendant has breached those implied warranties. Paragraph 26 would appear to be a claim also based upon the ASIC Act as is par 27. Quite how par 25, 26 and 27 relate to one another and to various sections of the ASIC Act is not entirely clear. For present purposes it is enough if I say that all three paragraphs relate to a claim brought under the ASIC Act.
8 Paragraphs 28, 29 and 30 plead an alternative cause of action under the Trade Practices Act 1974 if, which in the pleading is denied, the guarantee is not a financial service under the ASIC Act. The defendant says that s 51AF of the Trade Practices Act is to the effect that Pt 5 of the Trade Practices Act in which s 51A, s 52 and s 53 are to be found do not apply to the supply of financial services. The term "financial service" is defined in s 4 of the Trade Practices Act and, the defendant says, clearly covers such security instruments as the guarantee. That being so, it is not
(Page 6)
- open to the plaintiff to rely as it seeks to do on the various provisions of the Trade Practices Act.
9 In answer to that submission the plaintiff says that it is covering the prospect that if the guarantee will be held not to be a financial service so that the ASIC Act will not apply then it is entitled to rely upon the Trade Practices Act. It was submitted that it was appropriate to plead in the alternative in a situation such as this because if the defendant was to deny in its defence that the guarantee was a financial service, it would not be proper for a claim under the Trade Practices Act to be made in the reply.
10 Superficially, the plaintiff's argument is attractive. However, a reading of the definition of "financial service" in the Trade Practices Act makes it plain that it must cover a security such as this guarantee. That being so, were the defendant to plead that the guarantee was not a financial service, it would be proper and appropriate to apply to strike out that plea. As counsel for the defendant conceded, the strike-out application would, so far as the defendant is concerned, be unanswerable. That being so, there is no warrant for a plea under the Trade Practices Act, even when it is put in the alternative. Accordingly, par 28, 29 and 30 and the related par 40 ought be struck out.
11 By par 31, 32 and 33 the plaintiff pleads that a term is to be implied in the guarantee that the expiry date of the guarantee would be a date no later than the date after which reasonable enquiries had been made by the plaintiff with the defendant to ascertain whether any outstanding payments due by the third party had been made. Paragraphs 34 and 35, to which I have already referred, seek "further or in the alternative" to imply a term that the guarantee would not expire until 26 March 2001. The pleading in these paragraphs is defective. There is no material facts pleaded upon which it could be said the terms are to be implied in the guarantee. I have some doubts as to whether or not the pleaded facts could ever give rise to what is described as "the First Implied Term" pleaded in par 31, 32 and 33. Be that as it may, the pleading must set up the basis upon which it is said that the term is to be implied. Simply to recite the criteria for the implication of a term as is done in par 31 and 34 is not enough. These paragraphs should be struck out.
12 Paragraphs 35A and 35B plead an alleged variation of the guarantee. Apart from any other defects, the alleged variation is not supported by any consideration. During the course of the hearing counsel for the plaintiff acknowledged this deficiency in the pleading and undertook to file an
(Page 7)
- amended statement of claim dealing with this issue. That has not been done. In the circumstances these paragraphs ought be struck out.
13 Paragraphs 36 through to 40 all deal with what is defined as "the Nesbit Representation". The causes of action are based either on the ASIC Act (par 36, 37 and 38) or if the guarantee is not a financial service, on the Trade Practices Act (par 39 and 40). In neither case is there a plea of reliance and therefore for that reason alone, the pleading is defective. Moreover, it is somewhat difficult to see how any such plea can be maintained. The Nesbit Representation is said to be drawn from par 12 through to 18. Although it is not entirely clear, it appears the Nesbit Representation is in fact two representations; one made on 26 March, the other made on 27 March, not to call upon the guarantee. Assuming those representations were made, they could not have been productive of any loss because by those dates the guarantee expired on 24 March. If the plaintiff is to succeed on some cause of action based upon the Nesbit Representation it will be necessary first to establish that the guarantee had not expired when the representation was made. In any event, the paragraphs in their present form cannot stand.
14 Paragraphs 41 through to 44 deal with an alleged breach by the defendant of the duty of care it owed to the plaintiff. These paragraphs appear to tie in with the plea of the duty to be found in par 3 and 3A of the statement of claim. If no duty arises then these paragraphs cannot stand. The question then is whether or not the plaintiff has properly pleaded a relationship between the plaintiff and the defendant which would give rise to a duty of care. Because of the importance of par 3 and 3A to the plaintiff's claim, I will quote them in full. They read as follows:
"3. The plaintiff and the defendant have been in (sic) engaged in a customer and banker relationship since on or about 1960 until the present ('the Relationship').
3A. During the time of the Relationship, the plaintiff has come to rely upon the defendant to:
(a) provide appropriate information to the plaintiff and its directors, in relation to the banking and financial services provided by the defendant;
(b) provide appropriate advice to the plaintiff and its directors in respect to the banking and financial services required by the plaintiff to satisfy the needs of the plaintiff;
(Page 8)
- (c) provide appropriate advice to the plaintiff and its directors in respect of which of the banking and financial services of the defendant will satisfy the requirements of the plaintiff and to recommend that the plaintiff uses those services;
(d) fully explain to the plaintiff and its directors what the services that were being recommended and provided were and to fully explain all matters relating to those services; and
(e) to act with competence and good faith towards the plaintiff when providing the advice and making the recommendations referred to in paragraphs 3A(a) to 3A(d) herein."
15 The relationship between banker and customer is not one which, when established, always gives rise to a duty of care. This can be contrasted with the position of a solicitor and client. Once that relationship is established, then a duty of care arises. No further material facts need be pleaded. But that is not the case as between banker and customer, even when the relationship is one of long-standing: see Williams and Glyn's Bank Ltd v Barnes (1981) Com LR 205 per Gibson J at 208. Authorities such as Bryan v Maloney (1995) 182 CLR 609 and Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (1997) 188 CLR 241 established that liability for negligent misstatement arises out of known reliance or dependence, or the assumption of responsibility or a combination of both. Thus in the Esanda Finance case it was not pleaded that the auditors in question knew or ought to have known that a finance provider would rely on their audited statements of accounts and it was held on the pleadings that no duty of care was owed by the auditors to the finance provider.
16 That is the deficiency in par 3 and 3A. There are no material facts pleaded from which it could be said that the defendant knew that the plaintiff would rely on its advice. Nor is there any material fact which amounts to a plea that there was an assumption of responsibility on the part of the defendant. What is pleaded in par 3A are not material facts at all - they are conclusions. The plea is not sufficient to establish a duty of care and it cannot stand.
(Page 9)
17 Once that conclusion is reached, the allegations of the breach of duty pleaded in par 41 through to 44 cannot stand. They too should be struck out.
18 Given the deficiencies in this statement of claim the appropriate course is that it be struck out in its entirety. I will allow the plaintiff the opportunity to replead. However, the matter cannot go on indefinitely. The plaintiff must get its pleading in order. The present statement of claim is a long way short of what is adequate. It is not a matter of a defendant taking technical nitpicking objections to a statement of claim which contains all necessary material facts, albeit in a slightly disjointed fashion. This statement of claim is entirely inadequate. Counsel needs to give serious consideration to what causes of action can realistically be maintained and then to plead each of these causes of action with precision.
19 I will hear the parties as to the form of orders and as to costs.
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