State Bank of New South Wales Ltd v Currabubula Holdings Pty Ltd
[2001] NSWCA 47
•15 March 2001
NEW SOUTH WALES COURT OF APPEAL
CITATION: State Bank of New South Wales Ltd v Currabubula Holdings Pty Ltd & Anor [2001] NSWCA 47
FILE NUMBER(S):
40379/99
HEARING DATE(S): 12, 13, 14 February 2001
JUDGMENT DATE: 15/03/2001
PARTIES:
State Bank of New South Wales Ltd - Appellant/Cross-Respondent
Currabubula Holdings Pty Ltd - First Respondent/Cross-Appellant
Paola Holdings Pty Ltd - Second Respondent
JUDGMENT OF: Giles JA Heydon JA Ipp AJA
LOWER COURT JURISDICTION: Supreme Court - Commercial Division
LOWER COURT FILE NUMBER(S): 50268/95
LOWER COURT JUDICIAL OFFICER: Einstein J
COUNSEL:
R B S Macfarlan QC & C M Harris - Appellant
D E J Ryan SC & D A Mallon - Respondents
SOLICITORS:
Mallesons Stephen Jaques - Appellant
Gadens - Respondents
CATCHWORDS:
BREACH OF CONTRACT - banker and customer - overdraft facility - concern about customer's solvency - bank "freezes" current accounts - no more drawings on current accounts - but arrangements for opening new accounts, for transfer of funds paid into current accounts to new accounts, and for operation on new accounts provided within overdraft limit - whether freezing in breach of implied term not to vary customary mode of dealing without reasonable notice - no implied term - customer's case at trial not founded on such a term. DEFAMATION - bank sends to customer bank statements with "in liq" at end of balance column - whether conveyed that customer in liquidation or that account in liquidation or reduction - bank statements received by fax at customer's office - customer a company - seen by management - also seen by some employees with no business to see them - to whom communicated by bank - whether publication to customer - whether publication to other employees. D
LEGISLATION CITED:
DECISION:
(1) Appeal allowed; (2) Orders (1), (3) and (4) made on 5 May 1999 set aside; (3) Judgment for the defendant; (4) Respondents pay appellant's costs of the trial and of the appeal and have a certificate under the Suitors Fund Act if otherwise qualified.
JUDGMENT:
IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL
CA 40379/99
Comm D 50268/95
GILES JA
HEYDON JA
IPP AJAThursday 15 March 2001
STATE BANK OF NEW SOUTH WALES LIMITED
v
CURRABUBULA HOLDINGS PTY LIMITED & ANOR
JUDGMENT
GILES JA: Currabubula Holdings Pty Ltd (“Currabubula”) and Paola Holdings Pty Ltd (“Paola”) claimed from State Bank of New South Wales Ltd (“the Bank”) damages quantified at over $30 million for breach of contract; in the same proceedings Currabubula claimed from the Bank damages for defamation. The Bank was ordered to pay $1,748,278.20 to Currabubula, being $834,000 damages for breach of contract, $899,278.20 interest on those damages, and $15,000 damages for defamation. The claim by Paola failed. The Bank was ordered to pay 90 per cent of Currabubula’s costs and Paola was ordered to pay 20 per cent of the Bank’s costs.
Currabubula and Paola were members of the Paola group of companies (“the Group”). The Group banked with the Bank and was substantially indebted to it. The Bank was found liable in contract for breach of an implied term requiring that it give reasonable notice in the event that it determined to vary its customary mode of providing banking services. It was held that the breach injured the reputation and goodwill of Northern Rural Services Pty Ltd (“NRS”), another member of the Group, whereby NRS’s business was sold at an undervalue, and that Currabubula thereby suffered loss caused by the breach because it had to pay the Bank correspondingly more than it would otherwise have had to pay.
The Bank’s grounds of appeal challenged (a) the implication of the term, both in substance and on pleading grounds; (b) breach of the implied term; (c) causation of injury to the reputation and goodwill of NRS; (d) proof of consequential undervalue on the sale of NRS’s business; and (e) consequential suffering of loss by Currabubula.
The events at the material time included the Bank sending bank statements for Currabubula’s account which included the notation “in liq” at the end of the balance column. It was held that the bank statements carried the imputations that Currabubula was insolvent and that a liquidator had been appointed to it, that they had been published so as to be defamatory of Currabubula, and that defences under s 13 (unlikelihood of suffering harm) and s 22 (reasonable publication to a person with an interest) of the Defamation Act 1974 were not available. Currabubula was not a trading company. Damages were awarded on the basis that it had not proved any specific loss of business but was entitled to recover for injury to its reputation.
The Bank’s grounds of appeal challenged (a) the imputations; (b) publication of the “in liq” bank statements; (c) the rejection of the two defences; and (d) the award of damages other than nominal damages.
The Bank also challenged the orders for costs, as to the extent to which the Bank was ordered to pay Currabubula’s costs and the extent to which Paola was ordered to pay the Bank’s costs.
Currabubula did not by a notice of contention seek to uphold either award of damages on grounds other than those relied on by the trial judge. It cross-appealed to challenge as inadequate the damages awarded for defamation, but it did not otherwise cross-appeal. Paola did not appeal or cross-appeal.
The Group and its banking
Currububula and Paola were holding companies in the Group. Mr Tony Paola and his wife Mrs Lynette Paola each held one of the two issued shares in Currabubula. They and Currabubula each held one of the three issued shares in Paola. Currabubula and Paola, principally the latter, then had a number of subsidiaries and sub-subsidiaries acting as trading companies.
The Group had banked with the Bank since the early 1980’s or before. From at least 1984 Currabubula and Paola had taken up finance facilities made available by the Bank. On 7 February 1990 most of the members of the Group accepted a letter dated 1 February 1990 from the Bank formally extending the existing finance facility. The agreement on the extended finance facility had been reached in mid-December 1989.
The borrowers under the extended finance facility (“the facility”) were Currabubula, Paola and nine of the trading companies. The facility was a multi-option facility, as taken up providing for overdraft accommodation of $8,500,000 subject to reduction to $7,500,000 by 31 May 1990. As is customary, there was provision for review and for termination.
The provision for review was in the letter of 1 February 1990 -
“Review
All facilities are subject to a further review immediately financial accounts for the Borrower for the half year ended 31 December 1989 become available This review is to be completed by 31 March 1990.
Immediate review is to be conducted in the event of a material adverse change in the financial condition or change in ownership of any of the companies comprising the Borrower.”
The provision for termination was via the statement in the letter of 1 February 1990 that the terms and conditions in the Bank’s earlier letters providing finance facilities were to continue to apply unless inconsistent with the letter of 1 February 1990. Those terms and conditions included (the infelicities of expression are in the original) -
“Representation and Warranties:
Borrowers represents and warrants to the Bank as of the date of this Letter of Offer.
…
That there has been no material adverse change in the business, assets or condition of the Borrowers since the original application for facilities by the Borrowers; and
…
The Borrowers further represents and warrants that all statements made and documents provided in, or in connection with, the application to the Bank for the Facilities specified in this Letter of Offer and all representations which the Borrowers have made or may (during the continuance of the Facilities as outlined in this Letter of Offer) make to the Bank as to its financial position are true and fair and without limiting the generality for the foregoing, that, other than as notified to the Bank in writing, no property held by it or in its possession is impressed with or subject to any trust and acknowledges that the Bank has relied upon the correctness of the above statements in entering into this Agreement and will continue to do so in dealing with the Borrowers and/or any person on the Borrowers behalf.
…
Events of default:
Bank may by notice in writing to the Borrowers declare that the Facilities may be cancelled forthwith, and/or declare the Facilities immediately due and payable together with all interest accrued thereon and all other amounts payable hereunder if any of the following events shall have occurred and be continuing:-
…
(iii)Any representations or warranties contained herein shall prove to have been incorrect in a material particular when made or deemed to have been repeated hereunder or any such representations or warranties shall become incorrect in a material particular at any time during the term of the Facilities.
…
(vii)Any circumstances arising which give reasonable grounds in the opinion of the Bank that there has been a material adverse change in the financial condition of the Borrowers.
… “
The Group is under financial strain
On 21 December 1989 Mr Duncan Plante, the company secretary of the members of the Group, wrote to the Bank informing it that Automated Business Equipment Pty Ltd, a sub-subsidiary of Paola via its subsidiary ABE Holdings Ltd, had been placed in liquidation. By the same letter he confirmed that on 10 November 1989 a receiver and manager had been appointed to ABE Fax Pty Ltd, a subsidiary of Paola, and said that the appointment might require other companies within the Group “to complete some of the commitments of ABE Fax eg lease guarantees”.
On 5 January the directors of Paola noted a forecast group deficiency in shareholders’ equity of $1,060,686 if a particular guarantee of a commitment of ABE Fax Pty Ltd were honoured. It was resolved that advice be taken on “pros and cons of the company appointing a liquidator versus an appointment as a result of the section 364 notice issued by Mitsubishi”.
On 9 January 1990 Mr Paola noted in his diary a decision -
“1.To extend payment to creditors by 30 days and avoid the need for additional bank facilities.
2.Repay supplies by returning saleable stock which was not moving.
3.Reduce ordering to replace stock items which were fast moving only.”
This decision, which may only have been directed to NRS’s business of a trader in rural supplies, was implemented. The manager of NRS, Mr Ross Taylor, resigned because of what he saw as a direction “that no creditors be paid”. Suppliers to NRS were told that there would be delay in payment, not universally but as and when it was thought necessary to tell them.
At a meeting with officers of the Bank in mid-January 1990 Mr Paola said that all the Group’s assets were on the market except his home property Currabubula Station, owned by Currabubula. A report from the receiver and manager of ABE Fax Pty Ltd to the Bank dated 15 January 1990 revealed a deficiency of $4,878,000.
On 31 January 1990 the group auditor reported to the directors of Paola an estimated deficiency in ABE Fax Pty Ltd of $5,600,000. He also said that, excluding ABE Fax Pty Ltd from the consolidated accounts, he considered that it might not be appropriate for the group accounts to be prepared on a going concern basis. He projected a group net loss of $1,044,000 for the year ended 30 June 1990 and estimated a group deficiency in net assets at 30 June 1990 of $140,000.
The auditor’s letter included -
“The cash flow results of the above projections would indicate a negative cash flow to the group of approximately $1,500,000 (items (ii) and (iii)) during the 1990 year which would require the support of shareholders or third party creditors.
…
In view of the above projections we have sought advice as to whether Currabubula Holdings Pty Limited would provide agreements of financial support to the Paola group of companies. We have been advised that such agreement of support will not be given. Accordingly it is necessary to review the financial state of affairs of the Paola Group as an independent group without the financial support of any other party. We have formed the view that on this basis the Paola Group may not be able to continue as a going concern. In view of this assessment we have prepared our audit report on the group accounts on this basis and attach a copy of the proposed report for your consideration.”
By 12 February 1990 the facility was fully drawn, and the Bank began to dishonour cheques presented for payment from the accounts of some of the companies in the Group.
The group auditor’s report was not provided to the Bank. ABE Holdings Pty Ltd was a subsidiary of Paola, with a number of sub-subsidiaries including Automated Business Equipment Pty Ltd and NRS. On 12 February 1990 Mr Paola and Mr Plante met officers of the Bank, told them that ABE Holdings Pty Ltd was insolvent, and asked the Bank to appoint a receiver to that company. It was said that the purpose of appointment of a receiver was to protect ABE Holdings Pty Ltd from claims by creditors and that it was intended that Currabubula would purchase its land, plant and equipment. Perhaps it is no wonder that one of the Bank officers expressed concern about the position of the unsecured creditors. Mr Paola said that if the Bank was unwilling to appoint a receiver Currabubula would continue to provide support to ABE Holdings Pty Ltd. The Bank said the request would be considered.
On 13 February 1990 Mr Plante wrote to the Bank formally advising that ABE Holdings Pty Ltd was insolvent and repeating the request that the Bank appoint a receiver. A letter from Ferrier Hodgson & Co was provided to the Bank confirming the insolvency and anticipating that ABE Holdings Pty Ltd would also be required to honour guarantees of leases entered into by ABE Fax Pty Ltd.
The figures provided by Ferrier Hodgson & Co disclosed an estimated deficiency in ABE Holdings Pty Ltd’s assets of $874,000 as at 31 December 1989. Of particular significance, however, the figures indicated that loans to Paola totalling $4,454,000 had nil value; that loans to one of Paola’s subsidiaries ABE Jet Charter Pty Ltd of $2,670,000 had nil value; and that ABE Holdings Pty Ltd’s shares in related companies had an estimated realisable value of only $82,000.
The freezing letter
On 15 February 1990 Mr Alan Booth of the Bank sent what came to be called “the freezing letter”, the centrepiece of the breach of contract claim. It was addressed to “The Managing Director, Paola Group of Companies”, and was sent by fax at about 5.30, presumably pm, to the Tamworth office of NRS with a cover sheet directing it to Mr Plante and stating, “Here is the letter as advised. Could you relay this to Tony for me.” The Tamworth office was the office at which Mr Plante carried out his duties on behalf of the Group, and seems to have been the Group head office.
The freezing letter read -
“As advised in our telephone conversation with Duncan all current accounts operated by companies of the Paola Group (see list attached) have been frozen. No further drawings are to occur on any of these accounts.
The above action was necessary in order for the Bank to ‘crystalize’ [sic] present debt levels in view of the disclosure of 13/2/90 regarding the solvency of ABE Holdings Ltd.
I should add that it has already been necessary to return certain cheques presented to the Bank on 14 and 15/2/90 in order to keep overall drawings of the Group within the $8.5 million limit.
Your request that the Bank appoint a Receiver to ABE Holdings is presently being considered. In the meantime, in order to enable the Paola Group to continue to trade, it was recommended to Duncan that new accounts be opened and this is now being carried out in accordance with Duncan’s faxed request. (Please note these accounts are to be operated on a credit basis only.)
Discussions as to how the bank will respond to your request (to appoint a Receiver to ABE Holdings Ltd) and how the Bank will fund the Paola Group in the immediate future will be made following a further meeting with Ferrier Hodgson and Co which is presently planned to take place tomorrow.
We will contact you as soon as possible after that meeting to relay our decisions.”
The attachment listed nine accounts, including a Currabubula account and accounts of NRS at Tamworth, Narrabri, Gunnedah, and Moree. It noted that the account for ABE Fax Pty Ltd “is already frozen”, and that the account for ABE Travel Pty Ltd, one of Paola’s subsidiaries, “is in credit funds and is therefore not included”.
Events surrounding the freezing letter
As appears from the freezing letter, there had been an earlier telephone conversation between Mr Booth and Mr Plante, and Mr Plante had faxed a request in relation to opening new accounts. From the cover sheet, Mr Booth must have told Mr Plante the contents or effect of a letter he would be sending.
There was scanty evidence as to the earlier telephone conversation. It seems that it was on 14 February 1990. Mr Plante recalled a conversation with Mr Booth on or about that date. He could not remember its terms, but believed it involved being advised that cheques drawn by companies in the Group had been dishonoured. He gave no other evidence about a conversation involving freezing of the current accounts, or about his faxed request to open new accounts. That the conversation recalled by Mr Plante was to do with the freezing of current accounts appears from the evidence of Mr Paola, who said he had a telephone conversation with Mr Swinburne of the Bank on 15 February 1990 in which he told Mr Swinburne that Mr Plante “rang me last night telling me that the Bank accounts had been frozen”. Mr Booth gave no evidence about the earlier telephone conversation with Mr Plante.
Mr Paola’s evidence of his conversation with Mr Swinburne included -
“Mr Paola: Where are we going to bank the money that comes in to pay our suppliers?
Mr Swinburne: Look you’d better get someone to come in and see us about setting up new accounts so you can bank your money so you can trade and pay your bills.
Mr Paola: What’s wrong with banking them in the old accounts and just using that limit as a base?
Mr Swinburne: No you can only bank money into those accounts but you can’t draw on them.”
From other parts of the conversation, Mr Paola clearly thought that the facility had not been fully drawn. This is of some significance to the way in which the plaintiffs framed their breach of contract claim, see later in these reasons. It is not clear whether or not this conversation preceded Mr Plante’s faxed request to open new accounts.
The request was sent at 2.44 pm on 15 February 1990. It was addressed to Mr Booth, and read -
“Further to our telephone conversation earlier, would you please open the following new accounts;-
ABE Jet Charter Pty Ltd (No 2 A/c)
ABE Travel Service Pty Ltd (No 2 A/c)
ABE Holdings Limited (No 2 A/c)
Northern Rural Services Pty Ltd (No 2 A/c) (Tamworth only)
Pyojit Pty Ltd (No 2 A/c)
Currabubula Holdings Pty Ltd (No 2 A/c)The signatories for all accounts, except Pyojit, will be any 2 of:-
A M Paola P J Middlebook
L D Paola or
D D Plante J A Middlebrookin conjunction with one of the first 3 signatories.
Would you please arrange for the Macquarie Centre branch to prepare cheque books for Jet Charter and Travel Service and for Tamworth in respect of all other accounts.
Could you ask the managers of both branches to call me this afternoon in order to discuss our cheque book requirements.
Note that the NRS accounts in Moree, Narrabri, and Gunnedah will no longer be required.
Could you also direct all branches to charge monthly direct debits to the new accounts.”
At about 3pm on 15 February 1990 Mr Booth faxed the request to the managers of the relevant branches of the Bank. The cover sheet confirmed that “current accounts for the Paola Group of Companies are to be frozen forthwith”, attaching a listing and excluding ABE Travel Pty Ltd. The request from Mr Plante was then attached and the branches were asked to arrange the new accounts. The cover sheet concluded -
“Note 1) All further drawings on the existing current accounts are to be returned.
2) All the new No 2 accounts are to be operated on a credit basis only.”
Other arrangements were made in conjunction with the opening of the new accounts. Money banked to the credit of an existing account after it was frozen was transferred, initially on request and later under a general arrangement, to the credit of the appropriate No 2 account, so as to be available to the account holder. It seems that two amounts of $50,033.32 banked to the current account of ABE Fax Pty Ltd on 15 and 16 February 1990 were not transferred over, but that account was already frozen because of the receivership - there was no complaint as to the earlier freezing. The Bank complied with requests made by Mr Plante to pay various cheques drawn on the current accounts prior to 16 February 1990 from the appropriate No 2 accounts, including payment of NRS cheques from the Tamworth No 2 account although drawn on the Gunnedah, Narrabri or Moree current accounts. Mr Plante’s request for payment of direct debits from the No 2 accounts was implemented. Other money was banked to the credit of the No 2 accounts in the normal course.
In the result, the current accounts being at the limit of $8,500,000 so that the Bank was entitled to dishonour cheques drawn on them, the Group companies had the same practical benefit of the operation of accounts with the Bank as it would have had if the current accounts had not been frozen. If the current accounts had not been frozen they could not have drawn on the accounts unless money were first credited to them, but when money was credited to them they could have drawn on them to the extent of the money credited. Following the freezing letter they could not draw on the No 2 accounts unless money were first credited to them, but when money was credited to them they could draw on them to the extent of the money credited. The only difference was the mechanical difference of using newly opened accounts rather than the existing accounts, and by the arrangements described in the preceding paragraph any mechanical difficulty was obviated.
On what was for him an assumption that the current accounts were overdrawn, this was effectively acknowledged by Mr Paola -
“Q. And if the accounts were overdrawn you would accept that your company wasn’t entitled to draw any more on the account?
A. If the accounts were overdrawn the bank was entitled to withhold payment on cheques, which would take the account over the limit, yes. They were entitled to do that.
Q. And you understood by this letter that the Bank was saying that if you had any further funds coming in they could be put in fresh accounts and they could be drawn against?
A. Yes, I understand that all debtors’ payments coming in from that day were to be banked in different accounts, yes.
Q. And you understood that they could be drawn against?
A. Well, with credit funds it’s not a matter of understanding, we could have banked those anywhere.
Q. And there wasn’t any particular problem you saw in that procedure that was proposed by the Bank was there?
A. There was no problem with that procedure no.”
As will appear more fully later in these reasons, the plaintiffs’ breach of contract claim was initially on the basis that the facility had not been fully drawn as at 15 February 1990. It was ultimately accepted at the trial that it was then over the $8,500,000 limit, and that the Bank was entitled to dishonour cheques drawn on the current accounts as at that date and until 22 February 1990. As from 22 February 1990 there could have been honouring of cheques then drawn without the limit being exceeded. The falling of the total debit balance below $8,500,000 was due firstly to the untransferred amounts of $50,033.32 and secondly to reversals of the debit entries for cheques which had earlier been presented for payment, recorded as debit entries, but then dishonoured. Even then, the trial judge noted that the current accounts fell below $8,500,000 only by some $60,000 to $70,000.
Why did the Bank freeze the current accounts? Mr Swinburne said that he understood that it was necessary to freeze the current accounts once the Bank had notice of the insolvency of ABE Holdings Pty Ltd and possibly other companies in the Group, because any further drawings on the accounts might be unsecured and any payments into the accounts might be preferences or attributed to repayment of the secured debt. Mr Paul Stenhouse, a solicitor employed by the Bank since 1955, said that it was his practice on becoming aware that a customer was insolvent to advise that no further drawings should be allowed on existing accounts and that deposits should be to new accounts. We were referred to an article by Professor O’Donovan in (1987) 5 C&SLJ 50 discussing the decision in Kyra Nominees Pty Ltd v National Australia Bank Ltd (1986) 4 ACLC 400 in which payments reducing an overdraft were held to be preferences. The author was critical of the decision, but suggested that banks might be able to protect themselves against its impact by freezing the current account of a suspected insolvent corporate customer and requiring the customer to open a new account to be maintained in credit. We were not referred to precise evidence that the Bank’s actions in mid-February 1990 were brought about by these considerations, but it can readily be inferred that they were. I express no view on the merits of Professor O’Donovan’s suggestion.
The “in liq” bank statements
It seems that the Bank normally sent bank statements to the Group account holders weekly. Faxed transmission to the Tamworth office was the primary method of communication adopted by the Bank and the Group companies, and was routinely used - for example, the facility letter of 1 February 1990 was sent to the Tamworth office by fax.
For a time after 15 February 1990 bank statements included the “in liq” notation. The statements in evidence were -
Pyojit Pty Ltd (a sub-subsidiary of Paola) - 15 and 22 February 1990
NRS (Gunnedah) - 16 February 1990
NRS (Narrabri) - 16 and 23 February and 2 and 6 March 1990
NRS (Tamworth) - 16 February and 7, 14 and 21 March 1990
ABE Holdings Pty Ltd - 21 February 1990
Currabubula - 21, 23 and 28 February and 7, 14, 21 and 28 March 1990.A copy of the Currabubula bank statement of 21 February 1990 is attachment ‘A’ to these reasons as an example.
The defamation claim was a claim only by Currabubula. It originally relied on an “in liq” bank statement said to have been published on 14 February 1990. On the final day of the hearing it was granted leave to rely on its seven “in liq” bank statements in evidence. The “in liq” bank statements of the other Group companies were relied on by Currabubula and Paola as a rather contentious element in the breach of contract claims, but as a matter of pleading and as recorded by the trial judge Currabubula relied on those bank statements for the defamation claim as well, in addition to its own “in liq” bank statements. Any pleading or substantive consequences of a large number of alleged publications of defamatory matter were not addressed.
The implied term
In considering the Bank’s challenge to the implication of the term it is necessary to investigate in more detail what implied term was found. A better understanding of the implied term as found will be gained by referring also to the breach and the effect on the business of NRS as found. As will appear, in my opinion the implied term as found was not within the plaintiffs’ case in the summary of contentions in their summons. It is proper, however, to address its substance.
The trial judge noted that it was common ground that the express terms of the contract constituting what he described as the Facility Agreement were to be found in the letter of 1 February 1990 and the incorporated terms and conditions of the earlier letters. He said that “[t]he facility letters, properly construed in the light of the objective facts and surrounding circumstances known to both of the contracting parties contain the following terms … “, and set out the terms as found.
So far as immediately relevant, the express terms as found were -
“The Content of the Financial Accommodation
The Bank was to make available a Multi Option Facility with a limit of $8.5 million, effectively increasing the $6.8 million limit of an existing Multi Option Facility. The facility obliged the Bank to provide financial accommodation totalling not more than $8.5 million to such of the eleven Paola Group Companies identified as borrowers and in such amounts and in such form (whether commercial bill acceptance/discount or overdraft limit or fixed and floating term loans or documentary letters of credit) as was requested of it by the Paola Group Companies.
Reduction in the Facility Limit
The facility was reduced to $7.5 million by 31 May 1990.
Review of the Facility
The facility was subject to a review immediately financial accounts for the Paola Group Companies for the half year ended 31 December 1989 became available, such review to be completed by 31 March 1990.
An immediate review of the facility was to be conducted in the event of a material adverse change in the financial condition of any of the Paola Group Companies.
Cancellation of Facilities and/or Declaration that Facility Immediately Due and Payable
The Bank was entitled by notice in writing to the Paola Group Companies to declare that the facilities may be cancelled forthwith and/or to declare the facilities immediately due and payable together with all interest accrued thereon and all other amounts payable thereunder if any of the eight events of default specified in the letter of 4 September 1987 occurred and were continuing (the last of which events was of any circumstances arising which give reasonable grounds in the opinion of the Bank that there has been a material adverse change in the financial condition of the Paola Group Companies).
…
Duration of Facility
Subject to the reduction of the facility to $7.5 million by 31 May 1990, the facility was to continue:
(a)Until cancelled by notice in writing given by the Bank to the borrowers upon the occurrence of one or more of the events of default specified in the 4 September 1987 Facility Letter.
(b)Until terminated by agreement between the parties.
(c)Until terminated by operation of law.
Outside of cancellation by notice following the occurrence of an event of default, the facilities were neither repayable on demand nor repayable on reasonable notice.”
His Honour rejected a submission that the words in the letter of 1 February 1990, “Immediate review is to be conducted in the event of a material adverse change in the financial condition or change in ownership of any of the companies comprising the borrower”, gave the Bank an entitlement to withdraw the facility without notice on the happening of a material adverse change. He also rejected the possibility that following the immediate review the Bank might be entitled to seek to re-negotiate aspects of the facility and, if re-negotiation proved abortive, then to transform the facility into a facility with a defined term or to terminate the facility on reasonable notice. He said that the Bank’s power to conduct an immediate review “is likely to have been seen by the parties as a simple precursor to the Bank’s, having first satisfied itself on such review of its entitlement to do so, then exercising its said rights to declare the facilities cancelled or immediately due and payable”.
To this point his Honour was addressing the express terms of the facility, albeit engaging in construction of the letters in considering when it could be cancelled or withdrawn or repayment demanded. He considered that the power of review did not extend to cancellation, withdrawal or demanding repayment. Just what action by the Bank, if any action at all, the power of review encompassed in the absence of an event of default was not stated, and it is not necessary to express a view in these reasons. Reasonable notice was no part of the express terms - indeed, demand for repayment on reasonable notice was denied. And the express terms were all to be found in the letters embodying the Facility Agreement.
After consideration of joint and several responsibility for events of default, but without other discussion of implied terms of the contract, his Honour went on to find the implied term for breach of which he awarded damages. I think it desirable to set out a fairly lengthy passage from his reasons -
“Standard Incidents of the Banker-Customer Contract
It is axiomatic that in the case of a current account, a ‘bank is bound to pay a customer’s cheque drawn on such current account in as much as the relation of banker and customer as also that of debtor and creditor exists’. [Cf Dixon v Bank of New South Wales (1896) 17 NSWLR 355 at 368.] The same position obtains where a facility agreement is in place which obliges the Bank to pay a customer’s cheque drawn on a particular account up to the credit limit the subject of the facility agreement.
The Bank was obliged by an implied term of its contract with the Paola Group to give reasonable notice in the event that it determined to vary its customary mode of providing general banking services, and in particular the finance facility, to the Group. This obligation extended to any variations to the accounts to be operated with the Bank. The obligation embraced any requirement that overdraft facilities in place in relation to current accounts would no longer be permitted to be drawn upon. The obligation embraced any requirement that current accounts previously used for the operation of overdraft facilities could only be operated in reduction. The obligation embraced any requirement that the Group open new accounts. In the case of a determination by the Bank to vary its customary mode of permitting operations on the finance facility, the obligation to give reasonable notice implicitly embraced a correlative obligation to be precise and accurate in communicating what the variation involved and the effect, if any, of the variation on the continued operations of the facility.
Each of the five conditions necessary to ground the implication of a term summarised by the majority in BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 52 ALJR 20 at page 26 as repeated by Mason J in Codelfa Construction Pty Ltd v State Rail Authority NSW (1982) 149 CLR 337 at page 347 were satisfied.
In the case of a finance facility in place, it would be plain to a Bank that its customer's business relationships and other dealings could well be vitally affected by the Bank's tampering with the mechanics of the customer's usual operations on the facility. Hence the special significance of precision in the Bank's mode of communicating to the customer what a new regime would entail and whether it involved any suggestion of restricting or varying the facility or of holding the position while the Bank determined whether and if so, in what way, to restrict or vary the facility itself. Hence also the special significance of directing such communications to the customer [here a corporate group of inter-related companies] at a level within the customer's hierarchy commensurate with the significance of what the Bank had determined upon.
The obligation to give reasonable notice may be viewed as part of a general contract which is basic to all transactions:
'The relationship of banker to customer is one of contract. It consists of a general contract, which is basic to all transactions, together with special contracts which arise only as they are brought into being in relation to specific transactions or banking services. The essential distinction is between obligations which come into existence upon the creation of the banker - customer relationship and obligations which are subsequently assumed by specific agreement; or, from the standpoint of the customer, between services which a bank is obliged to provide, if asked, and services which bankers habitually do, but are not bound to provide . . .' [Pagets Law of Banking 11th Edition, Butterworths 1996 edited by Mr Mark Hopgood at page 110]”
The implied term was, it seems, implied in the contract as a term arising from the relationship of banker and customer, and not dependent on the existence of the facility or implied in the contract constituting the Facility Agreement. On one view there were three implied terms.
One was the obligation to give reasonable notice in the event that the Bank determined to vary its customary mode of providing banking services, both generally and as to the facility, as taking effect in this case variously further expressed as an obligation to give reasonable notice in the event that the Bank determined to vary the accounts to be operated with it, no longer to permit operation on the overdraft accounts in place, to require that the current accounts be operated only in reduction, and to require that new accounts be opened.
Another was the obligation to be precise and accurate in communicating the determination, as taking effect in this case seen as involving communicating what the variation involved and its effect on the continued operations of the facility, or what the new regime would entail and “whether it involved any suggestion of restricting or varying the facility or of holding the position … “.
The third was the obligation to direct the communications “at a level within the customer’s hierarchy commensurate with the significance of what the Bank had determined upon”.
The second and third obligations are not self-evidently manifestations of the first. If they are within it, it must be because reasonable notice has to be reasonable not only as to time but also as to precision and level of communication.
Later in his reasons, when considering the Bank’s submission to the effect that a bank was entitled to take reasonable steps to protect itself in the event of possible insolvency of its customer, his Honour said -
“The question of the steps which a bank is contractually entitled to take in the event that it suspects that one of its corporate customers might be insolvent is by no means a simple one. The matter may be dealt with by an express term. No such express term was relied upon in the present proceedings. Certainly the occurrence of a material event of default as defined in a relevant contract between the bank and its customer, will often give the bank, as in the present case, the right by notice in writing to declare that the facilities are cancelled forthwith and/or to declare the facilities immediately due and payable. But absent the bank taking such action and in the absence of any express term dealing with such circumstances, the bank may only achieve a variation of its customary mode of providing general banking services or of providing a particular finance facility to a customer or group, either by obtaining the customer's consensus to the proposed variation, or by giving reasonable notice of the bank's determination to impose the variation, as for example by requiring the customer to open new current accounts. The latter entitlement is conferred by an implied term of the contract. To my mind, a justifiable suspicion by a bank of a customer's insolvency is simply only one of possibly many circumstances which may in fact motivate a bank to exercise its contractual entitlement, upon giving the customer reasonable notice of the requirement, to require the opening of new accounts. What period of time will or will not prove sufficient to satisfy the requirement to give reasonable notice must depend on the circumstances of the individual case.”
It is clear enough that the implied term found by his Honour to have been breached was a term requiring reasonable notice of action by the Bank, as distinct from a term precluding the action even on reasonable notice. His Honour considered that the Bank was entitled to vary its customary mode of providing banking services, both generally and as to the facility, including by requiring the Group companies to open new current accounts. But it had to give reasonable notice of the variation. The Bank was found to be in breach of contract not because it denied to the plaintiffs the overdraft accommodation promised under the facility, but because what it did in mid-February 1990 was not done on reasonable notice.
So the finding of breach of the implied term was -
“Here it is crucial to keep in mind the fact that the bank did not elect to regard any of the Paola companies or the Group as having committed any event of default. The Bank did not purport to cancel the facility. The Bank did not declare the facility immediately due and payable. In my judgment the Bank, without giving reasonable notice, determined to and in fact froze all current accounts and determined to prevent any further drawings on any of those accounts. It then communicated that decision to the Group. It did not obtain the Group's consensus to its actions. Faced with the Bank's pre-emptive actions, the Group had no alternative other than to open the new accounts in order to continue trading. The Bank clearly determined to alter its customary mode of providing the finance facility through existing accounts which, subject to the customer bringing the balance in the accounts under the $8.5million limit, would absent the Bank's directive, have entitled the customer to continue to draw on the account.
That conduct of the Bank was in breach of the above described implied term. … “
The trial judge in fact held that there had been a number of events of default in mid-February 1990, but considered that the Bank did not act upon them. His finding of breach is in accordance with the relevant implied term being a term requiring reasonable notice of action by the Bank as distinct from a term precluding the action even on reasonable notice.
It does not seem at this point in his Honour’s reasons that precision and level of communication played a part in the breach as found. When his Honour came to the effect on the business of NRS the ground may have moved a little. I go to the finding as to the effect on the business of NRS only to assist in understanding the implied term as found. The reasoning, in brief, was that the Bank’s communications with the Group in mid-February 1990 were deficient not only as to the time but also as to precision and level of communication; that as a result Group staff, suppliers and customers of NRS and “the local community” came to see NRS and the Group as in serious financial difficulty; and that as a further result the subsequent sale of NRS’s business was at an undervalue. The “in liq” bank statements came into this as contributing to the widely perceived financial difficulty and making it impossible for NRS to weather the storm (the contention earlier mentioned was over the plaintiffs’ entitlement to rely on the “in liq” bank statements in this regard). The Bank addressed a number of criticisms to this reasoning and the factual steps along its path, as to which it is not necessary to express a view.
Sufficiently to assist in understanding the implied term as found, his Honour said -
“In substance, the Bank’s notifications to the Group at least involved the following parameters:
(i)That the Bank had determined to prevent the Group from further drawings on its current accounts, which determination was in place.
(ii)That the Bank had determined to require that if the Group wished thereafter to operate cheque accounts, new Number Two accounts would have to be opened and operated on a credit basis only, and that this requirement was also in place.
(iii)That all further drawings on current accounts were to be returned.
The Bank’s conduct fell far short of compliance with its contractual obligations. No notice at all was given, let alone reasonable notice. Such information as was given was neither precise nor accurate. The Bank’s communications did not affirm that the facility was to be continued. The communications in fact suggested the contrary. And as for the possibility that the Bank’s tampering with the mechanics of the customer’s usual operations on the facility could vitally affect the Group’s business relationships and other dealings, this appears to have been ignored - the Bank on the evidence, apparently having in mind only the question of protecting itself against the possibility that it might be adversely affected by further drawings on existing accounts, being later held to amount to preferential payment. And as for the special significance of the Bank directing its relevant communications to the Group at an appropriate level, the flurry of activity particularly on 15th and also on 16th February which included the sending of the “in liq” bank statements, paid no regard to this parameter - and indeed became an immediate cause of the panic within the Group’s and NRS’s offices and a cause of the events and resignations which followed, which events are generally referred to in more detail below. It is not difficult to discern that a ‘confidential’ letter addressed to Mr Paola explaining the Bank’s position in clear terms and giving him time to explain to Group employees what the position was, would have averted the panic and prevented the subsequent events.
In my judgment, there is no doubt that by reason of the Bank’s communications of mid February 1990, the impression gained by employees within the Group and by those dealing in business with the Group and by the local community was that the Bank had withdrawn support for NRS which was seen as no longer viable and as likely to fail. In my judgment, the impression gained by reason of the same communications, by employees within the Group and by those dealing in business with the Group and by the local community, went beyond NRS, and was that the Bank had withdrawn support for the entire Group which was likely to be no longer viable and may well fail.”
Again this is in accordance with, and confirmatory of, the implied term found by his Honour to have been breached being what I will for short call a notice term. The movement in the ground may have been the findings of imprecision and inappropriate level of communication, at least as to the “in liq” bank statements and perhaps more widely. But the reasoning to effect on the business of NRS, and so in due course to loss to Currabubula for which the damages compensated, rested on the quality of the notice given to the account holders, not on any failure to honour cheques drawn on the current accounts or on denial to the plaintiffs of the overdraft accommodation promised under the facility. Indeed, the Bank was found to have breached the implied term in mid-February 1990, at a time when it was also found to have been entitled to dishonour cheques drawn on the current accounts.
One reason for this rather lengthy consideration of what implied term was found is that in his reasons the trial judge used language at times possibly reflective of denial to the plaintiffs of the overdraft accommodation promised. An example is the observation that, although the Bank was not obliged to honour cheques drawn beyond the facility limit, that was not to say that it was “entitled to unilaterally vary the contract by refusing to permit the Group to resume operations on its banking accounts once it had deposited sufficient funds to bring the credit facility back into place”. The plaintiffs’ submissions in the appeal seemed sometimes to rest upon such a denial, rather than on breach of a notice term, and there was discussion of whether the Group had in fact been denied the promised overdraft accommodation. Save arguably as to the $60,000 to $70,000 earlier mentioned, and I emphasise arguably, on any view it was not. The damages awarded by the trial judge could not be supported on such a minor breach of contract, if breach there was. It was not a breach on which the trial judge’s award of damages rested, and towards the end of his reasons he found expressly, under a heading “The plaintiffs’ claim that the Multi-Option Facility was not provided to the plaintiffs so that there was a denial of the facility”, that the Bank did not call up the facility and that “The breaches of contract found do not include a calling up of the facility”.
The implication of the term
The trial judge did not regard the implied term as a legal incident of a class of contract (see for example Liverpool City Council v Irwin (1977) AC 239). He regarded it as an implied term necessary to give business efficacy to a particular contract, and considered that it satisfied the conditions stated in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 283 and adopted in Secured Income Real Estate v St Martin’s Investments Limited (1979)144 CLR 596 and Codelfa Construction Pty Ltd v State Rail Authority of New South Wales, (1982) 149 CLR 337. Those conditions are -
“(1) It must be reasonable and equitable; (2) It must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) It must be so obvious that ‘it goes without saying’; (4) It must be capable of clear expression; (5) It must not contradict any express term of the contract.”
As is stated by Mason J in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales at 346, the courts are slow to imply a term. It is not enough that it is reasonable to imply a term. It must be necessary to do so in order to give business efficacy to the contract and the term must be so obvious that it goes without saying; “Further, there is the difficulty of identifying with any degree of certainty the terms which the parties would have settled upon had they considered the question”.
The implied term as found is of remarkable width and generality. It extends to variation for all banking services, and to whatever may be meant by “the customary mode” of providing banking services. The combined concept of the customary mode of providing banking services is also uncertain. If the notice has to be reasonable not only as to time but also as to precision and level of communication, it is thrice uncertain in its application on any particular occasion. In particular, “the customary mode” of providing banking services could include matters of form or matters not affecting the customer’s obligations for which reasonable notice of variation is not reasonable and equitable and neither necessary to give business efficacy nor so obvious that it goes without saying. Would it include a change to the deposit slips used by a bank? Would it include the assistant manager rather than the manager of a branch having the dealings with the customer? Would a bank have to give reasonable notice if, because of improved clearance procedures, it determined to permit funds to be drawn against cheques two days after their deposit instead of five days? No doubt questions such as these might be answered, but that they must be asked casts doubt on the implied term.
Further, a term of the width and generality of the implied term as found is likely to conflict with other rights and obligations between banker and customer. It is not uncommon for banking authorities to confer unilateral rights of action on the bank without notice. No doubt because the implied term as found was not within the plaintiff’s case in their summary of contentions, this does not seem to have been addressed in the evidence in this case, and illustrations can not readily be extracted from the evidence. Specifically in relation to the facility, however, the Bank’s rights of cancellation or calling in the facility were not conditioned on reasonable notice. The Bank could act immediately. As a more general example, reasonable notice is not required before a bank exercises the long-standing common law right to combine accounts, surely a variation to the customary mode of providing banking services of a nature akin to the Bank’s action in mid-February 1990. An all-embracing implied term as found by the trial judge, arising simply from the relationship of banker and customer, can not be correct.
Again specifically in relation to the facility, the Bank agreed to provide an overdraft with a limit of $8,500,000, and it either provided that banking service or it did not. It may be taken that the customary mode of providing the banking service was by honouring cheques drawn on the Group companies’ accounts so long as the total debit balance did not exceed $8,500,000, but so long as the overdraft accommodation to a limit of $8,500,000 was provided by the Bank honouring cheques drawn within the limit it did not matter what account or accounts were used to provide the banking service. The change in accounts did not matter so long as, subject to the overdraft limit, outstanding cheques drawn on the current accounts were paid from the new accounts. In the circumstances of the present case, there was no need for anything more than notification of the freezing of the current accounts plus the making of the arrangements earlier described; even putting aside the width and generality of the implied terms as found and with specific reference to the events of mid-February 199o, there was no necessity in order to give business efficacy for an over-arching requirement of reasonable notice.
Whether as part of the general banker/customer relationship or treating the implied term as focused on the facility, and particularly on varying the accounts by which the facility was provided, operated with the Bank, in my opinion business efficacy did not require the wide and uncertain term as to reasonable notice with the three aspects found by the trial judge. Nor, in my view, was it reasonable and equitable to inhibit the Bank from seeking immediately to act in a manner perceived to protect it from the insolvency or possible insolvency of at least some of the members of the Group; or put with reference to another of the conditions stated in BP Refinery (Westernport) Pty Ltd v Shire of Hastings, the requirement of reasonable notice was not so obvious that it went without saying. Adopting the officious by-stander test of MacKinnon LJ in Shirlaw v Southern Foundries (1926) Ltd (1939) 2 KB 206 at 227, if an express term to the effect of the implied term as found were suggested at either the commencement of the banker/customer relationship or at the time of arranging the facility, the response from the Bank, at the least, would not have been testy suppression with a common “Oh, of course”.
In my opinion, therefore, the appeal must be upheld so far as damages were awarded for breach of contract, on the ground that the implied term on which the award rested should not have been found. It is unnecessary to consider the Bank’s other challenges, save that I should explain why in any event the implied term as found was not within the plaintiffs’ case in the summary of contentions in their summons.
The implied term and the plaintiffs’ case
In para 3 of their summary of contentions the plaintiffs alleged a written Facility Agreement, to be found in the letter of 1 February 1990 including by the incorporation of not inconsistent provisions from the earlier letters. They alleged that the Facility Agreement contained ten terms set out in lettered sub-paragraphs.
None of the terms stated a customary mode of providing general banking services, or of providing the facility. The closest they came to a mode of providing the facility was the terms in sub-paras (b) and (c) of para 3 -
“(b)the Defendant promised that it would provide the financial accommodation totalling not more than $8.5 million to such of the Paola Group Companies, in such amounts and in such forms (whether commercial bill acceptance/discount or overdraft limit or fixed and floating rate term loans or documentary letter of credit) as was requested of it by the Paola Group Companies.
(c)the Defendant promised that the $8.5 million multi-option facility would be available for as long as was desired by the Paola Group Companies subject only to the limitations set out in (d) - (g) below;”
Terms in following sub-paragraphs of para 3 dealt with review of the facility, being review immediately financial accounts for the Group companies for the half year ended 31 December 1999 became available (sub-para (e)) and an immediate review in the event of a material adverse change in the financial condition of any of the Group companies (sub-para (f)), and with entitlement by notice in writing to declare that the facility may be cancelled forthwith and/or to declare the facility immediately due and payable if any of eight events of default occurred and was continuing (sub-para (g)).
In para 4 the plaintiffs then alleged a number of implied terms in the Facility Agreement -
“4. On the proper construction of the Facility Agreement, if circumstances arose entitling a review of the facility, in the carrying out of the review:
(a)the Defendant was not entitled unilaterally to vary any of the terms of the Facility Agreement; and
(b)the Defendant was not entitled to declare that the facilities may be cancelled forthwith or declare the facilities immediately due and payable unless an event of default under the letter of 4 September 1987 was established; alternatively
(b)[sic]the Defendant was not entitled unilaterally to vary any of the terms of the Facility Agreement unless the variation was fair and reasonable between the parties; alternatively
(c)the Defendant was obliged to give the Paola Group Companies reasonable notice of any intention to vary any of the terms of the Facility Agreement.
Particulars
The limitations are implied in one or more of the following ways:
(a)as a matter of construction from the actual terms used in the Facility Agreement as referred to in paragraph 3 above;
(b)as a matter of ad hoc implication on the basis that it is necessary to give the Facility Agreement efficacy; or
(c)on the basis of implication of law, by reason of an imputed intention because the term is a legal incident of this class of contract.”
It will be noted that the only implied term in relation to notice was first, conditioned upon circumstances arising entitling a review of the facility and the carrying out of the review, and secondly, in relation to notice of an intention to vary any of the terms of the Facility Agreement - apparently the terms in the ten lettered sub-paragraphs of para 3.
Succeeding paragraphs alleged matters under the headings “Performance of the Facility Agreement up to 13 February 1990” and “Facts Relevant to Breach by Defendant of Facility Agreement”. The allegations under the latter heading were of the freezing letter and the dishonour of cheques drawn on the current accounts on and from 16 February 1990, and it was specifically alleged that if the cheques had been honoured the total accommodation provided by the Bank to the Group companies would have remained at less than $8,500,000.
Then under the heading “Breach by Defendant of Facility Agreement” came the allegations -
“22. The Defendant’s action on 16 February 1990 in dishonouring some or all of the cheques presented to it on 15 February 1990 was a breach of the Facility Agreement in that the Defendant did not allow the Paola Group Companies to exercise their overdraft rights up to the limit set by:
(a)the overdraft at close of business on 12 February 1990; alternatively
(b)$8.5 million.
23. The defendant’s actions between 17 February and 31 May 1990 in dishonouring cheques presented to it was a breach of the Facility Agreement in that the Defendant did not allow the Paola Group Companies to exercise their overdraft rights up to the limit set by:
(a)the overdraft at close of business on 12 February 1990; alternatively
(b) $8.5 million.
24. The Defendant’s actions from 15 February 1990 to June 1992 so as to freeze all accounts of the Paola Group Companies and not allow any drawings thereon, even when the total accommodation to the Paola Group Companies did not exceed $8.5 million (or post 31 May 1990, $7.5 million), was a breach in [sic] the Facility Agreement in that:
(a) post 31 May 1990 the Paola Group Companies substantially complied with the term set out in paragraph 3(d) above;
(b)the Defendant did not purport to exercise a right of review pursuant to the term referred to in paragraph 3(e) above;
(c)the Defendant did not purport to exercise a right of review pursuant to the term referred to in 3(f) above; and in any event, by reason of the matters alleged in paragraph 9(a), no right to review the facility arose under such term;
(d)further, the Defendant acted unilaterally in purporting to vary the Facility Agreement so as to freeze all accounts and not permit any further drawings thereon;
(e)further, such a variation to the Facility Agreement was not fair and reasonable between the parties;
(f)further, the defendant failed to give the Paola Group Companies any or reasonable notice of its intention so to vary the Facility Agreement;
(g)further, in the circumstances (including those set out in paragraph 9(b) above), there was no event of default under the letter of 4 September 1987;
(h)by reason of the matters set out in (d) - (g) above, and in the light of paragraph 4 above, if the Defendant conducted a review of the Facility Agreement (which is denied) and if the Defendant was entitled to conduct such a review (which is also denied), that review was ineffective to vary the terms of the Facility Agreement as set out in paragraph 3(b) and (c) above;
(i)further, by reason of the matters alleged in (g), the Defendant was not entitled (under the term referred to in 3(g) above) to declare that the facilities may be cancelled forthwith and/or to declare the facilities immediately due and payable;
(j)further the Defendant did not purport to declare that the facilities may be cancelled forthwith and/or to declare them immediately due or payable under the term referred to in 3(g) above;
(k)further the Defendant did not purport to cancel the facilities;
(l)by reason of the matters set out in (a) - (k), the Defendant breached the term of the Facility Agreement pleaded in paragraph 3(b) and (c) above.
25. In particular, the Defendant’s refusal to allow Currabubula to take $390,000 from the proceeds of sale of Durhambone East in late 1990 was a breach of the terms pleaded in 3(b) and (c) above.”
Costs
142 It follows that, save as to the order whereby the costs of an interlocutory application and hearing were to be costs in the proceedings, the orders as to costs made by the trial judge can not stand. It is unnecessary to deal with the challenges to those orders.
Orders
143 I propose the following orders -
1.Appeal allowed.
2.Orders (1), (3) and (4) made on 5 May 1999 be set aside.
3.Judgment for the defendant.
4.The respondents pay the appellant’s costs of the trial and of the appeal and have a certificate under the Suitors Fund Act if otherwise qualified.
144 HEYDON JA: I agree with Giles JA.
145 IPP AJA: I agree with Giles JA.
______________
LAST UPDATED: 19/03/2001
97