State Bank of New South Wales v Commonwealth Savings Bank of Australia

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IN THE FEDERAL COURT OF AUSTRALIA

DISTRICT REGISTRY

1	No. 248 of 1984

GENERAL DIVISION

STATE BANK OF NEW SOUTH MALES

Applicant

COMMONWEALTH SAVINGS BANK OF

AUSTRALIA

Respondent

COMMONWEALTH SAVINGS BANK OF

AUSTRALIA

Cross-Claimant

STATE BANK OF NE54 SOUTH MALES

First Cross-Respondent

STATE OF NEW SOUTH WALES

Second Cross-Respondent

28 MAY 1985

REASONS FOR JUDGMENT

LOCKHART J.

23 April 1985

I delivered my reasons

f o r judgment on

certain questions

of fact and

law raised by the pleadings. Before

remitting the matter to this Court the Chief Justice of the High Court

had

earlier directed that those questions, with one exception

question 14 -

be tried before other questions in the case. Question

14 was later

added by consent.

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I concluded my reasons for judgment by saying:

"Before finally answering these questions or making

any order or

declarations I shall stand the matter

over for

a short period to enable the parties to

consider

reasons

for

judgment

and

proposed

answers

... I

direct the applicant to bring in

short minutes in-' the meantime to give effect to my

reasons f o r judgment.

In the result, the matter was adjourned until yesterday. Since

April 1985 three notices of motion have been filed. ' The State Bank

filed a notice of motion for

an order that a judgment be entered in

its favour in the

sum of $13,779,801.13, and an order that judgment

entered in its favour being interest on that sum pursuant to

S. 79 of

the Judiciarv Act and

S . 94

of the Supreme Court Act 1979

(N.S.W.)

by way of damages. The State filed a notice

motion for an order

that those paragraphs of the CSB's cross-claim, which

I proposed to

answer adversely to it, be struck out.

CSB

filed a notice of motion

seeking the leave of the Court to amend its defence and cross-claim in

the form of annexure "A" to that notice

of motion.

I	turn first to the lastmentioned notice of motion. The

principles governing application for leave to amend proceedings are

well known and need no restatement.

The first amendment which the

CSB

seeks to propound is the addition of	cub-paragraphs l(b1) and (b2) in
these terms:

"In answer to paragraph

the statement of

claim, the respondent:

(bl) says that the said

agreement was an agreement between the respondent on the one hand and the Government of New South Males on the other and the applicant's predecessor

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3 .

was a

party thereto as agent and trustee for the

Government of New South Wales.

(b2) says that in

entering into the said agreement the applicant did

so as

agent and trustee for

the Government of New

South Wales.

Counsel f o r

the CSB submitted that the point which those paragraphs

seek

encapsulate

that,

although

the

Commissioners

were

authorized by

the Government Savinss Bank Act 1906

(N .S .W. )

to carry

on their savings bank business, they had no authority to dispose

their assets, liabilities and their business.

The source of their

power to neqotiate with the State and the State Bank for the transfer

of their property and to enter into

an agreement with respect thereto,

which ultimately became The Agreement, was

3 of the Government

Savinss Bank (Amendment)

Act 1931 (N.S.W.) which, so far as material,

provided that the Commissioners may enter into an arrangement with the

CSB for

amalgamation and for the transfer to it upon such terms and

conditions as

are agreed upon between the Treasurer, the Commissioners

and the CSB of the whole or any part of

the assets, liabilities and

business of

the State Bank and that

no such arrangement shall take

effect until ratified by the Parliament

of New South Wales.

The source

of the transfer of

the Commissoners' property to

the State Bank pursuant to the Agreement was,

so it was submitted, not

the Agreement itself but the Act.

The Commissioners held all real and

personal

property

whatsoever

vested

them

behalf

the

Government of

New South Wales:

S . 19 of the Government Savinss Bank

(Amendment) Act 1913

(Act No. 13 of 1913).

Hence,

so it was

submitted, the Commissioners entered into and became	a	party to the
Agreement as agent and trustee for the State.

Counsel for the CSB accepted for present purposes that the

Commissioners were not an agency

or emanation of the Crown in right

the State. The High Court has on at least two occasions rejected that

proposition: Bland Shire Council v. Rural Bank

New South Wales

(1947) 74 C.L.R. at p. 417 and Rural Bank	of New South Wales v. Hayes
(1951) 84 C.L.R. 146at p. 146.

It was suggested by counsel

f o r the CSB when this question

was discussed late last year that the subsequent decision

of the Hiqh

Court in Inslis v. Commonwealth Tradinq Bank

(1969) 119 C.L.R. 334, in

effect overruled those earlier decisions

or was at least inconsistent

with them. If this be

so then it is

f o r the High Court to say

so.

This Court is bound by the judgments of the High Court in Bland and

Haves and counsel for the CSB did not contend otherwise.

The second amendment sought by

the CSB is to add to the

defence a paragraph 16A in these terms:

" 16A.

On the proper construction of the said

agreement or alternatively it was a further implied

term and condition of the said agreement that: (a)

the

continuance

rights

and

obligations

thereunder of the respndent and the applicant

inter

should

interfiependent

with

collateral to and dependent upon the continuance of

the rights and obligations thereunder of the

respondent and the State of New South Males inter

se; or (b) the performance by the respondent of its

obligations thereunder should be dependent upon the

performance by both the applicant and the State

New South Wales

or their resepctive obligations

thereunder.

Counsel for the CSB said that this paragraph was consequential upon

l(b1) and l(b2) and involved the same point; namely, that it was

implied term and condition of the agreement that the obligations of

the State and the

CSB inter se and .those of the State Bank and the CSB

inter se are interdependent, such that, for example,

a breach by the

State of its obligations to the CSB under clause 17

of the Agreement

would operate to permit the CSB to be freed of its obligations to the State Bank under clause 11. Counsel for the. CSB also submitted that the paragraph could operate independently of the proposed paragraphs

l(b1) and 1Ib2).

The

third amendment sought by the CSB is the addition

paragraphs 19A and 19B in the following terms:

"19A. Upon the termination or recission

the

rights and obligations under the said agreement of

the respondent and the State

of New South Wales

inter se the respondent ceased to be bound by the

continuing obligations thereunder to the applicant.

19B.	The State of New South Wales has ceased to

perform its obligations under the said agreement by

reason of the matters referred to in paragraph 18

whereupon the respondent ceased to be bound by its

obligations thereunder to the applicant."

Counsel for the CSB said that those paragraphs were consequential upon

paragraph 16A,

so that, if they should fail, then so must paragraphs

19A and 19B fail.

The final amendment to

the defence sought by the CSB is the

addition of

paragraphs

22A, 22B and 22C and certain changes to

paragraph 23 in the following terms:

22B.	By reason of the matters referred to in

paragraph 22A the respondent has suffered loss and

damage and will continue to suffer loss and damages

particulars whereof are referred	to	in paragraph
2 2 .

22C.	The applicant threatens and intends, unless

restrained by this honourable court, to continue in

the conduct referred to in paragraph

22A.

23 . The respondent will seek to set off at law

and in equity the loss and damage referred to in

paragraph 2 2 ,

so much

thereof

may

necessary in satisfaction of any amount to which

the applicant may be found to be entitled."

Counsel'

for the CSB submitted

. that those paragraphs are intended

raise the tort of inducing, procuring and participating in breaches of

contract.

The CSB also

seeks amendments to its cross-claim against the

State Bank and the State by adding paragraphs

28A,

28B,

29,

36A,

39A,

39B,

42A,

42B

and

42C which mirror the amendments sought to the

defence, save for paragraph

23 .

In my opinion all amendments sougkt should be allowed. They

raise I think

reasonably

arguable

questions

for

determination.

However, there is no evidence in support

of the application for leave

to amend and no particulars of any of the fresh allegations have been

furnished.

7 .

Counsel for the CSB informed the Court in general terms of

the matters relied on

in support of the paragraphs, but full and

proper particulars

must-be furnished by the CSB, although

I realise

that final particulars of paragraphs 22(a),

22(b), 22(c) and

23 as

amended may have to await discovery, inspection and interrogatories. have most recently mentioned, could have been raised in the hearing last November and December before me.

Another approach that could be made to the motion to amend by

adding parayraphs 22B and

22C, raising the issue of inducement, would

to adjourn

that motion and determine it later in the light of

particulars to be furnished by the CSB and any evidence that may be

adduced in support of it in the meantime. Although

I recognise some

force within this approach I

think the preferable course to take is

the

one

I have mentioned.

It has

the

advantage

having

all

amendments to the defence and cross-claim made at the one time and

will doubtless lead

all consequential amendments by the State Bank

and the State to their pleadings also being made at the one time. If

'the particulars furnished

by the CSB are inadequate

or otherwise

defective an application may be made to strike out the relevant

paragraph of the defence and cross-claim.

have taken into account

all the matters of hardship which counsel for the State Bank and the

State assert may be sustained if leave to amend

is granted.

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I think the proper course for

the Court to take is to give

the same directions with respect to the questions raised by the new

paragraphs as were made by the Chief Justice of the High Court on

December 1983 with respect to the other questions

' argued before me.

This appraoch is, I think, consonant with the terms and spirit of the

Chief Justice's order.

Further,. any prejudice that may be sustained by the State

Bank or the .State by taking this course must be compensated

for by the

CSB. The costs of the application for leave to amend and the costs of and occasioned by the amendments and any additional costs caused by the separate hearing on these questions which will take place must be

borne by the CSB in any event. Also, if the State Bank ultimately

substantially succeeds in this case, the CSB should pay interest on

the amount of the judgment to it at

an appropriate commercial rate to

be fixed by

this Court covering the period

of delay between

23 April

1985 (when I delivered my earlier reasons

for

judgment) and the date

when my reasons for judgment with respect to the further questions

fact

and

law

are

delivered.

There

is, I realise, a certain

arbitrariness in assessing that period, but

think in all the

circumstances it is the fairest period to select. If counsel for the

CSB

informs the Court that his cli?nt is prepared

to proffer an

undertaking to that effect that will obviate the necessity	of	the
Court imposing conditions.

..., .. .,/.. .

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Other questions may also have to be determined arising out of

any amendments that may be made to the pleadings of the State Bank

the State consequent upon the amendments which

I propose to allow the

CSB to make to the defence and cross-claim, and, if it is appropriate

that those questions also be determined on the next hearing, orders

can be moulded to give effect to that circumstance.

The answers to the fresh questions which arise from

-the

amendments to the defence and cross-claim may relate to

or affect the

answers given by me to other questions which I answered

in my April

reasons for judgment, hence

shall not today answer any questions

make any declarations consequent upon those answers, but

shall

consider this question upon the determination

of the fresh questions.

In the result, the State Bank's motion for judgment and the

State's motion

strike out must abide the determination of the

questions arising from the amendments to the defence and cross-claim.

I shall indicate the undertakings and orders which appear appropriate

to give effect to my reasons and then ask for comment upon them.

Upon the CSB by its counsel undertaking to the Court:

(a) That

the

event

that

the

State

Bank

ultimately

obtains

judgment against the CSB substantially as sought in its statement of

claim, the

CSB shall pay to the State Bank interest at an appropriate

commercial rate to be fixed by this Court on the amount for which the

State Bank obtains judgment covering the period between

23 April 1985

and the date when the court's reasons for judgment are delivered with

respect to the further questions

of fact and law

.raised by and

consequent upon the amendments

to the defence and cross-claim;

and

(b)

that it will pay to

the

State

Bank

and

the

State

their

respective costs as agreed

or, failing agreement, as taxed -

(i) of the CSB's motion for leave to amend its defence and cross claim,

(ii) of and occasioned by the amendments to its defence and cross claim, and

(iii) any

additional

costs

incurred by reason of the

separate hearing

the

questions

raised

by and

consequent	upon the amendments to the defence	and
cross claim.

The court orders as follows:

1. That the CSB be granted leave to amend its defence and cross claim substantially in the form of the document annexed to the CSB's notice of motion fi'.ed on 20 May 1985 and marked "A", and that necessary amendments be made on or before a date to be fixed.

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That the CSB furnish in writing on or

before a date to be

fixed particulars of the allegations made in the new

amended-paragraphs

of the defence and cross claim.

That the questions or issues

of fact and law raised by

paragraphs l(b1) and

(b21, 16A, 19A

and 19B

of the defence

and paragraphs 28A, 28B,

36A, 39A and 39B of the cross-claim

be tried before other questions and issues of fact and law

and that the hearing be fixed for

17 June 1985.

4 . That each party be at liberty to apply on two days notice.

That the matter be listed

for directions on a date to be

fixed

6. That the motion of the State Bank for judgment and the motion

of the State

to strike out be adjourned to the date of the

hearing mentioned in order

The matter is adjourned to Monday next,

3 June 1985 at 9.15

a.m.

that the parties may consider my reasons for judgment and

proposed orders in the meantime.

I certify that this and the

preceding pages are a true COPY of the

Reasons for Judgmeot herein of his Honour

Mr. Justice Lockhart. ,

S	.
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Associate

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Dated: . ,	i ' 1 I -	I	. U .
I

[1985] FCA 696

28 May 1985