Stringer v Dicksons Ltd - [2005] SASC 98

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
STRINGER & ORS v DICKSONS LTD & ORS
Judgment of The Honourable Justice Besanko
18 March 2005
PROCEDURE - SUPREME COURT PROCEDURE - SOUTH AUSTRALIA - PRACTICE UNDER RULES OF COURT - PLEADINGS
Application for an order striking out paragraphs of the Statement of Claim and for further material facts - where plaintiffs claimed the third defendant authorised the first defendant to act as its agent in respect of a loan - whether it is arguable that a financial adviser could be an agent of a bank - where plaintiffs further claimed the third defendant had been negligent - whether it is arguable that a bank could owe a duty of care to its customers - strike out application dismissed - whether plaintiffs should provide further material particulars of the loss of opportunity claims - whether plaintiffs should provide further material particulars of the pleas of agency - application for further material facts allowed.
Trade Practices Act 1974 (Cth) ss 52, 53, 55A; Fair Trading Act 1987 (SA) ss 56, 58, 64; Australian Securities and Investments Commission Act 2001 (Cth) ss 12DA, 12DB; Supreme Court Rules 1987 rr 46.18, 46A.09, referred to.
General Steel Industries Incorporated v Commissioner for Railways (NSW) (1964) 112 CLR 125; Esanda Finance Corp Ltd v Peat Marwick Hungerfords (1996-1997) 188 CLR 241; X v State of South Australia (2003) 86 SASR 516; Daly v Sydney Stock Exchange Ltd (1986) 160 CLR 371; Capricorn Financial Planners Pty Ltd v ASIC (1999) 31 ACSR 46; Jonstan Pty Ltd v Nicholson [2002] NSWSC 1043; Branwhite v Worcester Works Finance Ltd [1969] 1 AC 552; Morlend Finance Corporation (Vic) Pty Ltd v Westendorp & Ors [1993] 2 VR 284; Custom Credit Corporation v Lynch [1993] 2 VR 469; NMFM Property Pty Ltd & Ors v Citibank Ltd (No 10) (2000) 107 FCR 270; Palandri Wines Ltd v O'Donnell [2002] WASC 123; Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226; Pacific Blues (Fiji) Ltd v Levi Strauss (Australia) Pty Ltd [2004] SASC 125; Marini v MLH Insurance Brokers Pty Ltd & Ors [2004] SASC 400, considered.

STRINGER & ORS v DICKSONS LTD & ORS
[2005] SASC 98
Civil

BESANKO J: I refer to my reasons in David Benson Nominees Pty Ltd v Dicksons Limited and Ors [2005] SASC 97.
In the Stringer action the plaintiffs have sued Dicksons (the first defendant), Mr Cassidy (the second defendant) and the Bank (the third defendant). The claim made by the plaintiffs is similar to the claim made by Benson in the Benson action although there are some differences in the respective Statements of Claim. For present purposes it can be assumed that unless otherwise stated the claim in the Stringer action is similar to the claim in the Benson action. The other point to note is that on 29^th October 2004 the plaintiff in the Stringer action put forward a Further Amended Statement of Claim/Order Sought. As I understand it, they do not have leave to amend in terms of that document. Nevertheless, the parties argued the Bank’s application by reference to that document and I am content to adopt that course. The Bank submits that in terms of its criticisms the document represents no material advance on the previous Statement of Claim/Orders Sought and that I can approach the application by asking whether I would grant leave to file the Further Amended Statement of Claim/Order Sought.
The agency claim
As with the Benson action, the Bank seeks an order striking out those paragraphs which allege that Dicksons acted as the Bank’s agent (ie, paragraphs 6A to 6E inclusive, the amendments to paragraph 7 and paragraphs 26A, 60A and 79A). Although not expressed in precisely the same way, the matters relied on are similar to the matters relied on in the Benson action, namely:
1The Bank provided to Dicksons brochures and the information memorandum containing the application form and the list of companies.
2The servants or agents of the Bank provided to the servants or agents of Dicksons information about the SAL including information about early termination, break costs and other matters.
3Dicksons and Mr Cassidy assisted the first and second plaintiffs to complete the application form and forward it to the Bank.
4The Bank paid a commission to Dicksons in relation to the clients who entered into the transaction.
5The Bank knew of and approved of the conduct of Dicksons in -
(a) providing brochures and the information memorandum;
(b)providing information about early termination, break costs and other matters;
(c)assisting clients in completing the application form and then providing it to the Bank.
For the same reasons I have given in relation to the claim of agency in the Benson action, I would not strike out the allegation of agency between the Bank and Dicksons in the Stringer action.
The negligence claim
The Bank seeks an order that paragraph 7CA be struck out insofar as it pleads a claim in negligence. Paragraph 7CA is in the following terms:
“7CAFurther by virtue of the matters pleaded in paragraphs 1 to 7 inclusive herein, at all material times the first and/or second defendant as agent for the third defendant owed to the plaintiffs duties particularised in paragraphs 7A.3 and 7A.6 referred to herein.”
The relevant subparagraph is paragraph 7A.3 which is in the following terms:
“7A.3a duty to supply the plaintiffs with accurate information and advice as to such products, such as:
7A.3.1the nature, meaning and effect of such products, including the risks and benefits of such products to the plaintiffs.
7A.3.2the nature, meaning and effect of any documents governing such products, including any contract to be entered into by the plaintiffs in respect of such products.
7A.3.3the financial consequences (or ‘break costs’) to the plaintiffs of selling their shares prior to the expiry of the term of any contract they entered into, the length of any such terms available and the advantages associated with choosing one particular term over another.”
It is well established that ordinarily the relationship between a bank and its customer is contractual in nature and that a bank does not owe a tortious duty of care to its customer. This general rule does not apply if there are facts suggesting that the bank has undertaken the role of financial adviser (see the cases and texts referred to by Lindgren J in NMFM Property Pty Ltd and Ors v Citibank Limited (No 10) (supra) at [799] – [803]). The plaintiffs rely on the allegations in paragraphs 1 – 7 inclusive to support their allegation of a tortious duty of care. Leaving aside the allegations of agency, there is nothing in paragraphs 1 – 7 inclusive which suggest that the Bank undertook the role of financial adviser. However, the allegations of agency between the Bank and Dicksons (which I have declined to strike out) raise a possibility that the Bank did take on a duty of care to the plaintiffs having regard to the allegation that Dicksons was providing financial advice to the plaintiffs. I am not prepared to say that such an argument is clearly untenable and I decline to strike out paragraphs 7CA and 7A.3.
Loss of opportunity claims
There is a general allegation in each of paragraphs 31A, 64A and 82A to the effect that by reason of the conduct of Dicksons and Mr Cassidy, the plaintiffs lost the opportunity to make a profit on the sale of shares in Peptech by borrowing other monies or using alternative sources of funding as particularised in later paragraphs in the Statement of Claim. For present purposes the relevant later paragraphs are paragraphs 84, 87 and 90. Paragraph 84 relates to the third plaintiff and alleges that Mr Thorne suffered a loss of opportunity to invest in Peptech shares using $100,000.00 of alternative funding, either recommended by Mr Cassidy or by Mr Thorne’s bank which would have allowed Mr Thorne the opportunity to buy the same volume of Peptech shares and to sell such shares at Mr Thorne’s discretion and without great cost. Particulars are provided that suggest that the interest payable on the loan of $100,000.00 would have been 9 per cent. For the reasons I have given in relation to the Benson action, I think that the third plaintiff should provide further material facts of its case in terms of who would have provided the facility and the terms and conditions of the facility.
Paragraph 87 relates to the first plaintiff and paragraph 90 relates to the second plaintiff. The two paragraphs are in similar terms. They allege that the plaintiff suffered the loss of opportunity to invest in Peptech shares using $50,000.00 of alternative funding which would have allowed the plaintiff the opportunity to buy the same volume of Peptech shares and to sell such shares at the plaintiff’s discretion and without break costs. Again, the calculation provided suggests an interest rate on the alternative facility of 9 per cent. Again, for the reasons I have given in relation to the Benson action, I think that the first and second plaintiffs should provide further material facts of their respective cases in terms of who would have provided the facility and the terms and conditions of the facility.
Further material facts of the pleas of agency
In the alternative to an order striking out the pleas relevant to agency, the Bank seeks an order that it be provided with further material facts in relation to such pleas.
It is necessary to set out the paragraphs which are the subject of complaint. They are as follows:
“6A.In or about the months of June 2001 to October 2001 the second defendant and other servants or agents of the first defendant were provided with information by employees, servants or agents of the third defendant in connection with the product concerning the:
6A.1calculation of and possible percentage of break costs;
6A.2termination of the product prior to the expiry of the relevant term;
6A.3the terms and conditions of the product for the purpose of providing such information and advice to persons such as the plaintiffs.
PARTICULARS
6ABThe plaintiffs will rely on the transcripts of conversations and cd recordings discovered by the parties evidencing conversations between the first and third defendants, their servants, employees or agents for their full force and effect at trial.
6BFurther or alternatively, it can be inferred from the conversations referred to in paragraph 6AB above between employees, servants or agents of the third defendant and the first defendant that it was intended that the information referred to in paragraph 6A above be provided to persons such as the plaintiffs.
6CThe second defendant assisted the first and second plaintiffs to complete and/or completed documents including application forms on behalf of the plaintiffs in connection with the product and forwarded the same to the third defendant.
PARTICULARS
Deleted
6D.At all material times the third defendant through its employees servants or agents knew and approved of the conduct pleaded in paragraphs 6, 6A and 6C herein.
PARTICULARS
6D.1Knowledge and approval are implicit; or
6D.2Alternatively knowledge and approval can be inferred from conversations referred to in paragraph 6D.3 below between the first and third defendants, their employees servants or agents.
6D.3The plaintiffs will rely on the transcripts of conversations and cd recordings discovered by the parties evidencing conversations between the first and third defendants, their servants, employees or agents for their full force and effect at trial.”
I am told that there are a substantial number of transcripts of recordings.
The rules in r 46A are designed to avoid long and technical arguments about the sufficiency of pleadings in terms of material facts. I have borne this in mind when considering the paragraphs under attack. However, I think the paragraphs are vague and general to an unacceptable degree.
In my opinion, the paragraphs are deficient in that they do not provide fair notice to the Bank of the case it will have to meet and in the particular circumstances of the case the Bank will be significantly prejudiced by not having them. The plaintiffs should provide further material facts in relation to the following:
As to paragraphs 6A and 6AB:
1.The employees servants or agents of the Bank who provided the information.
2.The precise nature of the information provided.
3.The employees, servants or agents of Dicksons to whom the information was provided.
4.The date and place(s) of the conversations wherein the information was provided.
As to paragraph 6B:
1.The parties to the conversations referred to, where and when they took place.
2.The precise matters in and in relation to the conversations from which it is said the alleged inference should be drawn.
As to paragraph 6C:
1.The precise nature of the assistance provided by Mr Cassidy, where when and under what circumstances.
As to paragraph 6D.2:
1.The same particulars as are to be provided in relation to paragraph 6B.
Conclusion
In relation to this action, I decline to strike out the pleas of agency and the plea of a tortious duty of care. The plaintiffs must provide further material facts in relation to the agency pleas and loss of opportunity claims in accordance with these reasons.
I will hear the parties as to the appropriate orders.