Waraway Pty Ltd v State Bank of New South Wales

[1996] FCA 85

FEDERAL COURT OF AUSTRALIA       )
NEW SOUTH WALES DISTRICT REGISTRY )    No NG 768 of 1995
GENERAL DIVISION                 )

BETWEEN:

WARAWAY PTY LIMITED
  First Appellant

FRANCIS JAMES CORBETT
  Second Appellant

MICHELLE MARIE CORBETT
  Third Appellant

AND:

STATE BANK OF NEW SOUTH WALES

Respondents

CORAM:    DAVIES, WHITLAM, SACKVILLE JJ.
PLACE:    SYDNEY
DATE:     28 FEBRUARY 1996

REASONS FOR JUDGMENT

Davies J:   The Court considers that it would be preferable to express short reasons rather than to give a delayed written judgment.  

This is an appeal from a judgment of a single judge of the Court, Moore J. His Honour found that the respondent, the State Bank of New South Wales, had committed a breach of s.42 of the Fair Trading Act 1987 (NSW). The Trade Practices Act 1974 (Cth) was not relied upon because of the decision of the High Court of Australia in Bourke v State Bank of New South Wales (1990) 170 CLR 276.
The breach found was that a manager of a branch of the State Bank, Mr M. Wood, had represented to the male applicant, Dr F.J. Corbett, and to Mr J. Spencer, who accompanied Dr Corbett, that the bank would not provide the $350,000 finance it had promised unless Dr Corbett obtained a certificate under s.317AE of the Local Government Act 1919 (NSW) ("a s.317AE certificate"), which is a certificate of compliance. In fact, the terms of the approval of the loan did not require the production of such a certificate.

Although the issue of damages had been deferred, the trial judge considered issues of causation and held that no loss had been occasioned as a result of this breach.  

I need not describe the relevant facts. Senior counsel for the appellants, Mr M.S. Jacobs QC, with whom Mr M.I. Harvey appeared, submitted that the appellants had lost an opportunity to settle a contract for the purchase of certain land and building at Cromer when Mr Spencer was put off by Mr Wood's reference to a s.317AE certificate.

Counsel submitted that an inference should be drawn from the evidence that settlement would have occurred on 30 April 1990 or close thereto but for Mr Wood's misrepresentation.   Counsel submitted that the appellants thereby lost an opportunity to settle the purchase.

In my opinion this case falls down on the facts.  The strongest evidence from Dr Corbett on this appears at pages 274-5 of Volume 1 of the Appeal Book as follows:- 

"Look, Dr Corbett, will you please just answer my question and do it as briefly as you can?   On 27 April, you were told that you would need a 317AE Certificate if the State Bank funds were going to be made available to you, that is correct, is it not?--- That's a complete furphy, it's nonsense.

You were told that on 27 April, you say?--- That's what I was told.  Subsequently I found out it was a con act. 

On that day you had the alternatives of either going with Mr Spencer and accepting the finance that he could arrange for you ---?---Well, the bank had done - sufficiently damaged Mr Spencer for - for it not to be a viable alternative.

Look, Dr Corbett, Mr Spencer - you and Mr Spencer have both given evidence in this case that as soon as you walked out of the bank's offices he said to you `We'll get this money somewhere else'?---That's right, no, he said there are other means of finance available other than the State Bank.  Now, that's not what he said, Mr Harris, if you don't mind me saying.  He said there are other means of financing this other than the State Bank.

He said he would introduce you to other financiers he knew?---Yes.

And he was very optimistic about it, was he not?---He was ---".

This is very weak evidence for the appellants. In fact, although he made an inquiry the same day from the local council, Dr Corbett does not appear to have accepted that a s.317AE certificate was required. He did not raise the matter with his solicitor or with the manager of the branch of the State Bank who was dealing with the loan.

Indeed, the evidence suggests that no firm arrangement to settle on 30 April 1990 had been made but rather that the appellants had already arranged that the existing contract would be cancelled and that a new contract would be entered into with a later settlement date.  This was in fact done on 3 May 1990.  Passages in Dr Corbett's evidence which show that
he was not concerned about Mr Wood's misrepresentation appear on pages 55, 56, 270, 278 and 297 of Volume 1 of the Appeal Book. 

Mr Spencer was interested in providing finance for the purchase but not in the capacity of a financier.  He sought an interest in the property and in Dr Corbett's project for it.  His evidence on these matters was given at pages 118 to 120 of Volume 1 of the Appeal Book, which I need not set out.  Mr Spencer proposed a one half interest or a one third interest in the project.  These matters were merely discussed, not agreed.

Mr Spencer left Dr Corbett willing to assist him. Dr Corbett did not, however, contact him again. Dr Corbett did not give evidence about this apart from the passage I have set out above, which as I have said deals with the matter only in a weak way and does not match a good deal of Mr Spencer's evidence. We merely know that Dr Corbett did not avail himself of Mr Spencer's willingness to help nor of the offer to explore finance from other sources without the need for obtaining a s.317AE certificate.

In my opinion there was no sufficient evidence to enable the Court to make a finding of the loss of a chance.  Such a finding in the present case would be mere speculation unsupported by the type of accepted evidence from Dr Corbett which one would expect to have been present if the Court were to make the finding.  The evidence in the case does not meet the standard of which Mason CJ, Dawson, Toohey & Gaudron JJ spoke in Sellars v Adelaide Petroleum NL (1994) 179 CLR 333 at 355.

A second alleged breach of s.42 was that, on 17 May 1990, an officer of the bank wrote the word "declined" on the approval of the loan, perhaps purporting to terminate the loan agreement under clause 16. This step was not communicated to the appellants.

Counsel for the appellants allege that, if the appellants had been informed that this step had been taken, they would not have incurred further expenses.  The trial judge found, at 626 of Volume 1 of the Appeal Book:-

"However as I have just discussed, by the time the Bank made the decision on 17 May 1990 to decline the loan, the nature of the transaction had changed materially.  The Corbetts were trying to finance the purchase by entirely different means and for a different purpose.  Haswell and Saunders were aware of this.  Whether the Corbetts knew or not that the $350,000 was no longer available was no longer material.  I find it difficult, in these circumstances, to see how the conduct of the Bank of not informing the Corbetts of the decision to decline the loan is deceptive or misleading conduct.  It is not, in my opinion, conduct contravening s52 of the TP Act."

In my opinion his Honour's finding was fully justified by the evidence before the Court and I accept his finding. 

I would dismiss the appeal with costs.

I certify that this and the 4 preceding pages are a
true copy of the reasons for judgment herein of
the Honourable Justice Davies.

Associate:

Date:  28 February 1996

FEDERAL COURT OF AUSTRALIA       )
NEW SOUTH WALES DISTRICT REGISTRY )    No NG 768 of 1995
GENERAL DIVISION                 )

BETWEEN:

WARAWAY PTY LIMITED
  First Appellant

FRANCIS JAMES CORBETT
  Second Appellant

MICHELLE MARIE CORBETT
  Third Appellant

AND:

STATE BANK OF NEW SOUTH WALES

Respondents

CORAM:    DAVIES, WHITLAM, SACKVILLE JJ.
PLACE:    SYDNEY
DATE:     28 FEBRUARY 1996

REASONS FOR JUDGMENT

Whitlam J:  

I agree with Davies J.

I certify that this is a true copy of the reasons for judgment herein of the Honourable Justice Whitlam.

Associate:

Date:  28 February 1996

FEDERAL COURT OF AUSTRALIA       )
NEW SOUTH WALES DISTRICT REGISTRY )    No NG 768 of 1995
GENERAL DIVISION                 )

BETWEEN:

WARAWAY PTY LIMITED
  First Appellant

FRANCIS JAMES CORBETT
  Second Appellant

MICHELLE MARIE CORBETT
  Third Appellant

AND:

STATE BANK OF NEW SOUTH WALES

Respondents

CORAM:    DAVIES, WHITLAM, SACKVILLE JJ.
PLACE:    SYDNEY
DATE:     28 FEBRUARY 1996

REASONS FOR JUDGMENT

Sackville J:   I agree with the learned presiding Judge.  I just add a brief comment on a matter that has been dealt with by his Honour.  It is of considerable importance that the trial judge found that Mr Spencer was willing, albeit on unspecified terms, to participate in the project by providing funds, and more particularly that this willingness continued after 27 April 1990, the date on which the first representation was made.

Mr Spencer's own evidence, reproduced in his Honour's judgment, was that after the meeting of 27 April 1989 he told Dr Corbett that he had other financiers and that he was sure he could get the finance from some other source without s.317AE certificate. His evidence continued as follows:

"And in addition to that you said to Mr Corbett, as I understand your evidence, on the footpath outside the bank immediately after this meeting or in the car at the car park, you said to him, 'look, I've got financiers, I'm sure that we can get the finance from some other source without 317AE certificates', is that right?---Yes, that was right.  Frank might have stayed at the bank though.

Did you leave it with him on that day that he would come back to you if he required your assistance or involvement in some way?---Basically, yes.

And did he ever contact you again after that time seeking your assistance or involvement?---Not directly, no.  Well, I thought he'd either got it from the bank eventually or the whole thing had fizzled up and I'd reinvested my money which he knew was on offer for a short time."

There was no finding that Dr Corbett refrained from contacting Mr Spencer after the meeting by reason of the first representation. Moreover, there appears to be no basis in the evidence to make any such finding. Mr Spencer remained ready after 27 April 1990 to participate in the project regardless of the availability of a s.317AE certificate. No reason was suggested as to why the first representation could have deterred Dr Corbett from continuing to seek Mr Spencer's assistance with the project in whatever capacity and on whatever terms were thought by Dr Corbett to be appropriate. In these circumstances, I find it difficult to see how it could be said that the first representation occasioned any of the appellants the loss of an opportunity of some commercial value. As the learned presiding judge has said, to use the language of the majority in Sellars v Adelaide Petroleum NL, the evidence simply falls short of what would be required to establish, on the balance of probabilities, that the contravening conduct caused the loss of a commercial opportunity of some value.  For these reasons I agree with the orders that are proposed.

I certify that this and the preceding 2 pages are a true copy of the Reasons for Judgment of the Honourable Justice Sackville.

Associate:

Dated:28 February 1996   

Heard:28 February, 1996

Place:                 Sydney

Decision:28 February, 1996

Appearances:           Mr M. Jacobs QC with Mr I. Harvey, instructed by Stewart Levitt & Co, Solicitors, appeared for the appellants

Mr C.M. Harris, instructed by Simpson & Harrison, Solicitors, appeared for the respondents.