Wardley Australia Ltd v Western Australia

HIGH COURT OF AUSTRALIA

Mason CJ, Brennan, Deane, Dawson, Toohey, Gaudron and McHugh JJ

WARDLEY AUSTRALIA LIMITED AND ANOTHER v. THE STATE OF WESTERN AUSTRALIA

(1992) 175 CLR 514

28 October 1992

Trade Practices (Cth)—Federal Court

Trade Practices (Cth)—Misleading or deceptive conduct—Action for damages to be commenced within three years after cause of action accrued—Conduct inducing giving of indemnity—Accrual of cause of action to indemnifier—Trade Practices Act 1974(Cth), s. 82. Federal Court—Practice—Amendment—Statement of claim—Statute- barred cause of action introduced by amendment—Whether permitted by rules of Court—Trade Practices Act 1974(Cth), s. 82(2)—Federal Court of Australia Act 1976(Cth), s. 86—Federal court Rules 1979(Cth), O. 13, r. 2(1)

Decisions

MASON C.J., DAWSON, GAUDRON AND McHUGH JJ. The principal question in this appeal concerns the time at which a cause of action under s.82 of the Trade Practices Act 1974 (Cth) ("the Act") accrues if, as a result of misleading or deceptive conduct, a party enters into an indemnity which is subsequently called upon. A second question relates to the power of a judge of the Federal Court to allow, under the Rules of that Court, an amendment to a statement of claim which adds a cause of action otherwise statute barred.

The proceedings

1. The appeal is brought from a decision of the Full Court of the Federal Court (Spender, Gummow and Lee JJ.) ((1) Western Australia v.Wardley Australia Ltd. (1991) 102 ALR 213.) which, for reasons given in a joint judgment, allowed an appeal brought by leave from a decision of French J. ((2) Western Australia v. Bond Corp Holdings Ltd. (1991) 28 FCR 68) in which his Honour had struck out par.16(c) of an amended statement of claim in proceedings commenced on 24 October 1990 by the respondent, the State of Western Australia, against the appellants and others. The case pleaded by the respondent, so far as it is relevant to the present appeal, was that the appellants, Wardley Australia Ltd. and Wardley Australia Securities Ltd., which carried on business as merchant banks, engaged in misleading and deceptive conduct in connection with the execution by the respondent of an indemnity in favour of the National Australia Bank Ltd. ("the Bank") against a facility granted by the Bank to Rothwells Ltd. ("Rothwells"), by reason of which the respondent suffered loss or damage. Paragraph 16(c) was introduced into the pleading on 14 January 1991, more than three years after the execution of the indemnity on 26 October 1987, the date when, on the appellants' case, the respondent's cause of action, as pleaded, accrued.

2. Before the introduction of par.16(c), the respondent's case, as pleaded, may briefly be stated. In October 1987, following the worldwidecollapse in stockmarket prices, Rothwells, which carried on business as a merchant bank, was encountering severe liquidity problems as a result of substantial withdrawals of deposits by depositors. A concerted effort was made by various authorities, corporations and individuals to arrange a refinancing or "rescue" package for Rothwells. That effort culminated in meetings which led to the…