Westpac Banking Corporation v Lee - [2013] NSWCA 375

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation: Westpac Banking Corporation v Lee [2013] NSWCA 375
Hearing dates: 12 June 2013
Decision date: 11 November 2013
Before: Barrett JA at [1];
Emmett JA at [4];
Gleeson JA at [44]
Decision:
1. The appeal be dismissed.
2. The appellants to pay the respondents' costs.
[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Catchwords: MISLEADING OR DECEPTIVE CONDUCT - financial services - s 12DA Australian Securities and Investment Commission Act 2001 (Cth) - where respondents had not read the documents provided by the appellants in relation to a complex financial product - where strong reservations on credit had been expressed - whether respondents were led into error by the appellants in relation to the capital protection feature - whether the appellants caused the respondents' loss - where post-facto evidence relied upon
Legislation Cited: Australian Securities and Investments Commission Act 2001 (Cth) ss 12BAA, 12 BAB, 12DA, 12DB
Corporations Act 2001 (Cth) ss 708, 761G(4), 761G(7), 944A, 946A
Corporations Regulation r 6D 2.03
Uniform Civil Procedure Rules 2005 51.36(2)
Cases Cited: Browne v Dunn (1893) 6 R 67
Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; 218 CLR 592
Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; 238 CLR 304
Campomar Sociedad, Limitada v Nike
International Ltd [2000] HCA 12; 202 CLR 45
Commonwealth Bank of Australia v Mehta (1991) 23 NSWLR 84
Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31
Fox v Percy [2003] HCA 22; 214 CLR 118
Henville v Walker [2001] HCA 52; 206 CLR 459
I&L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd [2002] HCA 41; 210 CLR 109
Johnson Tiles Pty Ltd v Esso Australia Ltd [2000] FCA 1572; 104 FCA 564
Jones v Dunkel [1959] HCA 8; 101 CLR 298
Manly Council v Byrne [2004] NSWCA 123
Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd [2010] HCA 31; 241 CLR 357
Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [1982] HCA 44; 149 CLR 191
Payne v Parker [1976] 1 NSWLR 191
Schellenberg v Tunnel Holdings Pty Ltd [2000] HCA 18; 200 CLR 121
Watson v Foxman (1995) 49 NSWLR 315
Texts Cited: Oxford English Dictionary, 3rd ed (2000)
Category: Principal judgment
Parties: Westpac Banking Corporation (First Appellant)
BT Funds Management Corporation Limited (Second Appellant)
BT Funds Management No 2 Limited (Third Appellant)
Michael Lee and Majed Hawatt (First Respondents)
Sandstone Constructions Pty Limited (Second Respondent)
Representation: Counsel:
K C Morgan (Appellants)
D A McLure (Respondents)
Solicitors:
King and Wood Mallesons…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2013] NSWCA 375
Decision Date: 11 November 2013

CaseChat Overview and Summary

Westpac Banking Corporation and another party appealed to the Court of Appeal of New South Wales against a decision concerning alleged misleading or deceptive conduct in relation to a financial product. The respondents, who had not read the documents provided by the appellants concerning this complex product, claimed they had suffered loss due to misrepresentations about a capital protection feature, despite having expressed strong reservations about their creditworthiness.

The central legal issues before the Court of Appeal were whether the appellants had engaged in misleading or deceptive conduct in contravention of section 12DA of the *Australian Securities and Investments Commission Act 2001* (Cth), and whether the appellants' conduct had caused the respondents' loss. The Court was required to consider the weight to be given to post-facto evidence in assessing these issues.

The Court of Appeal dismissed the appeal, upholding the primary judge's findings. The Court reasoned that the appellants' conduct, viewed objectively, was misleading or deceptive. It was held that the appellants had failed to adequately address the respondents' reservations and had not taken sufficient steps to ensure the respondents understood the nature and risks of the financial product, particularly concerning the capital protection feature. The Court found that the appellants' conduct had caused the loss suffered by the respondents. Consequently, the appellants were ordered to pay the respondents' costs.

Orders

Orders of the court

1. The appeal be dismissed.

2. The appellants to pay the respondents' costs.

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

Medium Neutral Citation:	Westpac Banking Corporation v Lee [2013] NSWCA 375
Hearing dates:	12 June 2013
Decision date:	11 November 2013
Before:	Barrett JA at [1]; Emmett JA at [4]; Gleeson JA at [44]
Decision:	1. The appeal be dismissed. 2. The appellants to pay the respondents' costs. [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
Catchwords:	MISLEADING OR DECEPTIVE CONDUCT - financial services - s 12DA Australian Securities and Investment Commission Act 2001 (Cth) - where respondents had not read the documents provided by the appellants in relation to a complex financial product - where strong reservations on credit had been expressed - whether respondents were led into error by the appellants in relation to the capital protection feature - whether the appellants caused the respondents' loss - where post-facto evidence relied upon
Legislation Cited:	Australian Securities and Investments Commission Act 2001 (Cth) ss 12BAA, 12 BAB, 12DA, 12DB Corporations Act 2001 (Cth) ss 708, 761G(4), 761G(7), 944A, 946A Corporations Regulation r 6D 2.03 Uniform Civil Procedure Rules 2005 51.36(2)
Cases Cited:	Browne v Dunn (1893) 6 R 67 Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; 218 CLR 592 Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; 238 CLR 304 Campomar Sociedad, Limitada v Nike International Ltd [2000] HCA 12; 202 CLR 45 Commonwealth Bank of Australia v Mehta (1991) 23 NSWLR 84 Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 Fox v Percy [2003] HCA 22; 214 CLR 118 Henville v Walker [2001] HCA 52; 206 CLR 459 I&L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd [2002] HCA 41; 210 CLR 109 Johnson Tiles Pty Ltd v Esso Australia Ltd [2000] FCA 1572; 104 FCA 564 Jones v Dunkel [1959] HCA 8; 101 CLR 298 Manly Council v Byrne [2004] NSWCA 123 Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd [2010] HCA 31; 241 CLR 357 Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [1982] HCA 44; 149 CLR 191 Payne v Parker [1976] 1 NSWLR 191 Schellenberg v Tunnel Holdings Pty Ltd [2000] HCA 18; 200 CLR 121 Watson v Foxman (1995) 49 NSWLR 315
Texts Cited:	Oxford English Dictionary, 3rd ed (2000)
Category:	Principal judgment
Parties:	Westpac Banking Corporation (First Appellant) BT Funds Management Corporation Limited (Second Appellant) BT Funds Management No 2 Limited (Third Appellant) Michael Lee and Majed Hawatt (First Respondents) Sandstone Constructions Pty Limited (Second Respondent)
Representation:	Counsel: K C Morgan (Appellants) D A McLure (Respondents) Solicitors: King and Wood Mallesons…