Westpac Banking Corporation v Northern Metals Pty Ltd

Re: WESTPAC BANKING CORPORATION
And: NORTHERN METALS PTY LTD
No. QG254 of 1988
FED No. 249
Trade Practices

COURT

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
Northrop(1), Davies(2) and Spender(2) JJ.

CATCHWORDS

Trade Practices - appeal from interlocutory orders - whether leave to appeal should be granted - motion to strike out that part of claim relating to s.55A Trade Practices Act as disclosing no reasonable course of action, as being embarrassing and/or as having a tendency to delay proceedings - whether element of misleading the public disclosed - whether claim sufficiently particularised - whether a declaration that s.55A has been contravened can be sought under s.163A(1) of the Trade Practices Act.

Federal Court Rules - O.11 r.16, O.12 r.1(1)

Trade Practices Act 1974 (Cth) - ss.52, 55A, 163A(1)

Lee v. Evans (1964) 112 CLR 276

HEARING

BRISBANE

#DATE 25:5:1989

Counsel for the applicant: Mr T. Simos QC with Mr P. Keane QC

Solicitors for the applicant: Feez Ruthning

Counsel for the respondent: Mr J. Muir QC with Mr D. Fraser

Solicitors for the respondent: Bowdens McCafferty Waters and Ward

ORDER

Leave to appeal be granted and the appeal be allowed.

The order of the trial judge be set aside and, in lieu thereof, there be substituted an order that paragraphs 23 to 33 inclusive of the amended statement of claim and paragraph 39(1)(a) thereof be struck out and that the Applicant pay the Respondent's costs of the Application to strike out.

Each party shall abide its own costs of the appeal.

NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

JUDGE1

The Appellant (The Bank) is seeking leave to appeal and if leave is granted, to appeal from an order refusing a motion by it to strike out specified paragraphs of the statement of claim of the respondent ("Northern Metals").

By application filed on 4 July 1988 Northern Metals is claiming damages against the Bank under a number of causes of action being damages under s.82 of the Trade Practices Act 1974 based on contraventions by the Bank of sections 52 and 55A of the Act and damages for breach of contract and damages for negligence. In addition Northern Metals is claiming three declarations "pursuant to s.163A(1)(a)" of the Act namely (i) a declaration that the Bank has contravened s.55A of the Act, (ii) a declaration that the Bank has contravened s.52 of the Act and (iii) a declaration that Northern Metals is entitled to set off its liability to the Bank with respect to other matters the losses it has suffered by reason of the contravention by the Bank of the provisions of section 52 and 55A of the Act.
Paragraphs 23 to 33 inclusive of the statement of claim contain the allegations which form the basis for the present proceeding. Paragraph 23 alleges that between 1982 and 1986 the Bank "offered to numerous customers and potential customers who were either private persons or small business organisations who had no experience in foreign currency borrowing" loans denominated in a range of foreign currencies. Paragraph 24 alleges that in making those offers and in making those loans the Banks provided "services" to the public within the meaning of s.55A of the Act. Paragraph 25 alleges that during the period mentioned in paragraph 23, the Bank "in trade or commerce, engaged in conduct that was liable to mislead the public as to the nature and/or the characteristics and/or the suitability for their purpose of the services constituted by the offering and by the providing ... of the loans referred to in paragraph 23".
As they stand, paragraphs 23, 24 and 25, appear to be in conformity with O.11 rr.1, 2 and 3 of the Federal Court Rules but do not conform with O.12 r.1 which requires particulars to be given of any claim. The statement of claim then takes a somewhat unusual form. Particulars of the allegations contained in paragraphs 23 and 25 are not set out as part of those paragraphs but there are set out numbered paragraphs as if each paragraph was in conformity with O.11 r.1. Each of these paragraphs, in reality, constitutes particulars. Thus paragraph 26 provides:-
"26. The best particulars that the Applicant

(Northern Metals) can provide of the allegations in paragraph (sic) 23 and 25 above, until after discovery, are set out in paragraphs 27 to 30 below."

The reference to 30 should be a reference to 31.
Paragraph 27 gives particulars to the effect that in the specified period the Bank "held out to customers and potential customers, who included the Applicant and one Chiarabaglio" that named employees of the Bank had the skills to give competent advice in relation to borrowing in foreign currencies when, as alleged in paragraph 28, those employees had received no training in the skills required and did not possess them. Paragraphs 29, 30 and 31 contain particulars of a similar nature. Paragraph 32 contains allegations and particulars similar to the allegations contained in paragraph 23 and 25 and the subsequent numbered paragraphs and contain statements to the effect that these are the best particulars that can be given until after discovery. Paragraph 33 alleges that by reason of the contravention of s.55A of the Act, Northern Metals has suffered loss.
By paragraph 15 of its defence, the Bank pleads as follows:-
"15. As to paragraphs 23, 24, 25, 26, 27, 28, 29, 30,

31 and 32 of the amended statement of claim the respondent:

(a) Objects to pleading to the allegations therein contained on the grounds that they disclose no reasonable cause of action against the respondent and alternatively on the ground that they are embarrassing;

(b) Says that the applicant has no, or no sufficient, standing to claim the declaration referred to in paragraph 39(a)(i) of the amended statement of claim;

(c) Says that on its true construction s.163A of the Trade Practices Act does not authorise the granting of the relief sought in paragraph 39(a) of the amended statement of claim."

Paragraph 39(a) of the statement of claim repeats the first claim as set out in the application. For present purposes it is sufficient to set out the substance of the sub-paragraph:-
"39. In the premises, the applicant claims:-

(a) pursuant to s.163A(1)(a) the Trade Practices Act -

(i) a declaration that the Respondent (the Bank) has contravened s.55A of the Act ...

(ii) a declaration that the Respondent has contravened s.52 of the Act ...

(iii) a declaration that the Applicant is entitled to set off ... by reason of the Respondent's contravention of s.55A of the Act and by reason of the Respondent's contravention of s.52 of the Act."

Pursuant to notice dated 23 September 1988, the Bank moved the Court for orders as follows:-
"1. That paragraphs 23 to 33 (inclusive) and

sub-paragraph 39(a)(i) of the amended statement of claim filed 5th August, 1988 be struck out.

2. Such further or other orders as to the Court may seem meet.

3. That the applicant pay the respondent's costs of and incidential to this application to be taxed."

The motion was brought pursuant to O.11 r.16 which empowers the Court to strike out a part of a pleading where the pleading:-

"(a) discloses no reasonable cause of action ...;

(b) has a tendency to cause prejudice, embarrassment or delay in the proceeding; or

(c) is otherwise an abuse of the process of the Court."

By order made on 27 October the Court refused the motion with costs. The order is interlocutory and the Bank must obtain leave to appeal from the order. The application for leave to appeal and the appeal were heard together.
In order to understand the submissions it is necessary to make reference to a number of the provisions of the Act. The Bank is a corporation within the meaning of the Act. Sub-section 52(1) provides that a corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. Section 55A provides as follows:-

"A corporation shall not, in trade or commerce, engage in conduct that is liable to mislead the public as to the nature, the characteristics, the suitability for their purpose or the quantity of any services."

A comparison of the wording of sub-section 52(1) and section 55A shows marked similarities but some important differences. In this regard conduct proscribed by s.55A is conduct "liable to mislead the public" while conduct proscribed by sub-section 52(1) includes conduct that is "likely to mislead". The words "likely to mislead" have a wider connotation than the words "liable to mislead" and it is fair to say that any conduct which is "liable to mislead" of necessity, must be conduct which is "likely to mislead". The important difference between the two provisions is that under s.55A, the proscribed conduct is conduct that is liable to mislead the public" (emphasis added). There is no similar requirement imposed by sub-section 52(1). Another difference, which is not relevant to this proceeding, is that under s.55A the conduct which is proscribed is limited to the specified type of conduct, but under sub-section 52(1) the type of conduct is unlimited.
The difference between sub-section 52(1) and section 55B is highlighted by a reference to s.79 of the Act. In substance that section makes it a criminal offence for a person, including a corporation, to contravene s.55B and the penalty that can be imposed on a corporation on a conviction for that offence is a fine not exceeding $100,000. Any contravention of s.52 is not a criminal offence. In this context, the requirement in s.55A that the conduct proscribed is conduct "liable to mislead the public" can be understood. The specific effect on the public forms an essential element in proving an offence against s.55A.
Section 82 of the Act confers a remedy upon a person "who suffers loss or damage by conduct of another person that was done in contravention of a provision of Part V" of the Act. Such a person may recover the amount of the loss or damage by action against that other person. Sub-section 52(1) and s.55A are each within Part V of the Act.
The nature of s.163A of the Act will be discussed later in these reasons.
At the hearing of the motion, counsel for the Bank contended that s.55A could not be used by Northern Metals as the foundation for a claim for damages. The Judge hearing the motion rejected that contention. Before this Court, counsel for the Bank conceded there was a basis for so holding and that for the purposes of the motion, this contention could not be relied upon.
The Judge hearing the motion drew attention to the fact that in order to succeed in a claim for damages under s.82 of the Act based upon a contravention of s.55A, it would be necessary for Northern Metals to prove that the conduct that was liable to mislead the public had come to its notice and that it had acted on that conduct to its detriment. In other words, a question of causation arose. His Honour noted that it was difficult to see what Northern Metals could achieve by relying upon a contravention of s.55A which it could not achieve by relying upon sub-section 52(2), but held that if Northern Metals desired to satisfy the additional burden imposed by s.55A, it should be free to do so. In the course of submissions before His Honour, reference was made to the fact that discovery under a claim based upon s.55A might be wider than discovery under a claim based upon s.52 and that evidence of similar acts may be held to be inadmissible under the latter claim but could be relevant under the former claim as being relevant to the public concept. His Honour did not refer to this aspect of the matter in his reasons for judgment but that by itself would not justify the giving of leave to appeal let alone for setting aside an order based upon the exercise of a discretion.
Before this Court counsel for the Bank contended that reliance upon s.55A had a tendency to cause prejudice, embarrassment or delay in the proceeding since no useful purpose could be achieved, there would be wider discovery in which the Bank could be required to determine what documents were relevant and that this could cause embarrassment in the proceedings. This contention, by itself, does not warrant the granting of leave to appeal.
Before this Court, attention was drawn to the fact that contravention by the Bank of the provisions of s.55A constituted a criminal offence and that it was possible that documents held by the Bank could be protected from discovery on the ground that their production might tend to incriminate the Bank.
The substantive matter raised before this Court was mentioned before the Judge hearing the motion but not stressed and not mentioned in the reasons for judgment. Counsel for the Bank contended that although paragraph 25 of the statement of claim alleged that the Bank had engaged in conduct that was liable to mislead the public (emphasis added), the particulars as given in paragraphs 26 to 31 and the whole of paragraph 32 had the effect of limiting the allegation to customers and potential customers of the bank including Northern Metals and one Chiarabaglio. Counsel contended that even on the assumption that these allegations were true, that conduct was incapable of constituting conduct that was liable to mislead the public. Counsel contended further that Northern Metals could not rely on matters arising out of discovery since that discovery would, of necessity, be based on the issues arising from the pleading as limited by the particulars and thus discovery would be with respect to documents limited by the particulars. In this case Northern Metals and Chiarabaglio were each existing customers of the Bank and the conduct by the Bank was directed to them as customers and not in their character as members of the public.
Counsel relied upon authorities in which opinions were expressed on comparable legislation. In Lee v Evans (1964) 112 CLR 276 the High Court had to consider the construction of s.4a(1) of the Registration of Business Names Act 1928-19671 (SA) which made it an offence for a person to do specified things "in any invitation to the public". The Court held on the facts of that case that an invitation to an individual or individuals as a member or members of the public was not of itself proof of an "invitation to the public" within the meaning of that sub-section. At pp 285-286 Barwick C.J. discussed the question and said:

"But whether the question is whether the invitation is ex facie an invitation to the public or whether an invitation has become an invitation to the public by reason of the nature or extent of its issue, the basic concept is that the invitation, though maybe not universal, is general; that it is an invitation to all and sundry of some segment of the community at large. This does not mean that it must be an invitation to all the public either everywhere, or in any particular community. How large a section of the public must be addressed in a general invitation for it to be an invitation to the public in the relevant connexion must depend on the context of each particular enactment and the circumstances of each case. But within that sufficient area of the community the invitation must be general ..."

At p 287 Kitto J. said:-

"I am not intending to hold, however, that the size of the immediate audience is necessarily conclusive of the question whether the invitation is an invitation to the public. That is a question of the true scope of the invitation. While it may be answered conclusively in one case by the terms in which the invitation was expressed, it may require in another case a consideration both of the words in which it was expressed and of the circumstances in which they were used. I see no reason to doubt that the statement of an invitation even to one person only may be seen, when considered in the light of all the circumstances, to be part of, even though only the first step in, the communication of the invitation to the public generally, so that if the lone hearer were to tell some stranger of it the stranger would be right in treating it as open to acceptance by him no less than by the hearer."

At p 292, Windeyer J., who dissented, said:-

"An invitation can be conveyed or communicated to the public in many ways: in writing, by a notice in the press or posted in a public place conveying an invitation to any reader: orally, by an address to a public meeting or an announcement in a public place: by handing leaflets to passers-by in a public street: by circulars sent through the post: by going indiscriminately from house to house repeating the invitation. The essence of an invitation to the public is not in the manner of its communication or in the number of the persons to whom it is communicated. The criteria are rather, are the recipients of the invitation persons chosen at random, members that is of the general public, the public at large, all and sundry: or are they a select group to whom and to whom alone the invitation is addressed, so that if an outsider sought to respond to it he would be told that he was not one of those invited to come in."

Counsel relied also on Corporate Affairs Commission (South Australia) v Australian Central Credit Union (1985) 157 CLR 201 especially at p 207, and Hurst v Vestcorp Ltd (1988) 12 NSWLR 394 especially at pp 407, 408 and 440, 441.
A reference to these authorities, as well as to other authorities cited by counsel, shows that the particular facts of the case are an essential element in determining whether the relevant statutory provision applies. There is no simple answer of what constitutes "the public" in a composite phrase such as "invitation to the public". The same may be said with respect to the words "the public" in the composite phrase of "conduct liable to mislead the public". A determination of that question will depend upon the facts proved at trial.
The authorities show that a pleading will be struck out only in exceptional circumstances; see, for example, General Steel Industries Inc. v Commissioner for Railways (NSW) (1964) 112 CLR 125. Further this matter involves an appeal from an interlocutory order relating to the practice and procedure of the Court. A reference to Adam P. Brown Male Fashions Pty. Ltd. v. Philip Morris Incorporated (1981) 148 CLR 170 at pp 176-7 shows that appellate courts must exercise particular caution in reviewing decisions pertaining to practice and procedure. This is particularly so where a challenge is being made to the exercise of a discretion; see House v The King (1936) 55 CLR 499.
From what has been said already, there is no basis for granting leave to appeal.
Section 163A of the Act confers a jurisdiction on the Court to hear and determine proceedings of the type specified in that section. The present proceedings are not brought under that section; see Polgardy v Australian Guarantee Corporation Ltd. (1981) 52 F.L.R. 240. The proceedings currently before the Court are brought pursuant to s.82 of the Act and s.19 of the Federal Court of Australia Act 1976. Under s.21 of the Federal Court Act, the Court has power to make declarations. It is difficult to see why the declarations are being sought but that is a matter for the applicant and to be decided by the trial judge. The application and the statement of claim each state that the declarations sought are so sought pursuant to s.163A of the Act. In this respect they are in error. The motion seeks the striking out of one of the declarations only. Logically the words "Pursuant to s.163A(1)(a) of the Trade Practices Act" appearing in the application and paragraph 39(a) of the statement of claim respectively should be struck out. The reasons for judgment of the Judge appealed from make no reference to s.163A(1)(a) of the Act or to that part of the motion which seeks an order that sub-paragraph 39(a)(1) of the statement of claim be struck out. In fact, the motion was too limited. This whole issue is of minor importance and at some convenient directions hearing an order should be made deleting the offending words from the application and the statement of claim. This is not a case where leave to appeal should be granted.

In the result I would refuse leave to appeal and order that the Bank pay the costs of Northern Metals.

JUDGE2

This is an application for leave to appeal from interlocutory orders made by a single judge of this Court. The Court heard counsel both as to the application for leave and as to the substantive merits of the appeal should leave be granted.

The motion before the learned trial judge was a motion to strike out paragraphs 23 to 33 inclusive and sub-paragraph 39(a)(i) of the amended statement of claim filed 5 August 1988. The motion was brought under O.11 r.16 of the Federal Court Rules which permits a pleading to be struck out if the paragraphs complained of disclose no reasonable cause of action, have a tendency to prejudice, embarrass or delay the proceedings or are otherwise an abuse of the process of the Court.
The statement of claim deals with matters arising from a loan in Japanese Yen which was arranged for Northern Metals Pty Limited ("Northern Metals") by Westpac Banking Corporation ("Westpac") and in respect of the obtaining and management of which employees of Westpac gave advice to Northern Metals. Early paragraphs of the statement of claim rely inter alia upon s.52(1) of the Trade Practices Act 1974 (Cth) which provides:-

"52(1) A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive."

The challenged paragraphs contain similar allegations, but rely upon s.55A of the Trade Practices Act which reads:-

"55A A corporation shall not, in trade or commerce, engage in conduct that is liable to mislead the public as to the nature, the characteristics, the suitability for their purpose or the quantity of any services."

Of ss.52 and 55A, the former has the wider scope.

In argument before us, Mr T. Simos QC, with whom Mr P.A. Keane QC appeared for Westpac, the respondent below, submitted that the allegations under s.55A were embarrassing and tended to delay the conduct of the proceedings, for if an actionable breach of s.55A causing damage to Northern Metals was established, the conduct relied upon would necessarily found a claim under s.52 and the claim under s.55A was unnecessary. If that were the sole ground of challenge, we would reject it for, if an applicant can establish breaches under two heads, the applicant is entitled to do so and it is not for a judge in interlocutory proceedings to make an applicant choose between two proper claims even though the judge might think that the second head of claim adds little or nothing to the applicant's entitlement to relief or to the nature or quantum of the relief sought.
However, in the course of argument, Mr J. Muir QC, with whom Mr D. Fraser of counsel appeared for Northern Metals, the applicant below, conceded that a reason for making the claim under s.55A was to obtain wider discovery than would be likely to be obtained if the claim were limited to s.52 and also to enable the applicant to call evidence of transactions with other persons, whom Northern Metals alleged to be members of the public, which Northern Metals might not be able to call on the s.52 head of claim, having regard to the legal restrictions on the calling of similar fact evidence.
The lack of any convincing explanation as to what the s.55A claim can add to the substance of the applicant's case and counsel's concession that the s.55A claim might permit the applicant to obtain advantages of a procedural and evidentiary kind call at least for a careful examination of what is alleged in the challenged paragraphs. It is not an abuse of process for an applicant to add a claim, the making of which may gain the applicant procedural or evidentiary benefits, provided that the claim be a genuine one. It is, however, an abuse of process to include in a statement of claim a claim which is merely a facade or ploy and the inclusion of which is designed to achieve procedural or like advantages which cannot be achieved by genuine claims elsewhere made in the statement of claim.
Accordingly, we turn to examine the claims made under s.55A, that is the claims as to conduct that was liable to mislead the public.
The substance of the s.55A claims appears in the following extracts from the challenged paragraphs:-

"23. In the period between January 1982 and March 1986, the Respondent offered to numerous customers and potential customers who were either private persons or small business organisations who had no experience in foreign currency borrowing, and made available to numerous such customers in Australia, loans denominated in a range of foreign currencies ...

...

25. At various times in the said period, in contravention of s.55A of the Act, the Respondent in trade or commerce, engaged in conduct that was liable to mislead the public as to the nature and/or the characteristics and/or the suitability for their purpose of the services constituted by the offering and by the providing as aforesaid of the loans referred to in paragraph 23 above.

26. The best particulars that the Applicant can provide of the allegations in paragraph 23 and 25 above, until after discovery, are set out in paragraphs 27 to 30 below.

27. In the said period between January 1982 and March 1986, the Respondent held out to customers and potential customers, who included the Applicant and one Chiarabaglio, who were interested in borrowing from the Respondent in foreign currencies:-

(a) certain of its employees, including one Imhoff, as employees who were skilled in and/or capable of giving competent advice with respect to the advantages and disadvantages to such persons of borrowing in foreign currencies;

(b) certain of its employees, including one Van der Boogaart and one Look, as employees who were skilled in and/or capable of giving competent advice with respect to the courses that a borrower in foreign currency from the Respondent could follow to minimise the losses such a borrower could suffer in relation to such a borrowing caused by exchange rate movements adverse to the AUD; ...

28. The Respondent so held out these employees when:-

(a) Such employees had received no adequate instruction or training ...

(b) Such employees lacked training or skills ...

...

29. As to the person Imhoff referred to in paragraph 27(a) above:-

(a) The Respondent in April 1982 by the then manager of its Fortitude Valley branch in Brisbane, one Storey, held Imhoff out to the Applicant and to one Chiarabaglio as a person who was capable of giving competent advice to the Applicant and to Chiarabaglio ... as a representative of the International Section of the Respondent ... ...

30. As to the person Van der Boogaart referred to in paragraph 27(b) above:-

(a) The Respondent by causing or allowing the then manager of its Fortitude Valley branch, one Gamick, to put such customers in contact with Van der Boogaart ... ...

31. As to the person Look referred to in paragraph 27(b) and (c) above:-

(a) The Respondent by allowing Look to give the Applicant advice of the kind referred to in paragraphs 15(b)(ii) and (d)(iii) to such customers and by allowing Look to describe himself to such customers as 'Manager, International Business Development', held Look out as an employee who could give customers who had borrowed off-shore competent advice ...

...

32. The Respondent, in the period between January 1982 and March 1986, in return for payment to it of commission at commercial rates in the event of loans being made:-

(a) offered to numerous customers and potential customers ... loans denominated in a range of foreign currencies, the taking up of which loans exposed the borrowers to a significant risk of loss ...

(b) failed to give any such inexperienced foreign currency borrowers warning of the existence of that risk ...

(c) The conduct of the Respondent in sub-paragraphs (a) and (b) was liable to mislead those customers and potential customers ...

(d) By reason of the matters alleged in sub-paragraph (c), the Respondent, engaging in the conduct referred to in sub-paragraphs (a) and (b) acted in contravention of s.55A the Trade Practice Act;

(e) The best particulars that the Applicant can give of the allegations in paragraph 32(a), (b) and (c) until after discovery are as follows:-

(i) In April 1982, the Respondent by Imhoff gave the Applicant the advice referred to in paragraph 7 above ...

(ii)In April 1982, the Respondent by Imhoff gave Chiarabaglio the advice referred to in paragraph 29(e) above ... ...

33. By reason of the Respondent's contravention of s.55A the Trade Practices Act, the Applicant suffered:-

(a) the loss referred to in paragraph 17(a) to (c) due to:-

(i) the Respondent's conduct referred to in paragraphs 23 to 25 as particularised in paragraphs 27(a), 28, 29(a) to

(d);

(ii)the Respondent's conduct referred to in paragraphs 32(a) to (e)(i);

(b) the loss referred to in paragraph 17(d) and (e) due to the Respondent's conduct referred to in paragraphs 23 to 25 as particularised in paragraphs 27(b) and (c), 28, 30 and 31. ... "

Northern Metals claimed damages and interest. Northern Metals also claimed a declaration under s.163A which we shall discuss separately.

The person Chiarabaglio referred to in the above paragraphs was a director of Northern Metals and apparently also took a foreign currency loan from Westpac.
It is not for the Court in this interlocutory proceeding to attempt to describe what conduct of a bank with respect to the making and the management of foreign currency loans and the giving of advice with respect thereto may be liable to mislead the public. It is clear, however, that such conduct must have a public element in it, something in the nature of a holding out or representation to the public.
What is said in a private conversation between an officer of a bank and a customer of the bank is unlikely to amount to conduct misleading to the public. In his dealings with his banker, a customer is not a member of the public. The relationship between a banker and a customer is essentially one of contract. Subject to some qualifications which we need not now discuss, it is a term of the contract that the banker will keep confidential the information which the banker acquires of the customer's affairs. See Tournier v. National Provincial & Union Bank of England (1924) 1 KB 461; Parry-Jones v. Law Society (1969) 1 Ch 1; Smorgon v. Australia & New Zealand Banking Group Ltd (1976) 134 CLR 475.
It appears from paragraph 3 of the amended statement of claim that Northern Metals had been a customer of Westpac for several years prior to the subject events and that the borrowing of Japanese yen had arisen because of the need for Northern Metals to refinance its indebtedness to Westpac which was about to become payable and which Westpac had insisted be paid. It appears from paragraph 5 of the statement of claim that one of the representatives of Northern Metals who negotiated with Westpac was Chiarabaglio. There is no separate and distinct allegation that, in his dealings with Westpac, Chiarabaglio was dealing as a member of the public.
Thus, as the particulars given of the conduct alleged to be a breach of s.55A were discussions between officials of Westpac and representatives of Northern Metals and Chiarabaglio, the particulars do not provide any foundation for an allegation that Westpac engaged in conduct that was liable to mislead the public.
It is alleged, though not particularised, that Westpac held out to customers that its employees, Imhoff, Van der Boogaart and Look, were skilled in relation to foreign currencies and capable of giving competent advice. Yet, assuming that Westpac did hold out to many of its individual customers that these employees were skilled and competent in the area in which they operated, the holding out would not appear to be a holding out to the public. Let us suppose that, as a result of obtaining through the discovery process details of other customers of Westpac who used Westpac's foreign currency services to obtain foreign loans, and assuming it could then be proved in each of those several cases that Westpac had misrepresented that the employees mentioned were skilled and competent, such evidence would not found a case under s.55A for no public element would be involved and the evidence would be admissible only if it were admissable as similar fact evidence to support the claim based on s.52.
There is an allegation that the qualities of Messrs Imhoff, Van der Boogaart and Look were misrepresented to potential customers and that Westpac thus engaged in conduct liable to mislead the public as these officers did not have the qualities represented. One may take this to be an allegation of holding out to the public. But the relationship between this allegation and Northern Metal's claim is not disclosed by the amended statement of claim. Northern Metals gives no particulars of any relevant holding out to the public on which it relied. If there were any such representation to the public known to Northern Metals, particulars would not have to await discovery, they would have been given. Northern Metals must know what were the matters on which it relied, what were the matters which affected it. No such particular, other than the conversations which took place with officers of Northern Metals and with Chiarabaglio are given. It seems a necessary inference from the statement of claim that it was those conversations, and those alone, that affected the applicant's conduct and which are the only such conduct of which Northern Metals is aware.
Likewise, with respect to paragraph 32 of the amended statement of claim, which alleges that Westpac offered to numerous customers and potential customers loans denominated in a range of foreign currencies, that the taking up of those loans exposed borrowers to a significant risk of loss and that Westpac failed to give to inexperienced foreign currency borrowers any warning of the existence of that risk, no particulars are given other than those referring to Northern Metals and Chiarabaglio. Northern Metals did not, apparently, rely upon anything done between Westpac and any other customer or potential customer, for no particulars are given thereof.
Northern Metals was affected by what was said to its representatives and to its director, Mr Chiarabaglio but those representations were not representations to the public and were not liable to mislead the public.
Order 12 r. 1(1) of the Federal Court Rules provides that a party pleading shall state in the pleading or in a document filed and served with it the necessary particulars of any claim, defence or other matter pleaded by him. An object of this rule is to prevent what paragraphs 22 to 33 of the amended statement of claim seek to do. Those paragraphs raise allegations of enormous width. Paragraphs 27 and 32 refer to conduct between Westpac on the one hand and its customers and potential customers on the other. The conduct complained of is serious for a breach of s.55A, unlike a breach of s.52(1), is an offence. A respondent should not be called upon to answer such an allegation if the applicant is unable to state any relevant parrticular of the conduct alleged.
Once the allegations respecting the dealings between Westpac, Northern Metals and Chiarabaglio are put on one side, because they do not support an allegation of conduct misleading the public or liable to mislead the public, then Northern Metals is unable to give any relevant particulars as paragraphs 26 and 32 make clear.
In our opinion, it is an embarrassment to the proceedings and an abuse of the process of the Court that Westpac should be called upon to litigate a case respecting dealings with "customers and potential customers" in relation to foreign exchange over the period January 1982 to March 1986 in the absence of any relevant particular of conduct said to be misleading to the public or liable to mislead the public.
It therefore appears to us that paragraphs 23 to 33 inclusive should be struck out as disclosing no reasonable cause of action, as being embarrassing and having a tendency to delay the trial of the proceedings and as being an abuse of process.
The further matter challenged is the prayer for relief in paragraph 39(a)(i) which seeks:-

"39. ...

(a) pursuant to s.163A(1)(a) of the Trade Practices Act -

(i) a declaration that the Respondent has contravened s.55A of the Act in the period between January 1982 and March 1986 in that, in trade or commerce, it has engaged in conduct that was liable to mislead the public as to the nature and/or the characteristics and/or the suitability for their purpose of services namely loans denominated in a range of foreign currencies made available by the Respondent to its customers;"

This prayer must fall with the paragraphs on which it is dependent.
In addition, s.163A(1)(a) of the Trade Practices Act does not apply to the matters raised in the statement of claim. Section 163A(1) reads:-

"163A(1) Subject to this section, a person may institute a proceeding in the Court seeking, in relation to a matter arising under this Act, the making of -

(a)a declaration in relation to the operation or effect of any provision of this Act other than Division 2, 2A or 3 of Part V or in relation to the validity of any act or thing done, proposed to be done or purporting to have been done under this Act; or

(b)an order by way of, or in the nature of, prohibition, certiorari or mandamus,

or both such a declaration and such an order, and the Court has jurisdiction to hear and determine the proceeding."

This provision turns its attention to matters done under the Trade Practices Act such as the issue of a s.155 notice and entitles a person to seek from the Court a declaration in relation to the validity of any such act or thing done or proposed to be done or purporting to have been done under the Trade Practices Act or a declaration in relation to the operation or effect of any provision of the Act. Mr Muir submitted that the declaration sought would be a declaration in relation to the operation or effect of a provision of the Act. But that is not so. Section 163A(1) is concerned with the Act itself, with its provisions, their interpretation and effect, and with the validity of things done or proposed to be done under the Act. The provision is not concerned with whether particular conduct in trade or commerce is conduct which has breached a provision of the Act.
For these reasons, the prayer for relief should be struck out.
The inter-relationship between ss.52 and 55A of the Trade Practices Act and the propriety of including a claim under s.55A to assist a claim under s.52 are matters of considerable importance to Westpac in this case and also to other large institutions which have dealings with many clients or customers. For this reason, we think the matter is of sufficient general importance to warrant the granting of leave to appeal. We would grant leave to appeal and would allow the appeal.
We should not close without saying that the manner in which the matter was presented this Court was quite different from the way in which it was put to his Honour. His Honour did not turn his attention to the details of paragraphs 23 to 33 for, as he specifically noted, "the respondent did not attack the details of the drafting of the paragraphs in question". Yet, the substance of the case which Westpac wished to put could only emerge from an examination of the particular claims made. There is no reason why a proper claim under s.55A should not be conjoined with a claim under s.52. As presently advised, we see no reason why an applicant who has suffered loss by reason of conduct that was liable to mislead the public should not rely upon both s.55A and s.52. Mr Simos did not argue to the contrary though he reserved his right to argue at the trial that a person may not claim damages for a breach of s.55A. The flaw in the amended statement of claim thus arises from the content of paragraphs 23 to 33 which do not contain any relevant particular of conduct liable to mislead the public. His Honour was not taken to these details. For this reason, Westpac should not receive the entirety of its costs.
We would order that the order of the trial judge be set aside and, in lieu thereof, there be substituted an order that paragraphs 23 to 33 inclusive of the amended statement of claim and paragraph 39(1)(a) thereof be struck out and that the applicant pay the respondent's costs of the application to strike out. We would make no order as to costs of the appeal as the matters put on the appeal ought to have been put to the trial Judge.

[1989] FCA 249

25 MAY 1989