Yamaji v Westpac Banking Corporation

[1993] FCA 426

TSUTOMO YAMAJI and CAYSAND No. 137 PTY. LTD. v. WESTPAC BANKING CORPORATION;
CAYSAND No. 138 PTY. LTD. and ISAMU YUTANI
Nos. QG136 and QG210 of 1992
FED No. 426
Number of pages - 12
Practice - Trade Practices
(1993) 115 ALR 240
(1993) 42 FCR 436

COURT

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
Drummond J(1)

CATCHWORDS

Practice - Attorney-General's fiat required to proceed with claim - application for leave to amend statement of claim - proposed amended statement of claim makes out significantly different case - no fiat to case pleaded in proposed amended statement of claim - leave refused.

Trade Practices - ss. 5(3) and (4) of the Trade Practices Act - Attorney-General's fiat required where conduct complained of was engaged in outside Australia - in respect of claim under s. 87, the Attorney-General's fiat must be obtained prior to proceedings being instituted - in respect of claim under s. 82, the Attorney-General's fiat must be obtained before any hearing, interlocatory or final, in relation to the claim.

Trade Practices Act 1974 - ss. 5(3) and 5(4).

HEARING

BRISBANE 31 May 1993

#DATE 4:6:1993

Counsel for the applicants: P.D. McMurdo, QC and

R.M. Derrington

Solicitors for the applicants: Carter Newell

Counsel for the first R.N. Chesterman, QC
respondent: and J.K. Bond

Solicitors for the first
respondent: Feez Ruthning

Counsel for the second and
third respondents: N. Samios

Solicitors for the second and
third respondents: Collas Moro

ORDER

Matter No. QG136

The Court orders that:

1. The applicants' notice of motion for leave to amend the statement of claim is dismissed.

2. The applicants' notice of motion for consolidation of action QG 210 of 1992 with this action is dismissed.

3. The applicants pay all respondents' costs, to be taxed, of and incidental to the application for leave to amend the statement of claim.

4. The applicants pay the second and third respondents' costs, to be taxed, of and incidental to the application for consolidation of action QG 210 of 1992 with this action.

5. UNLESS the applicants have filed and served a notice of discontinuance in either action QG 136 of 1992 or QG 210 of 1992 by 30 June, 1993, action QG 210 of 1992 is to stand dismissed, with costs, from 30 June, 1993.

Matter QG210
The Court orders that:

1. The applicants' notice of motion for consolidation of action QG 136 of 1992 with this action is dismissed.

2. The applicants pay the second and third respondent's costs, to be taxed, of and incidental to the application for consolidation of action QG 136 of 1992 with this action.

3. UNLESS the applicants have filed and served a notice of discontinuance in either action QG 136 of 1992 or QG 210 of 1992 by 30 June, 1993, action QG 210 of 1992 is to stand dismissed, with costs, from 30 June, 1993.

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

JUDGE1

DRUMMOND J By application filed on 16 September, 1992 that initiated

action QG 136 of 1992, the applicants claimed:

(a) relief in equity and under the Corporations Law;

(b) relief under the Trade Practices Act comprising: i) claims for damages under s. 82 in respect of infringements of Part V of the Act; and ii) relief under s. 87 of the Act.

A statement of claim was filed the same day.

1. The applicants seek leave to amend that statement of claim. It is poorly drafted and difficult to comprehend. The proposed statement of claim is, subject to one qualification, a much clearer statement of the facts upon which the applicants now wish to rely for the relief in their originating application which they still intend to claim.

2. The qualification is this: there is an allegation in the proposed pleading that entry by the first applicant into the Loan 2 agreement between the first applicant and the first respondent was "induced by and under the influence of Westpac" in circumstances in which Westpac had an ascendancy or influence over the first applicant. But nothing is alleged beyond that in support of the claim contained in the originating application for delivery up of the Loan 2 agreement and delivery up for cancellation of the securities given pursuant to that agreement and for orders against the first respondent pursuant to s. 87 of the Trade Practices Act which have not yet been identified by the applicants but which, presumably, would include orders in respect of the cancellation or avoidance of the Loan 2 agreement. Notwithstanding the allegation of undue influence I have referred to, it is not at all clear whether, if leave to amend is granted, the applicants do propose to seek the avoidance of the Loan 2 agreement. There is a specific allegation in paragraph 59 of the draft pleading that the Loan 1 agreement was voidable at the first applicant's election, but no similar allegation in relation to the Loan 2 agreement; there are allegations that the first applicant, at a particular stage, denied liability in respect of the Loan 1 agreement, but there is no similar allegation in respect of the Loan 2 agreement and while in the proposed pleading it is expressly alleged that the terms and effect of the Loan 1 agreement were harsh, unfair and improvident, nothing at all is said in this regard about the Loan 2 agreement. Moreover, it appears from the material before me that the first applicant at all times intended to borrow from Westpac approximately $5M, which is roughly the amount said to be covered in the draft pleading by the Loan 2 agreement, to assist him to purchase the Aplin House property and there is no allegation that these moneys were misapplied by any of the respondents or that, in this regard, the first applicant did not get from the first respondent exactly what he sought. It is no doubt true that this Court has a discretion, both in the exercise of its equitable jurisdiction and its jurisdiction under s. 87, to set aside a contract which one party was induced to enter into either under the influence of another or in circumstances that involve other unconscionable dealing on the part of that other, without proof that the contract was disadvantageous to the complainant. See, e.g., Commonwealth Bank of Australia Ltd. v Amadio (1982) 151 CLR 447 at 475. However, I cannot see any basis in the proposed pleading upon which the first applicant would be able to procure the discretionary intervention of this Court in relation to the Loan 2 agreement.

3. Although it was not submitted that I should take such a course, it seems to me that even if I were otherwise prepared to grant leave to amend, I should not do so unless and until the applicants clarify their position in relation to the Loan 2 agreement, either by deleting reference to it from paragraph 58 of the proposed pleading or by putting forward a further amendment exposing all the grounds upon which they may wish to claim to be entitled to relief in respect of that particular agreement. I think that would be a proper course, having regard to the way the applicants have conducted the litigation, not only in this Court but also in the Supreme Court and the District Court, which they have instituted as a result of their dispute with the respondents.

4. The only ground relied on by each of the respondents to resist leave to amend involves a consideration of s. 5 of the Trade Practices Act. It is submitted that leave to amend in the manner proposed should not be granted on the ground that the amendments, in claiming under ss. 82 and 87 of the Trade Practices Act, rely on conduct by the respondents to which s. 5(3) and (4) of that Act apply; it is then said that the consents already obtained from the Attorney-General do not extend to such conduct.

5. Section 5 provides:
   

"(3) Where a claim under section 82 is made in a proceeding, a person is not entitled to rely at a hearing in respect of that proceeding on conduct to which a provision of this Act extends by virtue of sub-section (1) or (2) of this section except with the consent in writing of the Minister.

(4) A person ... is not entitled to make an application to the Court for an order under sub-section 87(1) or (1A) in a proceeding in respect of conduct to which a provision of this Act extends by virtue of sub-section

(1) or (2) of this section except with the consent in writing of the Minister."

1. Conduct of present relevance that attracts the operation of these provisions is conduct engaged in outside Australia by companies incorporated or carrying on business within Australia: s. 5(1).

2. On 1 October, 1992, after the point had been raised by the solicitors for the first respondent, the then solicitors for the applicants wrote to the Minister seeking consent, pursuant to s. 5(3), to the institution of the action. The letter contains information relevant to the task the Minister was required to perform and it also enclosed a copy of the statement of claim which it was said the applicants intended to file. This appears to be the pleading actually filed on 16 September. Notwithstanding the limited request, the Minister correctly identified the need for consents under s. 5(3) and (4). On 22 December, 1992 the Minister consented to the applicants relying upon allegations of conduct engaged in outside Australia, in Japan, by or on behalf of each of the respondents for the purpose of claims under s. 82 and also, on 23 December, 1992, for the purpose of the applicants applying for orders pursuant to s. 87(1) and (1A) of the Trade Practices Act. The consents identify the conduct referred to as the "alleged conduct being particularised in paragraphs 15 and 22 (and described in other paragraphs supporting the claims contained therein) of the Statement of Claim filed on behalf of the Applicants".

3. Particulars of the allegations in the statement of claim were in fact sought by the first respondent on 21 October, 1992 and a response was made on 4 December, 1992. However, it is common ground that these particulars were not before the Minister when he made his decision to give the consents I have referred to. In my view, when a question is raised for the Court's determination as to whether consents have been given which are sufficient for the purposes of s. 5(3) and (4), that question must be answered by reference only to the information before the Minister when he gave the relevant consents. Clearly, the conduct in respect of which consent is given can only be so identified. I therefore disregard the particulars provided by the applicants to the first respondent (although even if it were appropriate to take them into account now, they would not alter the conclusion I have reached that the amendment application must be rejected).

4. The consents, insofar as they refer to paragraph 15 of the statement of claim of 16 September, 1992, relate to allegations concerning the secret commission which it is said the second and third respondents received from the vendor to the second applicant and second respondent of the Amaroo Beach Resort at Cairns. It was not, I think, clear from the material before the Minister whether any of this involved conduct on the part of the second or third applicants that was engaged in outside Australia. It is, however, now clear from paragraph 1(e)(ii) of the proposed pleading that no such extra-Australian conduct is involved in this part of the applicants' case: the relevant conduct on the part of the second and third respondents was engaged in within Australia and the Trade Practices Act applies to such conduct, assuming the allegations in the proposed pleading are well-founded, by force of s. 6(3).

5. The consents, insofar as they refer to paragraph 22 of the original statement of claim, are consents to the applicants relying upon conduct engaged in by the respondents outside Australia which comprises the procuring by the first, second and third respondents in Tokyo on 6 June, 1990 of the first applicant's signature to two loan facility agreements, identified as "Loan 1" and "Loan 2", in circumstances in which the first and third respondents misled the first applicant into thinking that he was signing a single set of documents relating to a single transaction, which documents "were intended to support moneys to be advanced by Westpac to the Applicants in respect of the Aplin House property alone" and in circumstances in which "the proceeds of the moneys arising from Loan 1" had already been paid by the first respondent to either of the second or third respondents long before, i.e., prior to 30 April, 1990.

6. It is quite a different case that the applicants seek to make out in respect of these two loan facility agreements in the proposed pleading so far as concerns the conduct on the part of the respondents which is now the subject of their complaint. Now, the applicants clearly enough acknowledge that the first applicant was, on 6 June, 1990, aware that he was signing two separate loan agreements, the one for AUD459,051.00 and the other for AUD5,148,823.00; the complaint now is that the first applicant, however, misunderstood, as a result of conduct by the first respondent, the true nature and effect of the Loan 1 agreement in that he believed that he was signing a guarantee in respect of the loan of the smaller amount by the first respondent to the second and third respondents, whereas it in truth operated as an agreement for the loan of that sum to the first applicant on security to be provided by the applicants over the same three Australian properties that were required to be provided as security by the first applicant under the Loan 2 agreement. The allegation now made in relation to the first applicant's signing of the Loan 2 agreement is that he believed (apparently correctly) that it was in respect of a loan to be made by the first respondent to him to assist him in the acquisition of the Aplin House property. In short, the conduct now complained of as having been engaged in by the first and second respondents in Tokyo comprises "encouraging and permitting the first applicant" to sign the Loan 1 and Loan 2 documents in the mistaken belief that the Loan 1 document related to a loan between the first and second respondents which the first applicant was required to sign only as guarantor of the second respondent's obligations thereunder and, so far as concerns the first respondent, that conduct includes procuring the first applicant's entry into the Loan 1 agreement (and also the Loan 2 agreement) by undue influence or unconscionable dealing.

7. While the question of the proper construction of s. 5(3) and (4) was not the subject of any detailed argument, I take the view that s. 5(4) prohibits a person instituting proceedings for an order under s. 87(1) or (1A) in respect of conduct engaged in outside Australia of the kind referred to in s. 5(1) (and, where relevant, s. 5(2)) unless he has the requisite Ministerial consent. The good sense of a requirement that consent be obtained before proceedings are instituted is manifest: if proceedings are instituted prior to a critical consent being obtained and that consent is ultimately not forthcoming, both the applicant and the respondent will, irrespective of costs orders which it would ordinarily be proper to make in favour of the respondent in that event, incur legal expenses which will be entirely wasted. There is no reason apparent to me why s. 5(3) should be drawn in language significantly different from s. 5(4), i.e., in language which indicates that where a party relies upon extra-Australian conduct to found a claim under s. 82, he can commence an action (and thus expose himself and his opponent to legal expenses that will be incurred fruitlessly if consent is refused) without first obtaining the necessary consent, which may never be forthcoming. I therefore think s. 5(3) should be read as requiring Ministerial consent to be obtained prior to any hearing, final or interlocutory, in an action at which an applicant claiming under s. 82 wishes to rely upon extra-Australian conduct. This interpretation fits well with the words of the sub-section, which refer to "a hearing in respect of" a proceeding in which a s. 82 claim is made and not to, e.g., "the hearing of the proceeding" itself. It follows that where a party applies at an interlocutory hearing to amend his pleading to set-up extra-Australian conduct in the context of a s. 82 claim, he will be able to pursue such an application at that time only if the necessary consent has already been obtained.

8. Although the applicant does not need consent to pursue its claims in respect of the secret commission and in respect of the partnership dispute, it does need consent before it can obtain leave to make the amendments proposed in relation to entry into the two loan facility agreements. This part of the case forms a substantial part of the whole litigation. The applicants are also seeking leave to make amendments which relate to the secret commission claim and the partnership claim. It seems to me that there is no point in giving limited leave to amend in relation to the latter two elements of a case since it will not be practicable to progress the action until it is known that the consents necessary to enable the applicants' claims in respect of the loan facility agreements to be prosecuted are forthcoming. While on the view I take of s. 5(3) and (4) of the Trade Practices Act, I must refuse leave in the absence of the necessary consents to make the amendments sought in respect of the claims concerning the loan facilities, for the reasons given, I also refuse leave to make the other amendments sought and which are identified in the proposed pleading.

9. The applicants also seek to consolidate with action QG 136 of 1992, action QG 210 of 1992. Only the second and third respondents oppose consolidation. The second action duplicates the claims made in the first in relation to the claims based on the loan facility agreements, the secret commission and the partnership dispute. The statement of claim filed and served in action QG 210 of 1992 is identical in all material respects with the statement of claim filed in the first action. It seems that the explanation for the institution of the second action was that the first was commenced in ignorance of the requirements of s. 5 of the Trade Practices Act; when the need for consent was drawn by the solicitors for the first respondent to the attention of the then solicitors for the applicants, they took steps to procure the relevant consents and immediately after obtaining them instituted the second action on 24 December, 1992, filing with that application the statement of claim. There can be no suggestion that the two actions can be separately maintained. There is no justification, in my view, for imposing on the second and third respondents the burden of bearing the costs they have no doubt incurred in respect of both actions, even though such costs may not amount to a large sum when that has been due to an oversight on the part of the then-solicitors for the applicants. That would appear to be the only consequence of ordering consolidation. The applicants should elect which of the two actions they wish to prosecute. The making of an application for leave to amend in action QG 136 of 1992 might well amount to such an election. However, I will give the applicants an opportunity to choose the proceeding to be discontinued.

10. It was submitted on behalf of the respondents that if the applicants received the leave they wanted to amend the statement of claim in QG 136 of 1992, they should be ordered to pay the costs of each of the respondents thrown away as a result of that amendment on an indemnity basis, because of what were said to be the special or unusual features of the case. Since I have accepted the submissions advanced by all the respondents that there should not be leave to amend for want of Ministerial consent, it is premature to deal with the question of the basis upon which any costs that the applicants may be ordered to pay are to be taxed should they succeed in the future in obtaining leave to amend the statement of claim.

1. I will order that the applications by the applicants for leave to amend the statement of claim in QG 136 of 1992 and to consolidate actions QG 136 of 1992 and QG 210 of 1992 be dismissed. The applicants must pay the costs to be taxed of all respondents of and incidental to the first application and the costs to be taxed of the second and third respondents of and incidental to the second application. I will also order that, unless the applicants have filed and served a notice of discontinuance of one of these two actions by 30 June, 1993, action QG 210 of 1992 is to stand dismissed, with costs, from that date.