1 Jl Verery Trade PraclLices - misleading or deceptive conduct - claims under ss.8Z ana 87 otf Trade Practices Act and accrued turisdiction - alleaved representations as to avaiiabilitv ot loan to finance purchase of farming propertv - summarv of principles relating to representations as to future and as to intention or state ot mind in s.52 claims - respondent company round to have contravened s.52 ~ whether managing director of companv involved in contravention - effect upon claim for damages of 3 vear limitation period in s.82(2) - consideration of when cause of action arose - observations as to when assessment of damages may be referred to Registrar pursuant to Federal Court Rules 0.38 r.1- whether damages too remote - observations as to test of remoteness applicable to claim under s.82 - failure of applicants to reduce liabilities by sale of land - whether novus causa interveniens - whether relief sought under s.87(2)(d) subiect to limitation period in s.82(2) - alleqed neqligent mis-statement and undue anfluence - whether Court has jurisdiction to deal with pendent common law claims where trade practices claims statute barred. Practice and Procedure ~ no case submission by two of three respondents - election not to call evidence - circumstances in which submission may be made - whether submission may only be made if by all respondents - whether distinction between submission of no case in law or on the evidence - effect of election upon right to cross-examine and final address in respect of case bv other respondent - observations on question of non-suit in Federal Court. Trade Practices Act 1974 ss.52, 75B, 82(2) and 87 KINGSLEY FREDERICK DAVID JAMES, JILL MAXINE JAMES, DAVID MAXWELL JAMES, PETER NORMAN JAMES, ANGUS KINGSLEY JAMES, YALLAMBEE PTY. LTD. and OCKHAM PTY. LTD. v. AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED and TAMAR MANAGEMENT PITY. UTD. and JOHN WELLS No. WA G106 of 1984 TOOHEY J. PERTH RECEIVED 26 FEBRUARY 1986 28 FEB 1986 FEDERAL COURT GF ® IN THE FEDEPAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION JUDGE MAKING ORDER: DATE OF ORDER: WHERE MADE: THE COURT ORDERS THAT: L. The applicants' No. WA G106 of 1984 ~~ ss we BETWEEN KINGSLEY FREDERICK DAVID JAMES, JILL MAXINE JAMES, DAVID MAXWELL JAMES, PETER NORMAN JAMES, ANGUS KINGSLEY JAMES, YALLAMBEE PRY. LTD. and QCKHAM PTY. LTD. Applicants and AUSTRALTA AND NEW ZEALAND BANKING First Respondent and TAMAR MANAGEMENT PTY. LTD. Second Respondent and JOHN WELLS Third Respondent MINUTE OF ORDER TOOHEY J. 26 February 1986 Perth claim against the first respondent dismissed with costs. ® 2. Z. The applicants claim against the second and third respondents 15 dismissed with costs. Note: Settlement and entrv of orders is dealt with in Order 36 of the Federal Court Rules. ary ey fr .f o a? af . at oH ce 7 wu ' ' ¢ - wee bea a, F . % 4 _ Cf ; - tg toy 4 : ot worth i 4 > . 1 OS noe ' rt : ' : ' ' ' \ ' ' oy ' . wont . + * ' ' - ' ' 1 . 1 ' . a 1 . a ats . . a : ' wt ' 1 1 : . .! w 1 aoe . att 1 . " roe 1 Te ' D yoy — - - . 4 ' . . ' ' 4 ' vale 1 . - ' se i . t "he rant) ba : it * IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION No. WA Gl06 of 1984 BETWEEN: KINGSLEY FREDERICK DAVID JAMES, JILL MAXINE JAMES, DAVID MAXWELL JAMES, PETER NORMAN JAMES. ANGUS KINGSLEY JAMES, YALLAMBEE PLY. LTD. and OCKHAM PTY. DTD. Applicants and AUSTRALIA AND NEW ZEALAND BANKIN' GROUP. LIMITED First Respondent and TAMAR MANAGEMENT PTY. LTD. Second Respondent and JOHN WELLS Third Respondent CONTENTS The James Family 2 The respondents 3 The background 3 The witnesses 9 Bibiking il Contact with Market Securities and Wells 16 The Bibiking contract 21 The meeting on 18 July 1980 26 The instalment due en 2? Ir August iy@u The snstalLment due on 31 August 1980 The events of November 1980 Advance Application of 14 Januarv 1981 Settlement of Bibiking Anaus James - the Lake King farm Sale of the James' properties The proceedings in this Misleading or deceptive Misleadinag or deceptive Misleading or deceptive Misleading or deceptive Claims in nealigence Neaqligence - the Bank Neqligence - Tamar court conduct conduct conduct conduct Undue influence - the Bank Fiduciary duty ~ the Bank Interim summary Defence of limitation Operation of s.87(2)(d) Tamar s neaqligence - jurisdiction Conclusion Appendix the relevant law the Bank Tamar Wells Rulina on "No Case" Submission by Second and Third Respondents delivered 2 December 1985 474974849192 102 IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION No. WA G106 ot 1984 ~weew er BETWEEN: KINGSLEY FREDERICK DAVID JAMES, JILL MAXINE JAMES, DAVID MAXWELL JAMES, PETER NORMAN JAMES, ANGUS KINGSLEY JAMES, YALLAMBEE Appiicants and AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED First Respondent and TAMAR MANAGEMENT PTY. LTD. Second Respondent and JOHN WELLS Third Respondent TOOHEY J. 26 February 1986 REASONS FOR JUDGMENT This 18 the unhappy story of a long established farming family at Katanning who in 1980 owned property worth some $4,000,000 but who have now lost much of their assets. They say that their loss was caused by the conduct of the respondents in makina statements as to the availability of a loan which they required in order to buy a farm for a price tust ln excess of $1,000,v0u. The respondents deny anv liabilitv to the applicants. The statement of claim pleads a number of causes of action. The defences raise matters of fact and of law. The hearing occupied 5 weeks. To understand the nature of the applicants' claim against the respondents, it is necessary to deal not only with the events surrounding the purchase of Bibiking, the farm in question, but also to say something of the parties and of their relationship to each other. As a matter of convenience, I shall use the term "applicants" though at times it will be apparent that a reference to some only of the applicants is intended. The James Family The James family have farmed in the Katanning district since early this century. The particular members of the family with whom these proceedings are concerned are Kingsley Frederick David James and Jill Maxine James (husband and wife), together with their children Anqus Kingsley James, aged 29 at the time of the hearing, David Maxwell James, then aged 27, and Peter Norman James, then aged 25. Angus Kingsley James is an applicant but seeks relief only against the Bank; a farm bought by him is relevant to the applicants' claim. The youngest son Anthony Robert James, then aged 18, is not an applicant, is not mentioned in the statement of claim and did not give evidence. 3. Yallambee Pty. Ltd. is a family company and, together with Mr. and Mrs. James, it constituted the partnership of Kinaslevy James & Co. Yallambee 15 the reqistered proprietor of some of the land farmed by the partnership. Ockham Pty. Ltd. is also a family company. In recent years it conducted the sheep farming activities of the family as trustee for the James Livestock Trust. The respondents The first respondent. Australia and New Zealand Banking Group Limited ("the Bank") 1s sued by reason of the actions of Terrance Bertram Parker who was manager of its Katanning branch from January 1979 until about September 1982. At all material times the second respondent, Tamar Management Pty. Ltd. ("Tamar") carried on business as a finance broker under the business name of Market Securities. The third respondent, John Wells, was at all material times the managing director of Tamar. The background The events giving rise to this claim began in mid 1980. However, for two reasons, it is necessary to say something of circumstances existing over earlier years. The first reason is that the applicants rely upon their long association with the Bank as throwing light upon the nature of their relationship with the Bank in 1980 and thereafter. Although it will be necessary to 4. develop the point, the applicants say that over the vears they had sought the advice of the Bank, in particular the managers of its Katanning branch from time to time, in connection with the purchase ot property and had come to rely upon the Bank in regard to such matters. The second reason is that reference to circumstances of the James family before 1980, and in particular those of Mr. Kingsley James, throws light upon the personalities of some of those involved in these proceedings. This in turn helps to explain what took place in 1980 and succeeding years. In 1980 Mr. Kingsley James and his family were among the biagest landholders in the Katanning district. Their holdings were divided between Katanning and Dumbleyung, some miles north. I shall not at this stage indicate which of the applicants owned the particular properties to be mentioned; I shall just speak of the applicants. In the Katanning district the applicants owned Avondale, a farm of 880 hectares; Yallambee, a farm of 903 hectares; Rowlands, a farm of 172 hectares; and S.M.P., a farm of 221 hectares. They also owned Brickworks, a small property of 114 hectares and Saleyards, an area of 17 hectares adjoining the town. In the Dumbleyung district they owned Cronins, a farm of 487 hectares and in 1980 they bought Bibiking, a farm of 1,854 hectares. They also owned a house at Middleton Beach, Albany and a home unit in Victoria Avenue, Claremont. In addition they had a substantial number of sheep and cattle and a considerable quantity of plant. The total value of these assets was, in July 1980, in excess of $4,000,000. There were liabilities to the Bank, to Elder Smith Goldsbhorough Mort Ltd. ("Elders") (the company with which the applicants dealt for stock purchases and sales) and 5. under various mortgages and hire purchase contracts. These liabilities amounted to about $590,000. It ais advisable now to say something in more detail about the various entities in which the James family carried on business and the identity of owners of particular areas of land. The farming partnership of Kingsley James & Co. was established by oral agreement on 1 dune 1964. The original partners were Mr. and Mrs. James. Yallambee Pty. Ltd. was admitted as a partner on 1 August 1964. On 20 October 1966 the three partners executed formal deeds of partnership which are still current. Yallambee is a partner to the extent of one-half and Mr. and Mrs. James are partners to the extent of one-quarter each. The Kingsley James Family Trust was established by a deed of trust executed on 6 November 1975. The trustees are Mr. and Mrs. James and the beneficiaries are their children. At some time in the 1970s the partnership of Bullock Hills Grazing Co. was established with Mr. and Mrs. James, Angus James and David James as partners. It ceased operations on 31 March 1982. This partnership was used mainly in connection with leased property at Wooroloo in the late 1970s. It owned sheep which it sold in 1982. The evidence did not disclose precisely when Yallambee Pty. Ltd. was incorporated. Its original directors were Mr. and Mrs. James. On 6 April 1982 David and Peter James were appointed additional directors. Mr. Kingsley James is the holder of one A class share, Mrs. James the holder of one B class share and Angus, David, Peter and Anthony hold C class shares. Ockham Pty. Ltd. was incorporated on 12 February 1980. The original directors were Me. and Mrs. James. Aqdain on 6 April 1982 David and Peter James were appointed additional directors. Mr. and Mrs. James each has one share in the company. Ockham is the trustee of the James Livestock Trust established on 18 March 1980. which trust acquired the livestock of Kingsley James & Co. In 1981 the trust also took over harvesting and cropping operations. The beneficiaries of the James Livestock Trust are Mr. and Mrs James and their children. The interests in the various farms and other landholdings referred to were as follows. In Yallambee Mr. James held a half interest and Mr. and Mrs. James held the other half as trustees for the Kingsley James Family Trust. In Brickworks. Mr. and Mrs. James held a half interest each. In the Albany house Mr. and Mrs. James held an half interest each. Yallambee Pty. Ltd. was the owner of Saleyards, Rowlands, Avondale and S.M.P. Mr. Kinasley James was the sole owner of Cronins. Mr. James, Mrs. James, David and Peter each held a quarter interest in Bibiking. Mr. Kingsley James was the driving force in the James family. There is no doubt that he was interested in the acquisition of land. In part this was due to the fact that he had four sons and wished to be able to provide land for them. But I am also satisfied that he was influenced by a sense of empire building. There was prestige attaching to the ownership of large areas of farmland and I am not being critical of Mr. James in Saving that he enjoyed that prestige. When Bibikinag came on the market in 1980, it hada particular attraction for him. It 7. adioined land which the family was already Farming. Another consideration was that Bibikina had once belonaed to Mr. James' arandfather and he was anxious that it should not be lost to the family. Many of the purchases in which Mr. James was involved were short term in the sense that the purchase price was not spread over many years. This caused the family liquidity problems and it 1s apparent that Mr. James often looked to the Bank to provide financial assistance in connection with these purchases. It 1s interesting to note that soon after his arrival in Katanning Mr. Parker made the following comments 1n his diury nole of 20 February 1979: "Notwithstanding previous comments in file and difficulties encountered with conduct of accounts, it is quite clear that these past problems arose through, 1) James burning desire to establish a large enterprise for his family (esp. sons), 2) lack of longa term finance available at times of purchase and 3) non-acceptance by customer of Bank guidance that he should not proceed with intentions. All this has resulted in stretching of resources that could have lead to more disasterous results. However, apart from the intended future (long term) purchase of a property which has been leased for many years, farming purchases are at an end now that James senior is planning the take-over of operations by sons". Unfortunately farming purchases were not at an end. It was the purchase of Bibitking in 1980 and the circumstances surrounding its purchase- that lead to the unhappy financial situation in which the applicants now find themselves. The 8. opinion expressed by Mr. Parker in his evidence that Mr. James was disposed to make a purchase and then approach the Bank for help in finding the purchase price has much force. From Mr. Parker's evidence, it is clear that the Bank was torn between a concern for the state of the applicants' finances, in particular the size of its indebtedness to the Bank from time to time. and what was seen to be the valuable connection of a customer who was so well known in the area and who could advance the position of the Bank. Mr. Parker's diary notes contain expressions of irritation at the failure of Kingsley James & Co. to get its financial affairs 1n order and to improve its liquidity. coupled with a desire not to lose the prestige associated with having the applicants as customers. All these matters played some part inthe events of 1980, 1981 and 1982. It is part of the applicants' case that, by reason of their association with the Bank in the years preceding 1980, they had come to rely upon the Bank for advice in financial matters relating to the conduct of their farming operations. This is a submission that needs to be approached with some care. Ido not accept that the applicants looked to the Bank for advice as to what properties they should buy or how they should conduct their farming operations. Indeed, given the lona farming history of the James family, it would be surprising if they looked to the branch manager of a bank for farming advice. As already mentioned, their stock sales and purchases were conducted through Elders, not through the Bank. The applicants 9. not only owned stock: they were stock traders. Their account with Elders was a very large one, so laraqe apparently that it was attended to by the companv s head office in Adelaide rather than in Perth. The Bank was concerned with the extent of the applicants' stock trading because of its effect on their liquidity and no doubt because it would rather have seen the money going through the partnership account at the Bank. The applicants certainly sought the help of the Rank from time to time in connection with the purchase of land for farming and, in that sense, in connection with their farming operations. But it was advice of a financial nature that they sought, advice as to how they might fund what they proposed. And very often it was advice that was not sought until after they had entered into a purchase. To say that the applicants relied upon the Bank in connection with their farming operations is too broad a proposition and one that 1s not supported by the evidence. The witnesses On the applicants' side, the principal witnesses were Mr. Kingsley James and Mr. David James. The Bank's principal witness was Mr. Parker. On some matters there was a conflict between the evidence of the James and that of Mr. Parker. On other matters there was Little dispute as to what had occurred but the parties invited the Court to draw different inferences. The second and third respondents did not call evidence. At the conclusion of the applicants' case, counsel for those respondents made a no case submission. To do so, they elected not to call evidence. The no case submission was rejected. My decision 10. reiecting the submission was delivered on 2 December 1985; my reasons for doing so are attached as an appendix to these reasons for judament. Mr. Kingsley James seemed to find difficulty in answering questions directly. I do not suqgest that he was not doing his best to answer questions truthfully but I think the loss of so much of what he had built up over the years was a great blow to him and he found it hard to be objective about what had occurred. Mr. David James returned from agricultural college at the end of 1978. He was keen to put into practice what he had learned and, when the question of buying Bibiking arose, the original intention was that the purchasers would be Mr. David James and his brother Peter. Bibiking was referred to in evidence as something of a showpiece and its price of more than a $1,000,000 might seem to reflect this. Mr. David James must have felt the loss of Bibiking as a bitter blow and in some respects, particularly when relating his dealings with Mr. Parker, his evidence was coloured by that loss. Anaqus James generally was a straightforward and credible witness. So too was his brother Peter, though his involvement was peripheral. Other witnesses were called on behalf of the applicants and I shall refer to them in the course of these reasons. The first respondent called only two witnesses, Mr. Parker, and Mr. fIan Jelley, a valuer. Mr. Parker had the advantage of diary notes extending over the relevant period. Nevertheless his recollection of most events was clear and he was careful and considered in his answers to questions asked ina ll. lenathy examination and cross-examination. Speakina generally, I accept Mr. Parker's evidence though, as will appear, there are one or two aspects of his conduct that I find puzzlinga. The explanation may lie in the ambivalent position he assumed of trying to protect the interests of the Bank and at the same time keep the James family as customers. Also it appears that, until the Bank demanded the sale of the James' farms, Mr. Parker was very friendly with Mr. Kingsley James and more latterly with Mr. David James. This may have lead him to extend undue tolerance to the James in their dealinas with the Bank. sibiking The James family first learnt that Bibiking might be for sale in May 1980. This is not to say that Bibiking came on the market at that time or indeed at any time, for the evidence suagested that its owners' dealings were with the applicants only. Bibiking Pty. Ltd. was the registered proprietor of the farn. There was no precise evidence as to the directors or shareholders of the company but the evidence was that Bibiking "belonged" to Mr. Phillip James (a brother of Mr. Kingsley James) and his son Kim. Mr. Kingsley James said that at the time he learned Bibiking might be for sale, he was "fairly well committed". This was something of an understatement. In a diary note of 6 May 1980, Mr. Parker commented: "Following lengthy and frank discussions with Kingsley and David today it was quite obvious from the cash flow produced that their liquid position was deteriorating and the picture for 1981 could be quite bleak. David 1s fully aware that this situation has been caused through extensive stock trading, something that was 12. pointed out to Kingsley by the Bank last vear - this appears to have been finally acknowledged by Kinaslev. Accordinaly, they have asked for time to consider re-arranaing their farming operation to a basic flock - this could take some time (say by end 1980) and would no doubt need support of ANZ. The ultimate benefits are obvious using other customers uperations as a quideline and after considering the value of land and assets (resources) available to customers. AA submitted requesting extension of existing facilities for some 6 weeks pending firm proposals from customers". "AA" referred to ""advance application", meaning an application submitted by a branch of the Bank to its head office seeking an advance for a customer. A number of these were submitted by Mr. Parker on behalf of the James during 1980 and 1981. An advance application did not always involve additional financial assistance: sometimes it simply sought an extension of time for repayment of advances already made. Notwithstanding this somewhat dismal prognosis, Messrs. Kinasley and David James decided to approach the Bank to see whether it would assist in the purchase of Bibiking. There is evidence from the applicants that Mr. David James first approached Mr. Parker on his own. This was done at the suggestion of Mr. Kingsley James who said he wished the Bank to make a decision on the merits of the application, without any embarrassment that might flow from his presence. Mr. Parker said he had no recollection of being approached initially by Mr. David James. Nothing turns on this aspect for it is clear that Mr. Kingsley James participated in the applicants' discussions with the Bank from an early stage and that he was the dominant figure in dealings with the Bank. It 1s sianificant that the diary note of 13. 6 Mav 1980 makes no mention of Bibiking. It 1s hard to imagine that, 1f any formal approach had been made to Mr. Parker bv that date, it wouid not have been reflected in a diary note so concerned with the liquidity position of the applicants. On the other hand. the diary note of 9 May 1980 beains: "Kingsley & David. could they look at our assistance if they purchased brother Phil's farm." Before saying anything more of the diary note of 9 May, something should be said of the wav in which Mr. Parker kept his diary. He was required by bank practice to make a note of interviews and of conversations of any importance. At the end of the day he dictated these notes on to a dictaphone and they were then typed on to the diary sheets of the customers concerned. The handwritten notes were destroyed. It was his practice to dictate notes at the end of the day, even on Friday. However he conceded that there were occasions when he was unable to follow this practice. It also appeared from some of the diary notes that, where several discussions took place in the course of a day or so, a diary note might represent a summary of the events of those days. It was also possible that, in typing a diary note, a typist might inadvertently record the date of typing rather than the date on which the diarv note was dictated. If this happened, it was infrequent and in any event was only likely to throw the diary note out by one day unless a weekend intervened. With these qualifications, the diary notes reflected what took place on the dates they bore. However they were not and did not purport to be a verbatim account of every thing that was said. 14, I return now to the meetina recorded in Mr. Parker's diarv note of 9 May 19860. At that time the price being asked for Bibiking was unknown. Mr. Kinasley James made an assessment of the Likely price, based on his knowledge of the tarm and of the area generally. He thought it would be in the vicinity of $750,000. Mr. Parker recorded that "Subject to firm proposals in hand to change style of operation (see prev D/N), advised that they could look at our favourable consideration." I am satisfied that the diary note reflects what was discussed that day and that it was envisaged that the vendors might carry $350,000 on mortgage, that Mr. Kingsley James might sell 650 acres of Rowlands for $200,000 or thereabouts and that the Bank might lend $200,000. These figures were necessarily conjectural at that staqe. But the suaqgested method of financing is of some importance because of evidence by David James that early in May, when he saw Mr. Parker, the latter spoke of petro dollars and off shore loans as a means of funding the purchase of Bibiking. David James gave evidence that at that time Mr. Parker rang someone called Charles and asked for "John". In John's absence, Mr. Parker gave Charles some details of the James' requirements in order to buy Bibiking. It was the applicants' case that John was John Wells, the third respondent and that Charles was his father. I think it unlikely that when the purchase of Bibiking was first raised with Mr. Parker, overseas finance was mentioned or that there and then Mr. Parker tried to contact Mr. Wells. The method of finance mentioned in the diary note of 9 May 1980 made outside funding unnecessary. It was only when 1t became clear that Mr. Phillip James was not prepared to carry any finance (and there is 15. a diary note to this effect on 13 June 1980), that the question of borrowing from an outside source would have arisen. The James were inevitably vadque about dates on which certain events occurred. I am satisfied that it was not until June 1980 that outside funding was discussed with Mr. Parker and that he made an attempt to locate a finance broker or some such person who might be able to assist the applicants. This conclusion 1s supported by Mr. Parker's diary note of 13 June 1980 which records a call by Mr. David James seeking quidance on the purchase of Bibiking for a price now mentioned as likely to be $950,000. The note records Mr. David James as saying "Vendors are not prepared to carry finance". It also records "Customers have been in touch with Bunbury mortaage brokers, $400,000 interest only x 3 years can be arranged ... Telephoned Neville Quartermaine (branch customer), who can put us in touch with a Merchant Bank who would be prepared to find up to $1.5M, interest only (13.25% p.a. x 5 years)." There is no mention in the diary note of the second or third respondents. Moreover, it was only in June that' the applicants became aware that the vendors of Bibiking would not carry any of the purchase price, thus making it necessary to consider funding from a source other than the Bank. While Mr. Parker had, in May, discussed the possibility of the Bank lending $200,000 or thereabouts, it was apparent to all concerned that the Bank was not interested in lending all or most of the purchase price. 16. Contact with Market Securities and Wells Mr. Parker gave evidence that after 13 June he spoke to about twelve finance brokers to see if they could find the necessary funds for the purchase of Bibikina. The first mention of Market Securities or Mr. Wells ina diary note is that of 14 July 1980 which reads: "We have commenced negotiations on dJames's behalf with Market Securities John Wells, telephone 3222288. who are mortgage brokers and have been requested to find a direct lending source". That would suggest an approach by Mr. Parker to the second and third respondents some time before 14 July: in all the circumstances, I do not think 1t was until after the middle of June. It must also be appreciated that it was not until 7 July 1980, on the occasion of a family funeral, that Mr. Kingsley James and Mr. Phillip James agreed on a price for Bibiking of $1,065,000. However there was at the end of June a telephone call made by Mr. Parker to the James who were then in Perth. The details of that phone conversation are in dispute to some extent and there is an aspect of the conversation which is not in dispute but which I find puzzling. Mr. Parker rang at about 8.30 or 9.00 p.m. on a Friday. I am satisfied that it was Friday, 27 June 1980. He had tried to contact Mr. Kingsley James at the farm but was told that Mr. and Mrs. James and David were at their unit in 17. Claremont. Mr. Parker spoke first to Mr. Kinaslev James and said that he had some qood news, "He had been speakina to Wells and it looked as if he was woing to raise the monev to buv Bibikind, to get the loan". He suagested to Mr. James that he buy some offer and acceptance forms from Sands & McDougall, stationers, and agave directions as to where that business was located. Mr. James added that Mr. Parker mentioned "a merchant banker or an overseas loan" and, referring to the purchase of Bibiking, said that 1t was a ""qoer". In cross-examination Mr. James conceded that, though he thought Mr. Parker had mentioned Mr. Wells by name, that may not have been so and that Mr. Parker may have just said that a broker was confident he could raise the necessary money. It is common ground that Mr. Parker then = spoke to Mr. David James. His evidence was: "IT think he said he had been speaking to Wells and that he had the money. I think he said that he had the money from - or he had found the source from overseas or he had found a lender. I cannot recall. But he definitely said it is a goer and we had the money". In cross-examination Mr. James stated that his recollection was that Mr. Parker said that Mr. Wells would look into the matter and he (Parker) thought that he (Wells) would not have much of a problem to get the loan. Mr. James added: "Yes. He told me that the lender required us to sign it up, get a signed offer and acceptance ... You need to qet it signed up, not subject to finance because the lenders wanted to make sure that you were in a position to take the money". 18. Mr. Parker recalled making an after hours phone call about the time in question but he was unable to recall the purpose for which he rand. He thought that the "good news" might have been related toa family inheritance. I am satisfied that Mr. Parker ranq in connection with the purchase of Bibiking. Quite apart from the evidence of the James to this effect, there 1s no doubt that Mr. Parker suqqaested the purchase of offer and acceptance forms as there is no doubt that on the next morning the James bought forms at Sands & McDougall. I accept that Mr. Parker mentioned that it was likely that money would be forthcoming for the purchase of Bibiking but I am not satisfied that he mentioned Mr. Wells as the source of that finance. The matter is one of credibility rather than an essential element in the case because no purchase price had then been agreed for Bibiking, the applicants made no use of the offer and acceptance forms and no contract was signed for the purchase of Bibiking until 15 July 1980. I mentioned earlier a puzzling aspect of the telephone conversation. It is this. It is hard to understand why Mr. Parker should have been as adamant as he was that the James acquire offer and acceptance forms. No purchase price for Bibiking had been agreed and there was no particular hurry about the matter. More importantly however, to suggest that the applicants enter into a form of offer and acceptance for the purchase of Bibiking when. on all sides, the amount of money the purchasers would require and the terms of any loan that would be acceptable to them were still ill-defined, was to say the least imprudent. Mr. Parker said that although he could not recall Ley. telling the James, during this conversallon, £) sian an orfer to buy Bibiking, he could nor deny kaving stid it. It was isamprudent advice to give and equally it would have been imprudent to accept such advice. The applicants may not have been skilled in financial matters but they were exper1enced in the buyina of properties and, even had Mr. Farker asserted that finance was avallable, it would have been an extraordinary action for the applicants to execute an agreement to buy Bibikina without having some particulars of the finance available to them. Me. Parker s explanation was that 1t was never in his mind that the applicants would enter into an unconditional contract for the purchase of Bibikina. That suagqgestion he said, was "Silly". The offer and acceptance form was expressed in terms "subiect to finance" so that the purchasers would be protected in the event that finance was not forthcominda. Whatever was in Mr. Parker's mind, I am satisfied that he did not make it clear to the applicants that they should protect themselves by completing the "subject to finance" provision. In any event it is hard to see how they could do so since they did not know with any certainty what money was forthcoming and when 1t would be available. On the other hand I am not persuaded that he told the applicants in positive terms to execute an unconditional offer to purchase. I accept Mr. Parker s denials in that reqard. Because no contract eventuated from that discussion, the matter is not vital. But it does throw some light upon the attitude of the parties and their relationship to each other. in buying the forms the James showed a willingness to act on the advice of Mr. Parker. In suagesting that they buy the forms and use them, Mr. Parker showed a lack of 20. appreciation of the James' interests. He showed a further lack of appreciation in suqgqestina to them, as he acknowledged, that "thev did not need to see a solicitor to complete an offer and acceptance. Given the maaqnitude of the purchase price and the uncertainty surrounding finance, 1t was very much in the interests of the James that thev see a solicitor. Mr. Parker thought that the meeting recorded in his diarv note of 14 July mentioned earlier (a Monday) in fact took place onthe preceding Friday, 11 July. Messrs. Kinasley and David James said that they did not meet with Mr. Parker on 11 July but that they did have a meeting on 14 July. It is more likely that the James' account of the date of the meeting is the correct one. It 18 apparent that on 11 July the Kingsley James family and the Phillip James family met during the afternoon at the office of Taylor, Knott & Murray, Katanning solicitors. They met for the purpose of settling the terms of the contract to be prepared by Mr. Taylor. In the contract as originally prepared, Bibiking Pty. Ltd. was the vendor and David Maxwell James and Peter Norman James were the purchasers. That contract was executed by the parties in Mr. Tavlor's office on 15 July. Some time later another contract was prepared, in identical terms save that Kingsley Frederick David James and Jill Maxine James were added as purchasers. Mr. James said that in December 1980 he suggested to Mr. Taylor that he and his wife be added as purchasers since they were committing their assets in the financing of the purchase. He thought he signed the contract on 2 February 1981. Mr. Taylor was of opinion that the new contract was executed "many, many months" before that tl ra date and cE-hat 1t had been prepared in Auqust or September 1980. Mr. Tavlor s evidence is the more probable. The contract fixed the purchase price at $1,065,750, to be paid bv a deposit of $10,000 on the sealing bv the vendor of the contract, a further sum of $25,000 on or before 8 August 1980, a further sum of $71,575 on or before 31 Auaqust 1980 and the balance of $959,175 on or before 1 February 1981. Clause 4 of the contract 1s of considerable importance in the events that followed and so I set it out in tull. "4, IT IS AGREED HOWEVER that if the purchasers for any reason do not wish to or are unable for any reason to proceed with the purchase and subiect in each case to the payment as aforesaid of the said two amounts of TEN THOUSAND DOLLARS ($10,000.00) and TWENTY FIVE THOUSAND DOLLARS ($25,000.00) by the 8th August, 1980 the Purchasers may by the 3lst August, 1980 communicate to the Vendor or to the said Solicitors by notice in writing that they are unable or unwilling to proceed with the purchase of the said land and in such event the Purchasers shall not be obliged to pay the said sum of SEVENTY ONE THOUSAND FIVE HUNDRED AND SEVENTY FIVE DOLLARS ($71,575.00) on the 3lst August, 1980 nor the balance of the purchase price namely NINE HUNDRED AND FIFTY NINE THOUSAND ONE HUNDRED AND SEVENTY FIVE DOLLARS ($959,175.00) and this Offer and Acceptance shall be cancelled so far as concerns those two payments but the sum of THIRTY FIVE THOUSAND DOLLARS ($35,000.00) due and payable by the Purchasers by the 8th Auaqust, 1980 shall be paid and if not so paid then pavment may be enforced by the Vendor after that date." In some wavs the terms of the contract were unusual. Although the purchase price was $1,065,750, the initial deposit was only $10,000 and an amount equal to the conventional deposit of 10% did not become payable until 31 Auqust. Furthermore, the contract gave Fhe ourchasers until 21 august 1ly8c0 te withdraw from the contract by Lrorreiting the amount of $35.000 due by 8 August. This provision gave the purchasers a breathina space of a month or so at the end of which thev could withdraw From the contract. It 1s true that thev would lose the $35,000 they had paid but this was less than half of a 10% deposit they might have been expected to provide at the outset and to lose 1f they did not complete the contract, quite apart from anv damages for which they miaght have been liable. Curiously, cl.4 was not inserted at the request of the purchasers but at the suaqestion of Mr. Phillip James. He did not aive evidence and none of the witnesses who were called, uncluding Mr. 'Taylor. threw much light upon the circumstances in which the clause was included. I infer that, because 1t was ina sense a family transaction. Mr. Phillip James was offering his relatives an opportunity to withdraw from the contract at an early stage. But he was not prepared to return the $35,000 and the reason for this, at least as to $25,000, may be found in Mr. Parker's diary note of 14 July 1980 which includes the following in relation to Bibiking: "Purchase terms $10,000 now, $25,000 on 8.8.80 (non refundable, vendors committed to making this payment on the farm he has bought at Dandarigan), $71,000 by 31.8.1980 (total $106,000 deposit). Balance on settlement 1.2.1981, take over 1.3.1981". Clearly Mr. Phillip James was committed to a purchase of his own and was not prepared to return the $25,000 and then find himself liable for that amount under the contract in which he was purchaser. There was no evidence that in any of the discussions between the Kingsley James and the Phillip James families, including the meetina with Mr. YVavior, there was anv suagestion Ehat the contract enould oe exetressed to be subtect to finance or in anv way made conditional upon the purchasers obtainina a loan. Counsel tor the applicants relied upon this fact as evidence that on il July 1980 the applicants were conrident that they would receive a loan of whatever moneys were necessarv to meet the contract For the purchase of Bibiking. In the circumstances, this conclusion has much force. However the conclusion does not dispose of other questions, in particular - were the applicants Justified in so believing and, if so, were they justified because of what had been said to them by Mr. Parker or by Mr. Wells? Whether the meeting with Mr. Parker took place on 1l duly or 14 July is not vital. The relevance of the date lies in the area of credibility and also perhaps for some light it may throw upon Mr. Parker s system of recording entries in his diary. However I am satisfied that the meeting took place on 14 July. The evidence of the James in this regard is confirmed by the diary entry aitself which refers in specific terms to details of the contract which were only arrived at on the afternoon of Friday, 11 Julv and so could not have been made known to Mr. Parker until later. The diary note also contains this statement: "David is to arrange with Tim Duncan, (Accountant C.P. Birds) for production of SP's, balance sheets and very basic cash flow before calling to see John Wells hopefully later this week". Mr. Parker made an appointment on behalf of the James with Mr. Wells on Friday, 18 July. This suggests that the entry was made earlier that week. I do not accept Mr. Parker's explanation that 24, he recorded "this week" in relation tao something that took place on Friday, Jil July because of uncertainty as to when the meeting Might 1n tact take place. Mr. & Mrs. James, David James and Peter James executed the contract of sale in Mr. Tavior's office on 15 July. once aqain I must savy how odd I find their actions in doing so. As will appear, they had a meeting arranged, three days later, with a man (Mr. Wells) whom thev had not met and upon whom they were relying to provide them with a loan of $1,000,000 or thereabouts on terms which had been mentioned but which were by no means settled. It would have been easy enough to ask Mr. Phillip James to wait a few days until they had seen Mr. Wells and were able to satistv themselves that a loan would be forthcomina. While Mr. Phillip James was involved in the purchase of at least one other property, there was no evidence that he was pressing for immediate execution of the contract. Indeed. while not a reluctant vendor, it was the purchasers who had approached him and not he who had approached the purchasers. Mr. Taylor reaqarded himself as acting for both vendors and purchasers, an unsatisfactory position though one that is not uncommon in the case of a country solicitor who has represented all concerned over the years. He gave no advice to Mr. Kanasley James or any members of his family as to the merits of the purchase or of the financial arrangements relating to the purchase. What had the applicants been told regarding the provision of finance by 15 July 1980? Whatever they had been told, it was by Mr. Parker for they had not had any dealings with 25. Mr. Wells at that stage. Il am satisfied that Mr. Parker had told Me. BLroagsley James and Mr. David James that Ehe proespects of their obtaining a loan were qood but I am not satistied that he told Lhem that there was no doubt about those prospects. And I think that he told them the prospects were good after he rana Mr. Wells on il or ld July, more likely the latter. The fact that Mr. Parker arranged for the James, together with their accountant Mr. Duncan, to attend on Mr. Wells and to take with them balance sheets and a cash flow indicates and must have indicated to the applicants that there was much information required by Mr. Wells. It is also apparent from Mr. Parker's diary note of 14 July 1980 that Mr. Wells had spoken of direct and indirect lending. Direct lending simply meant a loan made by a lender to the James on whatever security was thought to be satisfactory. Indirect lending, which was later explained to the James as being lending from an overseas source, usually required a quarantee from a financial institution such as a bank. Hence there is a reference un the diary note as follows: "It may well be that the Brokers are unable to locate a direct lending source and it may be necessary for the Bank to provide a Guarantee. If so lending would be at say 12% plus Bank quarantee fee of say 2/2.5%. Wells believes that if direct lending is found weight could be up to 14% maximum." In my view the James were entitled on 15 July, asa result of what they had been told by Mr. Parker, to feel some confidence about their prospects of getting a loan. But they were not entitled to assume that a loan acceptable to them was certain. They had not spoken to Market Securities as agent for any prospective lender. Mr Parker had mentioned, in reporting what he bo oO had been told by Mr. Wells, a loan ot $1.5 million over 5 years at 2 1/4% over the current bond rate, rixed tor 5 vears with a review in similar circumstances in 1985. But they did not know for sure that this was the sort of loan they would wet or whether 1t might be necessary to borrow money in circumstances where the Bank would be called upon to provide a quarantee. Given the size of the transaction in which they were involved, I am of the opinion that ordinary prudence dictated that thev should make no assumptions about the certainty of a loan until they had seen Mr. Wells. The meeting on 18 July 1980 On Friday, 18 July 1980 Messrs. Kinasley, David and Peter James, together with Mr. Duncan, met Mr. Wells in the latter's Perth office. All those present, except Mr. Wells, gave evidence. According to Mr. Kingsley James, Mr. Wells mentioned various tvpes of loans he would be trying to get for them. He mentioned overseas loans, saying that "if we had an overseas loan we would have to have a bank quarantee". Mr. Wells said he had been speaking to Mr. Parker in that reqard. He mentioned two or three weeks as the timetable for obtaining a loan. Mr. James said that "an amount of $1.6 million was the proposed loan" though he did not make it clear whether this fiqure was mentioned at the meeting as opposed to some earlier occasion. Mr. Wells looked at varlous documents brouaht to him that morning, in particular a two vear project buddet prepared by Mr. David James and some fiaqures Mr. Duncan had with him. fh ~) . In cross-examination bv counsel for the second and "third respondents. Mr. Kingsley James said thac Mr. Wells told him that he may or may not need a quarantee, dependina on where the money came trom, He admitted that Mr. Wells may have said that, in order to have any prospect ot success ot obtaining an overseas loan, a bank quarantee was necessary. Mr. James said that he was very confident at the time of the Bank granting him a quarantee and that he mentioned this to Mr. Wells. He admitted that Mr. Wells discussed other options in the event that a bank quarantee was not forthcoming, mentioning domestic loans as a possibility. Mr. James recalled Mr. Wells telling him that overseas loans were "cheaper" than domestic loans, a reference to interest rates. The meeting ended on the basis that Mr. Wells was to seek an overseas loan. Mr. David James said that at the meeting Mr. Wells talked about the type of loan that he was seeking. He recalled some mention of Barclays Bank though the name may have been mentioned before 18 July. Mr. Wells spoke of a quarantee, saying that the Bank would quarantee a loan. During the meeting Mr. Wells rang Mr. Parker to say that he may or may not need a quarantee and then told the meeting that there would not be any problem. In cross-examination Mr. David James said that he remembered Mr. Wells talking about hedged and unhedqed loans. He agreed that the purpose of the meeting was to discuss the possibility of Mr. Wells obtaining an overseas loan. He aareed that Mr. Wells had said that, so far as an overseas loan was concerned, a bank quarantee was essential. Mr. James said that he thought the loan that they were getting was an overseas loan. 28. The evidence oar Mr, Feter James added nothing to what T has already been said. He had little recollection ot Ehe aetails of the meetina, Me. Duncan had not met Mr. Welis before 18 duly. He took with him the previous three vears financial statements for what he described as "each of the James' accounting entities". He had a folder containing details of the properties owned by the family. with title descriptions. Mr. Duncan said that Mr. Wells would not sav who the loan was qoina to be from. "He suggested that 1t may be either a loan of off shore funds or a loan made by a@ local snvestor". In regard to an off shore loan, Mr. Duncan raised the matter ot insuring against currency fluctuations. He had the impression that Mr. Wells had someone in mind with money. What struck Mr. Duncan was that Mr. Wells wanted to qet on to the application for a loan that dav. "He suagested that we would probably have approval - or could - by Wednesdav, and certainly by next Friday. That very much surprised me because even lenders like the Commonwealth Development Bank ask applicants to have a six weeks option on the property they are going to buy before they will look at it. They need six weeks to look at anapplication but Mr. Wells was fairly confident of getting this within a week". Mr. Duncan recalled that there was mention of the Bank and that a bank quarantee would be necessary for an overseas loan. He mentioned that the James were looking for a long term loan on an interest only basis. The meeting concluded, according to Mr. Duncan, with Mr. Wells saying that he thought he could complete the application that day and would qet on to it straight away. ag. Almost his last words were "We 11 have a party when the loan has been aporoved". in ckoss-4#xaminatiLon ov counsel for the sccond and third respondents. Mr. Duncan said Lhat Mr. Wells stated that "he would be able probably to get an approval by Wednesday which was five days away. three working days, or bv the following Friday". Tam satisfied that at the meeting on 18 July 1980 Mr. Wells expressed to those present his contidence in his ability to obtain a loan of the sort that the applicants were seeking. He mentioned both domestic and overseas loans, without identifying one or the other as the Likely source. But. to the applicants, that was not so important as an assurance that they would get a loan of sutficirent size to enable them to complete the purchase of Bibiking and on reasonably long terms on an interest only basis. The James and Mr. Duncan left that meeting, optimistic about the prospects of a loan. They were entitled to be optimistic in the light of what Mr. Wells had told them. The instalment due on 8 August 1980 Under the contract of sale a further payment of $25,000 was due on 8 Auqust 1980. There was evidence from Mr. Kinasley James that before that date he spoke to Mr. Parker who told him not to worrv as he thoudht that Mr. Wells was capable of getting a loan. In cross-examination he agreed that Mr. Parker was saying only that Mr. Wells thought he could det a loan. However in ke-examination he said that he took that statement to be an assurance that Wells was capable of getting a loan because it came 30. Lrom o""mv trusted bank manucder", The oxpréssion was a rather artifictal one and 1k sounded 50. suk as Further 2vidence or the tact that Mr. Kinasley James assumed that a luan was Forthcomind, he anstructed Mr. Tavlor bo prepare an aaqreement whereby. in the event or the purchase price beina paid before the due date, Mr. Phillip James would be entitled toa lease of the property until 1 February 1981. In the event, no such agreement was prepared. Mr. Parker s diary note of 24 July 1980 records havind been told that an application had been submitted through Market Securities for a loan of $2,000,000 and "brokers are confident of success. Reply should be to hand within 2 weeks and proposal encompasses refinancing of all debts - Bank, Esanda, Private mortaages, etc.". The note goes on to refer to an understanding of the interest rate, duration of the loan and other matters relevant to the loan. This. I think, was a record of what Mr. Parker had been told bv Mr. Wells rather than what he had been told by the applicants. On 8 August Messrs. Kinasley and David James went to the Bank, needing help to pay the amount of $25,000 due that day. Mr. Parker said (and I accept his evidence) that he was upset that the James had left approaching him until the very day the payment was due. Mr. Parker telephoned the administrative section of the Bank and received approval for a commercial bill in the sum of $30,000 payable on 30 September 1980. That date was selected, according to Mr. Parker. because Mr. Kinasley James "believed the finance would be approved and available before that date". The applicants 31. had received no word from Market Securities that a loan had been granted. Mr. Parker said -hat on that eccasion he discussed with the James whether they should continue with the acquisition of Bibiking because the deposit due that day was mon refundable. In cross-examination. Mr. Kingsley James aqreed that some such statement could have been made by Mr. Parker thouqh this was denied by Mr. David James. There 15 no reason to doubt Mr. Parker s evidence in this reqard. He added that the James said they wished to proceed because' thev telt confident they would det the money. The instalment due on 31 August 1980 Paragraph 13 of the statement of claim pleads that on or about 27 and 28 Auqust 1980 Messrs. Kingsley and David James attended the Bank, sought advice as to what steps they should take in relation to the payment of $71,775 due on 31 August and were advised to borrow this sum against the security of Avondale. Evidence was given by the James in relation to such an attendance involving Mr. Parker. But 1t is clear that Mr. Parker went on holidays on the evening of 8 August 1980 and did not return to work until 8 September. In fact during Mr. Parker's absence the James arranged a loan of $70,000 from Bridging Finance Pty. Ltd. to enable them to pay the amount of $71,775 due by 31 August 1980. Settlement of Bibiking was due on 1 February 1981. Market Securities still had not arranged a loan. According to Mr. Kinasley James, Mr. Parker told him in or about October 1980 that he was still hopeful of Mr. Wells getting a loan and thought him ul WN capable Or gettine a Loan. Mt. James dad nok sudadest thet Mr. Farker was reporting a recent canversation with Mr. Wells. Mr. Parker s diarv note of 22 October 1980 records: "Kingslev, David and Peter called for interim review. Mortaage broker in Perth was still neqotiatina with Citicorp on the funding of a §2.2m loan encompassing the purchase of adjoining farmland ($1.2m) and refinance of existing debts and provision of carry on needs", The events of November 1980 On 7 November 1980 Messrs. Kinaslev, David and Peter James again called on Mr. Parker to discuss financial arrangements for completion of the purchase of Bibikina. According to Mr. Parker's diary note for that date. they expressed their concern that a loan had not been arranged and mentioned that Mr. Wells was seeking two loans of some $500,000 each. They told Mr. Parker that Mr. Wells "has suggested that the Bank may be prepared to meet any shortfall". That diary note also records the James acknowledging that "given the new circumstances, it will be more than likely necessary for them to seil land to co-incide with the purchase of the new farm". Mr, Parker suqgested that they consider three propositions, one involving two loans of $500,000 each, one involving one loan of $500,000 and the third with no outside lending involved. Each proposition would involve the sale of some of the James' land. Mr. Parker suaqgested that the James call back the following week to beaqin discussions with Mr. O'Toole. a farm adviser, "so that cash flow projections can be commenced in each of the circumstances to enable a course of 33. action to be undertaken during sav the lst or 2nd week in December". Messrs. Kinaslev., Uavid and Peter James called on Mr. Crane, the assistant state manager or the Bank. on 12 November 1980. They did so at the suggestion of Mr. Gellard of Bridging Finance Co. Pty. Ltd., the company which had provided the $71,000 required at the end of Audqust. They told Mr. Crane of the difficulties they were experiencing in securing a loan and how Mr. Parker had introduced them to Mr. Wells. Mr. Crane said he would write to Mr. Parker. The conversation ended with Mr. Crane saying "Don't worry. We'll look after you.". Mr. Crane telephoned Mr. Parker the same day and was told that Mr. Wells was now seeking a bridging loan of $900,000 or thereabouts from Barclays Bank or another two financial institutions. Presumably this 1s what Mr. Parker had been told by the James. Mr. Crane suggested to Mr. Parker that perhaps the Bank could provide the bridaing finance required on short term commercial bills. On 17 November 1980 the James aqain called on Mr. Parker, this time with Mr. O'Toole. He was a farm management consultant practising in Katanning and it was he whom Mr. Parker suggested the James consult. According to Mr. O'Toole, he was asked by Mr. Kingsley James to assist with "the preparation of budget estimates concerning the purchase and operation of the property Bibiking". Before the meeting at the Bank on 17 November, Mr. O'Toole saw Mr. Parker to get some details of the James' finances. He was trying 34, to assess the ramily » financial position as at 1 February 1941, the date on which thev were required to tind the balance of purchase price. Mr. O''Toole put together some fidaures which lead him to the conclusion that, on the basis of the familv's existing farmina operations and production programme, "there would be insufficient income to service anything like the level of debt that would be entailed in effecting the property purchase and operating the overall holding". Mr. Parker's diary note of 17 November 1980 records that at the meeting that day the James estimated their capital needs to complete the purchase of Bibikina as $965,000, together with other monies to enable them to carry on for the ensuing 12 months. The diary note contains this comment "O'Toole will immediately commence cash flow projections anda firm assessment of their needs to formulate a proposition". This concerted approach to the Bank in November, both to Mr. Crane and to Mr. Parker, is hardly consistent with the James' expressed optimism concernina a loan through Market Securities. It is even less consistent when regard is had to the fact that on 27 November 1980 Market Securities wrote to Mr. Kingsley James listing the various organizations it had approached and the reasons why those approaches had been unsuccessful. The letter concluded "Rest Assured we are still doing our utmost to set this deal". On 19 January 1981 Market Securities again wrote to Mr. Kinasiey James to report on its lack of success in its approach to various organizations. The letter concluded: "However we are continuing in our search and assure you of our best intentions to set your deal. We believe that the ANZ Bank may be assisting you in the short term. advise Could vou 35. Advance Application of 14 January 1981 on otfice account of 14 January of the Bank an advance Kinasley James & Co. was in the following terms: 1981 Mr. application in Parker submitted to please advise us or have Terry Purker us what 1S nappenina in this reaard". the head relation to the The "Accommodation Recommended" Nature of Existing Present Recommended Term Liabilities Liabilities Limits Limits Working Account 29546 - - FDL 52000 52000 52000 clear 1985 FDA 100000 100000 100000 5 years FDL NO 2 to open - 150000 10 years CBAD 50000 50000 1250000 12 months Total direct 7 limits $202000 202000 1552000 Total limits $202000 202000 1552000 Some the terms in the application require explanation. "FDL" refers to farmers debt loan. "FDA" 1s fully drawn advance. "CBAD" is commercial bill accepted and discounted. As can be commercial bills of 12 seen, months. Mr. Parker was from $50,000 to Commercial bills were $1,250,000 for recommendina an increase in a period a facility offered by the Ww 6. Bank. They were e1ther of 30 davs' or 6 months' duration. [In eftect thev consisted of a promissorv note drawn in favour or the Bank which the Bank then sold on a discounted basis in the monev market. When the term of the bill expired, it was "rolled over" for a further period. When this procedure had been followed on several occasions, the result was a commercial bill line. I shall Say more about the advance application of 14 January 1981 but first it is necessary to say something of the circumstances that brought 21t about. In this reqard there was a considerable conflict of evidence between Mr. Kingsley James and Mr. Parker. Mention has already been made of the interview on 17 November 1980 at which it was arranged that Mr. O'Toole would prepare cash flow projections. Mr. O'Toole thought that the meeting with Mr. Parker was on 18 November 1980 but the difference in evidence is of no real importance. Mr. O'Toole prepared what was described as a "rough budget" which did not work. By that it was meant that, having reqard to income and outgoings, there would be insufficient money to service the loans proposed. It is at this point that the conflict of testimony begins. Mr. Kinasley James stated that there was a further meeting with Mr. Parker, at which the latter said that the James would have to sell all their sheep and go on to an all cropping basis. The term "all cropping" is self evident; it simply means that the farmer runs no stock and confines his activities to cropping. Mr. James said that he approached Mr. O'Toole again, asking him to prepare a budget on an all cropping basis. Mr Parker denied that he had given any such instructions or advice to the James. He agreed that there was a la ~l need "to change the profile of the farm ta a basically cropping exercise"; but that was not the samé as an all cropping basis. I do not accept Mr. Kingsley James' evidence in this regard, tor a number of reasons. To begin with, he had beena farmer for many vears and was a man of firm views. I do not think he would have accepted advice from Mr. Parker as to the best way of conducting his farming operations though I accept that, where financial considerations were involved, he was bound to pay some heed to what the Bank told him. But I do not think that Mr. Parker would have given such advice. It 18S apparent that there are considerable risks involved in conducting a farm on an all cropping basis, except perhaps for a short term. This was made clear by David Eric William Nuttall. the managing director of Agribusiness Counsellors Pty. Ltd., a company carrying on the business of farm management consultants and valuers. The risks are those associated with putting all one's eags in one basket. If there is a crop failure, there is simply no income. The logistics of farming on an all cropping basis are considerable and there are real problems of controlling weeds, plant diseases and soil deterioration. All this was known to Mr. James and, ina more superficial way, to Mr. Parker. Furthermore, the term "all cropping" was used by the applicants in a rather loose way so as to refer sometimes to all cropping literally and at other times to a system in which a high proportion of land is used for cropping. Mr. Parker was concerned and had been concerned since his arrival in Katanning about the stock trading activities of Kingsley James & Co. As mentioned earlier, these activities 38. anvolved a areat deal of money and were responsible in part for the liquiditv probiems of the applicants. I accept that Mr. Parker continued to urae Mr. Kingsley James to cease stock trading. But that 1s an entirely different matter from running sheep for wool and to maintain a flock. In this regard I accept the evidence of Mr. Parker that, to increase the income of the James over the following vear or so, he advised an increase in cropping and a reduction in stock in 1980. These conclusions are born out bv the second budget that Mr. O'Toole prepared (exhibit 46). According to Mr. O'Toole it was prepared following discussions between him and the James - ",.. the essential features of which were to increase the cereal cropping to 11,000 acres per annum and reduce the Merino sheep flock to approximately 2,000 head and include a resale sheep enterprise; that is stocking the stubbles and selling the stock off again before planting of the subsequent crop". The second budget prepared by Mr. O'Toole comprised two projected cash flow statements, one covering the year ending 31 January 1982 and the other covering the year ending 31 January 1983. They reflect the discussions mentioned by Mr. O'Toole. They do not contemplate all cropping and no stock. The advance application of 14 January 1981 identified various properties to be held as security for the financial assistance proposed. It contained a lengthy statement by Mr. Parker as to the backaround of the application, in particular the need to finance the purchase of Bibiking. It included the following statement: "The Broker pneing used has seeminalv kept customers ona string for some time now with promises of funds and 'approved' applications - each of which has 'fallen through' or 'still being considered'. Customers are now in the position of settlement beind due lst February 1981 without finance backina and the probable loss of more than $107,000 deposit paid. Vendors have committed themselves to purchases elsewhere against funds being available from the sale. While vendors are 'family' there is not the affinity normally expected and even if there were - action against the vendors (Phil and Kim James) by the vendors of the properties thev are in turn purchasing, must be passed back to our customers. Accordinaly, and with considerable losses loomina, the Bank has been asked to provide a rescue operation with bridging finance pending the raising of outside funds or sale of other farm land to clear the $1M plus". The application also contained the following statement: "At this late date, there are only two alternatives open to customers - suffer the loss or locate bridging finance. Assuming the latter is successful, customers will continue in their quest for outside term lending or, if such a source(s) cannot be located within 12 months, they will undertake to immediately sell farmland and industrial land (latter already in hand) to clear the bridging content then remaining. This may take up to 12 months (maximum)." There 1S one further statement which I set out as it is of some importance, having reqard to what has been said concerning the livestock trading operation. "However, While the Budget (prepared by customers and Farm Adviser) is based on the bridging exercise in mind, it will be seen that cash flow qeneration is excellent. This is solely from the large cropping programme (on-qoing) capable of achievement following the excision of the livestock trading operation". 40. It 25 one of the applicants chief complaints aqainst the Bank that thev were persuaded to change their method of farming operations and that in doing sa they acted to their considerable detriment because their crops did not produce the amounts expected. Furthermore, the applicants say, they were persuaded by the Bank to assume liabilities under commercial bills which they were unable to service so that ultimately they were forced to sell most of their farming properties. These matters require closer consideration but I am satisfied that Mr. Parker did not advise the James to switch over to an all cropping basis and I am also satisfied that they did not do so. Mr. Parker suggested a higher proportion of cropping. The James discussed this aspect with Mr. O'Toole and, relying on his advice and their own experience, decided on the amount of land to be cropped and the amount of stock to be held. On 2 February 1981 Mr. Parker learned from area office that the application of 14 January had been approved. He informed the James accordingly. Counsel for the applicants made much of the fact that in a memorandum accompanying the advance application of 14 January 1981 (exhibit 83), Mr. Parker wrote: "A decision was made just prior to Christmas to submit this bridaing application and it has taken to now to compile same. James senior is an affable fellow and a reasonable farmer but a hopeless businessman. Trying to get to arips with him on financial matters is hopeless - he relies heavily on others. However, has a son now on farm who has completed an agricultural college course (NSW) and has taken over financial reins 4l. to a larae deqree. He has accrued an excellent level of landed assets, mainly through qood luck in the farmland purchases made around the town boundary, inflation and rapid town development over recent vears". The vear 1981 was a time of rising farm values, a rise which continued until mid 1982 and then fell away. Counsel pointed to the reference to "a hopeless businessman" and "he relies heavily on others" as evidence of the trust placed by Mr. James in the Bank and his necessary reliance upon any advice qiven by it. However it 1S important to keep in mind the distinction between advice of a financial nature and advice in reagard to farming operations. As to the first, there 1s no doubt that the Bank did advise the applicants from time to time and in the circumstances it had an obligation to do so. As to the second, I do not think Mr. Parker agave or the applicants accepted any such advice. There can be a real distinction between the giving of advice on the one hand and the imparting of information or the exchange of ideas on the other. Settlement of Bibiking Settlement of Bibiking was now due and security documents were prepared by the Bank as a matter of urgency. Some security documents were siaqned on 6 February in the office of the Bank. The mortaagqe documents themselves were, for the most part, signed on 12 February 1981. On this occasion Mr. Parker and Mr. Sharpe, the assistant branch manager, were present as well as members of the James family and Mr. Taylor. Mr. Taylor's role on this occasion was left somewhat in the air. I accept Mr. Parker's 42. evidence that he was not there at the reauest of the Bank. I am satisried that the James told him Ehat they were attendina at the Bank to sign security documents. I am not satisfied that thev asked Mr. Taylor to accompany them and I was told by counsel that there was nothing in Mr. Taylor s files to suggest that an account had been rendered to anyone for his attendance on that day. Mr. Tavlor did not seem to know why he was present. It was Mr. Parker who explained each document to the James before they signed it. Mr. Taylor may have made some comment 1m answer to a question by Mrs. James but apparently he did not see his role as one of advising the James. The security documents had been prepared and it is unlikely that the Bank would have agreed to any changes. In any event, 1t is not suggested that there was anything about the security documents themselves that was out of the ordinary or particularly onerous. On 7 August 1981 Messrs. Kingsley, David and Peter James called on Mr. Parker again. This is not to say that there had not been discussions between February and August. But a diary note of that date records advice by Mr. Parker that the Bank would consider rolling over the bill facility for a further 12 months "on the basis that working account was kept strictly in credit and a tangible reduction was made in CB facility presently standing at 6$1.25M. Suggested reduction $250,000. However, budget projections indicate that $250,000 reduction is not possible if they are to overcome need to borrow for carry on requirements next vear. It would seem that a reduction of $100,000 and possibly up to $150,000 only may be achieved". 43. The same diary mote records that, through their accountant, the applicants were advertising for lona term finance and that there was prospect of a loan of $1.9 million over a period of 10 to 20 years onan interest onlv basis. However bv October 1981 the applicants' position had worsened and Mr. Parker s diary note of Il October 1981 records advice by him to Messrs. Kinasley and David James that ",.. the bank is not interested in supportina them any further. They are to arrange and lodge funds to account prior to issuing any cheques to be drawn and which must not exceed those deposits. This arrangement to continue until grain proceeds are to hand - they expect first barley receipts during late November. However, this 1s considered premature and branch estimation on date of receipts is late December". There is a lengthy diary note of 19 October 1981. No outside loan was forthcoming. An inspection of Bibiking and Avondale by Mr. Parker with Messrs. Kingsley and David James showed the crops looking excellent and the possibility of a first advance on crops of $700,000. However Mr. Parker pointed out to the James that bank approval of a commercial bill line earlier in 1980 "was on the firm understanding that it could be cleared within 12 months". Mr. Parker emphasised the need to gqive consideration to selling land with a view to reducing the commercial bill line. In 1982 the applicants' position worsened even further. They were unable to meet their obligations to the Bank under the commercial bill line and in the end the Hank insisted that steps be taken to sell the properties the subject of its security. I shall say something more of the sale of the mortaaged land later 44, un these reasons but pefore doing so it 1s necessarv to rétrace steps to 1391 Fo cansider the implications or a purchase in which Mr. Anqus James was involved. is James _~- the Lake Kina _rarm The transaction 1s relevant to the applicants' claim against the Bank in this way. In or about September 1981 the Bank lent Mr. Anqus James the sum of $185,000 to buy a farm at Lake King. The applicants say that, at the request and on the advice of Mr. Parker, Mr. and Mrs. James executed a quarantee mortaage in favour of the Bank over part of Brickworks to secure the loan to Mr. Angus James. In that respect, the applicants say, the Bank was quiltv of misleading and deceptive conduct by representing that Mr. and Mrs. James were in a position to provide a quarantee mortaaqge when in fact they were unable to meet the terms of the borrowinas to which they were already committed. On 9 March 1981 Mr. Angus dames called on Mr. Parker to discuss in a qeneral way the prospects of a loan to secure the purchase of a farm. Mr. Parker did not commit the Bank but recommended to Mr. James that he look beyond the Katanning region to areas where properties were cheaper. He suggested looking at Esperance or even up north to a station property. Mr. Angus James looked around areas east of Katanning until he came upon a propertv at Lake Kina. Through the agency of Elders he sidgned an offer to buy Roe Location No. 2853 for $160,000. pavable bv a deposit of $16,000 and the balance 45, on 27 April 1981. Both vendor and purchaser signed the contract on 12 March L981. Although settlement was expressed to be on 4 Mav 1981, the vendor, Mr. Eichler, agreed to a term in the contract "to aive the purchaser immediate access to the property to start his cropping programme". Although there was some suaqgestion in the evidence of Messrs. Kinasley and Anaqus James that Mr. Parker was aware of the Lake Kina propertv before the contract was sianed, I am satisfied that he was not. His diary note of 13 March 1981 records a call by Messrs. Kinaslev and Anaqus James to inform him of the purchase of "3012 acres at Lake King for $144.576 - actual purchase price $160,000 (this includes a combine/culti trash, new root rake and new plough and water tanks and sufficient qrain to sow 1200 acres"). Angus James was seeking finance by 27 April 1981. Mr. Parker noted that this time was too short as an application to the Commonwealth Development Bank would have to be completed and this would require the preparation of cash flows over a period of 3 vears. Mr. Parker suggested to Mr. James that he seek an extension of terms from the vendor. Mr. James travelled to Adelaide where Mr. Eichler was then living and on3 June 1981 the parties agreed to extend the date for approval of finance until 12 August 1981, with a settlement date on 31 Auaust. Mr. James adqreed to pay interest on the sum of $160,000 at the rate of 16%, calculated from 4 May 1981 and payable at settlement. There was a further provision that in the event finance was not approved by the stipulated date "\.. the Furchaser aqrees that he shall waive anv interest or property in the crop sown by him on Lhe land and shall not seek anv reimbursement thereror holding any aunterest or property therein unto the Vendor absolutely as rrom either the date of refusal of finance or the 12 the day or Auqust 1981 whichever is the earlier". There were a number of meetings between Mr. Angus James and Mr. Parker in April, May and June 1981, with various attempts by Mr. Parker to obtain money from different sources to assist Angus with the purchase of the Lake King property. On 16 Juiy 1981 Mr. Parker wrote to Mr. Angus James "J... to confirm our verbal advices that a Farm Development Loan of $140,000 has been approved to assist in the purchase of the Lake King farm property and repay existing loans at this branch. As discussed, the Farm Development Loan approval is subject to the Bridging Finance Company loan of $70,000 and the Commonwealth Development Bank loan of $45,000". Unfortunately for Mr. Angus James, although the 1981 season started well in the Lake King area, it did not carry through and the first crop was not nearly as successful as expected. Mr. Angus James also put ina barley crop in Katanning but, in view of the lateness of the vear when the crop was sown, 1t too was not particularly successful. There 1s no doubt that Mr. Angus James bought the Lake King property ona very slim equity. He borrowed virtually the whole of the purchase price and. in mv view, 1t is extraordinary 47. that Mr. Kingslev James did not seek to dissuade him from sucha purchase, given the lamits to which the familv's finances were stretched 1n March 1981. Indeed it seems that Mr. James told his son that the block was for sale, although he may have been just passing ona message from Elders. In my view it was equally unwise of Mr. and Mrs. James to commit themselves as quarantors of the purchase in the circumstances in which they were then placed. Mr. Anqus James found himself unable to continue with the farm and eventually it was sold in 1983 for a purchase price of $210,000. There 15 no reason why it could not have been sold earlier and probably at a better price. Sale of the James' properties Although the applicants undertook in May 1982 to seil the land secured by the mortgages to the Bank in connection with the purchase of Bibiking, clearly they were reluctant to do so. The sale of farm iand was anathema to Mr. Kingsley James and was destructive of all that he had built up over the years. But the applicants had no choice and in August 1982, through Elders. they took steps to sell some of the land. They did so by tender rather than by auction or private treaty. This was on Blders' advice. The James were well known in the area and their financial difficulties would also have been well known by the end of 1982. Elders thought that to call tenders would be more likely to attract reasonable offers than a sale by auction which would have all the earmarks of a forced sale or than a sale by private treaty. +8, No sales were etfected until 1983. It 1s enough tor present purposes to set out in summary form when various farms were sold and the prices obtained. All properties to be mentioned were sold privately other than Rowlands which was sold bv auction. Propertv Date of Sale Price Total Yallambee Part One 20 April 1983 $280,000 Yallambee Part Two 9 March 1983 $148,950 $428,950 Cronans 20 April 1983 $170,000 $170,000 Bibikina Part One 8 April 1983 $431,330 Bibikinag Part Two 9 March 1983 $192,000 Bibiking Part Three 26 April 1983 $185,280 $808,610 S.M.P. 17 March 1983 $140,000 $140,000 Rowlands Part One 5 May 1983 $24,000 Rowlands Part Two 5 May 1983 $66,500 Rowlands Part Three 5 May 1983 $32,000 $122,500 $1,670,060 The proceedings in this court The application to this court was lodged on 13 November 1984. The applicants sought an interlocutory injunction to restrain the Bank from exercising its power of sale as mortgagee of Avondale. The Bank undertook to take no further steps in relation to the sale of that property until the litigation was determined. 49. Tt 12 unnecessarv te trace the historv of the litidgation therearter save to say that there have been motions bv the respondents séekina orders striking out various paradraphs of the statement of claim. In part those motions were successful, in part thev were not. The applications have been reported - see James v. Australia and New Gealand Banking Group Ltd. £1985] A.T.P.R. 40-504; £1985] A.T.P.R. 40-523; C1985] A.T.P.R. 40-567. The last of these decisions, which involved a contention bv the second and third respondents that any cause of action aqainst them was in any event statute barred, was the subject of an unsuccessful appeal by them to the Full Court of the Federal Court - see Tamar Management Pty. Ltd. v. James (unreported decision delivered 20 September 1985). A motion by the second and third respondents seeking an order for security for costs was also dismissed - see James v. Australia and New Zealand Banking Group Limited (unreported decision delivered 23 October 1985). Misleading or Deceptive Conduct - The Relevant Law The applicants' case adainst the respondents under s.52 of the Trade Practices Act turns upon statements said to have been made in relation to the availability and obtaining of a loan to finance the purchase of Bibiking. Assuming that the respondents made the statements attributed to them, some of what was said related to what would happen in the future. In Bell v. Australasian Recyclers (W.A.) Pty. Ltd. [19861 A.T.P.R. 40-644 I discussed the law in relation to statements relating to what would happen in the future. [I shall not repeat what is set out there 50. but shall summarise the views expressed. i shall also state in summary torm the law relatina to intention or state of mind where s.52 41s invoked. l. A corporation mav be in contravention of s.52, whatever its aimntention or the state ot mind of those controlling 1t. Hornsby Building Information Centre Pty. Ltd. v. Sydney Building Information Centre Ltd. (1977-78) 140 C.L.R. 216; Parkdale Custom Built Furniture Pty. Gtd. v. Puxu Pty. Ltd. (1981-82) 149 C.L.R. 191. 2. The mere fact that representations as to future conduct or events do not come to pass does not make them misleading or deceptive. Bill Acceptance Corporation Ltd. v. GWA Ltd. (1983) 50 A.L.R. 242. 3. Nevertheless, a statement relating to the future may contain an implied statement as to present or past fact. It may represent impliedly that the promisor has a present intention to make qood the promise and it may represent impliedly that he has the means to do so. Thompson v. Mastertouch TV Services Pty. Limited (1977) 15 A.L.R. 487. 4. A statement involving the state of mind of the maker of the statement e.q. promises, predictions and opinions ordinarily conveys the meaning that the maker of the statement had a particular state of mind when the statement was made and that there was basis for that state of mind. If the meaning contained in or conveyed by the statement 15 false in that or in any other respect, there will have been a contravention of 5.52. Global sportsman Fry. Ltd. v. Mitror Newspapers Ltd. (1984) 55 A.L.R. 25: L Ed. v. West, Australian Newspapers Ltd. (1984-85) 58 A.L.R. 549. 5. Although the applicants' case aqainst the first respondent depends almost entirely upon what was said bv Mr. Parker, it is the Bank and not Mr. Parker which has been sued. Both Tamar and its managing director, Mr. Wells, are respondents. If Mr. Wells is liable in damages under s.82 of the Trade Practices Act, it must be because he answers one of the descriptions in s.75B of that Act. The circumstances in which a person may be held liable under that section were dealt with by the High Court in Yorke v. Lucas (1985) 61A.L.R. 307; that is a matter to which I shall return in the event that Tamar is held liable to the applicants or any of then. Misleading or Deceptive Conduct - The Bank The statement of claim contains a number of allegations of misleading or deceptive conduct against the Bank. Each has as its core the loan which the applicants hoped to get through Market Securities. I shall not set out verbatim the various paragraphs of the statement of claim in which alleaations of misleading or deceptive conduct appear, but I shall deal with the substance of those allegations. 52. Part of the case against the Bank was that. by its conduct in reterrinag the applicants to Mr. Wells, the Bank represented that Tamar was competent to procure a loan for the applicants when in fact it was not redaistered asa licensed finance broker and was not competent to carry on that business. In other causes ot action. to which I shall refer later. the applicants alleged a failure by the Bank to tell them that Tamar was not a licensed finance broker. Nothing was said by Mr. Parker regarding the status of Tamar or of Market Securities. Indeed the evidence of all concerned indicated that it was Mr. Wells. by name, to whom Mr. Parker referred the applicants. Furthermore, nothing said by Mr. Parker, expressly or impliedly, carried a representation that Tamar or Market Securities was a licensed finance broker. Nor was there evidence that at any stage Mr. Parker became aware that Tamar was not licensed. Tamar admitted during the hearing that it was not a licensed finance broker. The applicants did not make out any case aaainst the Bank in reaard to the licensed status of Tamar; indeed most of the allegations in that reqard were abandoned by counsel for the applicants during his final address. The applicants further alleged that, by recommending them to Mr. Welis. the Bank represented that Tamar was competent to procure the loan for them. I am unabie to read into the statement attributed to Mr. Parker (that he knew someone who might be able to assist the applicants to obtain a loan) any 53. representation as cto che competence or the finance broker. Farliecr im chese reasons [ have tound that Mr. Parker s approach to the second and third respondénts was not earlier than the middle ot June 1980. It was not until 7 July 1980 that Mr. Kingsley James and Mr. Phillip James aaqreed on a price for Bibiking. Mr. Parker arranged the meeting of 18 July between the James and Mr. Wells and the contract for the purchase of Bibiking was executed three days before that meeting. After the meeting of 18 Julv Mr. Parker had some contact by telephone with Mr. Wells. but for the most part communication was directly between the applicants and Mr. Wells. Furthermore, notwithstanding the farlure by Mr. Wells to give evidence, I am not persuaded that he was incompetent as a finance broker. Certainly he failed to obtain the loan required by the applicants but that fazlure,. of itself, does not constitute incompetence. If the applicants have a case against the Bank in regard to Mr. Wells' failure to obtain a loan, it cannot be by reason of Tamar's unreqistered status or by reason of any incompetence on the part of Mr. Wells. Any such case must depend upon what Mr. Parker said to the applicants concerning the likelihood of Mr. Wells obtaining a loan for them. Part of the extensive range of conduct said to constitute a breach of s.52 is an alleged representation by Mr. Parker that an overseas loan would be obtained by Tamar, when such a loan was not available. An adjunct to this allegation isa further representation that the Bank would quarantee an overseas loan when it had no intention of doing so. 54. Iam far trom persuaded that any representation was made by Mr. Parker concerning the availability of an overseas loan as opposed to the availabilitv of a loan in aqeneral. Certainly an overseas loan was mentioned in telephonic discussions between Mr. Parker and Mr. Welis before the meeting of 18 July and certainly Mr. Parker conveyed these discussions to the applicants. But an overseas loan was mentioned only aS a possible source of finance for the applicants. It was a source that had some appeal for them because of the possibility that it might be a long term loan on an interest only basis and at a relatively low rate of interest. But I can find nothing in the evidence to justify a conclusion that Mr. Parker told the James that Mr. Wells would get an overseas loan for them or that he told them that the Bank would guarantee such a loan. While there was no evidence from Mr. Wells as to what was said at the meeting on 18 duly, it is apparent from the evidence of Messrs. Kingsley and David James and Mr. Duncan that the loan discussed might be from an overseas source or from within Australia. Not only did the applicants fail to prove that Mr. Parker told them the Bank would guarantee an overseas loan when it had no intention of doing so, but the applicants did not attempt to establish any lack of intention on the part of the Bank. Once again, it is apparent that there were discussions about the need for a bank quarantee. Mr. Wells told Mr. Kingsley James that a bank quarantee was required for an overseas loan and, according to 55. Mr. Kinasley James, Mr. Parker said that the Sank "miaht have to quarantee the loan". But this evidence rell far short of what was pleaded or ot what might reasonablv be held to be misleadina or deceptive conduct on the part of the Bank. In anv event it is clear that, betore 8 Auaqust 1980 when the further payment of $25,000 was due on Bibiking, Mr. Wells had made it plain to Mr. Kingslev James that there would be no bank quarantee. There was evidence from Mr. David James that at the meeting, said bv the applicants to have taken place on 14 July 1980, Mr. Parker expressed the view that the James could rely on the Bank quaranteeing a loan. I do not accept that evidence. Mr. James could not recall the context in which the remark was made. {t was denied by Mr. Parker, whose evidence on this matter I prefer. It 1s most unlikely that Mr. Parker would have made such a statement when he had no authority to do so and when the amount of the loan, its term, the rate of interest and indeed the currency in which it might be paid were all unknown. I accept the evidence of Mr. Parker "We would need to look at the proposition prior to the submission of an application to the bank's administration for a bank guarantee to issue". The applicants further plead misleading or deceptive conduct on the part of the Bank by reason of Mr. Parker's representation to them that they could arrange suitable borrowings to effect a purchase of Bibiking and should execute an offer to buy Bibiking when, it is alleged, no suitable borrowings had been procured or arranged or could be _ procured or arranged on their behalf. 56. Accordiny to Mr. Kingslev James, Mr. Parker said in May 1980 that "he thouaght Wells would be able to qet us a loan". Such a statement. if made. was no more than an expression of opinion based upon what Mr. Parker had been told and was expressed as such. On its own 1t could not. in my view, constitute misleading or deceptive conduct. Iam satisfied that, when Mr. Parker rand the James in Perth at the end of June 1980, 1t was in connection with the purchase of Bibikind. I amaiso satisfied that during this conversation Mr. Parker used the expression "it's a qoer" or something very much like it. From the fact that Mr. Parker advised the James to buy some offer and acceptance forms, it is apparent that the discussion involved Bibiking even if there were other topics. But IE do not think that the applicants have established that anything said by Mr. Parker on that occasion constituted misleading or deceptive conduct. I am not satisfied that Mr. Parker mentioned Mr. Wells by name or that anything said by Mr. Parker went bevond a general statement that it was likely that money would be forthcoming for the purchase of Bibiking. At that stage the purchase price had not even been agreed and certainly any mention of a loan could have been only in the most general terms as to amount, duration and rate of interest. It is apparent that no loan was in fact available on 27 June. It was not the applicants' case that Mr. Parker was dishonest. And he would have been dishonest to say that a loan was in fact available on 27 June. He had some reason for optimism and no doubt he conveyed that optimism to the James. But they must have realised 57. that much more remained to be done berore it could be said with certainty that a loan was available. It can hardly be supposed that the applicants were willing to commit themselves, sidqht unseen as it were, to a loan in excess of $1,000,000. The meeting on 18 July 1980 was arranged so that the James could take to Mr. Wells the sort of information that a lender would require before agreeing to advance such a substantial sum. Mr. Duncan was present at the meetina as the James' accountant, for the express purpose of providing information and answering questions. As Mr. Kingsley James said in answer toa question whv he had earlier agreed that it was obvious that Mr. Wells would require a budget, cash flow and statement of position "Because if aman is going to apply for a loan he has got to have some figures, does he not". Equally, Mr. David James, when asked why it was necessary to take so much information to Mr. Wells, replied "Nobody lends any money, whether big or small, without some facts". I do not accept that, during the telephone conversation at the end of June, the Bank through Mr. Parker represented that the applicants could arrange suitable borrowings to buy Bibiking. Equaliy I am not persuaded that Mr. Parker did not have an honest belief in what he told the James on that occasion. Of course the alleaqation of misleading or deceptive conduct against the Bank is not confined to events leading up to the end of June 1980. But the meeting on 18 July represented a direct contact between the applicants and Mr. Wells and a 58. situation in which the applicants knew thereafter the person with whom they were dealing. Mr. Parker was not present at the meetina on 18 July and, so far as 15 known, had no contact with Mr. Wells therearter other than an occasional telephone call. Once the meeting took place on 18 Julv, Mr. Parker largely dropped out of the picture so far as communication between the applicants and Mr. Wells was concerned. Thereafter the James were in the better position, as between themselves and the Bank, to assess the likelihood of a loan becoming available. I1t 1s true that they had already signed the contract to buy Bibikinag, but I have already expressed my views as to the wisdom of that course when they were to see Mr. Wells only three days later. And in any event, the contract into which they entered permitted them to withdraw at any time until 31 Auqust 1980 on forfeiture of $35,000. I am not persuaded that Mr. Parker told the James they could rely upon Mr. Wells to obtain a loan for them though, as I have said, I accept that he (Mr. Parker) communicated the optimism expressed by Mr. Wells. It is not without significance that, according to Mr. David James, in the middle of June 1980 Mr. Parker was looking at more than one source of finance for the dames. In particular he told Mr. David James that he had been in touch with a Mr. Quartermaine with a view to financing the purchase of Bibiking. [It is true that, in ail likelihood, this conversation preceded the telephone call at the end of June. But the point is that Mr. Parker was not looking only to Market Securities and, apart from the optimism expressed by Mr. Welis, Mr. Parker had no reason to conclude that finance was available through that firm. Nor, in my view, did Mr. Parker tell the James 59. anvthing more than it was likely that finance would be available. The neqotiation of the terms of that finance had to be a matter for the James as thev recoanized bv attending the meeting on 18 July 1960. Tt as pleaded that there was misleading or deceptive conduct on the part of the Bank in "failing to advise the Applicants not to execute an unconditional offer to purchase the Bibikina propertv". Conduct is not misleadina or deceptive unless 1t contains or conveys a misrepresentation. Although I am critical of Mr. Parker's advice to the James to acquire offer and acceptance forms and his further advice that they did not need a solicitor to complete the forms, I am not persuaded that there was any mMisrepresentation on his part. The James did not use the forms and the Bank played no part in the preparation or execution of the contract for the sale of Bibikind. There are other aliegations relating to the Bank's failure to advise the applicants that it was in their interest to withdraw from the contract. These alleaations run into the difficulty of spelling out misleadina or deceptive conduct from silence on the part of the Bank. And they founder on the evidence of Mr. Parker that he was on holidays between 8 August and 8 September 1980 (when the instalments fell due) and that, before he went on holidays, he asked Mr. Kingsley James to consider whether it was wise to continue with the purchase of Bibiking since it was then possible to withdraw from the contract. It 1s not clear whether at that time Mr. and Mrs. James had become ga-ourenasers or Bror1kirg but 16 2s of no moment; Mr. James had Trom tre cutset spoxen on behaif or nis familv. A Further head of conduct is that the Bank represented to the applicants that it was in therr interest "to undertake onerous short term borrowing commitments" to complete the purchase of Bibikinag "when the business conducted bv the Applicants on the all~croppina basis required bv the Bank could not service such commitments" (statement of claim para.19(n)). This allegation is linked with a complaint of misleading or deceptive conduct in farling to advise the applicants that, on an all-cropping basis, they could not service the Bank's loan (para.19(0)). These allegations are answered by the findings I have already made. The Bank did not require the applicants to change to an all-cropping basis. Mr. Parker suagested to Mr. Kingslev James that the applicants should cease their livestock trading in order to improve their liquidity. The decision as to how much land they should put to crop and how much to stock was one for them, in which regard they had the benefit of Mr. O'Toole's advice as well as of their own experience. Exhibits 52 and 64 evidence the assessment of Mr. David James in the one case and Mr. O'Toole in the other as to how much land might be cropped. Mr. O'Toole's evidence made it clear that it was Mr. Kingsley James who instructed him to prepare a revised budget, "the essential features of which were to increase the cereal cropping to 11,000 acres per annum and reduce the Merino sheep flock to approximately 2,000 head and include a resale sheep enterprise; that is stocking 61. the stubbles and selling the stock off aqdain before planting of the subsequent crop". The Bank did not represent to the applicants that 1t was in their interest to borrow on commercial bills; that was the only form of loan the Bank was prepared to undertake in February 1981 and then as part of what Mr. Parker described as a rescue Operation. Mr. O'Toole prepared a budget extending over a period of two years because Mr. Parker had told him that was the period "during which the overall indebtedness would need to be Substantially reduced, either through profits from the farming Operation and/or the sale of farming assets, farmland, to bring the debt down to a level that the bank might be able to finance on a conventional basis". It was the applicants' decision that they would not sell any of their land and this in turn meant that their ability to service the Bank loan depended upon the productivity of their farms. In that reaard Mr. Nuttall was of the view that in the short term, that is over a period of two years, the applicants could meet their interest obligations under the loan from the Bank. The remaining particulars concern the loan made to Mr. Angus James and the guarantee entered into by Mr. and Mrs. James. The misleading or deceptive conduct complained of 18 an alleged representation by the Bank that Mr. and Mrs. James were ina position to provide a quarantee mortgage at a time when the applicants were unable to meet their short term borrowing commitments and ata time when the Bank should have' known that 62. Anaus would be unable to meet the terms of the lcan made to him bv the Bank. The obliaation assumed bv Mr. and Mrs. James was the mortaage ot Brickworks. But Mr. James was alreadv liable asa quarantor of his son's obligations to the Bank under an earlier quarantee. It is true that, by giving a mortaage of her interest in Brickworks, Mrs. James assumed an obligation to the Bank. But anv liability Mr. and Mrs. James incurred could only be bv reason of default on the part of Mr. Anaqus dames. Mr. Parker did not represent to Mr. and Mrs. James that they were in a position to provide a quarantee mortgage "at a time when the Applicants were unable to meet the terms of the aforesaid onerous short term borrowing commitments undertaken by the Applicants and at a time when the Bank should have known that Angus Kingsley James would be unable to meet the terms of the loan facility provided to him by the Bank" (statement of claim para.19(r)). It was Angus James' decision to buy the Lake King farm, a decision which in my view was endorsed by his father notwithstanding some disclaimer by Mr. Kingsley James. Mr. Angus James had to borrow money to buy the farm and his equity in the farm was such that a aquarantee from his parents was not an unreasonable requirement by the Bank. At the time he bought the farm, the prospects were good. Mr. Anqus James himself was an able, hard-working farmer. The 1981 season began well and there was no reason to anticipate a default. Mr. Anqus James ran into problems because of bad weather; his clearing costs proved to be larger than anticipated; and the barley crop he planted at 63. Katanning was not a success. But none of these matters can be brought home to the Bank. When Me. James did run into crouble, he could have sald the farm at a price that would have rreed him and his parents of anv obligations in respect of that propertv. In fact 1t was not sold until 1983, at a price of $210,000. This was more than he had paid for it though he had spent money and time on the farm. It was not shown that Mr. and Mrs. James' obligations to the Bank in respect ot the Lake Kina property played anv part in the applicants' inability to meet their obligations to the Bank in respect of Bibiking or that it played any part in the later sales of the applicants' properties. Extensive though the ranqe of alleged misleading or deceptive conduct on the part of the Bank is, the applicants have failed to make qood anv of these allegations. Their claim against the Bank under the Trade Practices Act must fail. Misleading or Deceptive Conduct - Tamar The case of misleading or deceptive conduct pleaded against Tamar and Mr. Wells is in these terms. 1. In or about June 1980 Mr. Wells, acting for and on behalf of Tamar, represented to the applicants (other than Mr. Angus James) that Tamar "was able to obtain for them a long term low interest rate loan which would enable them to finance the purchase of Bibiking." (statement of claim para.24). 64, ?. Un or about 18 Julv 1980 Mr. Wells, acting for and on behalf of Tamar, represented to the apolicants that Tamar was a finance broker and that it was able to procure a loan of $1.6 million with an interest rate of between 12-14% per annum for a term of seven vears during which period interest only would be pavable and that the loan would be approved within 14 davs (para. 24A). 3. Between 18 Julv 1980 and January 1982 Mr. Wells. acting for and on behalf of Tamar, represented to the applicants that Tamar was able to procure a loan of the type just mentioned (para.24B). The statement of claim pleads each of these representations as instances of misleading or deceptive conduct on the part of Tamar. The representation said to have been made in or about June 1980 derives from what Mr. Wells told Mr. Parker in a telephone conversation. As it was not contended that Mr. Parker was the agent of either Tamar or Mr. Wells. any evidence given by the applicants of what Mr. Parker told them reaqarding that telephone conversation was necessarily hearsay so far as the second and third respondents were concerned. However Mr. Parker gave evidence and counsel for the Bank sought to adduce from him what Mr. Wells had told him. I permitted that evidence to be given so that Mr. Parker might explain what he in turn told the applicants and also because the conversation might throw light upon Mr. Parker's own conduct. Counsel for the applicants and the Bank aaqreed that evidence by Mr. Parker of what Mr. Wells told him was not evidence of the truth of those statements. However. in mv view, such statements might constitute admissions bv Mr. Wells. In any event there was nothing in the evidence of Mr. Parker regarding his contact with Mr. Wells before 18 July 1980 to support the pleading that Mr. Wells represented that Tamar was able to obtain for the applicants a long term low interest rate loan. Mr. Parker's evidence in that reqard went no further than that Mr. Wells expressed interest in seeking a loan for the applicants, to which end he would be pleased to meet them and that he (Mr. Wells) had in mind a loan of about $1.5 million at an interest rate of 2 1/4% or 2 1/2% above the government bond rate. There was nothing misleading or deceptive in that statement. The allegation of misleading or deceptive conduct on 18 July 1980 is the primary complaint against Tamar and Mr. Wells. It derives of course from the meeting that took place that day. In that regard there was evidence from Messrs. Kingsley, David and Peter James together with Mr. Duncan. There was no evidence from Mr. Wells, the only other person present at the meeting. Although the case pleaded is that Mr. Wells represented to the applicants that Tamar was a finance broker, the real complaint in that reaqard relates to the licensed status of Tamar. I do not accept that at the meeting on 18 July Mr. Wells expresslv represented to the applicants that Tamar was a finance broker. No doubt he did so by implication. But such a representation had no ty ms font fon causal part ta play in the events that followed. It is, I think, something of a red herraind. My. Duncan = evidence orfers the stronaest support for the applicants case against Tamar in regard to what Mr. Wells said. The meeting was held on a Friday. Mr. Duncan was struck by Mr. Wells comment that he would probably have approval of a loan by Wednesday of the following week and "certainly by next Friday". In cross-examination Mr. Duncan stated "He CEMr. WellsiI said that he would be able probably to get approval by Wednesday which was five days away, three working days, or by the following Friday". The case pleaded against the second and third respondents is of misleading or deceptive conduct in representing that Tamar "was able to procure a loan of 1.6 million dollars at an interest rate of between 12-14% per annum for a term of seven vears during which period interest onlv would be payable". The conduct pleaded is not in terms of an overseas loan or a domestic loan; 1t is ain terms simply of a loan, whatever the source might be. The distinction was not crucial to the applicants. Much was made by counsel for the applicants of the second and third respondents' failure to call Mr. Wells as a witness. That criticism was fairly made and, in accordance with the authorities, strengthens the evidence of those whom the applicants called in regard to the meeting. In this regard, the relevant authorities are noted by Woodward J. in Australian Transport Insurance Pty. Ltd. v. Graeme Phillips Road Transport Insurances Pty. Ltd. (unreported decision delivered 20 December oO ~t 1985). It mav be interred that, had Mr. Wells been called, he would not have denied the evidence of Messrs. Kinaslev, David and Peter James or that of Mr. Duncan. Hut the failure of a party to call a witness who might be expected to throw liaht upon a particular matter does not entitle the Court to make findings more adverse to that party than the evidence led iustifies. In the present case, the absence of Mr. Wells as a witness is an added reason for accepting the applicants evidence as to what took place at the meeting on 18 July. But the question still remains - does that evidence support the case pleaded aaqainst the second and third respondents and, in particular, is 1t sufficient to justify a finding that Mr. Wells told the applicants that Tamar was able to procure a loan of 1.6 million dollars at an interest rate of between 12 and 14% for a term of seven years on an interest only basis? The applicants' case must be distilled from the testimony of several witnesses. Mention of a loan of $1.6 million appears in the evidence of Mr. Kingsley James, Mr. David James and Mr. Duncan though there is some doubt whether Mr. Kingsley James was at the time speaking of the meeting itself or of an earlier conversation involving Mr. Parker. According to Mr. Duncan, Mr. Wells said that he thought he could do "considerabiy better" than an interest rate of 12%. Mr. Duncan also said that 1t was made clear to Mr. Wells that what the applicants wanted was a long term loan on an anterest only basis. There was some variation in the evidence of these three witnesses as to the period mentioned by Mr. Wells to obtain a loan. But I am satisfied that a period not exceeding 14 days was mentioned. 68. While ain one sense what Mr. Wells told those at the meeting was a representation as to the future viz. the procurement ef a loan, it was also a clear representation bv Mr. Wells of Tamar s capacitv to obtain a loan such as the applicants required. The question still remains - did that representation constitute misleading or deceptive conduct on the part of Tamar? The applicants called Gerald James Brown, a member of the firm G.J. Brown & Associates who are property consultants, valuers., auctioneers and real estate agents. Mr. Brown had a range of qualifications in the area of agriculture, valuation and finance broking. He qave evidence as to the information that, in his opinion, a finance broker would require in order to obtaina loan of $1.5 million for farming purposes. That information was as follows: "(a) Full set of Accounts over last 3 years. (b) Farm Records, over last 3 vears to establish yield per hectare or per acre, in comparison to district average yield. (c) (i) Budgets based on past performance as to yields above. (ii) Adequate allowances being made for increased plant if programme was to change. (d) References as to farming ability and management skills. (e) Up to date Valuations of the property by a qualified and competent Rural Valuer. (f) Independent farm advice as to acceptability of budgets. (q) Loan to value ratio not to exceed 35%. el thi A track record which contormed with accepted rarming practice ain the secasitv sar district". 'exhibat 63) By measuring this evidence adainst answers to interrogatories sworn ov Mr. Wells the applicants sought to demonstrate that a person who undertook to oabtain a loan without the requisite information would be incompetent, acting neqligently and could not have an honest belief in his capacity to obtain the loan. I shall not canvass Mr. Brown's evidence in any detail. Read in 1ts entiretv, particularly an the light of cross-examination by counsel for the second and third respondents, I am satisfied that at the meeting on 18 July 1980 Mr. Wells had for all practical purposes the information thoudaht by Mr. Brown to be necessarv to obtain a loan. The aspect on which Mr. Brown expressed some reservations was the lending ratio which he understood, in the light of a document prepared by Market Securities (exhibit 24), to be 61% or with added security 58%. However he thought that such a lending ratio would be acceptable 1£ accompanied by a bank quarantee. Thus the evidence of Mr. Brown did not assist the applicants qreatly in their case of misleading or deceptive conduct against Tamar. Nevertheless I am satisfied that the clear implication in what Mr. Wells said at the meeting on 18 July 1980 was that Tamar had the capacitv to obtain for the applicants within 14 davs a loan that was suitable for their requirements. Tamar did not have that capacity. In ordinary commercial experience, as deposed to by Mr. Duncan, such a loan was not procurable within that time. The fact that a loan was not 70. procured within that time or at all provides additional evidence of lack of capacitv. It 1s in this area of the claim that the failure of Mr. Wells to qive evidence assumes particular siqnificance. If there was evidence of Tamar's capacity to do what 1t represented it could do, that evidence should have been forthcoming. It was not and the Court mav more readilv draw inferences adverse to Tamar, inferences that in any event are open on the applicants' case. [In my opinion, what Tamar represented to the applicants at the meeting on 18 July 1980 reaarding a loan constituted misleading or deceptive conduct on its part. As to the third area of alleged misleading or deceptive conduct, I do not think the applicants established that between 18 July 1980 and January 1982 Mr. Wells continued to represent that Tamar was able to procure a loan in the terms pleaded (statement of claim para.24B). Messrs. Kingsley and David James' saw Mr. Wells again on or about 29 August 1980. The purpose of that meeting, Mr. Kingsley James thought, was that Mr. Wells "had an application form for us to sign for that loan". This apparently was a reference to the payment due on 31 August 1980, which Mr. Wells arranged through Bridging Finance Pty. Ltd. This emerged more clearly from the evidence of Mr. David James. Mr. Kingsley James said that at the meeting he asked "Why haven't we had the loan bv now" and Mr. Wells replied ""It's still coming. Don't worry". It was put to Mr. James in cross-examination that the purpose of the August meeting was to review the situation in the light of the knowledqe that a quarantee was not likely to be 71. forthcoming. Mr. James said he could not recall that as the purpose of the meetina and of course there was no evidence from Mr. Wells on the point. Mr. David James qave evidence of the August meetina, saying that Mr. Wells was asked how he was going with the loan. "He said we would not have any problem with qetting the long-term loan and he was just having a few technical problems about getting final approval or something of that nature." I am satisfied that at the meeting at the end of August 1980 Tamar continued to represent its capacity to obtain a loan as it had done at the meeting on 18 July and that this was continued misleading or deceptive conduct on its part. Thereafter, although there was evidence by Mr. Kingsley James and Mr. David James of telephone calls to Mr. Wells, Iam not satisfied that Tamar continued to make a representation in the terms pleaded or that there was misleading or deceptive conduct in the terms pleaded. The evidence of the applicants as to what happened thereafter was in very general terms. On 27 November 1980 Market Securities wrote to Mr. Kingsley James listing the organizations it had approached unsuccessfully. On 19 January 1981 it wrote again, reporting lack of success. And by the end of 1980 the applicants had themselves applied to the Bank for finance in regard to the settlement of Bibiking. This 1s not inconsistent with the case pleaded against Tamar but it does evidence the desultory state dealings between the applicants and Tamar had then reached. 72. The applicants have made qood the case pleaded against Tamar in para.24A of the statement of claim and the case pleaded in para.24B to the end of August 1980. Questions then arise as to the implications of this misleading or deceptive conduct for the applicants, in particular any causal connection between it and the purchase of Bibiking and whether the applicants sustained any damage by reason of that conduct. There is also the question of the limitation plea raised by Tamar. I shall deal with these matters later in these reasons for judament. The applicants' case against Mr. Wells under the Trade Practices Act depends upon a tinding of liability against Tamar. There is such a finding. Paragraph 28B of the statement of claim pleads that, by his conduct, Mr. Wells "aided abetted counselled or procured the said contravention of Section 52 and further, or in the alternative, the Third Respondent was directly or indirectly knowingly concerned in or party to the said contravention". By this plea the applicants invoke paras.(a) and (c) of s.75B of the Trade Practices Act. In the light of Yorke v. Lucas, to which reference has already been made, a person may only be held liable under para.(a) 1f he intentionally aided, abetted, counselled or procured a contravention by a corporation of a relevant provision of the Trade Practices Act and did so with knowledge of the essential matters constituting the contravention. in particular knowledae of the Taisity of representations amounting to misleading or deceptive conduct. Paragraph (c) requires knowledge of the essential facts constitutina the contravention; to be "party to" requires intentional participation, the necessarv intent being based upon knowledge of the essential elements of the contravention. I am satisfied that Mr. Wells did aid and abet the contravention of s.52 by Tamar found to have taken place. I am also satisfied that he was directly and knowingly concerned in and a party to the contravention. All dealings with the applicants by Tamar were through Mr. Wells. It was he who made the representations to the applicants and there is nothing to suggest that he was merely passing on information provided to him by Tamar. He expressed his own view of Tamar's capacity to obtain the loan sought by the applicants and he continued to do so, at any rate until the end of August 1980. He did so with knowledge of the essential facts constituting the contravention of s.52 by Tamar. In Yorke v. Lucas at 313 Mason A.C.J., Wilson, Deane and Dawson JJ. said: "We would only add, lest it be thought that it has escaped our attention, that the appellants may, even if knowledge were not necessary to involvement under para.(a) or under para.(c) as 'party to', have encountered difficulty in establishing that Lucas was involved within the meaning of s.75B in the contravention constituted by the making of the false representations, having regard to the fact that the representations, albeit made on behalf of the Lucas company, were made by Lucas himself. As Dixon J. iw a 74, observed in Mallan v. Lee (1949) 80 C.L.R. 198 at 216: 'It would be an inversion of the conceptions on which the dearees of offendinag are founded to make the person actually committing the forbidden acts an accessory to the offence consisting in the vicarious responsibility ao for his acts'". It was unnecessary for their Honours to resolve the difficulty to which they referred. Section 75B does not contain any limitation as to the class ot person who may be involved ina contravention of Part IV or V of the Act. The Federal Court has from time to time held persons in the position of managing director or the like liable within s.75B by reason of what they themselves have said. See for instance P.J. Berry Estates Pty. Ltd. v. Mangalore Homestead Pty. Ltd. £19841 A.T.P.R. 40-489. In the circumstances I find Mr. Wells to be a person involved in the contravention by Tamar of s.52 of the Act. As in the case of Tamar, questions then arise as to the consequences of Mr. Wells' conduct, in particular whether the applicants suffered any damage thereby and whether any claim for damages they may have against Mr. Wells is statute barred by reason of s.82(2) of the Act. Before turning to those matters I shall deal with the other causes of action pleaded against the respondents. Claims in Negligence The jurisdiction of this Court is attracted by the claim against all respondents of misleading or deceptive conduct in contravention of s.52 of the Trade Practices Act. However the sl in applicants have pleaded other causes otf action, in particular negligence against the Bank and Tamar. The respondents did not challenge the jurisdiction of this Court to entertain the other causes of action, save in one respect. The second and third respondents arqued that the trade practices claim against them was in anv event statute barred, having redard to the limitation period of three years in s.81(2) of the Act. Thev argued further that, the claim being statute barred, this Court had no jurisdiction to entertain any of the claims against them founded on the common law. These are matters to which consideration must be given but I propose to look first at the claim in negligence against the Bank. Negligence - the Bank Paragraph 7 of the statement of claim pleads that the Bank owed a duty to the applicants to exercise "all such skill care and diligence as was appropriate for a person carrying on business in the manner of the Bank and in providing advice and guidance to the Applicants in the manner aforesaid". The "manner aforesaid" I take to be the pleading in earlier paragraphs of the statement of claim that the applicants relied upon the advice and guidance of the Bank in matters of finance, particularly in regard to the purchase of farming properties. In para.7 of its defence the Bank admits that "it owed to its customers (including the applicants) a duty to exercise due skill, care and diligence in relation to advice and guidance 76. provided to it ain the course of its business as a bank". but otherwise denies vara.7 of the statement of claim. Paragraph 21 of the statement of claim pleads aqainst the Bank a breach of "its said dutv of care ... to exercise all due skill and diliaence" and alleges neqligent advice. Nealidgence 1s particularised under ten heads. I shall deal with each head of neqliqgence in turn. The Bank accepted that a duty of care may arise ina banker customer relationship, qiving rise to a responsibility to the customer who intends to act on that advice. Hedley Byrne v. Heller & Partners [19641 A.C. 465. However counsel for the Bank submitted that a duty of care does not arise in regard to all advice sought by a customer. There are, counsel submitted, two qualifications. The first is that the advice must be in regard to a matter relating to an area in which the banker carries on the business of giving advice or information or holds itself out as possessing skill and competence in the field in question. Mutual Life & Citizens' Assurance Co. Ltd. v. Evatt (1970) 122 C.L.R. 628. Secondly, the advice must be regarded by the banker and the customer as considered advice. It must not be given in passing or an "off the cuff" or "kerb stone" opinion. Mohr v. Cleaver and Browm (unreported decision of Full Court of Supreme Court of Western Australia delivered 6 June 1985). Despite the many criticisms made of the limitations imposed by the Privy Council in Mutual Life & Citizens' Assurance Co. Ltd. v. Evatt and the reservations expressed by the High Court in G. Shaddeock_ and Associates Pty. Ltd. v. Parramatta City Council (1981) 55 A.L.I.R. 713, I reaqard myself as bound to follow the views of the Privy Council. On the other hand, I do not read the decision of the Full Court an Mohr v. Cleaver and Brown as endorsing a principle that there can be no duty of care in respect of advice qiven in passing or off the cuff. Even in that case there may be an obligation to take such care as 1S reasonable in the circumstances. In the present case these qualifications and distinctions only assume importance in redqard to advice said to have been given by Mr. Parker to the applicants concerning a change in their farming operations. In so far as the purchase of Bibiking and the purchase of the Lake King property by Mr. Anqus James were concerned, I did not understand counsel for the Bank to quarrel with the submission made on behalf of the applicants that the Bank owed a duty of care in regard to any advice it gave concerning the financing of these purchases and in particular the terms of any borrowings that might be involved. One particular of negligence is that the Bank referred the applicants to Tamar, representing to them that Tamar was a person competent to procure the proposed loan "whereas the Bank knew or should have known the Second Respondent was not registered as a licensed Finance Broker as required by s.26 of the Finance Brokers' Control Act 1975 and was not competent to carry on the business of a Finance Broker" (para.2i(a)). I do nat accept the Bank's submission that advice of this nature was outside the area of the Bank''s expertise and was not capable of giving rise toa duty of care. However, for reasons already given in relation to the question of misleading or deceptive conduct, I do not think fFhat the Bank did represent to the applicants that Tamar was competent to procure a loan for them. Furthermore the Bank neither knew nor, in the circumstances, ought to have known that Tamar was not reaqistered as a licensed finance broker. The Bank had no reason to think that Tamar was other than competent to Carrv on the business ot a finance broker and there was no evidence that it was not so competent. It 1s then said that, in representing to the applicants that 1t would "quarantee an overseas loan". the Bank quided the applicants te enter into a contract to buy Bibikinag when the Bank knew or should have known that a lona term low interest loan was unlikely to be found (para.21(h)). Again, for reasons given in relation to the claim of misleadina or deceptive conduct, [I reject the arqument that the Bank said that 1t would quarantee an overseas loan. At its highest from the applicants' point of view, Mr. Parker said that the Bank would need to look at anv proposition involving a bank guarantee. And it was apparent to the applicants before 8 August 1980, when the further payment of $25,000 was due on Bibiking, that there would be no bank guarantee. The third particular of neqligence is that the Bank failed to advise the applicants that the business conducted by them "could not service the lending facilities and financial arrangements by the Bank for the Applicants". This is an alleaation of failure to advise and meets the difficulty that "as a qeneral rule, a failure to act 1s not negligent unless there is a duty to act" (Gibbs C.J. in Sutherland Shire Council v. Heyman 79. (1985) 59 A.L.J.R. 564 at 571; see also Brennan J. at 586-587). In my view there was no dutv on the Bank to aive the applicants advice as to whether or not their business could service the loan, which I understand in this case to be a reference to the actual loan provided by the Bank. I am not to be taken as expressing some qeneral principle that there 1s no dutv on the part otf a bank which is providing a loan toa customer to advise that customer of the prospects of meeting the obligations imposed by the loan. I speak oniv of the circumstances of this particular case. When the Bank did provide a loan for the applicants, 1t was some seven months after the contract for the purchase of Bibiking had been executed and the loan was made to assist the applicants by reason of their inability to secure finance elsewhere. At the time the contract was executed the Bank did not have the information necessary to make an assessment of the extent of the applicants' capacity to borrow and repay a substantial loan. When the Bank made the advance to the applicants in February 1981, it was against a background that Mr. O''Toole had been advising the applicants on their situation and their potential to repay a loan. In those circumstances I do not accept that the Bank had a duty to advise the applicants regarding their ability to service the loan offered to them by the Bank. It is alleged that the Bank was negligent in failing to advise the applicants not to execute a binding contract for the purchase of Bibiking until "appropriate loan facilities had been procured for the Applicants being a loan that could be serviced by ta aa. the Applicants business" (para.21(d))}. Again I do not accept that there was a autv on tne Bank to give the advice suaqested. It 15 true that the Bank nad been involved with the applicants in the purchase or a number of farming properties over 20 vears or so. But the applicants did not rely upon advice from the Bank in deciding to make those purchases. The applicants made those decisions for themselves and then looked to the Bank for financial assistance to complete the purchases. When the initial contract for the purchase of Bibikinq was executed, the applicants had access to the advice of Mr. Taylor who was acting for all concerned. Without doubt it was in the interests of the applicants to have a "subject to finance" provision in the contract. The fact that there was none was not the fault of the Bank. As it happened, the applicants were at liberty to withdraw from the contract at any time before 31 August 1980. Admittedly this involved a forfeiture of $35,000 but this was a small price to pay 1f there was any doubt as to their capacity to complete the purchase. These reasons lead me likewise to reject the allegation that the Bank was aware or should have been aware that "the proposed loan facilities" could not be obtained by 31 August 1980 or thereafter and that the Bank should have advised the applicants to withdraw from the contract (para.21(e)). In any event, before 8 August 1980 Mr. Parker had asked Mr. Kingsley James to consider whether it was wise to continue with the purchase of Bibiking, qiven the option that still existed of withdrawing from the contract. Notwithstanding that a loan was not then available, Mr. James was anxious that the purchase proceed. It is very likely 81. that his anxietv to have Bibiking included in the familv's holdings blinded him cto the pitfalls ofr continuing with the purchase. A further head of negligence pleaded is that the Bank advised the applicants to change their farmina operations to all cropping and to undertake a short term borrowing commitment on the basis that their land would be sold if no replacement finance could be obtained, when the Bank knew or should have known "that the applicants could not service such onerous commitments and that no replacement finance in the terms of the proposed loan was likely to be obtained" (para.21(f)). For reasons already given, I reject the contention that the Bank advised the applicants to change their farming operations to an all cropping basis. The applicants did make changes to their farming operations in favour of additional cropping but this was a decision made in consultation with Mr. O'Toole and in the light of the applicants' assessment of their capacity to service a loan from the Bank. Furthermore I am satisfied that, from the time when the applicants made their first approach to the Bank in regard to the purchase of Bibiking, Mr. Parker had pointed to the likelihood that they would have to sell land to fund the purchase. Apart from his oral evidence to this effect, his diary notes of 9 May and 7 November 1980 make this clear. It 1s then said that the Bank failed to advise the applicants to obtain independent advice on the terms of the loan and financial arrangements proposed by the Bank and "upon the 82. reasibilitv of the purchase of the Bibikina property on the part ot the applicants bv use of such loan facilities on the terms set by the bank" (para.2l(a)). I do not think there was a dutv on the Bank to advise the applicants to obtain independent advice as to the Bank's loan proposal. It was not suagested bv the applicants that there was anything unusual about the terms of the loan itself or about the security documents which they were required to execute. In that reaard Mr. Tavlor, 1f not expressly instructed by the James to be present when the mortaage documents were signed, was in fact present and available to give advice. The applicants' real complaint. I think, is that they were not financially able to service the loan. But again they had access to Mr. O'Toole and to Mr. Duncan and, particularly in the case of Mr. Kingsley James, they were farmers of long experience. IT am unable to accept that the Bank was negligent in failing to advise the applicants to obtain independent advice. It is said that the Bank was negligent in failing to warn the applicants of the possibility that Tamar might be unable to obtain a loan (para.21(h)). In my view the Bank was under no duty to advise the applicants in that regard. Once Mr. Parker arranged the meeting on 18 July 1980, he had very little to do with Mr. Wells. Following that meeting the applicants were ina position to make their own assessment of the likelihood of a loan and to continue to make that assessment in the light of their contact with Mr. Wells. There is a further head of negligence pleaded, that at a time when the applicants could not service the loan provided by 83. the Bank and at a time when the Bank should have known Mr. Anaus James would be unable to meet the terms ot his loan, the Bank advised Mr. and Mrs. James "to provide a personal quarantee to support the Bank s loan to Angus Kingsley James and advised these Applicants to encumber a further property by wav of mortaaqe to support the said loan facility" (para.21(i)). I have dealt with these matters in connection with the claim of misleading or deceptive conduct. It was Mr. Angus James' decision to buy the Lake King farm; his equity made a guarantee inevitable; the Bank did not advise Mr. and Mrs. James to provide a quarantee;: and there was no reason why the Bank should have thought it likely that Mr. Angus James would default. The last head of negligence alleged is that the Bank failed to advise Mr. and Mrs. James to obtain independent advice 1n regard to the quarantee mortaage provided in connection with the purchase of the Lake King property (para.21(4)). It is not at all clear what Mr. and Mrs. James might have gained by "independent advice". Mr. Angus James was anxious to purchase the Lake King property and Mr. Kingsley James was agreeable that he should do so. Whatever commitments Mr. and Mrs. James incurred in this regard, they did so on their own initiative and with a full appreciation of their own financial position. In my view none of the allegations of neqligence against the Bank has been made out. = 84. aIQ a Hi Q ny iO e - Tamar The applicants alleqe negligence on the part of Tamar; there 1S no similar claim aqainst Mr. Wells. Paracgraph 26 of the statement of claim pleads a duty owed by Tamar to the applicants to "exercise all due skill, care and diligence as iS appropriate ror a person conducting a business of finance broking". Tamar admits that duty of care but says that at all times "it exercised its duty skilfully, carefully and diligently in relation to the advice and information provided by it through the Third Respondent to the Applicants ..." (defence para.9). The particulars of negligence alleged against Tamar are that it was not a registered licensed finance broker, that it was not competent to carry on the business of finance broker, that it represented to the applicants and to the Bank that loan funds were readily available when 1t knew or should have known "that he was unable to competently provide such advice", that it failed to procure the proposed loan and that it failed to advise the applicants that its representations that it could procure the proposed loan and that such loans were readily available were false. There is some difficulty of lanquage with the way in which these particulars are pleaded. The reference "he was unable to competently provide such advice" appears to be a reference to Tamar. For reasons already given, the fact that Tamar was not a 35. reyistereqa or licensed tinance broker does not constitute nealigence and I am not wersuaded that Tamar was not competent to carry onthe opusiness of finance broker. The tact that Tamar Iarled to orocure a loan may be evidence of negligence but does not constitute neaqligence of itself. The plea that Tamar was negligent in tailing to advise the applicants that its representations were false adds nothing to the particulars that precede it. If the applicants have a case in nealigence against Tamar, 1t must arise from what Mr. Wells said at the meetings on 18 Juiv and 29 Auqust 1980. In my view Mr. Wells painted an unduly optimistic picture at the July meeting. He left those present in no doubt his capacity to secure the sort of loan required by the applicants, even though the precise terms of the loan had not been decided. Furthermore he left those present 1n no doubt that he would be able to arrange a loan within a week or so. In the light of the evidence generally and in particular that of Mr. Duncan, Mr. Brown and Mr. Parker regarding the obtaining of loans from various sources, I am of the opinion that Tamar through Mr. Wells was negligent in what it told the James. What Mr. Wells said was more than a mere expression of hope or a prediction as to what might happen: it was taken by those present and reasonably taken by them to be a statement of capacity to secure a loan. As I have said, the fact that he did not procure a loan is not of itself evidence of negligence. But it 1s at this point that the failure by Mr. Wells to give evidence assumes further siaqnificance. He made statements concerning the Be. loan which I am satisfied, from other evidence to which I have referred, were made carelessly. And thev were statements made to persons who were seeking advice on matters that Tamar held itselr out as qualified tc aive. if there was some iustification for what was said, 1t should have been forthcoming from Mr. Wells. It was not. Mv comments reaqarding the Julv meeting applv equallv to what was said at the Auqust meeting. Difficult questions arise as to the consequences for the parties of a finding that Tamar was nealigent in what was said at the meetings on18 July and 29 Auqust 1980; I shall deal with those questions later in these reasons. Undue Influence - the Bank The applicants plead that the arrangement they made with the Bank in February 1981 to borrow money to complete the purchase of Bibiking, the loan provided to Mr. Angus James and the quarantee mortgage executed by Mr. and Mrs. James in support of that loan were all procured by the undue influence of the Bank. Undue influence is particularised in this way. Having advised the applicants that they would obtain a lonq term low interest loan and that they should therefore buy Bibiking, and being aware that the applicants had not obtained a loan, the Bank advised them to seek from the Bank a short term high interest borrowing which it knew or should have known could not he serviced by the applicants. Further the Bank failed to offer any less onerous financial arrangements and failed to ensure that' the 87. applicants received independent advice when the Bank knew or should have known that there was areal prospect that the applicants would default under the arrangements into which they entered. In requiring the applicants to enter into these arrangements, the Bank took advantage of the inequality of baraqainina power between it and the applicants "to obtain' an advantage for itself in the form of a high earning loan facility supported by substantial securities" and did so in the knowledge that the applicants had no alternative source of finance and were un jeopardy of defaulting under the contract of sale (statement of Claim para.22(a), (b) and (c)). These allegations are denied by the Bank. In Johnson v. Buttress (1936) 56 C.L.R. 113 at 134 Dixon J. spoke of undue influence as falling into two categories. In one, "facts must be proved showing that the transaction was the outcome of such an actual influence over the mind of the alienor that it cannot be considered his free act". In the other, "the parties mav antecedently stand in a relation that qives to one an authority or influence over the other from the abuse of which it 1S proper that he should be protected". I agree with the submission by counsel for the Bank that it is the second type of undue influence upon which the applicants relv. In other words the applicants do not contend that the Bank brought influence to bear on the applicants; rather they assert that by reason of the relationship between the parties the will of the applicants was not independent and voluntary. 8a. In Commercial Bank of Austrailia v. Amadio (15983) 57 A.L.J.P. 358 at 363 Mason J. rererred to the distinction between unconscionaple conduct and urdue influence and sala: "In the latter the will of the innocent party is not independent and voluntary because it is overborne. In the former the will of the innocent party, even if independent and voluntarv, is the result of the disadvantageous position in which he 1s placed and of the other party unconscientiously taking advantage of that position. There is no reason for thinking that the two remedies are mutually exclusive in the sense that only one of them 1s available in a particular situation to the exclusion of the other. Relief on the ground of unconscionable conduct will be granted when unconscientious advantage is taken of an innocent party whose will is overborne so that it is not independent and voluntary, Just as it will he granted when such advantage is taken of an innocent party who, though not deprived of an independent and voluntary will, is unable to make a worthwhile judgment as to what is in his best interest". AY The relationship between banker and customer is not one which ordinarilv qaives rise to a presumption of undue influence. National Westminster Bank v. Morgan £19853 1 All E.R. 821 at 829. However Lord Scarman, who delivered the principal judqment of the House of Lords, said at 829: "... a relationship of banker and customer may become one in which the banker acquires a dominating influence. If he does and a manifestly disadvantageous transaction is proved, there would then be room for the court to presume that it resulted from the exercise of undue influence". At 831 Lord Scarman added: ",.. I would prefer to avoid the term 'confidentiality' as a description of the relationship which has to be 89, provea. In truth... the relationsnips which may develop a dominating aintluence of one over another are infinitely various. There 15 no substitute in this branch of the law for a meticulous examination of the facts ". There 1S no presumption of undue influence in the case of banker and customer. Whether there has been undue influence 1s a question of fact. There has been no undue intluence unless the will of the customer has been overborne, not necessarilv because there has been some wrongful act or threat on the part of the bank. It is enough that the will of the customer is overborne by reason of the position of intluence in which the bank stands, though it 1s apparent from National Bank of Westminster v. Morgan that the transaction in question must be one that 1s disadvantageous to the customer. In considering the circumstances in which the applicants executed various securities in favour of the Bank in February 1981, it is relevant to bear in mind that what the Bank was being asked to dowas, in Mr. Parker's words, to carry out "a rescue operation". Settlement on Bibiking was imminent and ail other attempts by the applicants to raise the balance of purchase price had failed. The time in which they might withdraw from the contract on forfeiture of $35,000 had passed some months earlier. They were anxious to complete the purchase and, substantial though the purchase price was, it is apparent from the evidence of Mr. Jelley and Mr. Ferquson, the valuers who testified, that the applicants were getting value for money. Indeed, had Bibiking been sold at any time before June 1982, the applicants would almost certainly have made a profit. 90. The Sank was not anxious to lend monev tc the applicants. IL 1s apparent that bv 1982 Mr. Parker relt that all too orten the Bank had been called upon to assist them in reaqard to the purchase of land. The Bank was uraqing the applicants and had been uraqing them for some time to sell land to reduce the extent of their borrowings but the applicants were unwilling to do so. There is little doubt that, except in the case of Salevards (land capable of sub-division within the township of Katanning), Mr. Kingsley James was reluctant to cede any of the land held by the family. It was sugaested by him in evidence that to do so might affect the capacity of the family to borrow but I am satisfied that this was largely rationalization. It was possible, at least until prices beqan to fall after mid 1982, for the applicants to sell some land and so bring their borrowings within manageable proportions. This they did not do and their failure to do so was entirely their own decision. The applicants had access to the advice of Mr. 0'Toole and Mr. Duncan in regard to their ability to service the loan from the Bank and they had access to Mr. Taylor in regard to any legal matters that required explanation or advice. From the point of view of the applicants, the commercial bill line was not a satisfactory form of finance, particularly having regard to its short term nature. But it was all that the Bank was prepared to offer in the circumstances and it would not have involved the applicants in undulv onerous obligations had they been prepared to quit some of their land. The contention on behalf of the applicants that the Bank obtained an advantage for itself "in the 91. torm of a hiah earning loan tacility" was not supported by the evidence. It 15 apparent trom exhibit 78, a schedule prepared bv Mr. Parker comparing the return to the Bank from commercial bills and the return from term lending thad that been available), that the Bank would have earned more from term lending than from commercial bills. There is no doubt that in Februarv 1981 the applicants were in an unhappy position. They had to find a great deal of money and they had to find it quickly since their earlier attempts to borrow had failed. It is important to bear in mind that those failures were not attributable to the Bank. The Bank was a reluctant lender and the package it proposed to the applicants was reasonable in the circumstances. In June 1981 Bibiking was worth, according to Mr. Ferguson, $1,130,000 and it is reasonable to conclude from the evidence of the two valuers as to the movement of price generally that the farm appreciated even further until mid 1982. This is true of the other land owned by the applicants. The remedy for their situation lay very much in their own hands. Fiduciary duty - the Bank Paragraph 23 of the statement of claim pleads that the applicants were longstanding customers of the Bank and that the Bank was in a fiduciary relationship with them "in that it received and continued to receive advantages from the Applicants custom", The paragraph then pleads various breaches of that fiduciary duty which amount to little more than the pleading of undue influence. 'oO ni Io donot accept that tne Bank stood ina i "Tiduciary relationship to the applicants. I was not orfered anv authoritv for that proposition and on principle I am not persuaded that it was the case. Sut in any event, the alleged breaches of fiduciary relationship went no further than the alleged matters of undue influence and the answers to one are answers to the other. This head of claim must fail. Interim summary The applicants' various claims against the Bank fail. They have established misleading or deceptive conduct on the part of Tamar and neagligence against that company. They have shown Mr. Wells to be a person involved in the contravention by Tamar of s.52 of the Trade Practices Act. It remains to consider the position of Tamar and Mr. Wells in the light of these findings. Defence of Limitation Paragraph 13 of the defence of the second and third respondents pleads that, in so far as the applicants rely upon ss.82 or 87(2)(d) of the Trade Practices Act, their cause of action "did not accrue within three vears of the commencement of this action and is barred by the provisions of Section 82(2) of the said Act." Section 82 reads: "(1) A person who surfers loss of damage bv conduct of anotner person that was done in contravention of a provision or Part IV or V mav recover the amount of the loss or damage by action against that other person or aqainst any person involved in the contravention. (2) An action under sub-section (1) may be commenced at any time within 3 vears atter the date on which the cause of action accrued." The application in these proceedings was filed on 13 November 1984, hence any cause of action earlier than 13 November 1981 is statute barred, at least so far as s.82 is concerned. Other questions arise in regard to the claim under s.87(2)(d) which empowers the Court to make "an order directing the person who engaged in the conduct or a person who is involved in the contravention constituted by the conduct to pay to the person who suffered the loss or damage the amount of the loss or damaqe". While the second and third respondents do not contend that any common law cause of action against them is statute barred, they do argue that since the claim under the Trade Practices Act is precluded by reason of s.82(2), there is no jurisdiction in the Federal Court to determine any common law claim against them. This argument bears on the applicants' claim in neqligence against Tamar. As yet there has been no definitive statement as to the meaning and operation of s.82(2) of the Trade Practices Act. I made some comments about the matter in mv ruling on the "no case" submission by the second and third respondents and that ruling is ® 94, an appendix to these reasons. However the defence goes to the very heart of the applicants' claim against the second and third respondents and I propose to deal with it fully here even though some of what is said echoes what appears in the earlier ruling. Section 52 of the Trade Practices Act prohibits conduct that is misleading or deceptive or is likely to mislead or deceive. The section dces not confer any right of action ona person injured by conduct prohibited by the section. Such a right of action is conferred by s.82(1) and it is conferred on a person "who suffers loss or damage by conduct of another person" done in contravention of s.52. Loss or damage is the gist of the action. In my view, a cause of action under s.82 accrues, not when there is a contravention of s.52, but when loss or damage is suffered in consequence. See Arcadi v. Coloniai Mutual Life Assurance Society Ltd. £1984] A.T.P.R. 40-473. In that case I said at 45,454: "There may be several distinct losses, flowing from conduct in contravention of the Act and the cause of action is not complete until those losses have occurred". This statement was not meant to suqqest that a cause of action is kept alive so long as any loss or damage is being suffered. Once an applicant has suffered loss or damage relevant to his claim, time begins to run. Counsel for the second and third respondents made a written submission that any loss or damage suffered by the applicants in consequence of misleading or deceptive conduct on their part must have been sutfered or at anv rate peaqun to have heen uftered on one or other of the followina dates: 17] 15 July 1980, when the applicants executed the contract to buv Bibiking and made the initial payment of $10,000. Fourteen davs atter 18 duly 1980, being the time within which Mr. Wells, acting on behalf of Tamar, represented that Tamar could procure a loan for the applicants. 11 August 1980, when the applicants made a further payment of $25,000 under the contract to buv Bibiking. In fact the date was 8 Auqust 1980. 31 August 1980, when the applicants made a further payment of $71.775 and lost the right to withdraw from the contract. February 1981, when the applicants effected settlement of Bibiking and at the same time borrowed $1,250,000 from the Bank to make the final payment on Bibiking and executed various securities in order to obtain that loan. In the submission of the second and third respondents, 1t does not matter which of those dates is selected as the appropriate one for all fall well outside the three year limitation in s.82(2). The question must be approached in this way. Did the applicants suffer any loss or damage by reason of the misleading 96. or deceptive conduct of Tamar? If they did, what was that damage and when did it occur? Unless the applicants suffered some loss by reason ot what Mt. Wells said concerning the availability of a loan, they have no cause of action against Tamar under s.82, in which case the question of limitation does not arise. One thing is clear. Since I have found that there was no misleading or deceptive conduct until 18 July 1980, there can be no claim against Tamar by reason only of the fact that the applicants aqreed to buv Bibikinag on 15 July. On the other hand, Mr. Wells played an active part in the loan of $70,000 made by Bridging Finance Pty. Ltd. to the applicants to enable them to meet the payment due on 31 August 1980. Although the evidence concerning the loan was somewhat sketchy, there can be no doubt that Mr. Wells knew that a payment was due at the end of August 1980. The whole purpose of securing a loan from Bridging Finance Pty. Ltd. was to meet that obligation. While I do not think there was any express evidence that Mr. Wells was given the Bibiking contract, the reasonable inference 1s that the contract was among the documents given to him on18 July 1980. He required the contract for the purpose of negotiating a loan; indeed he needed it to arrange the loan of $70,000 from Bridging Finance Pty. Ltd. An "Offer and Acceptance" is among the documents listed in Market Securities' memorandum, exhibit 24. It is also reasonable to conclude that Mr. Wells knew or ought to have known that the applicants could withdraw from the contract at any time until payment of $71,775 on 31 August 1980, though by doing so they would forfeit $35,000. Had Tamar not 97. continued its misleading or deceptive conduct on 249 Aucust 1980, the applicants would have been compelled to consider their position more seriveouslv betore making the payment due on 31 Auaqust. They mav have decided that, there being no continued assurance as to the availability of a loan, they should withdraw Trom the contract. In those circumstances they would have forfeited the $35,000 already paid. But they could hardlv hold Tamar responsible for that loss since they had entered into the contract to buy Bibiking before there was any misleading or deceptive conduct by Tamar. It was arqued on behalf of the applicants that Mr. Wells knew or should have known that there was a risk that the total deposits ($106,500) would be forteited if a lona term loan was not available at the time of settlement in February 1981. But the argument, even if persuasive, does not assist the applicants for that notional loss occurred outside the three vear period. Counsel for the applicants submitted that there was no loss until March or April 1983 when a number of properties were sold. Ido not accept that a relevant loss occurred, actually or notionally, at that time. Settlement had long passed and other considerations - the value of properties and the failure to sell them earlier - had long since intruded. Counsel for the applicants further submitted that, while his clients contracted liabilities in executing the security documents in February 1981, they received a corresponding asset. Thus, said counsel, the case was distinguishable from those in which an applicant, induced to enter into a contract by reason of misleading or deceptive conduct, acquired an asset that was worthless or worth less than he paid for it. See for instance Fenech v. Sterling (1983) 51 A.L.P. 205. The sianificance of that submission 1s as toliows. While the applicants indebtedness to the Bank increased as commercial bills were rolled aver, this was off-set by the value of Bipikina which continued to appreciate at least until mid 1982. It was only thereafter that Bibikind depreciated in value so that a point was reached where the applicants' indebtedness to the Bank outweiqhed the value of the land thev had acquired. Whenever that event occurred, it must have been no earlier than three vears before the commencement of proceedings. Although the Bank presented some material (in connection with a submission made by it on the question of limitation) that bore on the question of the value of Bibiking as against the applicants' indebtedness to the Bank, counsel for the applicants conceded, impliedly i1f not expressly, that the Court did not have ail the information necessary to make an assessment on this basis. He therefore submitted that the Court miqht exercise its powers under 0.38 r.1 of the Federal Court Rules and direct that Tamar's liability be ascertained by the Reqistrar, even though no inquiry had been souaght in the application or statement of claim. Order 38 r.1 provides useful machinery where all that remains is the assessment of damages which itself is "substantially a matter of calculation". That is not the case here. Differing views have been expressed in this Court in relation to remoteness of damage in the case of a claim under s.82. It may be that the test 1s one of foreseeability (Steiner v. Magic Carpet Tours Pty. Ltd. £1984] A.T.P.R. 40-490); or it may be that the statutory right to damages is intended to have a 99. Droadér ambit than commcn law actions so that applicants are entitled to those lasses which are the immediate result of the otfendina conduct and also to consequential losses if sufficientlv direct. (Frith v. Gold Coast _ Mineral Springs Pty. Ltd. £19833 A.T.P.R. 40-339) The resolution of these views 1s not somethina I need attempt in this case. On anv view, 1t seems to me that damages said to have been suffered by the applicants when their equity in Bibikina was outweighed by their debt to the Bank was not reasonablv foreseeable by Tamar, was not an immediate result of its offending conduct and was not a sufficiently direct consequential loss. There is a further obstacle in the way of the applicants. It was open to them at any time either to sell Bibiking or to sell other land and discharge their obligations to the Bank or at any rate bring them within manageable proportions. This they did not do even though for the best part of two years from their aqreement to buy Bibiking, the price of farmland was rising. Counsel for the Bank directed submissions to this aspect of the applicants' conduct, describing it as a novus causa interveniens. Whether it was so or constituted a failure to mitigate damages is of little consequence so far as the claim against Tamar is concerned. It may be that if the Bank had been found to have contravened s.52, different considerations would arise in reqard to the recoverability of damages from it. In Tamar Management Pty. Ltd. v. James, to which reference was made earlier, the Full Court suagested that attention might have to be 100. aiven to the fact that the security provided by the Bank was based upon a bill line, thus raising the point whether in February 1981 the applicants and the Bank enterea into one entire contract or whether they embarked upon a fresh transaction on each occasion the bill was rolled. The passage in question appears in mv ruling on the no case submission, in the attached appendix. While such a question may arise as between the applicants and the Bank, in mv view it cannot arise as between the applicants and Tamar. Whatever approach be taken on the question of the remoteness of damage, the rolling over of bills and any loss flowina therefrom was too remote so far as Tamar is concerned. It follows that any loss or damage suffered by the applicants by reason of the misleading or deceptive conduct of Tamar on 18 Julv and 29 August 1980 fell outside the limit of three years prescribed by s.82(2). These remarks apply equally to the claim against Mr. Wells. Operation of s.87(2)(d) There is a further question - whether the claim under s.87(2)(d) is affected by the limitation period in s.82(2). In Fenech v. Sterling (1984) 57 A.L.R. 98 a Full Court of this Court held that s.87(1A) (which contains the power to make ancillary orders in the case of a contravention of Part V, which 101. orders are defined 1n s.87(2)) 1s free of anv prescribed period of limitation. The Court said at 104: "However, the remedies it €s.87(1A)] provides, when read with sub-s(2), are discretionary (unirke the entatlement to damages given bv s82) and the court must aive full weiaht to the qeneral leqislative intention evinced bv s82(2) of the Act. The influence of this consideration will be particularlv strona when reliance 1s placed by the applicant on s87(2)(d) of the Act, which 1s in substantially the same terms as s82. It will be much less strong in a case where, for example, the return of the property 1S sought under s87(2)(c). or where the avoidance or variation of a contract is sought under s87(2)(a) or (b)". So far as I am aware, there was no application for leave to appeal from that decision. But in Sent v. Jet Corporation of Australia Limited the High Court recently gave special leave to allow the question of limitation under s.87 to be arqued. See (1985) 21 Leq. Rep. S.L. 4. The history of Fenech v. Sterling may be traced one more step. Following the decision of the Full Court, the matter came before Beaumont J. in Fenech v. Sterling (1985) 61 A.L.R. 445. His Honour held that the circumstances of the case did not call for the refusal of relief on discretionary grounds. Accepting, on the basis of existing authority, that relief sought under s.87(2)(d) is mot subject to any prescribed period of limitation, I do not think this a case for the exercise of discretion to order Tamar to pay damages sustained outside a period of three years before the commencement of proceedings. As the Full Court pointed out in Fenech v. Sterling, the general legislative intention evinced by 5.82(2) is that a claim for gamaqes must be brouant within three vears arter the date on which the cause of action accrued. Jt would, in my view. be a curious and unexpecnead result that a werson whose claim is barrea bv reason or $.82(2:) may nevertheless recover preciselv che amount B a claimed merelv by invoking para.td: of 5.8712). Jne can imagine circumstances ain which, bv reason ot a respondent s conduct in 52, or the continuance of [a concealing a contravention or w negotiations or some other circumstance that reasonably led an applicant to delay bringing proceedinas, the discretion might be invoked. See qenerally 57 A.L.R. at 104. While one must have aaqreat deal of sympathy for the applicants in the position in which they find themselves, I do not think that thev come within any of the situations in which the exercise of such discretion as may exist is appropriate. JI do not overlook the fact that on 10 December 1981 Market Securities wrote to Mr. Kinasley James in reqard toc the prospects of a loan from Citicorp, noting that answers to certain questions "will obtain the loan vou most desire". But that letter must be taken in the general context that well over a year had elapsed since the misleading or deceptive conduct by Tamar had taken place. In any event it would not assist the applicants to exercise the discretion, for the damage they claim to have suffered is too remote. Tamar's neqliqence - turisdiction Counsel for the second and third respondents contended that. ain the event of the applicants' claim against those 103. respondents being statute barred, there was no 1urisdiction in this Court to deal with anv common law claim aqainst them. This contention was the subject ot a detailed written submission to which I have qiven close consideration. If I appear not to deal with the submission in great detail, it 1s because [I am of the opinion that the question of the Court's iurisdiction is resolved bv a more direct path than that taken by counsel in propounding and rebutting the thesis. Counsel for the second and third respondents acknowledged that when a court exercising federal jurisdiction has its jurisdiction attracted in regard to a matter, its jurisdiction extends to the resolution of the whole of the matter. Counsel accepted that since Phillip Morris Inc. v. Adam P. Brown Male Fashions Pty. Ltd. (1981) 148 C.L.R. 457 and Fencott v. Muller (1982-83) 152 C.L.R. 570 the Federal Court has jurisdiction to determine, not only claims arising under the Trade Practices Act, but also other federal or non federal claims arising out of the same matter or controversy. Such matters fall within the accrued jurisdiction of the Court. The exercise of jurisdiction in matters thus attracted is discretionary, to be exercised in accordance with the principles enunciated in Stack v. Coast Securities (No. 9) Pty. Ltd. (1983-84) 154 C.L.R. 261. There is no doubt that the claim in negligence against Tamar arises out of the same matter or controversy that gave rise toa claim for breach of s.52 of the Trade Practices Act. Equally there is no doubt that the claim in negligence and the trade practices claim ne] o depend oan common tcansactions and facts that thev arise out of iD a commcn substratum or faccs. All Enis mav oe taken as common aground between the applicants on the one hand and the second and third respondents on the other. But it was the iatters'' submission that once the trade practices claim was held to oe statute barred, there was no basis upon which the Court could exercise 1ts accrued Jurisdiction. I do not accept that submission. This Court had jurisdiction to deal with the claim in nealigence against Tamar because that claim lav within the accrued iurisdiction of the Court according to the principles yust mentioned. To hold that the statutory claim is barred is not to sav that the Court did not have or does not have jurisdiction to deal with that claim. Although s.82(2) 1s expressed in terms that an action may be commenced within three vears after the date on which the cause of action accrued, the qaeneral approach to such a provision in comparable legislation has been that it constitutes a defence. A respondent or defendant may, for whatever reason, choose not to plead a relevant Limitation provision in which event it is not encumbent upon the court to consider the question for itself. Indeed, in the absence of such a defence, a court that did so would trespass beyond the issues raised by the pleadings. The position is in marked contrast to that where the Jurisdiction of a court to deal with the claim before it is in question. Notwithstanding the failure ot the respondent or defendant to raise the matter. the court must satistv itself as to jurisdiction. 105. In the present case, not only was there a claim against the second and third respondents under the Trade Practices Act, but there was a contravention of s.52 bv Tamar and Mr. Wells was involved un tnat contravention. Those ciaims have failed. by reason of the provisions of s.82(2) of the Trade Practices Act. In my view it 1s a misuse of lanquaqe to sav that the jurisdiction of the Court under the Trade Practices Act has never been attracted or that 1n some way it has been lost. For this reason I find it unnecessary to deal with the question of "pendent parties" and "pendent relief" to which counsel referred. Tamar was neqligent in what its managing director, Mr. Wells, told the applicants at the meetings on 18 July and 29 August 1980. The remaining question to be answered is - did the applicants suffer any and, 1f so, what damage as a result of that negligence? Another way of asking the question is - was Tamar's conduct a causally relevant factor in any damage suffered by the applicants? The applicants did not enter into the contract to buy Bibiking by reason of anything said by Mr. Wells on 18 July or 29 August 1980. It is true that Mr. and Mrs. James were not parties to the original contract and only became co-purchasers later. But their addition as purchasers was not the result of anything said by Mr. Wells; it had a quite unrelated cause. Certainly there was a causal connection between Mr. Wells' statements regarding the availability of a loan and the applicants' decision to make the further payment on 31 August 1980. But, as has been said more than once in the course of these 106. reasons, the applicants did not suffer damage by reason of that pavment or by reason of their decision to complete the purchase in Februarv 1981. And thev did not suffer damaqge merelv bv reason of the nature and terms of the loan obtained from the Bank to enable them to complete the purchase. They suffered damage because they overestimated their capacitv to service the loan from the Bank and, when that became apparent, they farled to take the logical step of selling some of their land. In mv view, any damages suffered by the applicants were too remote to hold Tamar responsible in neaqliaence for that damage; nor was that damage a consequence of Tamar's negligence. Conclusion The applicants have failed to make good any of the causes of action pleaded against the Bank. They have established a contravention of s.52 of the Trade Practices Act on the part of Tamar and have shown that Mr. Wells was invoived in that contravention. However their claims against Tamar and Mr. Wells under the Act are barred. They have made out a case of negligence against Tamar but have not shown that any damage suffered by them was as a result of that negligence. In those circumstances the applicants' claim against all respondents must be dismissed. I certify that this and the preceding one hundred and five pages are a true copy of the reasons for judgment herein of his Honour Mr. Justice Toohey HE bh Associate cad: 2k Febmany, (T&G IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRAL SL DISTRICT REGISTPY GENERAL DIVISION a iP)qi ur a on Q yy ~ va) qa re BETWEEN KINGSLEY FREDERICK DAVID JAMES, JILL MAXINE JAMES, DAVID MAXWELL JAMES, PETER NORMAN JAMES , ANGUS KINGSLEY JAMES, YALLAMBEE PLY. LTD. and OCKHAM PTY. LTD. Applicants and AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED First Respondent and TAMAR MANAGEMENT PTY. LTD. Second Respondent and JOHN WELLS Third Respondent CORAM: TOOHEY J. 2 December 1985 RULING ON "NO CASE" SUBMISSION BY SECOND AND THIRD RESPONDENTS The applicants concluded their case in the third week of this hearing. Mr. Owen-Conway, counsel for the second and third respondents then said that he wished to make a "no case" submission on behalf of his clients. He argued that his clients should not be put to an election whether to call evidence before making the submission. I reserved that question over night but, ey The Llart Le cumee cout reve, 20 at le. Lala ULRT Ag ala nat Wish TC eursue vnat was uvestriped as tne oretiminary submission. de sald tnat nis clients elected not to cail evidence and he asked that the court hear ana deai with the no case submission. It seemed to me, and I said so to counsel, that some difficulties might arise inthe event of the second and third respondents, but not the first respondent, Making such a submission. I suggested that evidence presented by the first respondent might tend to falsify whatever decision was given on the no case submission. The first respondent declined to join in the submission; indeed its stance has been that it wishes to give evidence to answer the alleqations made against ait. Counsel for the second and third respondents recognized that difficulties might arise but submitted that this only strengthened his clients' argument for having their submission dealt with before the first respondent went into evidence. Counsel for the applicants did not contest the entitlement of the second and third respondents to have their submission determined before the case for the first respondent began; counsel expressly conceded their right to such a course. But Mr. Templeman, counsel for the applicants, contended that by making the submission the second and third respondents lost not only the right to call evidence but the right to participate any further in the hearing including the making of a final address, Mr. Owen-Conway challenged this contention. In his submission, his clients were entitled, in the event of their no case submission beina overruled, to cross-examine the first respondent's witnesses and to make a final address. NFPOP SLO L LEI Wat WAS a thos guar ana considered submissicr, the argument of the second and third respondents was that the evidence adduced by the applicants was insufficient to establish a case in law aqainst either of them. Alternatively, they said, 1f there was sufficient evidence 1t was so palpably inadequate and unsatisfactory that the case should be "withdrawn" against them. They further arqued that. on any view of the evidence. the applicants' claim against the second and third respondents was barred by reason of the time limit contained in sub-s.82(2) of the Trade Practices Act 1974. As a gloss on that submission, counsel accepted that, in so far as the applicants relied in the alternative upon s.87 of the Trade Practices Act, no limitation period was directly applicable. But he submitted that the Court ought, in the exercise of its discretion, apply the limitation period of 3 years in sub-s.82(2) with the consequence that the applicants' claim against the second and third respondents must fail in any event. Counsel for the applicants responded at length to these arquments. The hearing was adjourned overnight to enable Mr. Owen-Conway to complete submissions begun in reply to those of the applicants. However, when the hearing resumed Mr. Templeman said that he wished to withdraw his submission that, in the event of their no case submission being overruled, the second and third respondents should not be permitted any further participation in the hearing. He said that he withdrew the submission in the light of certain authorities that had been referred to him by Mr. Ipp, counsel for the first respondent, authorities to which I shall refer later in these t (h re - = uw wt: mn basis Ou note ot Ir TRS wlLONMIbk alas Fas taat where Ay ti in D rs — a ry L 1¢ mere than one cespondent,., it 15 not avorcpriate tor the Court tc entertain a no case submission unless made on behalf of all respondents. Counsel for the applicants maintained, as an alternative approach, that for reasons already advanced in his earlier argument, the no case submission should be rejected because there was evidence upon which the Court might find the second and third respondents liable in damages to the applicants and that there were no matters of law which should lead the Court to conclude that in any event the applicants' claim against those respondents must fail. Mr. Owen-Conway then proceeded with his submissions in reply, in the course of which he argued that in the particular circumstances of this case the Court should deal with his no case submission, notwithstanding the absence of any such submission by the first respondent. I then permitted Mr. Ipp to address as to the appropriateness of the Court dealing with the second and third respondents' no case submission in the absence of such a submission by the first respondent. It will be necessary to deal later with the various authorities referred to by Mr. Ipp, but the crux of his argument was that at this stage the Court should not be concerned with an analysis of the strength of the applicants' case against the second and third respondents. He said that since there was no suqgestion that ano case submission by the first respondent would succeed, the Court should not compartmentalize the hearing but should look at the evidence as a whole. To this ana, me fad, clunse: lor the secora amu tnird respondents were entictleaqa ca cross-eMamine ary witnesses ne called and were entitled to make a final address; indeed, since they had not called evidence, they might address last. It was implicit in this submission that the second and third respondents could not withdraw their election to call no evidence. Counsel for the applicants then endorsed what had been said by counsel for the first respondent, with this qualification. He said that it was still open to the Court to find that "the applicants have proved affirmatively in their case that it is impossible to impute blame to the second or third respondents, then clearly the no case submission should succeed". That is a matter to which I shall return later. Against this background of somewhat shifting stances, I propose to consider first whether the second and third respondents' no case submission should be rejected in any event as inappropriate when there is a respondent who has made no such submission. The very term no case submission was described in Tate v. Johnson (1953) 70 W.N. (N.S.W.) 302 at p.304 as "an unfortunate phrase to use in civil proceedings". Street C.J., who delivered the judgment of the Full Court, referred to ambiguity in the expression for it may mean that there is no evidence of the elements necessary to be proved or that there is some evidence of those elements but that it is so weak or unsatisfactory that it should not be accepted. Again it may mean that by reason of some question of law the case cannot succeed in any event. The criticism by the Court was made in the context of an argument Tass ne mgcrys. Ac che cicse of the plaintifte2' case, ¢tunsel for tna amer ar the lorry submitted that there was no evidence against nis client and the County Court yudge accepted this submission and dismissed that defendant from the action. The case then proceeded against the owners of the car whose witnesses threw all the blame on the driver of the lorry. The judge found that the driver of the car was not negligent and entered judgment for the owner of that vehicle also. In their judgment ordering that there be anew trial, Bray and Lush JJ. said at pp.666-667: "In our opinion the learned judge took an entirely wrong course in allowing Leary to be dismissed from the action. Instead of trying the case as one entire case, which it was, and hearing all the evidence before arriving at a conclusion, he divided it into what we may call compartments and tried each separately, the result of which was that it was never really tried at all. He treated it as a claim against Leary alone and a claim against Foster alone, overlooking the fact that the plaintiffs, as they were entitled to do under the Rules, were alleging that either Leary or Foster or both were responsible for the accident. When once a state of facts were proved, as it was, from which the reasonable inference to be drawn was that prima facie one if not both drivers had been negligent, the plaintiffs were entitled to call on the defendants for an answer, and the proper time at which to decide whether on the evidence one defendant or the other defendant or both the defendants were liable was at the close of the whole case". Hummerstone v. Leary was followed by the Full Court of New South Wales in Menzies v. Australian Iron and Steel Ltd. (1952) 52 S.R. (N.S.W.) 62. That case concerned a claim for damages by a widow against the employer of her deceased husband and against the driver of a motor vehicle. The plaintiff claimed to recover against the defendants severally or, in the alternative, jointly. At the close of the plaintiff's case, tor cecoverv th cty £e93s5101 of cossession sof premises, the lessee was required to elect whether or not he would go into evidence before making a no case submission. And of course there is much authority on this matter, both in the context of civil and criminal proceedings. But that point does not arise here for the second and third respondents expressly elected not to give evidence. When a no case submission has an evidentiary foundation rather than a basis in some proposition of law, there is no logical inconsistency in the Court holding that there 1s a case to answer but thereafter dismissing the claim. The question for the Court on the no case submission is whether there is evidence upon which the Court could enter judgment for the applicant. A rejection of a no case submission does not carry with it an inevitable consequence that the claim must succeed. Where a judge is sitting with a jury, the distinction between the arbiter of law and the arbiter of fact is of course apparent. If the judge decides that there is a case to go to the jury, it is then for the jury to uphoid or dismiss the claim. While there is no logical inconsistency in rejecting ano case submission and thereafter rejecting the claim, the distinction is a fine one when a judge sits without a jury, given that the standard of proof is on the balance of probabilities and that inferences may be drawn by reason of the respondent's failure to adduce evidence. It is for these reasons, I think, that in Alexander v. Rayson (19361 1 K.B. 169 at 178 the Court of Appeal said: "Where an action is being heard by a jury it is, of course, quite usual and often very convenient at the \ 22 ar we tase fF Ene clasmtiter lOc "ne crposing Payctvy To ace ror tne rulard cf tne iudge whether there 13 any case to go to the jurv, who are the onliv studdes ot fact. ict also seems to ne not unusual in the Kings Bench Division to ask for a similar ruling in actions tried pv a iudde alone. We think, however, that this 1s highly inconvenient. For the judde in such cases 1s also the vudage of fact and we cannot think it right that the judge of fact should be asked to express any opinion upon the evidence until the evidence 1s completed. Certainly no one would ever dream of asking a jury at the end of a plaintiff's case to say what verdict they would be prepared to give if the defendant called no evidence, and we fzil to say why a judge should be asked such a question in cases where he and not a jury 18s the judge that has to determine the facts. In such cases we venture to think that the responsibility for not calling rebutting evidence should be upon the other partys' counsel and upon no one else". These remarks seem to have sounded the death knell for any election by defendants in civil actions. If a defendant elects not to call evidence, the judge has before him all the evidence upon which he is called to make a decision. Any distinction between the role of the judge in ruling on a no case submission and the role of the judge as an arbiter of fact becomes largely illusory. (This of course is in the context of a no case submission based on the evidence; such a submission based on a4 proposition of law may be in quite a different position.) The inconvenience of not putting the defendant to an election is apparent. If the judge's decision om the no case submission 15s upset on appeal, there must inevitably be a retrial. Where there 1S more than one respondent, the arguments against allowing one respondent to make a no case submission are powerful and they have been endorsed by courts ona number of occasions. Hummerstone v. Leary £19211] 2 K.B. 664 concerned a claim for damages against the owners of two motor vehicles, in one ne apcrcver aopsis- Toe A Veralcio cy lirection put the trial cugqge said tnat tne application was premature, but that 1t might be renewed later, and that counsel was free ta call or not call evidence as he thought fit. That practice was approved by the Full Court which also gave its endorsement to Hummerstone v. Leary and to a passage in Glanville Williams on Joint Torts and Contributory Negligence p.59 in the following terms: "In actions against concurrent tort feasors there is a further rule that 1f the plaintiff shows that prima facie one if not both of the defendants was negligent, the judge should not at the close of the plaintiff's evidence non suit him against one defendant only, but should hear the whole case before coming to a decision". In the present case the first respondent has not made a no case submission and so the applicants have not been concerned to show a prima facie case against that respondent. But I can see no difference in principle to the procedure to be followed where one respondent impliedly acknowledges a prima facie case against him. Hummerstone v. Leary was applied by Wilson J. in the Supreme Court of New Zealand in Mobil 011 New Zealand Limited v. Matthew Park Limited £19651 N.Z.L.R. 803. It is true that in Menzies v. Australian Iron and Steel Ltd. the court attached some importance to the language of s.2 of the Law Reform (Miscellaneous Provisions) Act 1946 (N.S.W.) and that in Mobil Oil New Zealand Limited v. Matthew Park Limited the court placed reliance on r.45 of the Magistrates' Courts Rules Labs, I7'e LF Sate ore tl A Rll calt cmt ls) ip acubt as to the Betean Geom warm "e rs entitled to renress to iin two or more deferdan fad ma] ct ia w» fan che question as to wnicn is liable, and toa what extent, mav one determined as berween all parties" (emphasis added). But ait is equallv clear that in each case the court rested its decision ona broader foundation of convenience and justice to the parties. The same may be said of Hummerstone v. Leary - see in particular Bray J. at 667. In Nesterczuk v. Mortimore (1965) 115 C.L.R. 140 at 147 Kitto J. referred with apparent approval to Hummerstone v. Leary, commenting: --- accordingly, where the evidence adduced for the plaintiff raises a prima facie inference that the plaintiff's injuries resulted from negligence on the part of one or other or both of the defendants, it is an error to dismiss one defendant from the action at the close of the plaintiff's case on the ground that as the evidence stands it is more probably the other defendant who was negligent. The proper course is to awa1lt the conclusion of the whole of the evidence then consider whether the collision was due to negligence on the part of one only or to negligence on the part of each". Trade Practices Commission v. George Weston Foods Ltd. (No. 2) (1980) 43 F.L.R. 55 concerned proceedings by the Trade Practices Commission against several defendants, alleging conduct in breach of s.45 of the Trade Practices Act. At the conclusion of the plaintiff's case the defendant sought to move for judgment on the qround that there was no case to answer. Davies Jd. required them to elect whether or not to adduce evidence, saying at p.ol: rest be sone ov eatlirg unan elect wnether arg not re casi evidence ission cf 19 case to answer, 1f it 1s on the whole of the evidence which is 16a account in this action" 'again, mA fq be taken 2 € I reagard that decision as an endorsement by a judge of the Federal Court of the general principles to which I have referred. The present claim does not assert that the three respondents acted jointly. The first and second respondents are sued by reason of alleqed misleading or deceptive conduct, the misleading or deceptive conduct not being precisely the same in each case. The third respondent's liability 1s based upon s.75B of the Trade Practices Act. There is in addition a claim in negligence against the first and second respondents, again not based on the same facts, though there may be evidence common to both. Nevertheless the principles enunciated in the decisions mentioned above are in my view equally applicable to the present case. The second and third respondents submit that there is no case to answer against then. The first respondent makes no such submission and must be taken, for the purposes of the present applicatiion, to acknowledge that it has a case to answer. The second and third respondents say nothing as to the case against the first respondent. In those circumstances I am of the opinion that, in so far as the no case submission has an evidentiary basis, I should not entertain ut. The first respondent proposes to call evidence, the second and third respondents have elected not to do so and it will be for the Court to determine at the end of the first respondent's case, and in the light of the final addresses, whether the applicants have made good any cause of action against any of the respondents. It 1S implicit in this view that the ae 2 ot ar ee ae - oe omen eeciIewl sa Tele t Lilie aes 'll owe Isbyitted ts rake a finest aaddress. They 1.4 naAtdiv ne erectide2i recom doing ¢o since all thev have soudnt to 29 125 TO arwue cnat thev have no case to answer. Equally £ am of the opinion that the second and third respondents are entitied to cross-examine anv witnesses called by the first respondent. As a general proposition, that cross-examination would not constitute the calling of evidence though it is conceivable that an issue may arise as to whether an answer to a particular question or the production of a document to a witness may constitute adducing evidence. These are matters on which I express no view until they arise, if they do, for decision. The question of a non-suit did not arise, no doubt because it was accepted by counsel (and rightly so, in my view) that such a procedure is not available in the Federal Court. The history of non-suits was expounded by Windeyer J. in Jones v. Dunkel (1958-1959) 101 C.L.R. 298, at pp.323-331. It is a consequence of the view I have taken that I do not propose to follow either Mr. Owen-Conway or Mr. Templeman in his analysis of the evidence adduced to date. In my view that is precisely the exercise that I should not embark upon, having regard to the admonitions in the authorities which have been mentioned. The time to consider the evidence is at the end of the hearing. Equally I am not prepared to accede to Mr. Templeman''s suaqestion that I might consider whether the evidence proves affirmatively that 1t 1S impossible to impute blame to the second or third respondent. The reasons that have led me to reject an uty, id ie oT wo 5 aang - ar) + anaivsis oF bie evisence t2 aate for che puercee ct 'me no case submig¢slon fcersuane me that © should reract tne iumvitation. it us not, L think, a necessary consequence of this view that I should not entertain the no case submission in so far as 1t involves auestions of law thouaqh in so far as those questions cannot be divorced from findinas of fact, the principles just enunciated principles would apply. For reasons that were developed in some detail during the course of Mr. Owen-Conway's submission, the second and third respondents arqued that any cause of action against them under s.82 of the Trade Practices Act accrued at the commencement of any loss or damage suffered by the applicants as a result of any conduct by the second respondent in breach of s.52 of the Act and that, in the light of the applicants' case as pleaded and conducted, that loss or damage began at the latest in February 1981. Because the application was not lodged in the Federal Court until 13 November 1984, the second and third respondents contended that any claim against them 1s statute barred. Mr. Owen-Conway made further submissions as to the consequence of the Court holding, as he said 1t should, that it had no jurisdiction to entertain the claim under s.82 against the second or third respondents. The consequence, he said, was that there was no jurisdiction 1n the Court to deal with the applicants' claim in negligence against the second respondent. In so far as the applicants sought relief under s.87 of the Trade Practices Act, counsel argued that the limitation period under sub-s.82(2) should, as a matter of discretion, be applied with the same CONSE lel Foe Cle AYE LM caro. ir ame ar oases la mot supmikt thac, su long as therS is A clair adainst ine secora respondent under s.38z2 for oreacn of 3.52 and aclaim against the third respondent under s.75F, tne Court could not entertain the claim in nealigence against the second respondent. The arquments of Mr. Owen-Conway and Mr. Templeman on these matters touched basic questions relating to the jurisdiction of the Federal Court, at any rate its accrued or pendent jurisdiction. But none of these questions arise unless it be held that the applicants' claim against the second and third respondents under the Trade Practices Act is statute barred; so it 1s to that matter that I must turn. Counsel for the second and third respondents accepted that any cause of action the applicants had by reason of a contravention of 5.52 of the Trade Practices Act did not accrue until they had suffered loss or damage, for their cause of action arose under s.82. Loss or damage may occur some time after contravention. See Arcadi v. Colonial Mutual Assurance Society Limited £19841 A.T.P.R. 40-473. However, they contended that any loss or damage claimed to have been suffered by the applicants must have commenced on one or other of the following dates: 1. On 15 July 1980, when the applicants executed a contract for the purchase ot "Bibikinag". rruries 'arr= RIECS ao Tuiv bac, Quad othe weriod within wrhicn the tunisl rescondent, acting an oehalr of the second cesponderc, sara that he cculd procure a loan. On 11 August 1980, wnen the applicants paid a further deposit of $25,000. On 31 Auaqust 1980, when the applicants paid a further $71,775 and lost the right to withdraw from the contract. By February 1981, when the applicants effected settlement of the purchase of ""Bibiking" and at the same time borrowed $1,250,000 from the first respondent to make the final payment to the vendor of "Bibiking" and executed various securities in order to obtain that loan. On 26 April 1985 I gave judgment refusing an application by the second and third respondents to strike out those paragraphs of the statement of claim relating to them. The second and third respondents appealed against that decision. The appeal was dismissed and in the course of its reasons (Tamar Management Pty. Ltd. v. dames, unreported decision delivered 20 September 1985) the Full Court said that the proper construction of sub-s.82(2) was at present "very much an open question". At p.9 the Court said: If 1t were necessary, it could be added that, in addition to the question of the proper interpretation of s§.82(2) already mentioned, it would seem that a further question will arise as to 1ts application to the facts of the present case having regard to the circumstance that the security given to the bank was best. ourrm g o1vii tine racility wl. Keayided for rell-avers at varlasit YATLS of interest. This raises the point, one of construction, wnether ain Februarv 1381 che respondents and the oank entered into one entire contract aun that connection ocr whether thev «embarked upon a fresn transaction on each occasion the bill was rolled 'see K.D. Morris & Sons Proprietary Lamited (in Liquidation) v. Bank of Queensland (1980) 146 C.L.R. 165)". The Full Court was at pains to point out that the question of iimitations under sub-s.82(2) is not some abstract question of law but a matter to be determined on the evidence. I am not to be taken as suaqgesting that the submissions of the second and third respondents in this regard ignored questions of fact. Clearly they did not. But the point is that, until the relevant facts have been found, it is not possible to reacha conclusion concerning the operation of sub-s.82(2). For instance, counsel for the applicants submitted that although his clients incurred a substantial liability when they executed the security documents, they also acquired a substantial asset. There was no immediate loss; it was as time went by that the applicants' indebtedness to the first respondent rose through the rollover of commercial bills. Had the value of the mortgaged properties remained the same, said counsel, the applicants' equity of redemption in those properties would have diminished. However there was evidence, in particular from Robert James Ferguson a licensed valuer, that property values rose between 1980 and 1982. It followed, ain counsel's submission, that no loss may have been sustained by the applicants until some time after 1982 when property values fell. 17. Gn this matter the applicants and the first resporaent are of a common mind, for counsel for the first respondent foreshadowed a submission that the applicants did not sustain damage until atter February 1981. Mr. iIpp submitted that the applicants did nat suffer loss cor damage until their liabilities under the securities exceeded the value of the secured assets. I fi) made 1t clear that the first respondent was not abandoning its plea of limitations under sub-s.82(2). But its primarv submission was that the applicants did not suffer loss until a time which, whenever it occurred, fell within a period of 3 vears preceding the commencement of these proceedings. While that may seema somewhat curilous submission for the first respondent to make, the point of 1t is that in the first respondent's submission the applicants were the authors of their own misfortune for they could have sold their farming land and avoided any loss. This submission was not developed at any length and so I say no more about ait except that it points up the dangers of seeking to resolve, on a no case submission by the second and third respondents, questions which bear directly upon the position of the first respondent and which may well be the subject of evidence by that respondent. Mr. Owen-Conway also made an attack upon those paragraphs of the statement of claim relating to his clients, on the ground that a pleading that the second respondent represented that it "was able to obtain" or "was able to procure" a loan for the first applicants was a representation as to the future and was not capable of constituting misleading or deceptive conduct within s.52. Once again, this 1s a matter which cannot be divorced from the evidence. Ina Judicature Act system of pleading the question whether a statement of claim discioses @ reasonable cause of action was put this way by 'che Privy Council in Mutual Life and Citizens Assurance Co. Ltd. v. Evatt (1970) 122 C.L.R. 628 at p.631: "The question is thus different from that which arises under the modern svstem of pleading in England upon an application to strike out a statement of claim as disclosing no reasonable cause of action. There the question is whether it would be open to the plaintiffs upon the pleadings to prove facts of the trial which would constitute a cause of action. See Dorset Yacht Co. v. Home Office £19703 A.C. 1004". Recently, in Bell v. Australasian Recyclers (W.A.) Pty. Ltd. (unreported decision, delivered 31 October 1985) I discussed the concept of misleading and deceptive conduct in the context of representations made by a respondent which have some future element about them and the relevance of the respondent's state of mind at the time the representations were made. I do not propose, at this stage of the proceedings, to add to what I said there. It 1s enough, for present purposes. to say that within the framework of the statement of claim it is possible for the applicants to adduce evidence capable of constituting misleadinag or deceptive conduct con the part of the second respondent and of establishing facts from which conduct on the part of the third respondent within s.75B of the Trade Practices Act may be inferred. Whether they do so is a matter to be determined in the light of the totality of the evidence. As to the operation of s.87 of the Trade Practices Act, the question whether the time limit in sub-s.82(2) should be © applied 1S very much a question of discretion, as the Full Court emphasised in Fenech v. Sterling (1984) 57 A.L.R. 98. See also the subsequent course of those proceedings as reported in Fenech v. Sterling C1985] A.T.P.R. 40-629. Furthermore this 15 a matter that touches the first respondent as much as it concerns' the second and third respondents and it would be inappropriate to seek to determine the operation of s.87 in these procecdings without having heard either evidence or submissions from the first respondent. I sum up the conclusions I have reached in this way: 1. I reject the no case submission made on behalf of the second and third respondents. 2. I do so on the ground that. in so far as the submission is based on lack of evidence or the unsatisfactory state of the evidence, 1t is inappropriate to entertain the submission when no similar submission has been made concerning the first respondent. 3. In so far as the second and third respondents' no case submission is based upon propositions of law, those propositions cannot be divorced from the evidence in the case and from relevant findings of fact which can only be made at the close of the proceedings. 4. The hearing will proceed. The first and second respondents have elected not to call evidence but they may cross-examine 20. witnesses called on behalf of the first respondent and their counsel may participate in final addresses. Whether any cross-examination of the rirst respondent's witnesses by counsel for the second and third respondents amounts to adducing evidence by them is a matter to be considered if and when 2t arises. I certify that this and the preceding nineteen pages are a true copy of the Ruling on "No Case" Submission by Second and Third Respondents herein of his Honour Mr. Justice Toohey | Associate Dated: Az Yectunley (985