\ 4q mye ~Jo\: SS . Guo. IN _THE FEDERAL COURT OF AUSTRALIA ) UEENS DISTRICT REGISTRY ) QLD G207 of 1987 _- GENERAL DIVISION ) BETWEEN: KENNETH JAMES AYLWARD Pirst Applicant AND: STAR HOLDINGS (QLD) PTY LTD Second Applicant AND: WESTPAC BANKING CORPORATION Respondent MINUTES OF ORDER (ol FE : JUDGE MAKING ORDER: PINCUS J. EOE COUG oe fel RN Pane DATE OF ORDER: 29 APRIL 1988 = $s WHERE MADE: BRISBANE THE COURT ORDERS THAT: 1. The further and better particulars filed by the applicants on 29 February 1988 be amended by adding Paragraph 4: "As to the allegations of inherent unfitness in paragraphs (1), (2) and (3) of this document, the applicants' case is that transactions of the type the respondent engaged in under the management agreement referred to in the pleadings were not fit for the purpose mentioned in the pleading, not because of the particular quality of the respondent's services, but because it 1s pure chance whether the provision of such services improves or worsens the position of a customer." 2. Paragrahs 16 and 17 of the amended statement of claim be struck out. 3. Leave be given to the applicants to deliver within 14 days a further amended statement of claim, and directs that the particulars be fully incorporated in the pleading. > cy The defence and counterclaim be delivered by 27 May 1988. The reply and answer be delivered by 10 June 1988. Discovery be given by 24 June 1988. Inspection take place by 1 July 1988. The matter be set down for further mention on Friday, 8 July 1988. The respondent's costs of the notice of motion filed on 12 April 1988 be taxed and paid by the applicants. Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA ) QUEENSLAND DISTRICT REGISTRY ) QLD G207 of 1987 GENERAL DIVISION ) BETWEEN: KENNETH JAMES AYLWARD First Applicant AND: STAR HOLDINGS (QLD) PTY LTD Second Applicant AND: WESTPAC BANKING CORPORATION Respondent PINCUS J. 29 APRIL 1988 REASONS FOR JUDGMENT This 1s a second attack on a pleading relating to a loan said to have been made in Swiss francs. The first applicant says he borrowed $1.5 million in Australian currency, and that 1s the extent of his obligation to repay principal. No defence has been delivered, but it seems likely the dispute will relate to whether the applicants or the respondent bank have to bear a_ substantial foreign exchange loss. On 23 February 1988, I struck out certain particulars of the applicants' claim and ordered that further particulars be supplied. The present application follows on from that made in February, in the sense that it attacks the further particulars supplied in pursuance of my previous order; it also raises, however, two new points. The amended statement of claim delivered on 7 December 1987 says that the respondent advanced $1.5 million in Australian currency to the first applicant, and that the respondent represented to the first applicant that 3,326,700 Swiss francs had been borrowed. Further, the statement of claim says it was represented that as a result of adverse currency fluctuations the first applicant had suffered substantial foreign exchange losses. The statement of claim goes on to say that the respondent offered to manage the offshore loan ona daily basis and para.ll(d) - "represented to the first applicant that the said services would result in an improvement of the first applicant's financial position" - the "said services" being the management of the loan. The pleading said the first applicant accepted the offer and executed a Management agreement. It complains that representations including that in para.11(d) were misleading - "in that the loan was a loan of one million, five hundred thousand dollars (Australian Currency) (A$1,500,000.00) only and the first applicant had not suffered foreign exchange losses." I pointed out during the hearing that the words just quoted could not inform the respondent of the respect in which the representation mentioned in para.11(d) was misleading, since 11(d) has nothing to do with the matters mentioned in the passage last quoted. That deficiency in the pleading is not, but is related to, a complaint made on behalf of the respondents and dealt with below. The pleading goes on to say that under the management agreement the respondent engaged in certain activities which - "were not reasonably fit for the purpose of improving the first applicant's financial position nor were they of such a nature or quality that they might reasonably be expected to achieve that result." That allegation is made in support of a claim for relief under s.74(2) of the Trade Practices Act 1974. That provision implies a warranty as to the quality of services supplied like the "fitness for the purpose" condition in the Sale of Goods Acts. The condition of its operation is that there shall be made known "any particular purpose for which the services are required or the result that he desires the services to achieve", "he" being the consumer mentioned in the provision. One of the additional points taken by Mr Keane for the respondent was that the pleading did not sufficiently specify the purpose or the result. It seems to me arguable that that 1s so, because the purpose said to he particular was merely improving the first applicant's financial position, and the result desired was' the same. The pleader might have made the allegations look more particular by speaking of a purpose of reducing the risk of loss from foreign exchange fluctuations, and if the pleading were so expressed, then a question would arise whether that is sufficiently particular for the purposes of s.74(2). As I indicated during the course of argument, however, I do propose to determine the point arising under s.74(2). Undoubtedly, the purpose could be stated more narrowly, but to require it to be amended to achieve that would not, in substance, advance the respondent's position nor enable it to prepare for the trial any more thoroughly. Further, it i3 not a case where I should attempt in a preliminary way to decide whether s.74(2) 18 capable of applying to the facts, in advance of their being found. The authorities to which I was referred relating to the Sale of Goods Act provision, namely Hardwick Game Farm v. S.A.P.P.A. £19691 2 A.C. 31 and Ashington Piggeries v. Christopher Hill Ltd £19723 A.C. 441, do not arrive at such a clear conclusion as to the width of the purpose which is permissible as to enable one to be confident that facts proved under this pleading must fall outside s.74,. To return to the pleading, 1t goes on to say that the respondent claimed that losses were suffered in consequence of the Management engaged in by the respondent, in the sum of AS344,398.40. What precisely is the complaint about the services provided under the management agreement? The solicitors for the respondent asked for particulars of that, and were told the services were deficient - "in that there was no reasonable likelihood of their improving the first applicant's financial position in that the services were not calculated to cope with the unpredictable factors governing foreign currency movements and the volatility in the foreign currency market caused by its being governed by such factors." I struck that out as being inadequate on 23 February and ordered further and better particulars, which were supplied on 29 February, and were (on this point) - "such services were inherently unfit for the purpose of improving the financial position of the Applicant". This rather odd assertion can only be understood against the background of the argument which was advanced at the hearing of 23 February 1988 referred to above. Senior counsel for the applicant there explained that what it was intended to urge was that such services as the respondent banker provided by way of management under the agreement were inherently worthless. It appeared then that the case being put forward was not that the process of entering into transactions under the management agreement was badly done, but that was a matter of pure chance whether such transactions would improve the customer's position or worsen it. That is, by saying that the services were "inherently unfit", the applicants intended not to attack the way in which the services were carried out, but the whole notion that provision of services of that sort could be worthwhile. What the pleader has done, erroneously, has been to extract a remark made in the course of the discussion on 23 February and insert it, out of context, in the pleading. I proceed on the assumption (which was not reinforced by anything said in the more recent hearing) that the nature of the applicants' case is still the same. I order that the further and better particulars supplied on 29 February 1988 be amended by adding para.4: "As to the allegations of inherent unfitness in paragraphs (1), (2) and (3) of this document, the applicants' case is that transactions of the type the respondent engaged in under the management agreement referred to in the pleadings were not fit for the purpose mentioned in the pleading, not because of the particular quality of the respondent's services, but because it is pure chance whether the provision of such services improves or worsens the position of a customer." The advantage of thus formalizing the position 1s that it makes 1t clear that, for the purposes of this aspect of the case, discovery directed to an examination of the quality of the decisions taken under the management agreement is irrelevant. The next point raised by Mr Keane relates to the effect of the Gaming and Betting Act 1912 (N.S.W.). In para.16 and 17 of the statement of claim, the applicants allege, in effect, that the respondent, pursuant to the management agreement, entered into contracts on behalf of itself as principal which were wagering contracts. Clause 6(f) of the management agreement permitted the respondent on behalf of the "debtor" (the first applicant) to deal with itself as principal. Mr Keane''s point was simply that, if he did so, that was risk-free; any loss fell on the first applicant. The applicant relies on s.16 of the Gaming and Betting Act 1912 (N.S.W.), which makes contracts and agreements by way of gaming or wagering null and void. As is the position under the general law, transactions are not caught by the statute unless "each party may under it either win or lose" - Carlill v. The Carbolic Smoke Ball Company £1892] 2 Q.B. 484 at p.491 applied by Rogers J. ina case under this Act, Jackson Securities Ltd v. Cheesman (1986) 4 N.S.W.L.R. 484 at p.489. In my view, the point taken by Mr Keane is good and should be given effect to. The result is that paras.16 and 17 of the amended statement of claim will be struck out. It is necessary to make some other observations. There is a letter from the solicitors for the applicants dated 2 March 1988 which suggests that attacks on pleadings are a waste of money. Sometimes that is so. However, it has been my experience of cases of this general character that if the pleadings are obscure and not carefully thought out, much time and money may be wasted at the trial. With all respect, it does not appear to me that the statement of claim here would have made it clear to the respondent what case was intended to be made. That is important, not only from the point of view of the respondent, but from that of the trial judge. For example, no one could have guessed from the pleading that the case to be put forward under "unfitness for purpose" was the unusual point explained above. Even after the changes in the pleading and in the particulars consequential upon these reasons, aspects of the applicants' case remain unclear. Representations are pleaded in Para.1l which are alleged in para.14 to constitute misleading or deceptive conduct in that the loan was of Australian currency and there were no foreign exchange losses. That has nothing to do with the representations in paras.1l(c) and 11l(d). This deficiency should be corrected; indeed, it should have been corrected when (as no doubt occurred) counsel studied the pleading in response to the attacks made upon it. I give the applicants leave to deliver within 14 days a further amended statement of claim and express the hope that counsel engaged will be careful to ensure that (to avoid the waste of time and money referred to above) the pleading is in proper form and hangs together logically. I direct that the particulars be fully incorporated in the pleading, for convenience. Both the further amended pleading and the particulars must, of course, comply with the substance of the orders I have made as to the previous pleadings. It will be further ordered that the defence and counter-claim be delivered by 27 May, that the reply and answer be delivered by 10 June, discovery take place by 24 June, and inspection by 1 July. The matter will be set down for further mention on Friday, 8 July 1988. The respondent's costs of the notice of motion filed on 12 April 1988 will be taxed and paid by the applicants. ; + -act fy that this and the s preceding > are a true copy of the reascns for Ls gment herein of His Honour Nir Justice Pincus A Sear Associate Dated AF April 1989