Figgins Holdings Pty Ltd v Commonwealth Bank of Australia [1995] FCA 53

CATCHWORDS PRACTICE AND PROCEDURE - summary dismissal of application - requirement that cause of action exists at date proceeding is commenced - whether no reasonable cause of action disclosed. TRADE PRACTICES - action for damages for misleading or deceptive conduct - failure of mortgagee of premises to notify lessee of the effect of lessor's default under mortgage - variation of lease agreed between lessor and lessee not binding on mortgagee - whether mortgagee's silence could constitute misleading or deceptive conduct. TRADE PRACTICES - action for damages for misleading or deceptive conduct - need to establish loss or damage as at date of commencement of proceeding - causal link between respondent's conduct and alleged loss or damage. Trade Practices Act 1985 (Commonwealth) ss 52, 82, 87 Fair Trading Act 1985 (Victoria) ss 11, 37 41 Transfer of Land Act 1988 (Victoria) s 42(2)(e) Kimberley NZI Finance Ltd v Terero Pty Ltd (1989) ATPR (Digest) 53,193 Demagogue v Ramensky 39 FCR 31 Gates v City Limited Life Assurance Society Ltd 63 ALR 600 Port of Melbourne Authority v Anshun Pty Ltd 147 CLR 589 Wardley Australia Limited and Anor v The State of Western Australia (1992) 175 CLR 514

FIGGINS HOLDINGS PTY LTD v THE COMMONWEALTH BANK OF AUSTRALIA

VG 421/94 Olney J Melbourne 15 February 1995.

IN THE FEDERAL COURT OF AUSTRALIA) VICTORIA DISTRICT REGISTRY ) GENERAL DIVISION ) No VG 421/94 B E T W E E N: FIGGINS HOLDINGS PTY LTD Applicant THE COMMONWEALTH BANK OF AUSTRALIA Respondent Coram: Olney J Place: Melbourne Date: 15 February 1995. MINUTE OF ORDER THE COURT ORDERS THAT the proceedings be dismissed with costs. NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA) VICTORIA DISTRICT REGISTRY ) GENERAL DIVISION ) No VG 421/94 B E T W E E N: FIGGINS HOLDINGS PTY LTD Applicant THE COMMONWEALTH BANK OF AUSTRALIA Respondent Coram: Olney J Place: Melbourne Date: 15 February 1995. REASONS FOR JUDGMENT The applicant in this proceeding seeks damages pursuant to s 82 of the Trade Practices Act 1985 (Commonwealth), and s 37 of the Fair Trading Act 1985 (Victoria), relief pursuant to s 87 of the Trade Practices Act and s 41 of the Fair Trading Act and damages at common law for negligent misrepresentation. The claim is pleaded in an amended statement of claim filed 8 February 1995 (hereafter referred to as the statement of claim). By notice of motion filed 20 December 1994 the respondent seeks an order pursuant to Order 20 Rule 2 of the Federal Court Rules that the proceeding be dismissed. Order 20 Rule 2 provides: 2(1) Where in any proceeding it appears to the Court that in relation to the proceeding generally or in relation to any claim for relief in the proceeding - (a) no reasonable cause of action is disclosed; (b) the proceeding is frivolous or vexatious; or (c) the proceeding is an abuse of the process of the Court, the Court may order that the proceeding be stayed or dismissed generally or in relation to any claim for relief in the proceeding. 2(2) The Court may receive evidence on the hearing of an application for an order under sub-rule (1). Although the notice of motion does not identify the specific basis upon which the respondent seeks relief, several grounds were argued which could all be categorised as involving the assertion that no reasonable cause of action is disclosed. Affidavit evidence was filed by the respondent in support of the motion and by the applicant in reply. The affidavits do not disclose any relevant issue of fact about which the parties are in dispute. Reference will be made in these reasons to a number of facts which are common cause. In each case the facts in question are established by the affidavit evidence and could conveniently have been pleaded in the original statement of claim or by way of amendment in the case of matters which have occurred since the proceeding was commenced. The Court's power to stay or dismiss a proceeding pursuant to Order 20 Rule 2, as with any power to summarily dispose of a proceeding without a trial, is one which should be exercised sparingly and only in cases where the claim is obviously untenable and cannot possibly succeed. This is particularly so if there are, or are likely to be, issues of fact to be resolved in order to establish whether a cause of action exists. In a somewhat analogous situation, which involved a question as to when a statutory limitation period commenced to run Mason CJ, Dawson, Gaudron and McHugh JJ said in Wardley Australia Limited v Western Australia 175 CLR 514 at p 533: We should, however, state in the plainest of terms that we regard it as undesirable that limitation questions of the kind under consideration should be decided in interlocutory proceedings in advance of the hearing of the action, except in the clearest of cases. Generally speaking, in such proceedings, insufficient is known of the damage sustained by the plaintiff and of the circumstances in which it was sustained to justify a confident answer to the question. Similarly, the same considerations are apt in a case such as is presently before the Court. I am however, in the present case, confident that sufficient is known of the relevant facts to enable the issues raised by the motion to be resolved by way of an interlocutory application. BACKGROUND The proceeding has to do with a lease of 2 shops (the premises) at 167-171 Collins Street Melbourne (the property). The applicant has at all material times been lessee of the premises under a lease (the lease) for a 4 year term which commenced on 26 October 1987 and which was renewed, pursuant to an option of renewal in the lease, for a further 4 years. The minimum annual rent reserved under the lease is $63,665. The respondent is the successor in law to the State Bank of Victoria. References herein to "the Bank" are references to the State Bank of Victoria until such time as the respondent became its successor in law and thereafter the term refers to the respondent. THE FACTS The following chronology summarises the facts. Except where otherwise indicated the facts set out below are those pleaded in the statement of claim: a) Lamina Pty Ltd (Lamina) became the registered proprietor of the property on 8 September 1989 and at the same time mortgaged the property to the Bank. Upon registration of the mortgage the applicant was a tenant in possession of the property within the meaning of s 42(2)(e) of the Transfer of Land Act 1988 (Victoria). At or about the time of the execution and registration of the mortgage the Bank was aware of the rental payable by the applicant under the lease. b) Lamina defaulted under the mortgage on about 20 December 1990 and thereafter at all material times remained in default. Upon Lamina's default the Bank became entitled to exercise rights and remedies in respect of the property as if the reversion of the lease had been vested in it, including the right to receive the rents and profits in respect of the property. c) On or about 1 February 1991 Lamina and the applicant executed a document (the deed of variation) whereby the applicant agreed to cease to carry on its business from the premises and to vacate same whilst still retaining its rights and interests under the lease and Lamina agreed that so long as the applicant did not resume the conduct of its business from the premises it would accept a monthly rental of $1.00 in lieu of the rent and other moneys payable under the lease. The applicant vacated the premises on or about 1 February 1991. Between 1 February 1991 and 1 July 1994 (sic, 1993) the applicant paid Lamina rent at the rate of $1.00 per month and did not operate its business at the premises or require Lamina to provide the benefits of the lease to it. d) At the time of executing the deed of variation the applicant was not aware of Lamina's default under the mortgage. e) On or about 18 March 1991 the Bank became aware that the applicant was paying the reduced rental of $1.00 per month. f) On or about 3 July 1991 the applicant exercised its option to renew the lease for a further term of 4 years. g) On or about 13 July 1993 the Bank appointed one Daly (the receiver) as receiver and manager of Lamina. The receiver appointed Baillieu Knight Frank (BKF) as managing agents of the property and on 22 July 1993 the receiver gave the applicant notice of his appointment and directed the applicant to thereafter pay rent in respect of the premises to BKF. Between 1 August 1993 and 14 February 1994 the applicant paid rent to BKF at the rate of $1.00 per month, and between 22 July 1993 and 14 February 1994 did not require the Bank to provide the benefits of the lease to it. h) On or about 19 October 1993 the Bank instituted a proceeding in the Supreme Court of Victoria (the Supreme Court proceeding) in which it sought, inter alia, a declaration that it was not bound by, and was entitled to sell the property free of, the deed of variation. On 21 December 1993 Hayne J held in the Supreme Court proceeding, inter alia, that the Bank was not bound by the deed of variation, that the exercise of the option of renewal of the lease was good against the Bank and that the applicant was entitled to hold the premises as tenant on the terms and conditions of the renewed term provided for in the lease but the Bank was unaffected by the deed of variation. (Hayne J's decision is reported at (1994) 2 VR 505). i) On or about 21 December 1993, after Hayne J had given judgment in the Supreme Court proceeding, the Bank asserted for the first time that it was entitled to claim from the applicant all moneys payable under the lease unaffected by the deed of variation less moneys paid by the applicant pursuant to the deed of variation.