Major Mining Ltd (in/liq) & Ors v State Bank of NSW [1995] FCA 749

CATCHWORDS TRADE PRACTICES - misleading and deceptive conduct - agreement to provide loan to purchase home - failure of Bank to advise customers of termination of loan agreement - whether loss or damage caused by conduct of Bank. Trade Practices Act 1974 (Cth) s52, s82. Sellars v Adelaide Petroleum NL (1993) 179 CLR 332 Wardley Australia Ltd v The State of Western Australia (1992) 175 CLR 514 March v E & M.H. Stramare Pty Ltd (1991) 171 CLR 506 Janssen-Cilag Pty Ltd v Pfizer Pty Ltd (1992) 109 ALR 638 Adour Holdings Pty Ltd (in liquidation) v Commonwealth Bank of Australia (1991) 13 ATPR 41-147 Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 No. NG 294 of 1993 MAJOR MINING LIMITED (IN LIQUIDATION) and WARAWAY PTY LIMITED and FRANCIS JAMES CORBETT and MICHELLE MARIE CORBETT v STATE BANK OF NEW SOUTH WALES

MOORE J SYDNEY 21 September 1995

IN THE FEDERAL COURT OF AUSTRALIA) ) NEW SOUTH WALES DISTRICT REGISTRY) No. NG 294 of 1994 ) GENERAL DIVISION ) BETWEEN: MAJOR MINING LIMITED (IN LIQUIDATION) First Applicant WARAWAY PTY LIMITED Second Applicant FRANCIS JAMES CORBETT Third Applicant MICHELLE MARIE CORBETT Fourth Applicant AND: STATE BANK OF NEW SOUTH WALES Respondent JUDGE: Moore J PLACE: Sydney DATE: 21 September 1995 ORDER OF THE COURT THE COURT ORDERS THAT: 1. The application is dismissed. 2. The applicants pay the respondent's costs. NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA) ) NEW SOUTH WALES DISTRICT REGISTRY) No. NG 294 of 1994 ) GENERAL DIVISION ) BETWEEN: MAJOR MINING LIMITED (IN LIQUIDATION) First Applicant WARAWAY PTY LIMITED Second Applicant FRANCIS JAMES CORBETT Third Applicant MICHELLE MARIE CORBETT Fourth Applicant AND: STATE BANK OF NEW SOUTH WALES Respondent JUDGE: Moore J PLACE: Sydney DATE: 21 September 1995 REASONS FOR JUDGMENT INTRODUCTION On 14 May 1993 an application was filed in this Court by Major Mining Ltd ("MM Ltd") and Dr Francis James Corbett seeking, inter alia, damages against the State Bank of New South Wales ("the Bank"). This application became matter G294 of 1993. It was framed as representative proceedings brought on behalf of Corbett, MM Ltd and the shareholders of MM Ltd. It alleged breach of s42 of the Fair Trading Act 1987 (NSW) and breach of contract. Earlier and related proceedings had been commenced in the Supreme Court of New South Wales by Corbett, his wife and Waraway Pty Ltd ("Waraway") against the Bank. On 12 July 1993 an order was made transferring those proceedings to this Court under the Jurisdiction of Courts (Cross Vesting) Act 1987. The transferred proceedings became G 502 of 1993. On 27 October 1993 Wilcox J made an order consolidating the proceedings and an order that the matters be tried together. He also ordered that there be determined as a preliminary question all questions concerning the Bank's liability reserving any issue as to the quantum of damages. On 4 November 1993 the applicants filed an amended statement of claim. The applicants then were MM Ltd, Waraway, Corbett and Mrs Corbett. While the statement of claim was drafted in terms that suggested the proceedings continued as representative proceedings, they did not for reasons it is unnecessary to detail. The proceedings became, in substance, an application by the four applicants seeking damages under s82 of the Trade Practices Act 1974 (TP Act) as a result of conduct of the Bank allegedly contravening s52 of that Act. Background in Summary The proceedings principally concern events in early 1990 involving the provision of a loan by the Bank to the Corbetts to purchase a property in the Sydney suburb of Cromer. The Bank agreed to lend the Corbetts the sum of $350,000 to purchase the property which was a new, but not yet complete, house on a large block of land. Before discussing what I view as the material evidence, it is necessary to set out a chronology of events so that the issues in the proceedings can be identified in a comprehensible way. This chronology glosses over some of the differences arising in the evidence as to what occurred. On 8 February 1990 the Corbetts met Mr Ron Haswell who was then the manager of the Rockdale branch of the Bank. There was a discussion about the purchase of the Cromer property and Haswell agreed to lend the Corbetts the sum of $60,000 for the deposit on the purchase. The following day contracts were exchanged between the vendors and Waraway. On 20 February 1990 the Corbetts again met Haswell and applied for a housing loan in the sum of $350,000 to purchase the Cromer property. A formal offer of loan was made by the Bank in writing on 23 February 1990 which was accepted in writing by the Corbetts on 2 March 1990. At that stage the purchase of the Cromer property was to be financed by the loan of $350,000 and the proceeds of the sale of the Corbetts' home at 5 Epacris Avenue, Caringbah. On 24 March 1990 the Caringbah property failed to sell at auction. It did not sell in the ensuing months. It was thus necessary for the Corbetts to find another source of funds to complete the purchase. By 10 April 1990 they had been served with a notice to complete requiring settlement of the sale by 30 April 1990. On 26 April 1990 Corbett met Haswell and discussed the possibility of funds of a company called Galdece Pty Ltd ("Galdece") on deposit with the Bank being used to finance the purchase of Cromer. Galdece was the trustee of the Corbett family trust. On 27 April 1990 Corbett met with Mr Malcolm Wood who was the branch manager of the Hurstville branch of the Bank. The meeting had been arranged by a Mr Spencer who was a business associate of Corbett who banked with the Hurstville branch. At that meeting there was a discussion about the need for 317AE certificate and whether the loan of $350,000 would be made available to the Corbetts without one. On 3 May 1990 the contract for the purchase of the property by Waraway was terminated and the Corbetts entered a contract to purchase it. On 10 May 1990, the Corbetts applied to the bank for a loan of $600,000 to provide bridging finance to purchase the Cromer property. This application was refused on 14 May 1990. A further application was made on 16 May 1990. On 17 May 1990 the loan application earlier approved to lend the Corbetts $350,000 was marked "loan declined" by an officer of the bank. That this action was taken was not made known to the Corbetts. On 4 June 1990 the vendor terminated the contract to sell the property to the Corbetts as a result of their inability to complete.