Smith v State Bank of NSW Limited [2001] FCA 946

FEDERAL COURT OF AUSTRALIA

Smith v State Bank of NSW Limited [2001] FCA 946

TRADE PRACTICES – misleading and deceptive conduct – bank issued certificate of accreditation to accountant – certificate represented accountant had been assessed by bank for competency and was competent to provide professional advice – accountant an undischarged bankrupt with convictions for fraud – whether representation misleading or deceptive – applicants invested funds in company controlled by accountant – investment a sham – whether representation caused loss – whether a substantial consideration or real inducement NEGLIGENCE – negligent misstatement – economic loss – bank issued certificate representing that accountant had been assessed for competency and was competent to provide professional advice – accountant an undischarged bankrupt with convictions for fraud – applicants relied on representation in certificate – invested funds in company controlled by accountant – investment a sham – whether bank owed applicants a duty of care – bank realised customers of accountant would act in reliance on representation in connection with matter of business or serious consequence – whether reliance reasonable – whether breach of duty – whether bank took reasonable steps to ensure representations in certificate were accurate

Trade Practices Act 1974 (Cth) ss 52, 53, 82

Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191, applied Ricochet Pty Ltd v Equity Trustees Executors and Agency Company Ltd (1993) 41 FCR 229, applied Como Investments Pty Ltd (In liquidation) v Yenald Nominees Pty Ltd (1997) 19 ATPR 41-550, applied Neilsen v Hempston Holdings Pty Ltd (1986) 65 ALR 302, cited Sutton v A J Thompson Pty Ltd (in liq) (1987) 73 ALR 233, cited Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No 1) (1988) 39 FCR 546, cited Tepko Pty Ltd v Water Board [2001] HCA 19; (2000) 75 ALJR 775, applied TERENCE SPENCER SMITH AND SUSAN JOAN SMITH v STATE BANK OF NSW LIMITED V 473 of 2000 GRAY J 20 JULY 2001 MELBOURNE