Chudleigh Nominees Pty Ltd v Westpac Banking Corporation [1993] QSC 232

/~ ''d-.\~'?,· Jl, State Reporting Bureau~--t'..!~t'IDL.· TRANSCRIPT OF ~ROCEEDINGS (Copyright in this transcript is vested in the Crown. Copies thereof must not be made or sold without the written authority of the Director, State Reporting Bureau.) SUPREME COURT OF QUEENSLAND CIVIL JURISDICTION McPHERSON J No 553 of 1991 CHUDLEIGH NOMINEES PTY LIMITED TRADING AS LISKEARD GRAZING COMPANY and WESTPAC BANKING CORPORATION BRISBANE () .. DATE 18/08/93 JUDGMENT ?.7~ <;s.~3 ~~';,:,'0,~:;"'' ,:;-;~IDat:JJ_~~~~ . ~?~. Plaintiff Defendant -- 1 of 14 -- 180893 D.1 Turn 1 jah (McPherson J) HIS HONOUR: I have concluded that I should make orders that are identified at pages 10 and 11 of the reasons, which I now publish. Speaking very generally, Mr Bain, they are orders that certain particulars be supplied and that a certain portion of the statement of claim be struck out, and it follows, in my conclusion, that the plaintiff should pay the defendant's costs of and incidental to this application. I will order accordingly. MR BAIN: I don't wish to be heard as to the costs, of course, Your Honour, and not having read Your Honour's reasons to the extent that passages in the statement of claim are struck out, may there be leave to the plaintiff further to amend the statement of claim as it may be advised? HIS HONOUR: Yes, I will give you that leave. I think it is necessary generally, and I will give you that leave in an unqualified way. I should explain that those parts of the statement of claim that I ordered to be struck out are only those that you acknowledged should not be there; that is, the repeated references to the fact that the bank has a great deal of information and can provide its own particulars. MR BAIN: It may prove not to be necessary in those respects. HIS HONOUR: I think it might as well be that you have general leave to replead. I think that your leave to amend should prevail for 30 days. Those are the orders I make. JUDGMENT 2 10 20 30 40 50 60 -- 2 of 14 -- IN THE SUPREME COURT OF QUEENSLAND CHAMBERS BETWEEN: AND: CHUDLEIGH NOMINEES PTY LIMITED trading as LISKEARD GRAZING CO. (ACN 009 961 808) WESTPAC BANKING CORPORATION No. 553 of 1991 Plaintiff Defendant Before: Hon. Mr B.H. Justice McPherson Judgment delivered 18/08/93 CATCHWORDS Counsel: ·solicitors: PLEADINGS - Particulars - Negligence - Break of contract - Breach of fiduciary duty - Foreign currency loan. R. Derrington for the defendant/applicant R. Bain Q.C. for the plaintiff/respondent Feez Ruthning for the defendant/applicant Murrell Stephenson, T/A for Goldsmiths, Sydney, for the plaintiff/respondent Hearing Date: 13 July 1993 -- 3 of 14 -- IN THE SUPREME COURT OF QUEENSLAND CHAMBERS BETWEEN: AND: CHUDLEIGH NOMINEES PTY LIMITED trading as LISKEARD GRAZING CO. {ACN 009 961 808) WESTPAC BANKING CORPORATION No. 553 of 1991 Plaintiff Defendant REASONS FOR JUDGMENT - McPHERSON J.A. Delivered the Eighteenth day of August 1993 This is an application for further and better particulars before delivery of defence in an action in which the plaintiff claims against the defendant bank damages for negligence or breach of contract, and compensation for breach of fiduciary duty or harsh and unconscionable conduct. The claim arises out of what is described as a foreign currency loan "facility" entered into between the parties on 30 September 1981 in the Swiss franc equivalent of AUD530,973 for an initial term of four years. The statement of claim is in many respects an unsatisfactory document. This is the fourth occasion on which it has come before a Judge in Chambers. On at least two of past occasions particulars were ordered to be furnished. The most recent instance was on 13 May 1993. In response to that order, a consolidated pleading incorporating those and earlier particulars was delivered, although some days late, under cover of a letter dated 6 . July 1993. It is this document that falls to be considered in the present application. -- 4 of 14 -- 2 It cannot be said that the latest statement of claim is a marked improvement over its predecessors. It retains much of the imprecision that characterised earlier versions of the pleading, notably in relation to those respects in which the defendant is said to have breached its contractual, fiduciary and other duties to the plaintiff. Instead, the pleading constantly repeats the assertion that the defendant is a bank which should have kept diary notes that would or should enable the plaintiff after discovery to provide the further particulars requested. The assertion appears in one form or another in some 13 or more places and occupies a not inconsiderable proportion of the 31 paragraphs of the statement of claim. A pleading is not the proper place for it. It does nothing to assist in disclosing or defining any cause of action that may inhere in the plaintiff, and serves only to impede the narrative. If the point is a good one the appropriate course would be to depose by affidavit to the relevant facts providing a justification for the claim to defer giving particulars. I accordingly order that all of those parts of the statement c~ of claim in paragraphs 2, 3, 5, 8, 11, 12, 16, 17, 18, 21, 22, c~ 28 and 31 that make assertions about discovery, and the dependence of particulars on i.t, be struck out. Mr Bain of counsel, who is not the author of the pleading, acknowledged that I would be justified in taking that course. Another unsatisfactory feature of the statement of claim is its fondness for jargon. Foreign currency loans no doubt present elements of novelty and complexity that tend to breed a shorthand vocabulary of their own; but that is no reason for discarding the -- 5 of 14 -- 3 rule that a pleading must be in plain English. Neither clarity nor comprehensibility is achieved by alleging, for example, that "the loan was fully hedged and only roll-overs occurred until the loan was brought back on shore"; or that the defendant ought to have exercised "stop-loss, currency switching, forward exchange contracts, and other risk management and avoidance mechanisms". It is possible for an intelligent reader to guess at the meaning of some of these allegations; but a party who persists in using ::J language of this kind to describe critical parts of his claim can scarcely escape the suspicion that he has no real case; or, that if he has one, he has deliberately elected not to plead it, or not to plead it until he has found out as much as he can from discovery of the defendant's documents. Of course, it is true that in •some circumstances a plaintiff may be entitled or permitted to defer giving particulars of matters that are not known to him but are from the nature of things peculiarly within the knowledge of the defendant. In the present case, however, the plaintiff has not pleaded enough to enable it to be gathered from the statement of claim what are the nature and range of ~ obligations that arise in a contract of this kind (or, in short, how it "works"); nor, in consequence, whether any and which matters might reasonably considered to be peculiarly within the knowledge of the defendant and outside that of the plaintiff. According to the allegations in paragraphs 1 and 2 of the statement of claim, the plaintiff is the corporate trustee of the Chudleigh Family Trust, of which Mr Ron Chudleigh is the controller. He acted on behalf of the plaintiff in the negotiations and transactions that took place during a period -- 6 of 14 -- 4 that stretched from 1981 to 1988. At those .times the plaintiff and Mr Chudleigh conducted agricultural and pastoral activities or enterprises in rural Queensland. He had little knowledge or experience of foreign currency loans and the risks associated with them, and it is alleged th~t the defendant knew or ought to have known this. Both the plaintiff and Chudleigh trusted and relied on the defendant in relation to business and financial affairs, as it is said Chudleigh' s father and grandfather had also done before him, thus giving rise to what is alleged to be a "special relationship" between the plaintiff and the defendant bank. By contrast, the defendant carried on the business of banking and lending and dealing in foreign currencies (paragraph 3); the particulars appended to the allegation refer to representations made by Mr Jensen, bank manager at Emerald, and Mr Imhoff of the defendant's International Business Section, but paragraph 3 itself contains no reference to any representation. Paragraphs 8 to 11 allege that the plaintiff approached Jensen and later Imhoff with a plan to buy and develop a property named Gordon Downs for agriculture and pastoral purposes. The development was expected to take as long as 10 to 20 years, and finance was needed for the duration. Jensen advised Chudleigh of prevailing high domestic interest rates, and referred him to Imhoff as the expert in foreign currency loans. Meetings and discussions with Imhoff followed between 23 June 1981 and 30 September 1981. The latter is the date of a formal written loan facility contract between the parties. The statement of claim says very little about it, but it is alleged to form part of a () c c -- 7 of 14 -- 5 wider agreement (which is described in paragraph 13 as "collateral") embodying both written and oral terms agreed during the period mentioned (paragraph 15). The written part is or includes a letter dated 23 June 1981 from the defendant to the Chudleighs. The agreement is alleged to have embodied a term that the loan would be in a foreign currency equivalent of AUD500,000; that it should be drawn in Swiss francs; and that the duration of the loan should be four years, but that it could be extended by the defendant. Perhaps because they reveal so little of substance, there is not much in the allegations in paragraphs 9 to 11 that can justly be considered contentious. On the other hand, paragraph 12 alleges it to be a term of the agreement that the defendant would assist the plaintiff to properly manage the foreign loan "in the event that such management was necessary"; and there is a further particular (ii) appended to paragraph 10 ~ which alleges that Irnhoff told Chudleigh that active management of the Swiss Bank (sic:? franc) loan was unnecessary because there was only a small possibility of the Swiss franc/Australian ~~ dollar moving against the plaintiff. There is not much at all in the statement of claim recounting what happened after 30 September 1981, which was when the formal written agreement was executed. It is implicit although not clearly stated in the pleading that the loan money was paid to and received by the plaintiff. By scrutinising the pleading it is also possible to discover that the loan has been repaid. It is a fact that is mentioned, although merely in passing, in paragraph 22 and also in paragraph 23, which is -- 8 of 14 -- 6 concerned with something else; as well as in paragraph 29, where it is alleged that the defendant breached "the said collateral agreement" - presumably the one referred to in paragraph 13 - by forcing the plaintiff to pay out the loan early; in paragraph 22 the date is given as 11 March 1988. The point has a wider importance because paragraph 31 alleges loss and damage, of which the plaintiff says it is unable to give particulars until discovery. The loss is ascribed to two separate causes; viz. mismanagement of the loan, and its early termination. It is noteworthy that the property Gordon Downs is alleged (paragraph 14) to have been purchased at auction on 28 May 1981, which is before the date (30 September 1981) when the loan agreement was entered into, and even before the date (23 June 1981) on which the conversations with Imhoff concerning the loan are alleged to have commenced. It is thus not immediately apparent from the pleading itself what relevance, if any, the Gordon Downs project has to the plaintiff's cause of action. In any event, if the loan has been paid out, whether early or not, it ought to be possible at the very least for the plaintiff now to calculate the amount it has lost by entering into the agreement to borrow, and borrowing, money in foreign currency. So much was conceded by Mr Bain. To assert, as do the further particulars to paragraph 31, that the plaintiff cannot provide particulars going to quantum until discovery of the "dealers' position slips" is therefore not a tenable proposition. The plaintiff's failure to identify and quantify its loss means that other deficiencies in the statement of claim assume greater significance. There is an almost complete absence of () c~ (_/ -- 9 of 14 -- 7 information about what it was that made the loan an unfavourable one, or why the defendant should be held responsible for its being so. The closest the pleading comes to it is in paragraph 17, where the narrative refers to the time between early 1985 and 30 September 1985 as "a period of dramatic deterioration" in the value of the Australian dollar as compared to the Swiss franc. The reference forms part of an allegation that the defendant failed and refused to provide the plaintiff 0 with hedging facilities "to manage properly or at all the said "-. __ j foreign currency loan". Particulars of the refusal, said to have been oral, are then proffered but in a form that shows they constituted advice and not refusal. Similar criticisms are relevant to the allegation and particulars in paragraph 18, which is that the defendant wrongfully refused to allow the plaintiff to hedge. It is then alleged (paragraphs 19-21) that on 30 September 1985, the ~j defendant agreed to provide an automatic currency hedge '-----') arrangement for two years; that on that date the plaintiff executed a deed establishing an arrangement of that kind under /-\, J which the defendant would manage the loan; but in February 1986 the defendant wrongfully purported to cancel the arrangement. The particulars to this last allegation (paragraph 21) contain what is really an assertion of an evidentiary admission by another of the defendant's employees (a Mr Look) to the effect that the defendant was in breach of its obligations under that deed and otherwise. Despite all this, paragraph 22 and particulars seem to be saying that even after the hedging arrangement was terminated, the defendant continued to manage the -- 10 of 14 -- 8 loan by giving advice to the plaintiff, on which it acted, about various matters including hedging. Indeed, in the further particulars to paragraph 16 it is alleged that after February 1986 the loan was fully hedged until "brought back on shore". The complaints made against the defendant in this and succeeding paragraphs (23-27) of the statement of claim are expressed in a most general form. Failure to hedge, or inadequate hedging, or perhaps it is inflexible hedging, emerge as the major grounds of complaint; but, even if the present application were confined to allegations of that sort, there is an entire absence of particulars showing what the defendant ought to have done or advised the plaintiff to do in that regard. Assuming, as was confirmed by counsel at the hearing that "hedging" means buying other currencies to spread and so offset the risk that the exchange rate in Swiss francs might alter in an unfavourable way, the pleading fails to identify any such other currencies, or the amounts in which, and the dates on which, they should have been bought. The only detailed particular is to be found in paragraph 28, which is that the defendant engaged in "point-taking" on 1 May 1986 and again on 2 June 1986. However, this involves a separate allegation that the defendant improperly earned and retained a secret profit, in what may well have been a relatively small sum, at the expense of the plaintiff. It throws no light on the nature of the defendant's alleged mismanagement of the foreign loan. Taken as a whole, the statement of claim seems to me to bear all the hallmarks of a document that has been mass-produced rather than tailored to meet the needs and circumstances of the -- 11 of 14 -- 9 particular plaintiff and its case. Because of its deficiencies, I would be inclined to strike it out entirely and require the plaintiff to plead again. In fact, Mr Derrington asked me to do so; but in view of Mr Bain's protest that he was not sufficiently alerted in advance to the possibility that such a remedy might be sought, I think that the plaintiff should, before that more drastic step is taken, be given one last chance to improve its pleading by providing particulars. Little close attention was directed by counsel in the course of the hearing to the precise extent to which previous orders for particulars had, or had not, been complied with; nor was there any detailed consideration of the request for particulars that preceded the application. Instead, the matter was approached before me in a general manner that emphasised the defects and difficulties of the pleading, and did so without any detailed reference to what had gone before. Approaching the matter in the same spirit, and bearing in mind that what is sought is particulars before delivery of defence, I will order that the following particulars be provided 1. Particulars (whether by reference to dates, form, contents or otherwise, or all of them) sufficientto identify the advertisements and publications· in which the defendant is alleged in paragraph 6 of the statement of claim to . have represented that the general public "would be safe from serious loss in dealing with the defendant". By way of explanation, I do not consider that the allegations in paragraph 5 need at this stage to be further particularised in order to enable the defendant to plead to them. The complaint by Mr Derrington that they open up a potentially vast area of -- 12 of 14 -- 10 discovery of documents is not presently relevant. Indeed, the allegation in paragraph 5 is relatively innocuous, and one might expect that in the end it will be admitted.by the defendant. Nor do I consider that any further particulars are required at this stage of the allegations in paragraphs 8-10 of the statement of claim. The substance of the representations, the individuals involved, and the period during which they are alleged to have been made, are now sufficiently identified to enable the defendant to answer those allegations. Likewise, I consider that no further particulars are presently needed for the defendant to plead to the allegations in paragraphs 11 to 15. I also order that the following particulars are to be provided within 30 days: 2. 3. Particulars sufficient to identify each of the "responsibilities in relation to management" alleged in paragraph 16 to have been undertaken in respect of the risk connected with the foreigncurrency loan facility. In relation to paragraphs 16, -17, 18, 22, 23, 25 and 28, particulars sufficient to identify each of the other currencies, together with dates andamounts in each instance, with respect to which it is alleged the defendant ought to have engaged in, or to have advised the plaintiff to engage in "hedging". 4. Particulars of the amounts of loss and damage alleged in paragraph 31 to have been suffered by the plaintiff, distinguishing between:- (a) loss and damage sufferedreason of mismanagement of foreign currency loan by defendant; and by the the (b) loss caused by early termination of the loan facility - stating the date or dates on which each suchwas suffered. C' _/ c -- 13 of 14 -- 11 These orders are in addition to those on page 2 of these reasons that certain parts of identified paragraphs of the statement of claim should be struck out. The case is plainly one in which the plaintiff should pay the defendant's costs of and incidental to the application, and I so order. -- 14 of 14 --