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

Catchwords 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.

Orders

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.

ReasonsIN 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

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.

j) On 23 December 1993 the Bank entered into a contract to sell the property to SEAA Enterprises Pty Ltd (SEAA) and on 14 February 1994 transferred the property to SEAA.

k) The applicant has been called upon to pay SEAA the alleged arrears of rent, and other moneys payable under the lease unaffected by the deed of variation for the period 1 February 1991 to 14 February 1994.

l) On 6 April 1994 SEAA instituted a proceeding pursuant to the Retail Tenancies Act 1986 (Victoria) and the Commercial Arbitration Act 1984 (Victoria) (the arbitration proceeding) claiming to be entitled to be paid by the applicant arrears of rent and other moneys payable under the lease for the period 1 February 1991 to 14 February 1994 unaffected by the deed of variation. (The affidavit evidence establishes and it is common cause that at the time the application herein was filed the arbitration proceeding had been heard and the arbitrator had reserved his decision. Subsequently, on 30 January 1995, the arbitrator brought down his award in which he declared that the present applicant is not liable to pay the Bank any further rent or other moneys payable under the lease in respect of the period between 1 February 1991 and 14 February 1994. The outcome of the arbitration proceeding has not been specifically pleaded).

m) The applicant has been called upon to pay SEAA rent and other moneys payable under the lease in excess of $1.00 per month for the period from 14 February 1994 until the expiration of the renewed term of the lease. (This fact was pleaded in paragraph 47A of the statement of claim by way of amendment made subsequent to the arbitrator's award).

THE TRADE PRACTICES CLAIM

The applicant pleads that the Bank has engaged in conduct in contravention of s 52 of the Trade Practices Act and s 11 of the Fair Trading Act by reason of the following matters. (The numbering in the following paragraphs corresponds with the paragraph numbers in the statement of claim):

34 Between 1 February 1991 and 14 February 1994, the Bank well knew that:

34.1 upon Lamina being in default under the mortgage, the Bank was entitled to -

34.1.1 exercise the rights and remedies of Lamina under the lease;

34.1.2 receive the rents and profits in respect of the premises;

34.1.3 direct the applicant to pay the rent and profits of the premises to the Bank;

34.2 the lease had been varied to provide for a nominal rental;

34.3 the reduced rental payable by the applicant to Lamina under the lease was a nominal rental of $1.00 per calendar month;

34.4 in the applicant was paying rent at the reduced rate;

34.5 the applicant had vacated the premises and was not operating its business at the premises.

35 In the circumstances, by its acts and omissions, the Bank represented to the applicant that it acquiesced in and/or consented to:

35.1 the continuation of the tenancy of the premises by the applicant at the nominal rental of $1.00 per month;

35.2 Lamina holding itself out to the applicant as continuing to be the landlord of the premises and continuing to be the party entitled to be paid the nominal rent under the tenancy at the nominal rental of $1.00 per month;

35.3 the applicant tendering payment in respect of the premises to Lamina rather than the Bank;

35.4 the acceptance and retention by Lamina of the reduced rent paid by the applicant;

35.5 the proffering by the applicant of rent, and the acceptance by Lamina of rent at the reduced rate of $1.00 per month in lieu of the rent, outgoings and other payments payable under the lease.

36. Further, and in the alternative, at all relevant times from 1 February 1991 the Bank did not exercise:

36.1 the rights and remedies of Lamina under the lease;

36.2 the rights or remedies that it had to receive the rents and profits of the premises at the rate provided for under the lease;

36.3 the rights or remedies that it had to require the applicant to pay the rent and profits in respect of the premises directly to the Bank.

37 In the circumstances, by its acts and omissions, the Bank represented to the applicant that it elected not to exercise:

37.1 the rights and remedies of Lamina under the lease;

37.2 the rights or remedies that it had to receive the rents and profits of the premises at the rate provided for under the lease;

37.3 the rights or remedies that it had to require the applicant to pay the rent and profits in respect of the premises directly to the Bank.

38. Further, and in the alternative, the Bank failed to notify the applicant:

38.1 that it claimed to be entitled:

38.1.1 to exercise the rights and remedies of the lessor under the lease as if the reversion in the lease vested in the Bank;

38.1.2 to exercise the right or rights that it had to enter into possession of the premises and evict Lamina as the lessor of the premises;

38.1.3 to receive the rents and profits of the premises at the rate provided for under the lease;

38.2 of the default and continuing default of Lamina under the mortgage.

40. Further, and in the alternative, in the circumstances, by its acts and omissions, the Bank represented to the applicant that
payment by the applicant to Lamina of rent, and acceptance and retention by Lamina of that rent constituted a discharge of all or any liability that the applicant had or may have had to the Bank in respect of its obligations to pay rent, outgoings and all other payments payable by it under the lease.

41. Further, and in the alternative, in the circumstances, by its acts and omissions, the Bank represented to the applicant that it abandoned any claim against the applicant and had waived or released the applicant from any further claim in respect of rent, outgoings and other payments in respect of the premises.

42. Further, and in the alternative, as a consequence of the Bank's failure at all material times to give notice to the applicant of any entitlement by the Bank to the reversion or transfer to the Bank of Lamina's interest as lessor of the premises, the applicant, notwithstanding the default of Lamina under the mortgage, duly paid rent in the nominal sum of $1.00 per month to Lamina, and subsequently to the receiver and manager of Lamina, in fulfilment of its obligations to pay in respect of the premises and on the assumption that it was only required to pay rent in the nominal sum of $1.00 per calendar month in respect of the premises.

43. Further, and alternatively, in the premises, at all relevant times from 1 February 1991 Lamina was and acted as agent for the Bank in relation to the tenancy of the premises by the applicant and the Bank was and is bound by and liable for the conduct of Lamina in relation to the receipt of rent and in relation to the variations in the obligations of the applicant as to payment of rent and outgoings in respect of the premises.

The applicant says that acting on the faith and truth of the pleaded representations and induced thereby, it allowed the premises to remain vacant and did not conduct its business from the premises; paid the amount of $1.00 per month to Lamina in fulfilment of its obligations to pay rent, outgoings and all other payments payable by it under the lease; did not require the Bank to provide the benefits of the lease; took no steps to exercise its rights to rescind the lease in consequence of the breaches of the lease; took no steps to exercise its rights to recover damages in consequence of breaches of the lease; took no steps to negotiate a surrender of the lease with the Bank; and dealt with Lamina as if Lamina were entitled to exercise the rights and remedies of the lessor under the lease.

THE CLAIM FOR NEGLIGENT MISREPRESENTATION

The applicant pleads that by reason of the matters previously pleaded the Bank was under a duty to take care in the making of each such representation and that in breach of its duty the Bank was negligent in making such representations.

The following particulars of the claimed breach of duty are pleaded:

(a) Failing to inform the applicant of the default of Lamina under the mortgage;

(b) Failing to inform the applicant that upon Lamina being in default under the mortgage, the Bank was entitled to exercise the rights and remedies of Lamina under the lease to enforce the collection of rent and outgoings in accordance with the lease;

(c) Upon the default of Lamina, failing to require the applicant to pay the rent and outgoings due under the lease to the Bank;

(d) Failing to inform the applicant after it became aware that the applicant was paying to Lamina nominal rent at the rate of $1.00 per calendar month (sic) under the lease and/or that it ceased to conduct its business at the premises, that the Bank had an entitlement to receive rent and outgoings from the applicant in respect to the premises at the rate provided for under the lease;

(e) Requesting and/or allowing Lamina to collect rent in respect of the premises from the applicant at the nominal rate of $1.00 per month when it knew, or ought to have known, it was entitled to be paid the rent and outgoings provided for under the terms of the lease;

(f) Allowing or permitting the applicant to pay nominal rent of $1.00 per month in discharge of its obligations to the lessor under the lease;

(g) Allowing or permitting the receiver and manager of Lamina, or BKF, as the agent on behalf of the Bank, to receive rent from the applicant at the nominal rate of $1.00 per month in respect of the applicant's obligations to pay rent relating to the premises under the lease;

(h) Not requesting or instructing the receiver or BKF to require the applicant to pay the amount of rental and outgoings due under the terms of the lease, not subject to the deed of variation.

DAMAGES

The applicant claims to have suffered loss and damage which it particularises as follows:

(a) The applicant claims to recover from the Bank the amount of any arrears of rent, outgoings, contributions to the Promotion Fund, and interest under the lease which may be found to be due by the applicant to SEAA in consequence of the arbitration proceedings.

(b) The amount of any income tax and/or capital gains tax which might be levied by the Australian Taxation Office in respect of any damages found due by the Bank to the applicant.

(d) Any amount of rent, outgoings, contributions to the Promotion Fund, and interest under the lease in excess of the sum of $1.00 per month for the period 14 February, 1994 until the expiration of the renewed term of the lease which the applicant may be required to pay to SEAA.

(Paragraphs (c) and (d) were pleaded by way of amendment subsequent to the arbitrator's award).

MISLEADING AND DECEPTIVE CONDUCT

The substance of the applicant's complaint against the Bank is that after having had notice of the rent reduction agreed between Lamina and the applicant, at a time when Lamina was in default under the mortgage (and thus at a time when the Bank was entitled to receive the rent and profits of the property), it did nothing to alert the applicant to the fact that the Bank was entitled to insist upon payment of the full amount of the rent provided for in the lease, and furthermore, it allowed Lamina to continue to conduct its affairs including its dealings with the applicant as if the Bank was bound by the terms of the deed of variation.

Although it is not expressly pleaded, it can reasonably be inferred from the case sought to be made out by the applicant that had it been aware that the Bank claimed not to be bound by the deed of variation, it would not have exercised its option to renew the lease for a further term of 4 years. If the lease had not been renewed there could have been no question of any liability for rent after 25 October 1991. And further, the applicant says that it would have taken steps to repudiate or surrender the lease.

The question of whether, and if so in what circumstances, silence can amount to misleading or deceptive conduct that contravenes s 52 of the Trade Practices Act has been the subject of judicial consideration on a number of occasions. It is unnecessary to refer extensively to the authorities as they all turn on their own facts and I have not been referred to any precedent in which the facts resemble those pleaded by the applicant.

In Kimberley NZI Finance Ltd v. Terero Pty Ltd (1989) ATPR (Digest) 53,193 after commenting on the danger of trying to essay any principle by which cases in which silence would constitute conduct in contravention of s 52 might be exhaustively defined French J (at p 53,195) went on to say:

... However, unless the circumstances are such as to give rise to the reasonable expectation that if some relevant fact exists it would be disclosed, it is difficult to see how mere silence could support the inference that the fact does not exist.

The Full Court of the Federal Court in Demagogue Pty Ltd v Ramensky 39 FCR 31 had occasion to consider a case in which it was claimed that silence amounted to misleading or deceptive conduct. Although the decision turned upon the particular facts of the case, Black CJ (at p 32) made these comments:

The primary question was whether there had been conduct that was misleading or deceptive or likely to mislead or deceive. In this case, as in every case in which s 52 is relied upon, this was a question of fact that could only be determined - as the judge did determine it - having regard to all the relevant circumstances.

Silence is to be assessed as a circumstance like any other. To say this is certainly not to impose any general duty of disclosure; the question is simply whether, having regard to all the relevant circumstances, there has been conduct that is misleading or deceptive or that is likely to mislead or deceive. To speak of "mere silence" or of a duty of disclosure can divert attention from that primary question. Although "mere silence" is a convenient way of describing some fact situations, there is in truth no such thing as "mere silence" because the significance of silence always falls to be considered in the context in which it occurs. That context may or may not include facts giving rise to a reasonable expectation, in the circumstances of the case, that if particular matters exist they will be disclosed.

Whether or not in the context in which the events arose the Bank's awareness of the applicant's continued reliance upon the terms of the deed of variation gave rise to a reasonable expectation that the Bank would disclose to the applicant its right to insist upon payment of the full rent is a question of fact to be determined at trial on the evidence. In my opinion, it cannot be said that on the facts pleaded, the Bank's conduct could not in any circumstances give rise to a reasonable expectation that it would alert the applicant to the change in the Bank's position arising from Lamina's default under the mortgage. The applicant's case on this issue is not so obviously untenable that it can be said that it cannot possibly succeed.

The Bank further says that the applicant's claim is premature because on the facts pleaded, at the time the proceeding was commenced, no damage had been sustained by the applicant.

It is well established that there is no cause of action under s 52 until loss or damage is suffered. In Wardley, Mason CJ, Dawson, Gaudron and McHugh JJ said at p 525:

As loss or damage is the gist of the statutory cause of action for which s 82(1) provides, the cause of action does not accrue until actual loss or damage is sustained. The statutory cause of action arises when the plaintiff suffers loss or damage "by" contravening conduct of another person. "By" is a curious word to use. One might have expected "by means of", "by reason of", "in consequence of" or "as a result of". But the word clearly expresses the notion of causation without defining or elucidating it. In this situation, s 82(1) should be understood as taking up the common law practical or common-sense concept of causation recently discussed by this Court in March v. Stranmare (E. & M.H.) Pty Ltd (1991) 171 CLR 506 except in so far as that concept is modified or supplemented expressly or impliedly by the provisions of the Act.

And at p 526-7:

Under s 82(1), as under the common law, a plaintiff can only recover compensation for actual loss or damage incurred, as distinct from potential or likely damage. In that respect, we agree with the comments of the Full Court of the Federal Court and we disagree with the statement of French J, "that risk of loss is itself a category of loss". The Act draws a clear distinction in Pt VI between loss or damage which may be recovered under s 82 and the likelihood of loss or damage which may be prevented or, if not prevented, reduced by one of the remedies under s 87.

In paragraph 47 of the statement of claim the applicant pleads that it has been called upon to pay SEAA arrears of rent and other moneys payable under the lease unaffected by the deed of variation for the period 1 February 1991 to 14 February 1994, and subparagraph (a) of the particulars of damage pleaded in paragraph 48 contains a claim to recover from the Bank the amount of any arrears of rent and other moneys payable under the lease which may be found to be due by the applicant to SEAA in consequence of the arbitration proceeding. As it has happened, events have overtaken the pleadings and it is now common cause that no such sum is due. There having been no
damage suffered, there can be no claim pursuant to s 82 in respect of the matter pleaded in paragraph 47.

It would seem that for present purposes, it is unnecessary to consider subparagraph (b) of paragraph 48. If the Bank is correct in its argument that no damage had been sustained at the time the proceeding was commenced there can be no question of any liability of the type pleaded in 48(b) arising.

The applicant claims that it has suffered loss and damage to the extent of the amount of the legal costs it incurred in defending the arbitration proceeding (para 48(c)). It may reasonably be inferred, although it is not specifically pleaded, that the parties having embarked upon the arbitration proceeding in April 1994 (and it being common cause that the arbitration was concluded, apart from the arbitrator's award being made, before this proceeding was instituted) that the applicant incurred legal costs in relation to the arbitration proceeding prior to 25 November 1994. And it is also common cause that no part of such costs are recoverable by the applicant in the arbitration proceeding. Be that as it may, the Bank says that there is no causal link between the alleged misleading or deceptive conduct of the Bank and the expenditure incurred by the applicant in defending the arbitration proceeding. In my opinion, the Bank's argument is correct. The costs in question were incurred as a result of the Bank's decision to claim (in the name of SEAA pursuant to an agreement with SEAA which entitled it to do so) rent and other moneys payable under the lease unaffected by the deed of variation. The regime under which a dispute of this type may be resolved admits of no order for costs being made except in exceptional circumstances. No such award was made by the arbitrator. The cause of the claimed loss or damage sustained by the applicant was the conduct of the Bank in pursuing its claim for rent which conduct had nothing to do with any alleged misleading or deceptive conduct.

The situation with respect to rent due after 14 February 1994 is somewhat more complex. Whilst it is true that the arbitrator in his reasons expressed the view that the applicant is liable to pay SEAA the full rent and other moneys payable under the lease from 14 February 1994 until the expiration of the renewed term in October 1995, that was not a matter within the scope of the arbitrator's reference and the parties are not bound by the view so expressed. Assuming for present purposes that paragraph 47A of the statement of claim amounts to an assertion that SEAA has demanded payment of rent and other moneys payable under the lease since 14 February 1994 unaffected by the deed of variation, the only damage that the applicant could have suffered up to the time this proceeding was instituted would have been the rent and other moneys due from 14 February 1994 to 25 November 1994. As a matter of logic it must be that as at 25 November 1994 the applicant was either under a present liability to pay such rent and other moneys, or it was not so liable. If it was not so liable, no damage had then been suffered and there could be no basis for the cause of action pleaded. If the applicant was, as at 25 November 1994, legally liable to pay SEAA such rent and other moneys, it would be necessary for it to assert that fact to establish that it had suffered damage to the extent of such liability.

The applicant has not admitted liability for the full rent and other moneys payable under the lease in respect of the period since 14 February 1994 either in the statement of claim or in the evidence filed or submissions made in relation to the motion now under consideration. The only inference that can be drawn is that the applicant does not assert that it is liable to SEAA for any sum in excess of $1.00 per month. There is therefore no assertion that the applicant has suffered damage by way of being liable to pay rent at a rate in excess of $1.00 per month. And that being so, it has not pleaded an essential element of its Trade Practices Act claim.

In my opinion, the applicant's pleading, supplemented by the common facts, does not disclose a cause of action against the Bank pursuant to the Trade Practices Act at the time it commenced this proceeding and this conclusion is not affected by the mere claim in the application for "such relief under section 87 of the Trade Practices Act 1974 and section 41 of the Fair Trading Act 1985 or as the Court may seem fit".

In Gates v City Limited Life Assurance Society Ltd 63 ALR 600 Mason, Wilson and Dawson JJ at pp 606-7 referred to s 87 as
conferring on the Court wide power to make ancillary orders to compensate persons who suffer loss or damage by conduct that was engaged in contravention of a provision of Pt IV or Pt V of the Act. In the context of the facts of this case s 87(1), in so far as it refers to "a person who is party to the proceeding (who) has suffered, or is likely to suffer loss or damage by the conduct of another person" (emphasis added) does not create a cause of action separate from that provided for in s 82. To so conclude would be contrary to the passage from the joint judgment in Wardley quoted earlier in these reasons.

Although in the foregoing, reference has been made only to the Trade Practices Act, the same considerations would apply in respect of any claim pursuant to the Fair Trading Act.

The Bank relies upon a further argument namely that the applicant is estopped from making the claims pleaded in the statement of claim by the judgment of Hayne J in the Supreme Court proceeding. I have some doubt as to whether this is a matter which can properly be raised on an application expressed to be made pursuant to Order 20 rule 2. Be that as it may, no exception was taken by the applicant to it being argued. Put briefly, the Bank's submission is that having regard to the nature of the claim in the Supreme Court proceeding and its subject matter the applicant acted unreasonably in that proceeding in not relying on the allegations made in this proceeding. It is said that the allegations in both proceedings are based upon the same facts, and the alleged consequence of the allegations is practically identical namely that the applicant avoids the consequences of the original lease. The Bank's argument is based on the principal in Port of Melbourne Authority v Anshun Pty Ltd 147 CLR 589. In view of my conclusions concerning other aspects of the case, it is unnecessary for me to consider the question of estoppel but as the matter has been raised I make the following brief comments.

I do not think that this is a case in which the Anshun principle is applicable. In the Supreme Court proceeding the Bank sought declarations that it was not bound by either the lease or the deed of variation. It was only after Hayne J had given his decision that the Bank sought to amend its claim to encompass a claim for the full rent, but it was unable to do so as the Supreme Court lacked the jurisdiction to deal with that aspect of the matter. The Bank's remedy was to go to arbitration. In these circumstances it cannot be said to have been unreasonable for the applicant to have failed to raise the subject matter of this proceeding in the Supreme Court proceeding. Indeed, on the case put to this Court by the Bank, there was at that time nothing for the applicant to raise. It could not have sought relief of the type contemplated by s 87(2)(b) or (ba) of the Trade Practices Act as the Bank, the party whose conduct is said to have contravened s 52, was not a party to the lease and Lamina was not "a person who was involved in the contravention constituted by the conduct".

NEGLIGENT MISSTATEMENT

The conventional view is that an allegation of negligent misstatement can be maintained on the basis of silence only where there has been a half-truth or a failure to correct an earlier statement which was true when made but now untrue

(31 Halsbury's Laws of England (4th ed) Vol 31 paras 1050-1053). No such allegations are made in this proceeding.

Assuming however for present purposes that the Bank owed the applicant a duty of care requiring it to disclose to the applicant at an early stage the legal effect of the Lamina's default under the mortgage, any action by the applicant against the Bank based upon an alleged breach of such a duty would not, as at 25 November 1994, have been maintainable for the same reasons as to the Trade Practices Act claim was not maintainable.

CONCLUSION

On the facts pleaded and otherwise established it has not been demonstrated that at the time this proceeding was commenced the applicant had a reasonable cause of action against the Bank pursuant to either the Trade Practices Act or the Fair Trading Act, or for negligent misrepresentation.

In my opinion the appropriate order is for the proceeding to be dismissed.

I certify that this and the preceding 21 pages are a true copy of the Reasons for Judgment of the Honourable Justice Olney

Associate:

Dated:

Heard: 9 February 1995

Place: Melbourne

Judgment: 15 February 1995

Appearances:

Mr M. Pearce (instructed by Phillips Fox) appeared for the respondent for the motion.

Mr G. Golvan QC and Mr A. Strum (instructed by Feingold Partners) appeared for the applicant in opposition to the motion.

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