FEDERAL COURT OF AUSTRALIA

Garrett v Westpac Banking Corporation [2007] FCA 525

ANDREW MORTON GARRETT v WESTPAC BANKING CORPORATION, TIERNAN WHITE AND CARL ZUBER

SAD 20 OF 2007

MANSFIELD J

13 APRIL 2007

ADELAIDE

THE COURT ORDERS THAT:

1.                  The application filed on 3 February 2007 be dismissed.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

1                     This application was made on 3 February 2007 accompanied by a statement of claim.  The facts that the applicant relies upon are set out in paragraphs [2]-[6] below (using the persons’ and entities’ names as they appear in that document).

2                     The applicant as trustee of the Andrew Garrett Trust No 3 holds an account at the Hutt Street Branch of the first respondent.

3                     In October 2006, the applicant approached Robert Gray of Creditnet seeking funding of AUD$350m for the purchase of assets owned by Fosters Wine Estates.  On 16 December 2006, Mr Gray confirmed that US$300m would be made available for the applicant’s proposed bid for those assets.  On 18 December 2006 Creditnet issued an International Sight Draft of US$350m in favour of Cullen Capital (the first Sight Draft), which was subsequently endorsed to the applicant as trustee of the Andrew Garrett Family Trust No 3.  On 4 January 2007, the applicant received and deposited the first Sight Draft with the first respondent and instructed that it be sent to the second respondent (an employee of the first respondent) for his attention. 

4                     On 31 December 2006, the applicant agreed to hold on trust for Corporate Investments STID another International Sight Draft issued by Creditnet Bank in the amount of USD$11b (the second Sight Draft) drawn on the account of Dr Zvonko Berdik-Albert in favour of Gadens Lawyers.  The second Sight Draft was intended for use in a bid for 100% of the issued capital in Qantas Ltd.  On 2 January 2007, the applicant made an offer in writing to purchase 100% of the issued capital in Qantas Ltd.  On 3 January 2007, the applicant deposited the second Sight Draft with the first respondent, by then endorsed to him by Gadens Lawyers.  At that time, the applicant requested that the second Sight Draft be sent to the attention of the second respondent.

5                     On 5 January 2007, the second respondent confirmed by telephone that he had received the first and second Sight Drafts and that he would investigate them.  From 8 January 2007, the applicant had a number of communications with the second respondent, culminating in the second respondent suggesting on 11 January 2007 that he would return the first and second Sight Drafts to the applicant.  During this time the second respondent had spoken about the first and second Sight Drafts with the third respondent (also an employee of the first respondent).

6                     On 12 January 2007, Mr Gray (of Creditnet) told the applicant that he (Mr Gray) had been told that Dr Albert, on whose account the second Sight Draft had been drawn, had been told by the Office of Foreign Asset Control with the US Treasury that it (OFAC) had confirmed the two Sight Drafts to the first respondent and that the funds were available for collection.  The applicant requested that the first respondent confirm that it had investigated the genuineness of the first and second Sight Drafts.  The applicant received no response to that request.  (Why Dr Albert may have received information about the first Sight Draft is not explained).  Both Sight Drafts, on their face, set out the account held with OFAC from which funds could be drawn.

7                     The applicant claims that the first respondent, by the second and third respondents, failed to investigate the genuineness of the first and second Sight Drafts, and failed to accept the first and second Sight Drafts.  The first respondent is said to have offered to return the first and second Sight Drafts to the applicant, but the applicant refused to accept their return.

8                     The applicant claims that the first respondent or the respondents breached the duty of care owed by a bank to its customer; acted unconscionably; breached a contract; breached the Bills of Exchange Act 1909 (Cth); breached the Banking Act 1959 (Cth); breached the general law of banking and financial institutions; and committed a breach of trust.  He also claims that he “faces serious damages” as a result, but the relief claimed does not include a claim for damages.

9                     The application seeks the following relief (apparently wrongly described as interlocutory relief), namely that a writ of Mandamus be issued commanding each of the respondents to deal with the first and second Sight Drafts in accordance with:

“a.        The Law of Contract,

b.         The Laws of Australia generally,

c.          Common Law,

d.         The Banking Act (C’th) (1959) and the duties of the paying bank.

e.          The Bills of Exchange Act (C’th) (1909) and in particular the obligations of “The Holder of the Bill in Due Course.

f.          The Duty of Care owed by a Bank to its Customer and

g.          Banking and Financial Institution Law generally.”

There is no other final relief claimed in the application, save for costs.

10                  I directed that the applicant not serve the application before the first directions hearing, as it appeared to me that there were some real difficulties with the claim being maintainable in the terms in which it was first expressed.  I thought it preferable to raise those concerns with the applicant before the proceedings were served to see if he wished to have an opportunity before serving them of addressing my concerns in any way.  I pointed out some possible problems with the applicant’s pleadings, particularly with the nature of the relief sought, at a directions hearing on 21 February 2007.  At that time, I gave leave to the applicant to file such amended application and such amended statement of claim as he may have been advised by 21 March 2007.  The applicant has not filed any amended application or amended statement of claim.

11                  However, on 19 February 2007, the applicant filed a notice of motion seeking that this application be heard together with matter SAD 9 of 2007, together with an affidavit of that date.  It merely annexes the affidavit he filed in matter SAD 9 of 2007 and correspondence between him and the first respondent’s solicitors of 6 and 15 February 2007 with the enclosures referred to. Obviously the order sought cannot be made in light of the events referred to in the following paragraphs.

12                  The letter from the solicitors for the first respondent clearly identifies its position.  It says the two Sight Drafts are incapable of being cleared because the first respondent had been unable to verify the existence of the financial institution upon which the funds are said to have been drawn, or that any such funds exist.  The first respondent was concerned that the two Sight Drafts were fabrications, and likely to be fraudulent.

13                  Matter SAD 9 of 2007 was commenced by the applicant on 24 January 2007. It has identical parties, and the applicant alleges identical causes of action in both matters, and filed identical statements of claim in both matters.

14                  On 26 March 2007, Finn J ordered that the applicant’s application in matter SAD 9 of 2007 be summarily dismissed with costs: see Garrett v Westpac Banking Corporation [2007] FCA 439. I will not refer in detail to his Honour’s reasons.  I respectfully agree with them. As a consequence, to the extent that these proceedings raise the same issues as matter SAD 9 of 2007, I would dismiss this application.  In oral submissions, the applicant said that his Honour, when considering the application of the Bills of Exchange Act 1909 (Cth), had based his decision on s 59 of that Act and had failed to have regard to s 28(1) of that Act.  That is quite incorrect:  see his Honour’s reasons as [23].  In my view, the statement of claim discloses no cause of action that has any reasonable prospect of success.

15                  There are two differences between this application and the application in matter SAD 9 of 2007 upon which I should remark.

16                  First, in matter SAD 9 of 2007, the applicant brought the application in his capacity as trustee of the Andrew Garrett Family Trust No 3; as trustee for “Corporate Investments” pursuant to a declaration of trust dated 31 December 2006; and as trustee of the Andrew Garrett Group & Corporate Investments Joint Venture.In these proceedings, the applicant has brought the action only in his capacity as the trustee of the Andrew Garrett Family Trust No 3. In Garrett [2007] FCA 439, at [20], Finn J found that the applicant did not have standing in any of his capacities, including as trustee of the Andrew Garrett Family Trust No 3, in relation to the first Sight Draft. His Honour found that the applicant did have standing in his capacity as trustee of the Andrew Garrett Family Trust No 3 to have brought the application in respect of the second Sight Draft, but dismissed the claim for reasons he gave.  The more limited standing relied upon by the applicant in this matter would, for the same reasons, not affect the result here.

17                  Secondly, the relief sought in this matter is different from that sought in matter SAD 9 of 2007.  There, the applicant sought:

“that Westpac give an undertaking as to damages in respect of and arising out of these proceedings and in particular, with respect to;

(i)         letter of Offer addressed to the Qantas Board dated 2 January 2007 to purchase 100% of the Issued Capital of Qantas Ltd;

(ii)                letter of Offer addressed to the Fosters Group Board dated 12 January 2007 to acquire 100% of the issued capital of Fosters Group Ltd;

(iii)               letter of Offer addressed to the Suncorp Board dated the 12^th January 2007 to acquire 100% of the issued capital of Suncorp Metway Ltd (Post Promina Merger);

(iv)              letter of Offer addresses to the BHP Billiton Board dated 14^th January 2007 to acquire 100% of the issues capital of BHP Billiton Ltd;

(v)        transfer of a further USD$100b to the account of the Joint Venture.”

18                  In this proceeding, the applicant has sought a writ of mandamus against each of the respondents in the terms set out above.  That point of difference also does not lead to any different result, for the reasons given by Finn J.  Moreover, a writ of mandamus can only be sought against an officer of the Commonwealth: Judiciary Act 1903 (Cth), s 39B(1). None of the respondents are officers of the Commonwealth. The relief sought against them is misconceived in any event.

19                  There may also be a more fundamental reason why this claim must now be dismissed.  Matter SAD 9 of 2007 involved the same claims between the same parties based upon the same alleged conduct.  Relevantly, the essence of the claim in each matter was that the first respondent and its officers had failed to meet the first and second Sight Drafts so as to make available in the account of the applicant as trustee of the Andrew Garrett Family Trust No 3 the funds to which they referred.  The causes of action in each matter are the same.  The issues as to whether any of those causes of action are reasonably arguable have been decided in Garrett [2007] FCA 439.  The difference in the nature of the relief sought does not mean those issues have not been decided.  The applicant should be estopped in any event from litigating in this proceeding the same issues as he raised in that matter simply because he claims a different (but misconceived) form of relief.

20                  The applicant in oral submissions asked for an order under Order 80 of the Federal Court Rules that the applicant be referred for legal assistance, if available.  I am not prepared to do that.  No adequate foundation exists for the making of such an order.  The beneficiaries or potential beneficiaries of the Andrew Garrett Family Trust No 3 are not identified.  Their assets are not disclosed.  Even assuming (which is not shown) the trust itself has no readily available assets to fund the instructing of a solicitor, the beneficiaries themselves may be in a position to do so.  They may need to consider whether the causes of action are worth pursuing before doing so; that is a matter for them.  Moreover, as Finn J said in Garrett [2007] FCA 439, at [19], the claim itself has an air of unreality.  The applicant said he is an undischarged bankrupt, and his capacity to secure and negotiate banking instruments of this value in the circumstances he claims seems highly unlikely.  As I put to him, his simple solution if the funds are available to him as trustee is to arrange for them to be transferred at source to a better known banking institution whose instruments would be readily verifiable.

21                  For the reasons given, in my view, the application is simply not sustainable.  It discloses no cause of action that has any reasonable prospect of successfully prosecuting this proceeding.  The application is dismissed under s 31A of the Federal Court of Australia Act 1976 (Cth).  I make that order of my own motion.

Associate:

Dated:         12 April 2007