Territory Sheet Metal Pty Ltd (ACN 009 634 333) v Australia and New Zealand Banking Group Ltd (ACN 005 357 522)

• Jurisdiction: Northern Territory
• Court: Supreme Court
• Judge: Olsson AJ
• Judgment Date: 09 July 2009
• Neutral Citation: [2009] NTSC 31
• Docket Number: FILE NO: 177 of 2000
• Date: 09 July 2009

[2009] NTSC 31

SUPREME COURT OF THE NORTHERN TERRITORY

IN THE SUPREME COURT OF THE NORTHERN TERRITORY OF AUSTRALIA AT DARWIN

Judgment of:

Olsson AJ

FILE NO: 177 of 2000

Between:

Territory Sheet Metal Pty Ltd (ACN 009 634 333)

First Plaintiff

Smith, David Lennox

Third Plaintiff

Dean, Edward Charles

Fourth Plaintiff

Dean, Susan Ellen

Fifth Plaintiff

Smith, Nicole Kerrian Smith

Sixth Plaintiff

and

Australia and New Zealand Banking Group Ltd (ACN 005 357 522)

Defendant

REPRESENTATION:

Counsel:

Plaintiff: D Trim QC and R Sallis

Defendant: J Kelly SC and D McConnel

Claims for damages by customers and sureties against bank — Claims based on asserted breaches of the provisions of s 51A and s 52 of Trade Practices Act(Cth), common law duty of care, fiduciary duty and contract, and by reason of alleged negligent misstatement — pleas by defendant of contributory negligence — counterclaims by defendant based on deceit, negligent misrepresentation and alleged breaches of s 52 of Trade Practices Act(Cth) and s 42 Consumer Affairs and Fair Trading Act (NT) — loan facilities approved by respondent bank to corporate plaintiff — personal plaintiffs sureties for those facilities — discussion of principles as to liability in relation to causes of action promoted by respective parties — expert evidence as to banking practice and financial aspects reviewed — breaches of contract by defendant in respect of the processing of two cheques — other causes of action maintained by parties not made out — issues of causation discussed — basis on which damages fall to be assessed — primary findings published.

REASONS FOR JUDGMENT

(Delivered 9 July 2009)

Index

Definitions	Pages 1–2
PART I
Introduction and the Narrative Facts
Introduction	Paragraphs 1–3
Relevant narrative aspects:
Credibility issues (key narrative witnesses)	4
DLS	5–19
ECD	20–34
The witness Bradley	35–39
The witness Barnett	40–43
The witness Meers	44–46
The witness Pedler	47–52
The witness Flynn	53–54
The witness Wellman	55–58
The witness Baylis	59–71
The witness Burford	72–77
General background
Preliminary	78–80
Relevant history	81–115
The re-financing proposal	116–212
The finance application	213–285
The finance agreement	286–317
The ANZ security requirements	318–321
The alleged Godwin properties	322–338
Events leading up to the settlement of the ANZ loans	339–453
Settlement of the ANZ loans	454–463
Caveats on the alleged Godwin properties and their ultimate removal	464–486
The procurement of the $570,000 cheque	487–504
A request to the ANZ for additional finance	505–512
Godwin's fraudulent conduct is revealed	513–520
The ultimate situation causing the $570,000 obtained by Godwin from NPG	521–524
The ANZ exit strategy	525–548
TSM ceases to trade	549–568
The situation immediately prior to and post February 1998 as revealed by cross examination of DLS	569–581
Some reflections on the conduct and attitudes of DLS, ECD and Godwin	582–588
PART II
Expert banking evidence and the evidentiary case as to damages
The expert evidence related to banking procedures and responsibilities	589
The witness Guild	590–635
The witness Kirkmoe	636–647
The witness Silver	648–703
The witness McFadden	704–737
A matter of terminology	738–745
The evidentiary case as to damages:
General	746–764
Specific areas of work
Rain water tank production	765–774
Curved flashings	775–785
Spectre metal door and window awnings	786–797
Battenless and screwless roofing/cladding systems	798–804
Prefabricated housing units	805–817
The plaintiffs' technical experts
The witness Marcroft	818–823
The witness Valastro	824–828
The witness Maschke	829–857
The defence technical experts
The witness Sullivan	858–885
Curved flashings
Awnings
Battenless and screwless cladding systems
The witness Newley	886–910
The witness Neil Clarke	911–928
The expert evidence as to quantum:
The witness Martin	929–974
The witness Clark	975–1009
The witness Edwards	1010–1111
The expert evidence as to technical and financial aspects	1112
General conclusions as to the opinions of the financial experts	1113–1126
PART III
A consideration of the causes of action relied on by the plaintiffs:
Introduction	1127–1134
The claims based on the provisions of the TPA
The claim	1135–1141
Relevant principles	1142–1159
The basis of the claim made	1160
Issues arising	1161–1193
Claims based on breach of common law duty of care and breach of contract
General	1194–1196
Some important legal principles	1197–1230
Some preliminary considerations	1231–1249
When did the relationship of banker/customer come into existence?	1250–1267
Claims based on common law duty of care
The claims as pleaded	1268–1283
Issues arising	1284–1328
Claims based in contract
The claims as pleaded	1329–1345
Issues arising	1346–1412
Issues arising in relation to parties other than TSM in respect of the banker/customer relationship period	1413
Claims based on breach of fiduciary duty
The basis of the claims	1414–1424
Relevant general principles	1425–1442
Issues arising	1443–1485
Claims based on negligent misstatement
The basis of the claims	1486–1492
Relevant principles	1493–1506
Issues arising	1507–1523
The issues as to damages claimed by the plaintiffs
Introduction	1524–1526
Principles to be applied	1527–1545
Damages issues as debated by the parties:
General	1546–1570
Specific heads of claim	1571–1688
The defendant's plea of contributory negligence	1689–1712
The defendant's counterclaim
The pleaded basis of the counterclaim	1713–1721
Specific counterclaims	1722–1728
The final basis as pursued	1729–1730
Issues arising	1731–1761
Conclusion	1762

Olsson AJ

Definitions

In the course of these reasons I propose to employ the following expressions:

Expression	Meaning
‘ANZ’:	the defendant
‘ATO’	the Australian Taxation Office
‘CAFTA’:	the Consumer Affairs and Fair Trading Act (NT)
‘CBA’:	The Commonwealth Bank of Australia
‘CRAA’:	the Credit Reference Association of Australia
‘DLS’:	David Lennox Smith
‘ECD’:	Edward Charles Dean
‘LTD’:	LTD Constructions (NT) Pty Ltd
‘NAB’:	National Australia Bank
‘NKS’:	Nicole Kerrian Smith
‘NPG’:	Northern Property Group Pty Ltd
‘primary proceedings’:	the plaintiffs' claims against the defendant as expressed in the statement of claim
‘secondary proceedings’:	the defendant's claims against DLS and ECD as expressed in its finally amended counterclaim
‘SED’:	Susan Ellen Dean
‘the alleged Godwin properties’	a collective reference to both the Brayshaw Crescent property and the Wells Street property
‘the Anula property’:	the property situated and known as 10 Kohinoor Street, Anula, formerly owned by ECD and SED
‘the Brayshaw Crescent property’:	the property situated at and known as 7 Brayshaw Crescent, Millner
‘the finance agreement’:	the finance agreement defined in paragraph 37 of the statement of claim, as said to have been evidenced by a letter dated 19 November 1997 written by the ANZ to TSM
‘the finance application’:	the application made to the ANZ as referred to in paragraph 14 of the statement of claim having the oral and documentary content pleaded, as well as the documents comprising the re-financing proposal, the relevant ANZ Business Credit Application, an associated document titled ‘Security to be offered’ and Personal Statements of Position of DLS, ECD and Lionel Anthony Godwin (‘Godwin’) respectively (Exhibit P1 pages 57–66, 83–93)
‘the first LTD development project’	the construction by LTD of initial prefabricated units at Shearwater Drive, Bakewell, as referred to in paragraph 8.4 of the statement of claim
‘the first October meeting’:	the meeting said to have been held on 14 October 1997, as referred to in paragraph 17.3 of the statement of claim
‘the first November meeting’:	the meeting said to have been held on or about 7 November 1997, as referred to in paragraph 27 of the statement of claim
‘the fourth October meeting’:	the meeting said to have been held on 29 October 1997, as referred to in paragraph 17.6 of the statement of claim
‘the indicative proposal’:	the indicative ANZ proposal, being a letter dated 22 October 1997 written by the ANZ to TSM (Exhibit P1 pages 76–82)
‘the October meetings’:	a collective reference to the first, second, third and fourth October meetings
‘the November meetings’:	a collective reference to the first November meeting and the second November meeting
‘the Raffles Road property’:	the property situated at and known as 2 Raffles Road, Palmerston, being the former home of DLS and NKS
‘the re-financing proposal’:	the written TSM re-financing proposal, a copy of which is reproduced at pages 57 to 67 inclusive of Exhibit P1
‘the second LTD development project’:	the...