CITATION: Rodgers v ANZ Banking Group Ltd [2006] QSC 190

[4] Mr and Mrs Rodgers were involved with two companies. The first was a private investment company wholly owned by them called Rodgers Family Investments Pty Ltd ("RFI"). RFI operated two businesses. The first was a computer retail business called "Baroona Computer Centre." The second business was that of an internet service provider trading as "Rocknet."

[5] The second company with which Mr and Mrs Rodgers were associated was an unlisted public company called Wodda.com Limited ("Wodda"). Wodda had the benefit of a software programme for e-commerce developed by Mrs Rodgers. In essence, it was to operate an online shopping centre. Businesses could rent space in the on-line shopping centre to sell their products to customers accessing Wodda through the internet. Mrs Rodgers held the majority of the shares in a third company called Wodda Team Pty Limited. Wodda team Pty Limited in turn held 86% of the shares in Wodda. Mrs Rodgers was the managing director of Wodda.

[6] Until October 2001, RFI and Wodda were customers of the National Australia Bank ("NAB"). In about September 2001, the ANZ, by Mr Cameron Blair, a relationship manager in Rockhampton, approached Mrs Rodgers with a view to the companies transferring their accounts to the ANZ.

[7] RFI had an overdraft facility with NAB of approximately $390,000. Wodda wanted an overdraft facility in its own right but was unable to obtain approval for it from the NAB.

[8] Mr Blair is alleged in the present statement of claim to have represented that it would be no problem to provide Wodda with the overdraft facility it required. Later, after the accounts were transferred, Mr Blair said that the structure of Wodda was too complicated but that the extra facility required could be provided through RFI. Other representations are alleged in the statement of claim. To the extent they are relevant to the present application, they will be outlined later.

[9] On 5 October, 2001 the plaintiffs signed three letters of offer from the ANZ. Each of the letters was dated 26 September 2001. The first offer was for an overdraft of $25,000 and a business loan of $270,000. The second was for a business mortgage loan of $85,000. The third was for a business mortgage loan of $39,000. All these facilities were provided to RFI. A deed of guarantee and indemnity of unlimited amount was also signed by Mrs Rodgers. Mr Rodgers signed a deed of guarantee and indemnity limited to $419,000.

[10] On 19 June 2002, the ANZ appointed receivers and managers to RFI.

[11] RFI brought an application to end the receivership. That application was dismissed by White J on 16 August 2002. Those proceedings are not presently relevant.

[12] The ANZ then commenced proceedings[1] against Mr and Mrs Rodgers under the guarantees ("the first action"). That action proceeded to trial before Muir J in September 2003. On 17 September 2003, judgment was given against each of Mr and Mrs Rodgers for the sum of $393,662.20. Orders for possession of certain properties over which the ANZ had taken securities were also made in favour of the ANZ.

[13] A number of issues were raised by the present plaintiffs by way of defence in the first action.

[14] A question arose as to the legitimacy of the signatures on the guarantees. That issue was decided in favour of the ANZ. It was also alleged by way of defence that the ANZ by Mr Blair had entered into an oral collateral agreement to allow RFI to draw up to $450,000 on the facilities rather than the $419,000 permitted on the face of the documents. Muir J found that no such agreement had been entered into. In the course of his reasons, Muir J went further and found:[2]

"The defendants have not established that any relevant representation was made by any servant or agent of the plaintiff. The evidence does not establish reliance by them or the company on any representation concerning the mortgage facilities, the guarantees, the relaxation of their terms, their enforcement or the rights of the parties in relation to them. Nor do I find any reliance by the defendants on any internal bank procedures or any failure on their part to understand the nature and substance of the guarantees, mortgage or mortgage debenture."

[15] These findings were apparently in response to paragraph 3.2 of the Rodgers' amended defence, which alleged that the ANZ was estopped from relying on the letters of offer because of alleged representations concerning the handling of the facilities and failures to comply with, inter alia, internal risk assessment procedures.

[16] The finding that the evidence did not establish reliance on any representation was, strictly speaking, unnecessary since the pleading did not allege any such reliance notwithstanding that such reliance must be proved before a party can rely on any estoppel.

[17] The judgment in the first action was appealed to the Court of Appeal. That appeal was dismissed on 28 May 2004.

[18] An application for special leave to appeal to the High Court was dismissed on 26 May 2005.

[19] Ordinarily that would have been an end of the litigation.

[21] On 26 August 2003, a few days before the commencement of the trial of the first action, the ANZ was successful in having the Rodgers' counterclaim struck out. Leave to replead was given but in order to preserve the trial dates that were then set an order was made that the counterclaim be tried separately from the ANZ's action. As part of its strategy for avoiding a delay in the trial of the first action, the ANZ by its counsel undertook not to rely on any estoppel arising from the failure of the Rodgers to litigate in the first action any issue that ought to have been raised in the first action but was not.[3] In doing so, the ANZ acknowledged that the matters the Rodgers wished to raise by way of counterclaim, notwithstanding their failure to properly articulate them at that point, might, if proven, give rise to a claim for damages against the ANZ.

[22] On 8 July, 2005 a new action was commenced against the ANZ and the ANZ solicitors by Mr and Mrs Rodgers ("the second action"). The amended claim filed in the second action sought the reopening of the findings of the trial judge in the first action and the setting aside of the judgment against Mr and Mrs Rodgers. The basis of the re-opening was said to be errors in the findings of fact by the trial judge and fraud and unconscionable conduct by the ANZ and its solicitors.

[23] On 8 December 2005, I struck out the second action as an abuse of process.[4] An appeal lodged against my decision in relation to the second action has not yet been heard.

[24] The present action ("the third action") was commenced on 24 March 2006.

[25] The third action claims damages for unconscionable conduct or for misleading or deceptive conduct, or for negligent advice. There is a reference in the statement of claim to the provisions of the Trade Practices Act. As a financial institution the ANZ is governed by the analogous provisions of the Australian Securities and Investment Commission Act 2001.[5] Again, no point has been taken about this.

[26] Having regard to the undertaking given by the ANZ when the Rodgers' counterclaim in the first action was struck out, Mr and Mrs Rodgers have a prima facie right to litigate the matters that might have formed the substance of their counterclaim had they been permitted to pursue it with the first action. It seems to me that the issue is whether they are prevented from raising the matters they wish to raise in the third action because of estoppels created by the findings in the first action.

[27] In a general sense, Mr and Mrs Rodgers argue that no such estoppels arise because of the limitations on the binding nature of such estoppels as discussed in Sol Theo & Anor v Official Trustee in Bankruptcy [1996] FCA 1036. That decision provided an example of the application of the principle discussed by Dixon J in Blair v Curran [1939] HCA 23; (1939) 62 CLR 464. In essence, an issue estoppel arises only in relation to facts critical to the actual determination in the prior action. Dixon J said at 531 - 533:

"...matters of law or fact which are subsidiary or collateral are not covered by the estoppel. Findings, however deliberate and formal, which concern only evidentiary facts and not ultimate facts forming the very title to rights give rise to no preclusion. Decisions upon matters of law which amount to no more than steps in a process of reasoning tending to establish or support the proposition upon which the rights depend do not estop the parties if the same matters of law arise in subsequent litigation."

[28] For the ANZ, the primary submission is that, "the claim and statement of claim ... offends fundamental principles as to the finality of litigation, and is an abuse of process, as it is replete with, and relies upon, allegations of fact ... that have been rejected in previous proceedings between the parties or are contrary to the decision or findings of fact in previous proceedings."

[29] To assess the force of this submission it is necessary to examine in more detail the issues raised in the first action.

[30] The issues raised in the first action are summarised by the trial judge at paragraphs [9] to [13] of the judgment. The primary issue litigated was whether Mr and Mrs Rodgers had in fact signed the guarantees. A second issue was whether the letters of offer and other securities were subject to an oral collateral agreement limiting the ANZ's ability to rely upon them. The third issue was whether the conduct of the ANZ was such as to estop it relying on its security documents.

[31] It should be noted that the ultimate issue before the trial judge in the first action was whether the ANZ was entitled to the benefit of its securities. By separating the claim and the counterclaim it became unnecessary for the trial judge to consider whether any unlawful conduct by the ANZ or any of its officers had caused loss to either Mr or Mrs Rodgers. What was critical to the judgment in the sense of Blair v Curran was that the security documents were properly executed, the money claimed had been advanced or was otherwise owing in terms of the arrangements between the banker and the customer. It was necessary to conclude that the ANZ had not bound itself to any collateral agreement precluding reliance on the security documents. Such an agreement could arise by representation amounting to a warranty. None was found. It was also necessary to conclude that the ANZ was not estopped by any representation, not amounting to a warranty, from reliance on its securities.

[32] The findings of the trial judge at paragraph [76], which I have set out previously, need to be read in this context. It follows the trial judge's rejection in paragraph [75] of any contractual agreement inconsistent with the ANZ's position. Beyond this, the only "relevant" representation was one capable, if proved, of founding an estoppel precluding reliance on the securities. Once it was established that the documents had been validly executed and that no collateral agreement inhibited the ANZ's recovery, estoppel was the only basis relied upon to resist its claim. To found an estoppel, the representation must be one made in circumstances where the representor knew or intended that the representee would act to his or her detriment in reliance on the representation and on which the representee so acted.[6] A finding that no representation was proved is an evidentiary finding in this context. The ultimate relevant finding that gives rise to an issue estoppel is that no combination of circumstances existed that estopped the ANZ from relying on its securities.

[33] In the third action, the Rodgers do not seek to hold the ANZ to a represented position by estoppel or otherwise. On the contrary, they allege that they have suffered damage by committing themselves to incurring the obligations to the ANZ as found by the trial judge in the first action. They allege that they committed themselves to incurring those obligations in reliance on representations made either orally or by conduct in circumstances that rendered the representations misleading or deceptive or made in circumstances amounting to actionable negligence.

[34] Ordinarily, such a claim would not be permitted to go forward because of the principles discussed in Anshun, but in this case no such prohibition applies for reasons I have already given.

[35] Mr and Mrs Rodgers are not permitted to seek by way of the third action an outcome inconsistent with the outcome in the first action. In terms of issues, it seems to me that what Mr and Mrs Rodgers may not now assert are matters that might have been raised by way of defence to the Bank's claim, as opposed to matters that sound in damages and that are not necessarily inconsistent with the continuing validity and enforceability of the ANZ's securities.

[36] During the course of oral argument I attempted to elicit from Mrs Rodgers exactly what her claim was. In essence it was that she was generally happy with the service she was receiving from the NAB. She was approached by the ANZ, who offered her an overdraft facility for Wodda if she caused the companies to change banks. In reliance on this representation she transferred the accounts. The representation was misleading because there was no reasonable basis on which Mr Blair, representing the ANZ, could have believed that such an overdraft would be provided. Had the Rodgers stayed with the NAB that bank would have continued to allow the companies to trade and the action by the ANZ that followed and that caused both Mr and Mrs Rodgers and the companies loss, would not have been taken. It is relevant to this cause of action that the manner in which the Rodgers and their companies had been used to conducting their accounts at the NAB and would continue to do so might result in the very action the ANZ ultimately took. This does not appear to me to traverse the key findings in the first action but rather, in some respects, relies on them.

[37] In my view, for the reasons set out, given the circumstance of the separation of the first action and the counterclaim and the undertaking given on behalf of the ANZ not to rely on any Anshun type estoppel, the third action is not an abuse of process.

[38] The application to strike out the claim is refused.

[39] In saying this, I express no view on the likelihood of such an action succeeding. The evidentiary problems associated with proving such a claim are obvious.

[40] As far as the statement of claim is concerned, the only attack on it that was pursued separately from the attack on the action as an abuse of process was in relation to some items of damage particularised in paragraph 33.[7]

[41] The challenged items include loss on the sale of two properties. The basis on which it is submitted that the loss in relation to these properties is not able to be claimed is that, as set out in the statement of claim, they were sold by the ANZ in the exercise of its rights under its securities, rights already established by the judgment in the first action.

[42] The exercise of the power of sale was as a result of the failure of the businesses, which was itself the result of the appointment of receivers. Mr and Mrs Rodgers allege in paragraph 27 of the present statement of claim that the guarantees were obtained without their knowledge, and in paragraphs 28, 29 and 30 refuse to acknowledge the validity of the ANZ's other securities. The result of the first action precludes the Rodgers from pursuing any such contention. The allegations are not, in fact, of any real relevance to this part of the claim. Any damage suffered as a result of a forced sale of properties owned by the Rodgers is arguably recoverable if they otherwise succeeded in establishing unconscionable conduct, misleading or deceptive conduct or negligence. The essential premise on which damages are calculated is that, subject to issues of remoteness, they should reflect the position in which the claimants would be if the unlawful conduct had not taken place: see Haines v Bendall [1991] HCA 15; (1991) 172 CLR 60 at 63; Marks v GIO Australia Holdings Ltd [1998] HCA 69; (1998) 196 CLR 494. In this case, the Rodgers' claim is that but for the negligence or misleading or deceptive conduct of the ANZ the companies would have continued to trade and they would not have lost the property sold by the ANZ to recover its advances.

[43] Another head of damage to which the ANZ objects is the claim for lost wages by Mr and Mrs Rodgers.

[44] The wages claimed are wages that Mr and Mrs Rodgers claim would have been paid by RFI and Wodda.

[45] It is well established that a claim for a "reflective loss" cannot be made by a shareholder or employee of a company where the loss arises from the impecuniosity of the company brought about as a result of the conduct complained of. Such a loss is reflective of the company's own loss and should be claimed by the company: see Gould v Vaggelas (1983-1984) 157 CLR 215 at 219-220; Johnson v Gore Wood & Co [2002] 2 AC 1 at 67 B-C; Chen v Karandonis [2002] NSWCA 412 at [43], [8], [49], [51], [134] - [136]; Thomas v D'arcy [2005] QCA 68; [2005] 1 Qd R 666. Notwithstanding that Mr and Mrs Rodgers might consider that the wages claim is necessary to restore them to the position they claim they would have been in but for the unlawful conduct of the ANZ, this head of damage is considered too remote to be recovered other than by the company concerned.

[46] In the circumstances I am satisfied that the claim for loss of wages is unsustainable and should be struck out.

[47] A complaint was made about the remaining claims for damages on the basis that no facts were pleaded to support them. I disagree. It seems to me they are caught up in the general reference to "valuable property" in paragraph 32 of the statement of claim. The lack of particularity in paragraph 32 is properly cured by the provision of particulars of the property referred to.

[48] A final general submission was made on behalf of the ANZ that the causes of action were inadequately pleaded. The submission appears only in broad outline in paragraph 99 of the ANZ's written submissions and was not developed further in oral argument. It appears to have been something of an afterthought. The statement of claim is not a work of art from a lawyer's perspective. Parts of it undoubtedly do infringe the prohibition on re-agitating issues that have been conclusively decided in the first action. I have briefly mentioned some instances previously. In places the term "agreement" is used instead of "representation". Notwithstanding this, I am satisfied that enough facts are pleaded to sustain the causes of action on the basis on which I elicited them from Mrs Rodgers. It is likely that if, unaided by submissions, I were to examine the document minutely, I would find other technical deficiencies in the pleaded causes of action. Mr and Mrs Rodgers are not legally represented. As I was not specifically asked, I do not intend to trawl through the statement of claim line by line to eliminate the offensive material or find technical pleading points. I do not propose to take this submission any further.

[49] Of course, the ANZ may bring a further application to deal in detail with the deficiencies in the statement of claim. What real forensic purpose is served by such a course is presently mysterious; but that is not a matter with which I am concerned. The Rodgers' history suggests they will not be oppressed by multiple interlocutory applications into giving up. They have no apparent capacity to pay costs orders. Mrs Rodgers has made plain what case she is trying to mount. The best approach may be simply to expedite a trial and dispose finally of the matter.

[50] In the result, I order that the claim in paragraph 33 of the statement of claim for wages for Mr and Mrs Rodgers be struck out. I otherwise dismiss the application.

[51] In my view the ANZ has been substantially unsuccessful in its application. In view of the fact that they are unrepresented, it is unlikely that the Rodgers are entitled to any significant amount by way of a costs order. Nonetheless, I order that the defendant/applicant pay the plaintiffs/respondents costs of the application to be assessed on the standard basis.

[2] ANZ Banking Group Limited v Rodgers & Anor [2003] QSC 304 at para [76].

[3] At page B246-247 of exhibit "JBP-27" to the affidavit of Janelle Simone Boegheim filed 2 May 2006, counsel for the Bank acknowledged that his client would not rely on any estoppel based on the principles discussed in Port of Melbourne Authority v Anshun [1981] HCA 45; (1981) 147 CLR 589.

[4] See Rodgers v ANZ Banking Group Ltd & Anor [2005] QSC 365.

[5] Ss 12CA and 12CB relate to unconscionable conduct and s 12DA relates to misleading or deceptive conduct.

[6] See Waltons Stores (Interstate) Ltd v Maher (1987-1988) 164 CLR 387.

[7] See submissions by ANZ paragraph 1(b).