Clenae Pty Ltd & Ors v Australia & New Zealand Banking Group Ltd [1999] VSCA 35

Clenae Pty Ltd & Ors v Australia & New Zealand Banking Group Ltd [1999] VSCA 35 - VSCA 1999 case summary — Zoe

[95]

Here the number and value of the shares of which the learned judge became the owner upon his mother's death can only be described as minuscule when compared with the Bank's total shareholding and asset value. The litigation involved a claim for unliquidated damages which, I have said, might, if successful, have resulted in an award of damages of up to $1,500,000 (although damages were unlikely to exceed $1m.). That amount is substantial but, having regard to the Bank's annual profit of over $1b. and the Bank's total asset value, the success of the claim could not, as Mr. Douglas conceded, have affected the value of the judge's shareholding. Nor could the outcome have affected the amount of the potential dividend, or the ability of the Bank's subsidiary, Esanda, to meet its obligations upon the debenture. The judge, on this analysis, did not have any financial interest in the outcome of the litigation, and this conclusion is one which in my view could not be said to be marginal or open to reasonable question. I have not ignored the fact mentioned by Mr. Douglas in argument, that there was before the Court a report published in The Age newspaper on 16 October 1997, in which the reporter, commenting on the judge's decision in the case, stated that the "decision was widely seen as a ground-breaking judgment for 1750 foreign-currency loans arranged by the ANZ Bank in the mid-1980s" and that "legal sources" said that if Mr. Quick had won the case "many other ANZ forex borrowers could have mounted similar damages claims against the Bank". By mid-1997, there had been a substantial volume of cases against various banks brought by foreign currency borrowers, a number of which had succeeded, these decisions being well-publicized. No evidence was placed before this Court of any other proceeding actually having been commenced by a foreign currency borrower against the ANZ Bank. In the absence of any such evidence, and having regard to the length of time which by 1997 had elapsed since the "mid-1980s", I would not be prepared to treat this unsubstantiated newspaper report as establishing that the present action was in any sense a test case, certainly not in the absence of evidence of any other proceedings having been commenced against the Bank.

[113]

The submission made by Mr. Douglas in these circumstances was that the learned judge had erred in confining the Bank's duty to being no more than to alert the appellants generally as to the risks of foreign currency loans. He submitted that the judge had adopted an approach to determining whether a duty of care existed which did not fully comprehend the appellants' claim in negligence. His Honour was said to have defined the content of the Bank's duty in a very specific way in addressing the question whether a duty of care and skill was owed by the Bank to the appellants. The argument continued that the learned judge gave paramountcy to the concept of assumption of responsibility by looking only subjectively as to what responsibility the Bank itself had assumed, whereas an objective test should have been applied to the question whether responsibility should be held by the court to have been assumed by the Bank to the appellants. Accordingly it was submitted that the tort of negligence is concerned with risks created for one person by reason of another's conduct, and that, once the relationship of proximity was properly identified, it was apparent that the Bank had not discharged its duty merely by adverting to the existence of a risk without any need to elaborate upon the nature of a risk; for example, the likelihood of the risk eventuating and the extent of the loss which would be suffered if the risk did eventuate. To draw support for this argument, Mr Douglas relied on Caltex Oil (Australia) Pty. Ltd. v. The Dredge 'Willemstad' [1976] HCA 65; (1976) 136 C.L.R. 529 per Stephen, J. at 558-576; San Sebastian Properties Pty. Ltd. v. The Minister [1986] HCA 68; (1986) 162 C.L.R. 340 at 354-355; Wardley Australia Ltd. v. Western Australia [1992] HCA 55; (1992) 175 C.L.R. 514 at 527; Hawkins v. Clayton Utz (1988) 164 C.L.R. 539, at 600-601; Bryan v. Maloney (1995) 182 C.L.R. 609, at 617-619; Hill v. Van Erp (1997) 188 C.L.R. 159 at 192-197; and Williams v. Natural Life Foods [1998] UKHL 17; [1998] 2 All E.R. 577, per Lord Steyn at 582. Mr Douglas submitted that in all the circumstances the Bank's obligation was not merely to warn the appellants, but to "exhort" them not to take the loan, and that the appropriate standard of care in the circumstances dictated that the Bank should not have marketed foreign currency loans at all to persons such as the appellants. He submitted that all the elements of assumption of risk, vulnerability, dependence, reliance and forseeability of harm were present to give rise to this duty of care and that the Bank's obligation was increased by virtue of the appellants having existing property rights which were at risk as a result of the Bank's conduct.

[144]

(a) This case does not concern a judge who holds his or her shares as a bare trustee, as Williams, J. did in the Bank Nationalization Case: see R. v. The Industrial Court [1966] Qd.R. 245 at pp.279-280. Nor may the holding itself be regarded as de minimis, so there is no occasion to consider the correctness of the tentative view expressed by the New Zealand Court of Appeal in Auckland Casino Ltd. v. Casino Control Authority [1995] 1 N.Z.L.R. 142 at p.148, assuming that that view applies to a minuscule shareholding rather than to a negligible interest in the case.

(b) This is an ordinary commercial dispute. If there is room for a presumption that a shareholding imports an interest in the litigation, there is room for that presumption to operate. It is not like a dispute between two shareholders as to which of them is to receive a dividend that the company is undoubtedly liable to pay to one or other of them.

(c) To hold that a judge who is the beneficial owner of 2,400 shares in a bank should automatically disqualify himself or herself accords with well established practice and causes little inconvenience and no injustice if the position becomes apparent at the outset. In the unusual case where it becomes apparent later, justice is served by balancing the competing considerations.

(d) The contrary view gives rise to undesirable questions of fact and degree on which reasonable minds may differ. In particular an appellate court may differ from a judicial officer's assessment as to whether the result of the case might affect the value of his or her shares. In the absence of exceptional circumstances, there will then have to be a retrial.

(e) As a general rule, it is the duty of a judicial officer to hear and determine the cases allocated to him or her by his or her head of jurisdiction. Subject to certain limited exceptions, a judge or magistrate should not accede to an unfounded disqualification application. It has not hitherto been the practice for a judge or magistrate who holds shares in one of the parties to refuse to disqualify himself or herself if objection is taken.

At a glance

Court

Decision date

Before

Source

Judgment (151 paragraphs)

Parties