The Quade Appeal on Decision vs CBA 3

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Given that I'm not a lawyer, this case has a strange status. The Quades went before the full bench of the Federal Court to seek
leave to appeal against a single judge Federal Court judgment against the Quades and in favour of the Commonwealth Bank.

The full bench in this three person  judgment unanimously found that the Quades had cause (non-discovery of documents, but in general, an inadequate judgment) and found in favour of the Quades right to appeal the judgment before a full bench.

From my understanding the Bank caved in and settled after this judgment to give the Quade's the right to appeal.

About three months later, the Dwyer case was argued and the same counsel for Commonwealth Bank of Australia, Mr. Sarkan, bullied and blustered his way to flim flam the judge while neither Mr. Dwyer's counsel nor the Judge took notice of the Quade decision nor of the new documentation revealed belatedly in the discovery process that had similarly been left "undiscovered" in the Dwyer case.

The quality of the decision in the Dwyer case was noticeably substandard.

12.  However, before I turn to an examination of the authorities bearing upon
that question, which is in itself an interesting and difficult question of
law, I should point out that there is yet another reason why the view taken in
David Securities is irrelevant to the present case. In David Securities, the
claim against the bank failed on the quite fundamental basis that the relevant
advice and information were supplied, not by the bank, but by an independent
accountant consulted by the disappointed borrowers, who was said to be "well
versed in the intricacies of foreign loans" (at 275), and whose duty it was
"to hold (their) hands" in relation to the borrowing "and generally to look
after the loan" (276). Obviously, a finding of fact that the borrowers were
not looking to the bank, for the relevant advice and information, precluded
any rational reliance by them on documents having only the effect of the new
documents. The primary ground on which the appellants in David Securities
failed in their case against the bank in negligence, on the appeal, was stated
by the court (at 292) as being the absence of any reliance or dependence on
the bank by the appellants or any assumption of responsibility on its part.
The bank had recommended they consult an accountant well versed in the
intricacies of foreign loans, and they had done so. It was made clear (at 293)
that the case under s. 52 of the Trade Practices Act failed on substantially
the same basis. The joint judgment (at 292-293) does add that the bank, if it
owed a relevant duty, was not in breach. But the question of breach was
inevitably tied up with the extent of the duty owed, and thus raised the same
considerations, as is made clear by the court's reference to the bank's
indication, not only that there were risks and that hedging was available at a
price, but also that "independent expert assistance should be sought".

13.  David Securities is thus quite unlike the other full court decisions,
Westpac Banking Corporation v. Spice (1990) ATPR 41-024 and Westpac Banking
Corporation v. Chiarabaglio (Sheppard, Neaves and Burchett JJ., unreported, 24
August 1990), and the decision of Rogers C.J. Comm D, of the Supreme Court of
New South Wales, in Mehta v. Commonwealth Bank of Australia (unreported, 27
June 1990), all of which were concerned with the consequences of a bank
undertaking to give some advice or information to a customer concerning the
suitability and incidents of a foreign currency loan. The evidence in
Chiarabaglio raised the very same questions of principle as are raised by the
evidence of Mr  Quade , the vital difference between the cases being that Mr
Chiarabaglio and his witnesses were accepted, whereas Mr  Quade  and his
witnesses, at a trial at which the new documents were unavailable, were not
accepted.

14.  The general rule concerning the basis on which a new trial may be
granted, upon an appellant's claim to have discovered fresh evidence, was
stated by Dixon J. in Orr v. Holmes (1948) 76 CLR 632 at 640:
    "If a trial has been regularly conducted and the
    party against whom the verdict has passed cannot
    complain that evidence has been wrongly received or
    rejected or that there has been a misdirection or
    that he has not been fully heard or has been taken
    by surprise or that the result is not warranted by
    the evidence, the successful party is not to be
    deprived of the verdict he has obtained except to
    fulfil an imperative demand of justice. The
    discovery of fresh evidence makes no such demand
    upon justice unless it is almost certain that, if
    the evidence had been available and had been
    adduced, an opposite result would have been reached
    and unless no reasonable diligence upon the part of
    the defeated party would have enabled him to procure
    the evidence."

15.  In the present case, there is of course no difficulty about the question
of diligence; the appellants required the respondent to make discovery of
documents, and it was entirely the respondent's default which rendered the
evidence unavailable to the appellants. The outstanding problem, in applying
the rule laid down in Orr v. Holmes, is the effect which the evidence would
have had if available, but there is an anterior question - does the rule, in
all its strictness, govern such a case as this? The rule is formulated in
general terms, and covers situations where third parties withhold, and
subsequently reveal, evidence; or where a party's original ignorance and
subsequent knowledge of evidence occurs through circumstances beyond anyone's
control. Here, the evidence was withheld from the appellants by the default of
the respondent in the performance of its obligation to comply with an order
relating to the discovery of documents. It seems to me the rule was not
formulated to cover such a case. Indeed, the opening words of the passage I
have cited from the judgment of Dixon J. in Orr v. Holmes may be wide enough
to exclude it. His Honour said: "If a trial has been regularly conducted ...
." (Similarly, in Council of the City of Greater Wollongong v. Cowan (1955) 93
CLR 435 at 444 Dixon C.J. put to one side (inter alia) cases of miscarriage
through "error" and cases of "surprise" and "malpractice".) It is only in the
narrowest sense that a trial can be said to have been regularly conducted when
a vital procedural step involved in the preparation for it has been stultified
by one party's default. Certainly, the proceeding of which the trial was the
culmination was not regularly conducted.

16.  I do not think it can be right to treat the rule, which necessarily sets
so stringent a standard for the ordinary cases to which it applies, as
applicable to the extraordinary case where a respondent has seriously failed
in the performance of its own obligation, and has thereby created the
appellant's difficulty. In my opinion, in such a case, the principle on which
the general rule is really founded - "interest reipublicae ut sit finis
litium" - must be modified by its collision with the equally important
principle that a party should not be permitted to mock the orders of the
court, which would surely be mocked if the opponent could be deprived
permanently of a fair prospect of success by a party's failure to comply with
the obligation of an order so important in the conduct of litigation as an
order for discovery. That the general rule is subject to exceptions was
suggested in Totterdell v. Nelson (Morling, Burchett and Lee JJ., unreported,
6 November 1990), and in the authorities there cited. To revert to the
language of Dixon J., in such a situation as this, an appellant is entitled to
claim there is an imperative demand of justice to be fulfilled. The case is
not different in character from a case of surprise, to which Dixon C.J.
expressly referred: there, the need of evidence is concealed by the other
party; here, the existence of the evidence was concealed.

17.  In the joint judgment of Dixon C.J., Fullagar, Kitto and Taylor JJ. in
McCann v. Parsons (1954) 93 CLR 418 at 430-431, the High Court recognised that
there are cases in which broad considerations of justice require the grant of
a new trial. Their Honours said, of the jurisdiction to yield to those
considerations:
    "But however it (the grant of a new trial) began it
    came to be regarded as a remedy used by the court in
    banc to relieve against a verdict when it would be
    unjust to allow it to stand as a determination of
    liability. The grounds upon which the court
    proceeds in granting the remedy have been settled by
    practice, but they have never become completely
    stereotyped; they have always possessed some
    flexibility and have been governed by the overriding
    purpose of reconciling the demands of justice with
    the policy in the public interest of bringing suits
    to a final end."

18.  Counsel cited no case which squarely raised the point I am presently
discussing. Counsel for the appellants did refer to Skone v. Skone (1971) 1
WLR 812, where vital documents had been withheld by a party, but there no
order for discovery had been obtained. (Cf. Council of the City of Greater
Wollongong v. Cowan (supra) at 445, 447.) A respondent's solicitor had stated
in writing that he had no documents to discover, and the House of Lords
treated this as an exculpation of the appellant from any charge of lack of
diligence in relation to the fresh evidence he sought to adduce. That, of
course, is a different question. Furthermore, the test for the reception of
fresh evidence is, in any case, not so stringent in England as it is in
Australia; it is sufficient that the evidence "would probably have an
important influence on the result of the case, though it need not be decisive"
(as Denning L.J. put it in a passage cited by Lord Hodson in Skone v. Skone at
815).

19.  In my opinion, if the appellants fail in their other grounds of appeal,
they are entitled to have the decision against them set aside, and to be
granted a new trial, on the ground of fresh evidence, being evidence which
ought to have been made available to them, but was not, pursuant to the bank's
obligation to make proper discovery of documents. As the trial has been
aborted by virtue of the default of the bank, for which the appellants are in
no way responsible, I think they should have their costs of the trial and of
the appeal. It is important that this court should not shrink from insisting
on the seriousness of a party's duty to comply fully with an order for
discovery.

20.  As to the other twenty-odd grounds of appeal, I can be brief. The
appellants' case on these grounds was dressed up in a number of different
ways, but, however it was put, it almost always came down to an attack on the
trial judge's conclusions of fact. Without the fresh evidence, this attack
cannot succeed; for the findings were well open on the evidence presented at
the hearing. The full court, which has not heard or seen the witnesses, is in
no position, in a case of this kind, to reconsider those findings for itself:
cf. Abalos v. Australian Postal Commission (1990) 65 ALJR 11 at 16; Westpac
Banking Corporation v. Spice (supra).

21.  A point of law was, indeed, raised by an argument that a foreign currency
loan is inherently dangerous, so as to bring into existence a special duty.
But this argument is refuted by David Securities (supra, at 291).

22.  There was some discussion concerning what was or ought to have been
gleaned by the appellants from certain graphs produced by the bank. If the
trial judge had accepted the account given by the appellants' witnesses of
what the bank officers said, I do not think anything in the graphs could have
compelled a different conclusion; for the appellants, if they studied them,
might easily have misunderstood material of that kind. When experts spoke,
they would, indeed, have been well advised to listen rather than attempt their
own interpretation. But the trial judge did not accept their account. The
graphs cannot resurrect the claim in the absence of any finding that they were
read in a particular sense favourable to the appellants. Nor is there any
other basis on which the appellants can be held to have been misled, so long
as their version of what they were told and understood remains rejected. In my
opinion, the conclusions of fact upon which the case was dismissed are
impregnable, except at a new trial at which the fresh evidence is adduced.

23.  However, the motion to adduce fresh evidence upon the appeal should be
allowed with costs, and the orders I have already foreshadowed should be made.
JUDGE3
Introduction
  Thomas  Quade  and members of his immediate family (the appellants) brought
proceedings in this Court against the Commonwealth Bank of Australia (the
respondent) claiming damages for breach of section 52 of the Trade Practices
Act, of the Contracts Review Act 1980 (NSW), and of its common law duty not to
give negligent advice. A breach of a special duty not to subject the
appellants to the "dangerous product" of a foreign currency loan was also
suggested. The claim arose from significant financial losses suffered by the
appellants following a Swiss franc loan to them by the respondent made in
January 1985. The appellants conceded that if they failed on one of the three
bases, they would also fail on the other two. A judge of the Court (Morling J)
dismissed the appellants' claims. They now appeal from that judgment.
Facts

2.  In recent times, this Court has dealt with several cases involving foreign
currency loans. In each of them, the particular facts regarding what was said
and done by both the customer and the bank have been crucial in determining
the outcome. This case is no exception. The facts here are lengthy and have
been set out in detail by Morling J. As his Honour's findings of fact are not
specifically challenged on appeal, it is not necessary to set them out in
detail again. It will suffice to summarise that the appellants were farmers
from the West Wyalong area of New South Wales who were borrowing the
equivalent in Swiss francs of $A600,000 for the purpose of purchasing a
property adjoining their farm. Part of the loan was to cover interest
liabilities, currency fluctuations and other contingencies. The appellants had
no prior experience of borrowing sums of this magnitude, especially not in
foreign currency. Their commercial and entrepreneurial skills were
substantially limited to their pastoral activities.

3.  Thomas  Quade  was the only one of the appellants who communicated with the
respondent. On two occasions he spoke to the manager of the respondent's West
Wyalong branch, Neville Plumb, seeking information as to overseas borrowing.
At one of these meetings Mr  Quade  spoke on the telephone to someone from head
office. At the branch manager's suggestion, Mr  Quade  went to Sydney in early
October 1984 and spoke to two of the bank's foreign currency experts at head
office. The branch manager also presented a document entitled "Foreign
Currency Borrowing" to Mr  Quade  for his information. It was apparently
custom-made but appears to have been largely taken from a standard letter
probably prepared elsewhere in the bank than at the West Wyalong branch. It is
not dated but was given to Mr  Quade  just before his trip to Sydney. Relevant
parts of this document (the Advice) include the following:
    Many Australian corporates, including a number of
    clients of the CTB (mainly exporters with foreign
    currency income) actively utilise the foreign
    currency market as an alternative to Australian
    Dollar borrowings.
    They are usually encouraged to do so when -
    *    there are lending constraints within Australia
         and their borrowing demands cannot be met; and
    *    they can arrange foreign currency loans at
        lower all-up costs than Australia dollar loans.
....
    In addition to the normal security considerations,
    due recognition needs to be given by you to
    potential "foreign currency exchange risk" attached
    to offshore loans. Because the loan is denominated
    in a foreign currency, all repayments of principal
    and interest need to be effected in that currency.
    If you have no offshore income in the borrowed
    foreign currency you are exposed to fluctuations in
    exchange rates between the Australian and foreign
    currency (this is commonly known as exchange risk).
    Consequently there is always the risk that the
    currency concerned will be stronger against the
    Australian dollar at the time of repayment than at
    the time of drawdown. As discussed, in such
    circumstances you will need more Australian dollars
    than were initially borrowed to purchase the
    required foreign currency amount to repay the loan.
    The currency exchange risk can be hedged for capital
    transactions, through the facilities of the CTB.
    Hedge contracts may be taken out at any time during
    the currency of the loan.
    By entering into a foreign currency hedge contract
    you can determine the amount of Australian dollars
    you will eventually required to repay the borrowing.
    In this way you eliminate/quantify your foreign
    exchange risk and the CTB is in a better position to
    assess more accurately the adequacy of the security
    offered.
    In some instances such as yours borrowers do not
    wish to hedge their foreign exchange risk. While
    the CTB has no basic objection to providing foreign
    currency loans on an unhedged basis, it is most
    important that you fully understand the potential
    risks involved in borrowing in a foreign currency on
    an unhedged basis. In particular you must
    understand that you will be required to make a cash
    adjustment (parity adjustment) at the end of each
    interest period to meet any adverse exchange rate
    movements; thereby ensuring that the value of the
    loan is brought back to the approved AUD amount.
....
    I advise you to seek advice on taxation
    considerations as there are several aspects of
    foreign currency loans (eg interest, hedging,
    exchange losses/gains) which are assessed
    differently for taxation purposes and these could
    have a bearing on whether or not the proposal is
    viable for the customer concerned.
    This withholding tax could make the total interest
    cost significantly dearer than an Australian funded
    loan. Assuming the following:-
                                        $ Amount
    Interest Rate of borrowing 6.00%    30,000
    Usage and Facility Fee     1.75%    8,750
    Withholding Tax 10% of
    Interest Amount            0.60%     3,000
                               8.35%    $41,750
    Plus any exchange fluctuations
    Please have a good Accountant check my figures
    because I am not sure what other tax implications
    there may be.

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