25.  For example, on 7 November 1985 the respondent's Chief General Manager
wrote to the managers of all branches:
    It is of concern that customers may be entering
    these arrangements without a full appreciation of
    the risks involved.

26.  A "Group Treasury Memorandum" of 4 October 1985 contains the stark
admission of:
    ... the lack of experience in foreign exchange
    markets of the vast majority of our staff involved
    in dealing with applications from customers and the
    level of reliance placed on the bank's advice by a
    large number of F/C/L applicants.

27.  Three months later, absolutely no progress could be reported. A Mr
Hamilton from Sydney Head Office wrote on 6 February 1986:
    ... it is now apparent that many of our staff do not
    have an adequate understanding of the risks involved
    and were not well placed to advise potential F/C/L
    borrowers.

28.  The use of the word "now" signifies or infers that throughout or for the
majority of its 1982-6 campaign to sell foreign currency loans, the bank had
apparently been content to allow its clients to encumber or put at serious
risk their assets, perhaps their life savings, as security for the bank
without the slightest sense of urgency about remedying this most
unsatisfactory approach to its obligations under the Trade Practices Act and
the general law. In terms of risk, the emphasis was heavily on the bank's
exposure and profits rather than the clients'. The clients' capacities to fund
the consequences of adverse currency movements other than by the sale of basic
assets were not even mentioned.

29.  Although new procedures were eventually introduced, long after the
appellants' loan was in place, to assist bank staff to advise clients
adequately and to help borrowers to manage the loans they undertook, it should
be noted that an internal memorandum of 8 October 1984, about the time Mr
 Quade  was given the Advice, had stated:
    It is ... planned to conduct as soon as practical
    (subject to resources) short term seminars on
    foreign currency related lending techniques.

30.  The words in parentheses are instructive. They convey a disturbing
tendency to prefer administrative economies to statutory and legal obligations
to provide competent advice and information to clients.

31.  The evidence before Morling J. concerning the complexities of dealing in
foreign currency, supplemented by the 'G' documents on their face, shows that
the risks to which the bank was subjecting its customers for these loans
required considerably more education and training than could have been
embraced in "short term seminars". Moreover, perhaps due to "resources" being
scarce or applied to other activities, there is little evidence that even
these procedures had been implemented and, if implemented, that they had had
the intended results, at least sufficiently so in the case of the officers of
the respondent who dealt with Mr  Quade .

32.  In summary, then, the 'G' documents appear to me to give a radically
different underpinning and content to the evidence at the trial concerning the
state of knowledge of this area of borrowing bot at West Wylong and in Sydney,
and the respondent's responsibilities under section 52 and under the general
law. If nothing else, the absence of the `G' documents at the trial appears to
have robbed the appellants of the opportunity to cross-examine bank officers
about all these matters and more, backed as the cross examiner would have been
by materials which essentially represented admissions of matters which at the
actual trial had had to be largely the subject of speculation, implication and
inference. They also deprived the appellants of what would have been a
powerful criticism of the bank's reluctance to admit its failures in this
regard and to call evidence on these subjects at the trial. It is difficult to
overstate the forensic and evidentiary effects of this change of atmosphere,
even at a trial before a judge alone.
The case of David Securities

33.  A Full Court of this Court (Lockhart, Beaumont, Gummow JJ) in David
Securities Pty Ltd and Ors v Commonwealth Bank of Australia (1990) 93 ALR 271
dealt with a similar issue. It too was a case regarding claims made in
relation to foreign currency loan transactions, where the same respondent also
failed to produce the 'G' documents at the time of the trial. The bundle of
'G' documents in this case is significantly larger than in David Securities
but a few of the documents are the same.

34.  The Full Court in that case held that the presence of the 'G' documents
on appeal did not warrant the overturning of the first instance decision or
the granting of a new trial. Their Honours stated (at 293):
    Although the trial judge did not have them, we are
    not persuaded that these documents, of themselves,
    or taken in conjunction with the evidence before his
    Honour, establish that the bank should be held
    liable for the losses suffered by the appellants.

35.  The appellants submitted that this case is distinguishable from David
Securities not only because there are many more documents in the 'G' bundle
before the Court in this instance but also because the facts in the two cases
are very different. Particularly, in David Securities according to the facts
found at trial, the respondent did not assume any responsibility to advise nor
did the appellants rely on anything said by the respondent. In fact those
appellants were specifically advised to seek outside expert advice, and the
bank expressly declined to advise them at all.

36.  In the present case by comparison, Morling J agreed with the appellants'
submission that this is a case in which the bank assumed the responsibility of
explaining foreign currency borrowing (p  35 of the judgment). The appellants
suggested that the Full Court in David Securities discounted the effect of the
'G' documents not because their content had no bearing on the advice the
respondent should have provided, but because the respondent in that case did
not have a duty to advise.

37.  The appellants also sought to distinguish David Securities on the basis
that the decision turned in part on the rejection of a submission that the
obligation in tort to advise of and protect from 'dangerous products' extended
to the provision of financial services and that a general caution of risks is
not sufficient to discharge the duty of care. The appellants submitted that
the Full Court was wrong in so deciding, but in my opinion, because of the
views expressed by that Court, this Court should not entertain this issue. In
any event it is not necessary to do so because a sufficient duty for the
present case is established by virtue of Morling J's finding that the
respondent assumed responsibility to advise and knew of the appellants'
reliance on whatever it said.

38.  Furthermore, unlike in David Securities, these appellants were, to the
bank's knowledge as their bankers for many years, financially unsophisticated.
The appellants submitted that this fact is particularly relevant to the
question of what level of advice was required of the respondent. They argue
that the obligation of the respondent in this case was to give accurate and
complete advice, whereas in the light of the 'G' documents and to the contrary
of Morling J's finding, it in fact gave incomplete and misleading advice.

39.  The thrust of the appellants' submission was that on the basis of these
factual differences, the duty of care in this case should be more onerously
stated than in David Securities, where it was said (at 293):
    The most that the bank could reasonably be expected
    to do was to indicate to the appellants, in a
    general way, that there were risks, that hedging was
    available at a price and that independent expert
    assistance should be sought.

40.  It is significant in this respect that Morling J was not able to find
that the appellants were told that independent expert assistance should be
sought. His Honour held that the appellants "were aware of the risk" but the
appellants submitted that the questions to be determined are whether the
respondent directly misled or gave negligent advice to the appellants, or did
so indirectly by not directing them to an independent adviser, and how its
failings in these regards increased or manifested the true risk.

41.  It is also useful to compare the views expressed in David Securities with
that of another Full Court in relation to similar documentation of another
bank expressed by Sheppard J in Westpac Banking Corporation v Spice 1990 ATPR
41-024 at p 51,394:
    A reading of these various letters and memoranda and
    of some others written within the same period
    discloses a tension between the desire of the Bank
    to take advantage of what it saw as profitable
    business and its concern that borrowers might find
    themselves in financial difficulty, particularly if
    their foreign exchange loans were not adequately
    monitored and managed. There are also to be found
    in some of the documents indications that the bank
    thought that the form of its warnings of risk to
    potential borrowers in foreign currencies should be
    made clearer and more emphatic than had been the
    case especially as many of the borrowers were quite
    unsophisticated.

42.  See also the observations of Foster J at first instance in that case at
page 73 (unreported 1 September 1989). In Chiarabaglio v Westpac Banking
Corporation 1989 ATPR 40-971, the same Judge had held that the duty was
heavier at the threshold of entry upon a foreign currency loan than later,
when for example the issue of taking out a short-term hedge arose. In general,
I agree with respect with the views of yet another Full Court in National
Australia Bank Ltd v Nobile (1988) ATPR 40-856 per Davies J at pp 49,239 and
49,244, Neaves J. at p 49,251 and Spender J at p 49,253 that the best way for
a bank to avoid liability was to suggest, perhaps 'require' or 'insist on'
might be more appropriate alternative formulations for this case, obtaining
independent advice. See also, in the context of a banker's duty to a
guarantor, Commercial Bank of Australia v Amadio (1983) 151 CLR 447 per Gibbs
C.J. at 455 and Mason J at 462 and 464-467.
The negligent advice

43.  The appellants suggested the following incomplete and misleading advice:
    . the respondent told the appellants that they could reduce
    the risks inherent in foreign currency loans by 'hedging'
    but it did not tell them how they could do this nor that,
    if it was to be done effectively, it would require
    constant monitoring of exchange rates by an expert in
    foreign currency
    . the respondent advised the appellants to see an
    accountant about the taxation implications of a foreign
    currency loan, implying that no independent advice
    regarding any other aspect of the proposed loan was
    necessary. In fact the respondent's advice should have
    been that the appellants seek and obtain comprehensive
    advice from an expert on all aspects of such a
    transaction, and consult this expert frequently during
    the course of the loan
    . the respondent told the appellants that it would indicate
    which of four types of loans was suitable to their
    financial situation, but instead of doing so, offered a
    foreign currency loan. This implied that such a loan was
    suitable and appropriate to the appellants' needs
    . the respondent failed to tell the appellants that a
    foreign currency loan was potentially ruinous and
    effectively impossible for people like them to undertake
    because of their inability to monitor the loan regularly
    . a document headed "Example of Exchange Rate Fluctuations"
    which reviewed the dollar's movements over several past
    six monthly periods, was misleading, despite Justice
    Morling's conclusion that it correctly pointed to the
    nature of the risk in foreign currency loans. The
    appellants submitted that his Honour failed to look at
    the document as a whole and that properly construed, the
    document suggests that over the long term any risk was minimal.

44.  It is now well established that silence, that is the failure to advise on
a significant matter when the task of advising has been embraced and
undertaken, or there is a duty to advise, may demonstrate a breach of section
52 in the right circumstances: see Rhone-Poulenc Agrochimie SA and Anor v VIM
Chemical Services Pty Ltd and Anor (1986) 12 FCR 477, 68 ALR 77 per Bowen CJ
at FCR 489, ALR 85; Davkot Pty Ltd v Custom Credit Corporation, NSW Supreme
Court, Wood J. unreported 10 May 1988 at p  118; Mehta and Anor v Commonwealth
Bank of Australia NSW Supreme Court, Rogers C.J. Comm D unreported 27 June
1990 and the cases cited by his Honour at pp 46-48. If the appellants'
submissions are correct, the bank's failure to advise the appellants
comprehensively would fall for consideration under the principles developed in
those cases.
The respondent's submissions - discussion

45.  The respondent said that Morling J's conclusion that the appellants were
aware of the risks represented a correct basis for his Honour's conclusion
that there was no breach of section 52 or of the common law duty of care,
because it is implicit in his Honour's reasoning that the respondent informed
the appellants of the nature and extent of the risk. The respondent made the
following submissions in regard to the alleged illustrations of misleading
conduct:
    . The respondent did not merely make an offer of a foreign
    currency loan. Instead it told the appellants that they
    could borrow on four different bases and it was up to
    them to decide which one they wanted to use.

46.  As a single bland if a little simplistic submission, this probably ought
to be accepted.
    . At the trial the appellants said that they had not relied
    on the document headed "Example of Exchange Rate
    Fluctuations". They can therefore not now submit that
    the document is misleading and that they did rely on it.
    In addition, Justice Morling did not misconstrue the
    document as the appellants allege, but correctly found
    that the document is not misleading. The fact that it
    only dealt with six month periods is not misleading. In
    fact the appellants' own expert stated that six months is
    probably the most relevant period.

47.  Likewise, taken in isolation, I believe that this is generally a correct
assertion, although currency activities and movements in some of the earlier
periods pre-dated deregulation and were thus of no relevance to this problem.
As well, the unfamiliarity of the Australian dollar to flotation and
international currency movements and other factors affecting rates of exchange
from time to time needed to be considered in determining the value and weight
of the document.
    . The advice or comment that the appellants should see
    their accountant regarding tax implications is not
    misleading. To tell them to enquire about tax does not
    mean that the consultation with the accountant only had
    to be about tax. In fact the respondent used the word
    "particularly" and not the word "only".
    . The appellants did not, in fact, see their accountant
    about the tax implications. In these circumstances it
    should be concluded that they would not have seen him/her
    about the general question of whether to take the foreign
    currency loan even if advice to do so had been given.
    Therefore, there is no causative link between any failure
    to advise the appellants to seek general advice and the
    loss suffered by virtue of their entry into the foreign
    currency loan.

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