Venn & Anor v Bendigo Bank Limited (No 5)
[2008] QDC 11
To print this judgment please return to the case and click on the PDF icon
next to the
case name. For court use, a full PDF copy is required or preferred.
Exit Distraction Free Reading Mode
Please Note: You are about to print a copy of the onscreen
version of
this judgment. For court use, a full PDF copy of the judgment is required or preferred. Please
return to
the case for PDF printing options.
- Unreported Judgment
- Venn & Anor v Bendigo Bank Limited (No 5)[2008] QDC 11
- Add to List
Venn & Anor v Bendigo Bank Limited (No 5)[2008] QDC 11
Venn & Anor v Bendigo Bank Limited (No 5)[2008] QDC 11
DISTRICT COURT OF QUEENSLAND
CITATION: | Venn & Anor v Bendigo Bank Limited (No 5) [2008] QDC 011 |
PARTIES: | STUART VENN and JUDITH VENN (TRUSTEES FOR THE S & J VENN FAMILY TRUST) Plaintiffs V BENDIGO BANK LIMITED ABN 1106804918 Defendant |
FILE NO/S: | D387 of 2004 |
DIVISION: | Civil |
PROCEEDING: | Claim |
ORIGINATING COURT: | District Court of Queensland, Maroochydore |
DELIVERED ON: | 14 February 2008 |
DELIVERED AT: | Brisbane |
HEARING DATE: | Maroochydore on 22, 23, 24 and 25 October 2007; further post-trial applications heard at Brisbane on 5 and 30 November 2007; written submissions received on various dates up to 12 December 2007 |
JUDGE: | Alan Wilson SC, DCJ |
ORDER: |
|
CATCHWORDS: | NEGLIGENCE – DUTY OF CARE – ECONOMIC LOSS – FORESEEABILITY – VULNERABILITY TO HARM AND LOSS – PROXIMITY – whether investors in building development via unit trusts have sustainable claims against bank lending money to developer company – whether any loss actually sustained by any party – whether plaintiffs suffered loss and, if so, whether recoverable in tort from defendant Cases considered: Caltex Oil (Australia) Pty Ltd v The Dredge Willemstad (1976) 136 CLR 529 Dublin Port and Docks Board v Bank of Ireland [1976] IR 118 Fortuna Seafoods Pty Ltd v The Ship ‘Eternal Wind’ [2005] QCA 405 Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465 Lidden v Composite Buyers Ltd (1996) 67 FCR 560National Westminster Bank Ltd v Barclays Bank International Ltd [1975] QB 654 Perre v Apand (1999) 198 CLR 180 Royal Brunei Airlines v Tan [1995] 2 AC 378 Thomas v Darcy [2005] 1 Qd R 666 Venn v Bendigo Bank [2006] QDC 319 Venn v Bendigo Bank Limited (No. 2) [2007] QDC 266 Venn v Bendigo Bank Limited (No. 3) [2007] QDC 325 Venn v Bendigo Bank Limited (No. 4) [2007] QDC 332 |
COUNSEL: | T Macklin, directly instructed, for the Plaintiffs D P de Jersey for the Defendant |
SOLICITORS: | Plaintiffs self-represented Middleton Solicitors for Defendant |
- [1]This case has its genesis in the construction of a home units building in Bowen, in the period 2001 – 2002. The plaintiffs are husband and wife. In and after 1998 they became involved with others (including, in particular, a Mr Terry Stone) in a joint venture to develop the units, which was to be effected through several corporate entities: Rosebay Properties Pty Ltd, which purchased the land upon which the development would take place; Rosebay Developments Pty Ltd, which was to undertake the development; and, Oakpride Staff Pty Ltd which would do the actual building work.
- [2]Each of the Rosebay companies was the trustee of a unit trust, and the plaintiffs had an interest in some of those units as a result of a contribution of capital to the trusts made via their own family trust. The male plaintiff, Mr Venn, is an experienced building project manager and was at material times one of the managing directors (with Mr Stone) of each Rosebay company – positions he held until the latter part of 2002. Mr and Mrs Venn were also the directors of, and shareholders in, Oakpride Staff.
- [3]The plaintiffs’ final pleading was an amended Statement of Claim filed by leave on 17 February 2006. A lengthy document of 38 pages, it yet contains a simple prayer for relief: that the defendant pay the plaintiffs $100,416.40 as ‘… damages for economic loss for negligence’[1]. The plaintiffs sue for this sum as trustees of the Venn Family Trust which, they allege, lost that sum in its investments in the Rosebay unit trusts. The essentially simple nature of the claim is captured in the opening written submissions their Counsel delivered after the trial:
- The Plaintiffs, who bring their claim as trustees of the S & J Venn Family Trust, claim $100,416.40 for damages in negligence for pure economic loss, together with interest…
- The amount claimed is the Plaintiffs’ provable investments in a joint venture property development by Rose Bay, Bowen. The investment has been lost by reason of breaches of duty owed to them by the Defendant bank. (emphasis added)
- [4]The plaintiffs’ original action involved other defendants: Aeroploy Pty Ltd which was, with the consent of all parties, released by discontinuance when the trial commenced; and, the Deputy Commissioner for Taxation who was, also, once a party but was not represented at trial and against whom no relief was sought.
- [5]For reasons that follow the plaintiffs’ claim fails. Their alleged losses did not occur in circumstances where the defendant Bank actually owed any duty of care to them. The manner in which their case was conducted means it is necessary, however, to say more. In particular, because their pleading, assertions made on their behalves during the trial, and submissions delivered for them after the trial, raised diffuse allegations about a variety of circumstances said to involve bad behaviour on the part of the defendant Bank, it is also appropriate to record that none of these allegations were persuasive that the plaintiffs might otherwise have had, even if properly pleaded, some other entitlement to lawful relief or a remedy against the Bank.
- [6]What the Venns claim their family trust did not receive from the Bowen project was some profits they expected from a speculative property development. There is simply no evidence, however, from which it might be concluded that the Bank had any control over, or responsibility for, the circumstances leading to that loss. Indeed, the evidence does not establish that any compensable (or actual) loss was suffered by anyone as the product, directly or indirectly, of any conduct on the part of the Bank.
- [7]While it is unnecessary to speculate about the true cause of the Venns’ alleged losses, there are grounds for suspecting it has its roots in the urgency with which the loan from the Bank was arranged and, also, the absence of a proper focus by the plaintiffs on the terms of the loan and the payments which occurred under it. As to the first matter, Mr Venn’s oral evidence indicates the loan from the defendant was organised at a time when the building, housing the apartments, was already up to the fourth level, the parties had committed about $750,000, and the financier at the time had refused more funds. As he said, money was needed, Christmas was coming up and everyone from the managing directors through to the workers was ‘… desperate … there’s mouths to be fed’[2].
- [8]As I understood the balance of his evidence, he allegedly believed the Bank had committed itself to advance sufficient funds to complete the building (whatever the final cost). As the weight of evidence (including, in particular, evidence from Mr Venn himself) convincingly shows, however, he had no reasonable basis for believing that, at any time.
- [9]Rather, as the evidence also persuasively showed, the loan was always limited to $2.6 million. Before any funds were available to pay for building work, there would be deductions from this amount necessary to pay out an existing mortgage over the land on which the units were being built, and some of the defendant Bank’s outgoings. The loan terms meant the developers would have to inject additional funds over and above the loan to complete the development. In other words, it was plain from the outset that the loan was insufficient to finish the building work.
- [10]In fact, as an affidavit sworn by Mr Venn in other proceedings between Rose Bay Properties and Oakpride Staff shows[3], the joint venture and relations between Mr Venn and Mr Stone seem to have collapsed after July 2002 in a way that relevantly, among other things, involved allegations that Rose Bay Developments had underpaid Oakpride for building work. That allegation, if true, appears to go a very long way toward explaining why the Venns’ Family Trust did not receive all the money the Venns thought it should. But no action has, it seems, been brought by them or their trust against any Rosebay entity and, somehow, responsibility for those events is sought to be traced back to the Bank in the present action.
- [11]The plaintiffs’ action also confronts an immediately apparent legal difficulty – that it involves a claim for pure economic loss. Despite these practical and legal hurdles no effort was spared to press a case on their behalves, and those efforts persisted even after the trial finished. Before trial, the plaintiffs successfully resisted the Bank’s application to strike out the final Statement of Claim[4]. The matter went to a full hearing in a four day trial at Maroochydore in October 2007. After the trial finished directions were given for the exchange of written submissions – a process interrupted, however, by two further post-trial proceedings brought by the plaintiffs. The first, heard on 5 November 2007, involved applications by the plaintiffs to make significant amendments to their pleading and pursue other, associated relief. It was refused, with Reasons, on 9 November 2007[5]. Nothing daunted the plaintiffs then brought another application on 30 November which also sought a wide variety of relief but, ultimately, primarily involved an application for further disclosure. It, too, was refused with indemnity costs[6].
- [12]There has also been a welter of post-trial material from the plaintiffs and their legal advisor: the second application was accompanied by four volumes of papers, documents and submissions in ring-bound folders; and, the plaintiffs’ subsequent written submissions involved five large ring-bound folders[7].
- [13]The evidence unequivocally shows that the defendant Bank loaned a fixed sum of money, $2.6 million, to Rosebay Developments in return for a mortgage over the property at Bowen upon which that company would develop home units; that Mr Venn was a managing director of that company, and Rosebay Properties and he provided a personal guarantee; that the development work was undertaken by Rosebay Developments and Oakpride Staff; that after the development was completed the loan was repaid in full from the proceeds of sales of units in it; and that the guarantee provided by Mr Venn was not called upon, and the Bank later released the securities which had been provided by Rosebay Developments for the loan.
- [14]As will shortly be seen, neither of the plaintiffs was a customer of the defendant Bank in any sense connected with these dealings nor the loss and damage claimed by them. Nevertheless, their pleading alleges that a duty of care arose on the Bank’s part in respect of these transactions. These allegations are pursued through constructs called, in the plaintiffs’ Statement of Claim, a ‘construction loan facility’[8] comprised of various accounts called the ‘facility accounts’[9]. These accounts were, however, opened in the name of Rosebay Developments which was plainly the Bank’s only ‘customer’ in any sense immediately relevant to these transactions, and any associated duties of care.
- [15]To succeed the plaintiffs have to establish, then, that the Bank may yet owe a duty of care in the conduct of its customers’ accounts to operate those accounts in such a manner that a non-customer will not suffer loss and damage. Framed in this way, the Bank owed a duty to conduct the accounts of Rosebay Developments in a manner which meant Mr and Mrs Venn, as trustees of the Venn Family Trust, did not lose the trust’s funds which had been placed in a speculative property investment. (They must also, of course, establish all the other elements of an action in tort, like causation.)
- [16]The cases show that for persuasive reasons a duty of care between a bank and a non-customer will not ordinarily, in the context of a customer’s account, be implied. While it is trite that banks owe duties to their customers, the law has been careful to decline or, at least, heavily circumscribe any extension of that duty to non-customers. The sound basis for that stance can be seen quite vividly here: in paragraph 68.12 of their Statement of Claim the plaintiffs’ allege the defendant ought to have acted solely in accordance with their written instructions rather than those of the Bank’s actual customer, Rosebay Developments. The difficulties to which an obligation of that kind would give rise, both legal and practical, are obvious.
- [17]It is unsurprising, then, that the plaintiffs were unable to point to any authority in support of the things said to support their cause of action, and the claims they make. Indeed, the cases are to the contrary. It was held in National Westminster Bank Ltd v Barclays Bank International Ltd [1975] QB 654 that a bank does not, in deciding whether to honour a customer’s cheque, owe a duty of care to the payee of the cheque. Nor does a bank owe a duty to the payee to pay a customer’s cheques in order of presentation: Dublin Port and Docks Board v Bank of Ireland [1976] IR 118. Indeed, even when the bank customer is a trust there is no direct duty of care to the beneficiaries of that trust: Royal Brunei Airlines v Tan [1995] 2 AC 378 (at 391).
- [18]In his written submissions Mr de Jersey of Counsel, for the Bank, helpfully identified the ways in which the plaintiffs have attempted to overcome this problem. First, they plead that they fall within the definition of ‘group member’ in some of the Bank documents. The term as it is used in those documents is limited, however, to those who grant security to the Bank in the context of some form of transaction involving it. The plaintiffs did not, as trustees of the Venn Family Trust, grant a security interest of that kind and, indeed, the female plaintiff was not a party to any form of security. Even if one or both of the plaintiffs qualified, however, the definitions do not elevate group members to a position in which they are acknowledged as customers of the Bank. Rosebay Developments – a security provider and borrower – plainly qualifies but that does not, without more, avail the Venns.
- [19]In the alternative it is said for the plaintiffs that Mr Venn was a ‘personal banking customer’ of the Bank[10] and he and Mrs Venn were the holders of a debit card issued by it[11]. But these accounts have no connection to the sum claimed by the plaintiffs or the facts, matters and circumstances said to give rise to it. They were not used for any purpose relating to the development and do not, then, advance the plaintiffs’ case.
- [20]It was also alleged that Mrs Venn opened a private account with the Bank in her own name[12] but the evidence simply failed to establish that – and again, in any event, there is no allegation of any connection between this alleged account, and the transactions which the plaintiffs seek to impugn. The same conclusion applies to yet another account involving Mr Venn which was not, it seems, ever fully opened and, certainly, was never used for any relevant transaction.
- [21]In the further alternative it is alleged that there are a number of other matters which are said to indicate a relationship between the plaintiffs and the Bank, supporting the implication of a duty of care. Appearing at various places in the Statement of Claim, these include assertions that Mr Venn negotiated the loan, and dealt with the Bank virtually on a daily basis; that he gave a written personal guarantee; that the letter of offer of finance which led to the loan was handed to him personally; that he represented Rosebay Developments and Rosebay Properties and on their behalves executed documents which the Bank required; and that the plaintiffs, as trustees of the Venn Family Trust, owned units in the Rosebay Developments unit trust and the Rosebay Properties unit trust.
- [22]It was accepted in Caltex Oil (Australia) Pty Ltd v The Dredge Willemstad (1976) 136 CLR 529 that there is no general rule that one person owes another a duty to take care not to cause reasonably foreseeable financial harm, because the consequences of such a rule would be intolerable. That is not to say, of course, that there are no circumstances in which the law will recognise a duty of care so as to permit recovery of nothing more than financial loss[13]. The reasons for the rule were comprehensively explained by Gleeson CJ in Perre v Apand (1999) 198 CLR 180, at 192 – 193.
- [23]As the judgments in Perre v Apand also confirmed, there are longstanding policy considerations which militate against extending the imposition of a duty of care to circumstances like the kind raised here, having their roots in a concern that to broaden the parameters too far would unduly impair legitimate commercial activity[14]. All of the additional matters raised by the plaintiffs come up hard, it seems to me, against these matters of policy and the principles which underpin them. The claim is for economic loss, and nothing more. Mr Venn’s actual dealings with the Bank simply arose through his position as a director of the Rosebay companies. They did not occur in any way because of his involvement with his family trust, or the investments it made. The last step in the pathway the Venns seek to plot towards, the point at which a duty of care may be discerned, falls, then, beyond the parameters of the relevant principles. It is, in effect, a step too far.
- [24]There is of course an additional difficulty with Mrs Venn, who did not have any of these day-to-day dealings with the development, the Rosebay companies or the Bank. She was a director of Oakpride Staff and a trustee of the Venn Family Trust, but that is the apparent extent of her connection with the relevant transactions.
- [25]Yet another difficulty confronts the plaintiffs: Perre v Apand is also authority for the proposition that vulnerability to harm is an essential ingredient of the cause of action they seek to set up. The principle is expressed in terms that, unless these plaintiffs are vulnerable to the loss and damage complained of, their claim must fail. Put another way, if the plaintiffs could reasonably have taken available steps to protect themselves from the loss and damage they claim to have suffered, their action will not succeed.
- [26]Whatever vulnerability (i.e., vulnerability or exposure to economic loss) might have attached to Mr and Mrs Venn arose from their own involvement in the transactions surrounding the building of the apartment block, and the financing of that development. The evidence about those matters does not assist them. It established, rather, that the information and knowledge Mr Venn had available to him left him in truth far from vulnerable and, indeed, either well informed about and alert to the very dealings the plaintiffs now purport to attack or, at least, in a position where it was readily within his power to put himself in that position – and, in either event, in that position from a time very early in the dealings involving the Rosebay interests and the Bank.
- [27]These aspects of the evidence, which concern Mr Venn’s conduct in respect of progress payments made from the loan funds, commence with his acknowledgment in an affidavit sworn on 20 February 2003[15] that firstly, he was aware the Bank had not agreed to lend sufficient funds for all costs associated with the development; secondly there would be some shortfall; and, thirdly, he and other interested parties would have to put in additional funds. As the evidence also persuasively shows, Mr Venn as the active project manager was either aware of the balance funds available under the loan at any given time, the purposes for which payments had been made from it, and the amount and nature of those payments, or could easily find out, and should, in his own interests and those of the plaintiffs, have done so.
- [28]These elements of the transaction history arise in a context where Mr Venn was, again, the managing director of both Rosebay companies and a director of Oakpride Staff; and, he was far from being a newcomer to matters of this kind. He had worked in a variety of property developments since 1973 and had extensive experience in project management of large building projects. That experience included dealings with banks and other financiers. On this particular project he was on-site daily and took overall responsibility.
- [29]Although (as my previous judgments in this matter have sometimes noted) it is difficult at times to discern the nature and elements of the plaintiffs’ case, it does seem to be central to their arguments on this question of vulnerability that they were not given access to the Bank’s accounts for the purpose of the development, and could not know or satisfy themselves about what had been or ought to have been paid to Oakpride Staff or otherwise disbursed. The obvious difficulty with the argument is that the plaintiffs were joint managing directors of Oakpride and must be taken to have always had the means of knowledge and, indeed, actual knowledge of the time, and amounts, of payments made to that company. They must have had Oakpride Staff’s bank account statements. They could see how much had been paid to it, from and after the first progress payment.
- [30]Other allegations are made about that first payment and it needs to be considered in some further detail, but the question whether or not the plaintiffs attract the necessary level of vulnerability to place themselves under the umbrella of a duty of care must, in light of all of these facts and circumstances, be answered in the negative.
- [31](In passing, it is of interest that both plaintiffs conceded that their investment hinged upon a good continuing relationship with their joint venturers (in particular, Mr Stone) and once that relationship broke down – as it did – things fell apart. It is not an unreasonable inference that the final cause of the plaintiffs’ failure to receive their hoped-for profits was, also, that break down.)
- [32]The next difficulty the plaintiffs face is that the weight of evidence points strongly to the conclusion that if a duty of care ever, in fact, arose the Bank did not in any event act in a way which breached it. The Bank officer who arranged the loan, Mr Kennett, gave lengthy evidence about how the accounts were conducted. While his memory was on some points, unsurprisingly, less than perfect there was nothing to suggest that that part of his evidence showing the accounts were conducted in accordance with the terms of the facility between the Bank and Rosebay Developments was wrong.
- [33]Mr Freney, the Bank’s regional manager later conducted an investigation into the facility, and Mr Venn’s complaints. He was a careful, impressive witness who, again, gave persuasive evidence that the facility was conducted in a way that accorded with its terms, with the result that Mr Venn’s complaints were seen to be without substance. That conclusion was at least partly corroborated by another Bank witness, Ms Carter, who looked after the winding up of Oakpride Staff. She concluded there were no outstanding matters between the Bank and the liquidator at the end of the winding up, and that the Bank had appropriately accounted for all moneys due to the company.
- [34]It seemed to be an important element of the plaintiffs’ allegations that the Bank had appropriated to itself, at an early stage and from the loan funds, an amount which precisely equalled what would have been the equity required to have been provided by Rosebay Developments, in addition to the amount of the bank loan, to complete the construction of the units according to the building contract extant at the time the loan was arranged[16]. The proposition was put to the Bank’s various witnesses on a hypothetical basis and, as the evidence eventually stood, it never achieved a more palpable state. It is not specifically alleged in the plaintiffs’ Statement of Claim and was, in that sense, surprising. The coincidence, if it arose (and that was not proven) was said to have some sinister implications which were not, however, immediately apparent. Nor was it clear how any implication might support some cause of action available to the plaintiffs.
- [35]Ultimately the proposition did not, in any event, require any rebuttal evidence because it seems there is an innocent, mathematical explanation for it: that the disbursements made by the Bank (and, in any view, authorised under the loan facility) to pay out the prior mortgage to the National Bank, and make disbursements for other purposes, had been incorporated into the way in which the quantum of the loan had originally been calculated. It meant that the difference between Oakpride’s first request for a progress payment and the amount it actually received from the first advance under the loan did nothing more than reflect that feature of the loan facility.
- [36]Allegations about this aspect of the transaction can be seen in paragraph 68 of the pleading, which contains particulars of the Bank’s alleged breaches of the duties said to be owed to the plaintiffs. The particular allegations depend, however, upon the establishment of a number of terms of the loan facility alleged earlier in the pleading – and those terms simply cannot be located or identified in any of the loan documents. In those circumstances a finding that the alleged terms were not, in truth, actual terms of the loan facility is unavoidable.
- [37]Mr Venn gave evidence, nevertheless, that the origin of these terms was his ‘knowledge’ but the source of that knowledge or the information said to underpin it simply cannot be located. It appears to rest on other conversations and documents involving Mr Venn, and Mr Kennett. The latter says, however, that in early December 2001 he met with Mr Venn and Mr Stone and explained the first progress payment would be less than the builder might claim because of the amount which had to be paid to the National Australia Bank to remove its mortgage over the title; and, that the amount of the loan excluded any GST components of the construction or other costs. That was in truth what occurred from the first draw down under the loan facility so the builder was paid its claim less the amount of the existing indebtedness to the National Bank, and some of the defendant’s legal fees.
- [38]Disbursement in this fashion was approved by Rosebay Developments and, on the face of the loan facility, was in accord with its terms (which, unsurprisingly, provided that the defendant Bank required a first registered mortgage over the property, and its legal and other costs paid, before any advances would be made).
- [39]Significantly, too, Mr Venn also approved subsequent progress payments and had the opportunity to review each of them including the amount of each draw down, relevant valuation certificates and other pertinent documents, and information about where each draw down was to be paid before he authorised the payments.
- [40]Mr Venn denied any meeting of the kind alleged by Mr Kennett but there was ample evidence to confirm that it did in fact occur or that, if it did not, the information which Mr Kennett says was communicated at the meeting was in truth within Mr Venn’s knowledge before the time the first draw down was disbursed. In the affidavit sworn by Mr Venn on 20 February 2003[17] in an action between Rosebay Properties and Oakpride Staff, the following passage (mentioned earlier, in other contexts) appears:
- During discussions with the Bendigo Bank in November 2001 it was realised that the bank would not provide funding for all costs associated with the development including design changes, portable long service leave, interest charges on the facility and GST and other developer’s costs. (emphasis added)
- [41]Further, in the original Statement of Claim, drawn and settled by Mr Venn himself, he pleaded that the finance provided by the Bank was for ‘part payment’ only of the construction costs of the development. He was, of course, aware of and approved the various progress payments over some months in 2002 in circumstances where his position in each of the Rosebay companies and, even more significantly, Oakpride Staff make it simply inconceivable that he was unaware the latter had not received all of the proceeds of the first draw down.
- [42]Mr Kennett’s evidence about the alleged meeting in late 2001 and his credit were attacked (and alleged to be ‘recent invention’) but, it is appropriate to note, he has not been an employee of the defendant Bank since April 2003 and there was no evidence suggesting he has any present or continuing obligations to his former employer or is anything other, now, than a disinterested witness. He presented as a credible witness and in light of the matters just traversed I accept his evidence about the meeting.
- [43]Even if this evidentiary question was resolved in the plaintiffs’ favour it remains impossible, in all the prevailing circumstances, to see how they can establish any reliance on their part upon the Bank in a way which would found a duty of care. They were always fully informed, or otherwise knew, of the manner in which the facility accounts would be conducted, and could see after the first draw down was disbursed what moneys had been transmitted to Oakpride Staff. The manner in which the first draw down was paid accords (or, at worst, is not inconsistent) with the terms of the loan facility to Rosebay. It is inconceivable that the plaintiffs would not, in those circumstances, have made some early complaint, and taken prompt action, if there was in truth anything amiss with the first draw down.
- [44]The next difficulty in the plaintiffs’ case is that their pleading does not articulate a comprehensible basis upon which any party has suffered any compensable loss and damage; or, how the alleged loss might be something for which the Bank is responsible. In paragraph 43 of the Statement of Claim the plaintiffs say they expected they would come to enjoy, through their units in the two Rosebay trusts, some part of the money available after completion of the project and the release of the mortgages. It is also alleged their loss and damage flows from money which would have come through the Rosebay companies, when the joint venture exercise was completed.
- [45]The general air of imprecision and unreality which surrounds these allegations can be illustrated by reiterating the primary, indubitable facts surrounding the relevant transactions; the loan was for a fixed sum to Rosebay Developments; when the development was completed that loan was repaid in full; Mr Venn was a director of the companies undertaking the development and had control over it and was plainly, then, a major instrument in responsibility for its success or failure; and the development did not fail but, as Mrs Venn said, was a ‘huge success’[18] and ‘… made over a million dollars profit’. There is no allegation of a contract between the defendant and the plaintiffs, or of any representations by the former which might found a right to losses, if sustained. There is simply, on any view, no discernable connection between the alleged loss and the transactions, involving the Bank, referred to in the plaintiffs’ case.
- [46]For the plaintiffs’ action, as pleaded, to succeed it is also essential they establish that, if any loss or damage was actually suffered, it was by the Rosebay companies. So much has previously been recognised by his Honour Judge Dodds in an earlier judgment when the defendant sought to strike out the plaintiffs’ Statement of Claim[19]. Notwithstanding the clear view (and warning) expressed on that occasion, the plaintiffs did nothing at trial to bridge the evidentiary gap between the Rosebay companies, the Bank, and themselves.
- [47]Nor was any attempt made to plead or prove any causal connection between the alleged losses of the Rosebay companies and any conduct of the Bank. The breaches mentioned earlier and pleaded at paragraph 68 of the Statement of Claim were, again, the subject of a succinct summary from Dodds DCJ in his earlier judgment. His Honour said that it was difficult, if not impossible, to understand from the pleading how the breaches of duty articulated in it were causative of or linked to a shortfall in moneys which might have flowed to the Rosebay companies, but did not do so. Notwithstanding this plain warning the pleading was never amended.
- [48]Ultimately of course as the earlier discussion has shown the fundamental problem for the plaintiffs is that even if all of these hurdles could be overcome, all that is reached is a point at which it is impossible to conclude other than that the plaintiffs and, with respect, Mr Venn in particular, simply failed to keep abreast of the payments made under the loan facility or, possibly, building costs; and, to keep in mind that the loan funds would, very likely, be insufficient to pay all of the claims of Oakpride Staff. But to conclude, now, that the relevant transactions were ones in which the plaintiffs were, in effect, innocent dupes simply defies all common sense. Mr Venn was at the heart of all of the relevant transactions. He knew or ought to have known what money would be needed to complete the development and, from an early date, that the amount of the bank advance would not be sufficient for that purpose (and never could have been).
- [49]The plaintiffs’ claim is not, as Mr de Jersey submitted, even an arguable case at the frontier of the law pertaining to actions for damages for pure economic loss. It falls outside any legal principle relating to the recovery of damages in tort for losses of that kind. There can be nothing novel for the plaintiffs in these conclusions; the possibility they would arise was made abundantly clear in the proceedings before, and the judgment of, Dodds DCJ.
- [50]The five volumes of submissions provided by Counsel for the plaintiffs after the trial contain much in the way of allegations of fraud, dishonesty, and such matters as the wrongful withholding of documents, against the defendant. Some involve reiterations of what arose in the course of the two post-trial applications the plaintiffs brought and in that sense have already been dealt with, and dismissed. As was remarked in Reasons delivered in respect of those applications, I was not always confident of fully comprehending precisely what was being alleged by the plaintiffs or on their behalves. But ultimately, in light of the plaintiffs’ pleading, all of these submissions and allegations can form no part of their case. Again, in their final submissions the plaintiffs revive a previous application to amend their Statement of Claim but that also was, I am satisfied, addressed in the post-trial applications and dismissed.
- [51]There are, nevertheless, some aspects of those submissions which must be remarked. The first is that the plaintiffs appear, in them, to accept that they were not customers of the Bank at any time or in any relevant capacity. Secondly, their submissions are silent about the Bank’s claim that the plaintiffs never, as trustees of the Venn Family Trust, granted any relevant security interest to the Bank. Rather, the highest the plaintiffs’ case is put is in an assertion that the plaintiffs were ‘… known to the Bank as being contributors to, and interested in, the ‘client contribution’ … and as owners of, and interested in, each of the Rosebay trusts and the Builder’. (Elsewhere it is asserted the plaintiffs were positioned ‘… very closely to the defendant Bank’.)
- [52]The first difficulty with all these allegations is that they do not refer to any evidence presented at trial; and the second, that they ignore the requirement in Perre v Apand that the plaintiffs must, as an essential ingredient of the cause of action they pursue, establish they were in a position of vulnerability to harm. Foreseeability alone is not, the authorities show, of critical or even great importance[20].
- [53]When it is remembered that Mr Venn’s evidence points conclusively to an understanding on his part that the Bank would not be providing funding for all costs associated with the development; that he was able to see the quantum and nature of each progress payment made by the Bank; and, that he was actively involved in (and indeed, at the heart of) all relevant transactions, it is difficult to see how he could ever establish vulnerability of the requisite kind, or to the necessary degree. In any event, the plaintiffs’ submissions simply fail to address these matters.
- [54]The submissions also contain a variety of allegations of what are said to be breaches of the terms of the loan facility, many of which do not appear in the plaintiffs’ pleading. It is said, for example, that the Bank acted ‘capriciously and unfairly’ but in each instance the conduct said to attract that description is either not pleaded, or not founded in any evidence – or, simply, does not give rise to a cause of action of the kind set up by the plaintiffs (and is most unlikely to form a successful basis for some other cause).
- [55]It is appropriate, too, to observe that the plaintiffs concede in their submissions that if it was the case that they had been told, before the first draw down, that part of the finance provided by the Bank would be paid to discharge the National Australia Bank mortgage debt, then their claim must fail – and, of course, Mr Venn’s affidavit sworn in February 2003 is not inconsistent with just that event.
- [56]Finally, the plaintiffs’ submissions only very tersely address the apparent problems that it has been commenced in the name of the wrong parties (as Dodds DCJ implied) or that no duty of care can arise. The plaintiffs purport to meet these difficulties by reference to two cases, Thomas v Darcy [2005] 1 Qd R 666 and Lidden v Composite Buyers Ltd (1996) 67 FCR 560.
- [57]Neither is, however, supportive of the plaintiffs’ contention that, if a duty of care arises, it might extend to them in the circumstances prevailing here. In Thomas v Darcy it was held that a shareholder in a company is not entitled to claim or recover damages comprising a diminution in the value of the shareholding reflecting loss of or injury to the assets of the company, as to which the company itself is the only proper plaintiff. In Lidden there may be some faint suggestion of support for the unusual course inherent in the plaintiffs’ case, but only in what that judgment acknowledges as ‘exceptional circumstances’. Nothing of that kind can be said to arise here: this is simply a claim for damages for negligence.
- [58]The plaintiffs’ claim fails, for these reasons. I will hear further submissions about costs.
Footnotes
[1]During the trial the plaintiffs’ agreed there would be a small reduction in the quantum of this claim: Exhibit 1; T 25.40-.56
[2]T 57
[3]Exhibit 2
[4]Venn v Bendigo Bank [2006] QDC 319
[5]Venn & Anor v Bendigo Bank Limited (No. 2) [2007] QDC 266
[6]Venn & Anor v Bendigo Bank Limited (No. 3) [2007] QDC 325; Venn & Anor v Bendigo Bank Limited (No. 4) [2007] QDC 332
[7]Called variously ‘Outline of Submissions on behalf of the plaintiffs’, ‘Conclusion of plaintiffs’ Submissions’, ‘Issues on the Pleadings’, ‘Analysis and References to transcript of proceedings’, and ‘Authorities and sundry materials on Submissions’.
[8]Statement of Claim, paragraph 67
[9]Statement of Claim, paragraph 35
[10]Statement of Claim, paragraph 50.7
[11]Statement of Claim, paragraph 50.8
[12]Statement of Claim, paragraph 5
[13]Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465
[14]Perre v Apand (supra) per Gaudron J at 200
[15]Exhibit 2, paragraph 10
[16]T 290-291
[17]Exhibit 2
[18]T 79.42
[19]Venn v Bendigo Bank [2006] QDC 319 at [22] and [23] per Dodds DCJ
[20]Fortuna Seafoods Pty Ltd v The Ship ‘Eternal Wind’ [2005] QCA 405 per McMurdo P at [20]