Rubin v Bank of Queensland Ltd
[2010] QSC 175
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
- Rubin v Bank of Queensland Ltd[2010] QSC 175
- Add to List
Rubin v Bank of Queensland Ltd[2010] QSC 175
Rubin v Bank of Queensland Ltd[2010] QSC 175
SUPREME COURT OF QUEENSLAND
CITATION: | Rubin v Bank of Queensland Ltd [2010] QSC 175 |
PARTIES: | HELEN STONE RUBIN |
FILE NO: | BS 9120 of 2009 |
DIVISION: | Trial Division |
PROCEEDING: | Application |
ORIGINATING COURT: | Supreme Court of Queensland |
DELIVERED ON: | 25 May 2010 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 4 December 2009 |
JUDGE: | Daubney J |
ORDER: | 1.The defendant, by its appropriate officer or officers, file and serve an affidavit deposing to whether any documents: (a)within the scope of paragraphs 1(i), 1(iii), 1(iv), 1(v), 1(vi), 1(ix) of the application, or (b)comprising reports to ASIC pursuant to s 912D of the Corporations Act 2001 (Cth) that relate to the defendant’s Kirwan branch Storm customers in 2005, are in the possession or under the control of the defendant or the circumstances in which those documents cease to exist or passed out of the control of the defendant; 2.Paragraph 1(vii) of the application be dismissed; 3.The defendant shall disclose to the plaintiff any documents in its possession or under its control which record, comprise or evidence any: (a)compliance checks and reports; (b)internal and external audit reports; (c)operational risk reports; and (d)fraud/investigations/financial crime reports that relate to the defendant’s Kirwan branch Storm customers in 2005. 4.Paragraph 1(x) of the application be dismissed. 5.The defendant disclose to the plaintiff any document in its possession or under its control detailing the results of the credit risk review undertaken in or about September 2006 by Angela Morrison and/or Petar Bicanic, Manager, Credit Risk Review, Home and Consumer, in relation to the North Ward branch but only insofar as such documents refer to or relate to the defendant’s North Ward branch Storm customers managed by Mr Matthew Buchanan. 6.The defendant disclose to the plaintiff any documents in the possession or under the control of the defendant detailing the results of the credit risk review undertaken in or about February 2008 by Alan Butler or anyone reporting to him but only insofar as such documents refer to or relate to the defendant’s North Ward branch Storm customers managed by Mr Matthew Buchanan. 7.The defendant disclose to the plaintiff any documents in the possession or under the control of the defendant which: (a)detail the results of informal credit risk reviews conducted by Alan Butler or anyone reporting to him relating to the defendant’s Kirwan branch Storm customers in 2005; (b)detail the results of informal credit risk reviews conducted by Alan Butler or anyone reporting to him relating to the defendant’s North Ward branch Storm customers managed by Mr Matthew Buchanan between 2006 and 2008. 8.The defendant disclose to the plaintiff the report of Alan Butler, former head of portfolio management and financial crime, dated in or about 2006, but only insofar as such report refers to or relates to the defendant’s North Ward branch Storm customers managed by Mr Matthew Buchanan. 9.The defendant disclose to the plaintiff any report of Geoffrey O'Sullivan or anyone reporting to him regarding the credit risk review dated in or about January 2009 and all preceding drafts of that report, but only insofar as such report and such drafts refer to or relate to the defendant’s North Ward branch Storm customers managed by Mr Matthew Buchanan. 10.Paragraph 1(xvi) of the application be dismissed. 11.The costs of and incidental to this application be reserved. |
CATCHWORDS: | PROCEDURE – DISCOVERY AND INTERROGATORIES – DISCOVERY AND INSPECTION OF DOCUMENTS – DISCOVERY OF DOCUMENTS – ORDERS FOR FURTHER DISCOVERY – where there plaintiff has made an application for further disclosure by the defendant – where the plaintiff alleges that representations were made by the defendant bank regarding an investment strategy – where the plaintiff seeks disclosure of documents relating to another branch of the bank where she was not a customer – where the plaintiff claims these documents would prove or tend to prove the allegations in issue – whether these documents are directly relevant to an allegation in issue in the pleadings and should therefore be disclosed Uniform Civil Procedure Rules 1999 (Qld), r 211 DF Lyons Pty Ltd v Commonwealth Bank of Australia (1991) 28 FCR 597, applied Robson v REB Engineering Pty Ltd [1997] 2 Qd R 102, cited |
COUNSEL: | FG Forde for the plaintiff B Porter for the defendant |
SOLICITORS: | Slater & Gordon Lawyers for the plaintiff HWL Ebsworth Lawyers for the defendant |
- The plaintiff has applied for further disclosure by the defendant. It is necessary, in order to understand the issues on the present interlocutory dispute, to give some background to the matter. What follows, however, is not a comprehensive statement of the claims and allegations made by the plaintiff in the principal proceeding, but highlights a number of matters which will be relevant to the determination of this particular interlocutory dispute.
- The plaintiff has sued the defendant seeking:
(a)Damages for breach of contract;
(b)Damages for negligent misrepresentation;
(c)Damages and other relief under one or more of the Trade Practices Act 1974 (“TPA”), the Australian Securities and Investments Commissions Act 2001 (“ASIC Act”), the Corporations Act 2001 (“Corporations Act”) and the Fair Trading Act 1989 (Qld) (“FTA”);
(d)Equitable compensation or an account of profits.
- From mid-2005, the plaintiff made a number of investments through Storm Financial Ltd (“Storm”). As her case is pleaded, these investments involved, in essence, the plaintiff borrowing money to be used to acquire units in a fund (“Challenger Fund”), the performance of which was supposed to reflect the performance of the Australian stock market. She claims that this investment strategy promoted by Storm involved her acquiring these units in the Challenger Fund by borrowing from the defendant against the security of her home and also entering into a margin loan facility with Macquarie Bank Ltd (“Macquarie”), which itself was secured by a charge over those units which she had acquired with borrowed funds. On the basis of this strategy, the plaintiff:
(a)In mid-2005, borrowed $184,000 from the defendant, secured by a mortgage over her home;
(b)In mid-2005, borrowed $100,000 from Macquarie under a margin loan secured over the units she had acquired in the Challenger Fund;
(c)Between mid-2005 and late 2008, on eight occasions increased the amount borrowed from Macquarie to a total of $602,000, which was invested in the Challenger Fund;
(d)In July 2008, used $60,000 from her private savings to deposit with Macquarie as further security.
- From October 2008, margin calls were made in respect of the plaintiff’s investments in the Challenger Fund. As there were insufficient funds available to meet the margin calls, the plaintiff’s investments were sold and applied to meet the calls. Without descending into detail, the plaintiff, in broad terms, claims to have lost (in round figures):
(a)$184,000 (previously the value of the unencumbered equity in her home);
(b)$117,000 in interest and fees paid to the defendant and Macquarie;
(c)$50,000 in fees paid to Storm;
(d)Sundry other bank fees and other charges.
- The plaintiff’s case against the defendant includes allegations that a number of representations were made to her to the effect that the Storm investment strategy was sound, suitable for her needs, and would increase her wealth, and specifically that she should borrow from the defendant 80 per cent of the value of her home and give the defendant a mortgage to secure that loan. These representations are alleged to have been made on 29 June 2005 at the Kirwan branch of the defendant in a conversation between the plaintiff and the then manager of the Kirwan branch, Mr Matthew Buchanan.
- It is also alleged that at this time, i.e. June 2005, the defendant failed to warn the plaintiff “about the risks of investing in Storm in circumstances where there was a duty to disclose or alternatively where there was a reasonable expectation of disclosure”.[1] The plaintiff particularises a variety of facts and circumstances said to give rise to the duty to disclose or a reasonable expectation of disclosure.
- The plaintiff alleges that these representations were false, and that by making the false representations and not making the disclosures it should have, the defendant was both negligent and in breach of the consumer protection provisions of the various statutes referred to above, including s 52 of the TPA.
- The plaintiff also contends that there was a contract between her and the defendant under which the defendant was to provide financial or investment advisory services, and that there were express terms (by reason of the Banking Code, which was imported into the loan agreement which the plaintiff entered into with the defendant) that “before offering or giving [the plaintiff] a credit facility [the defendant] would exercise the care and skill of a diligent and prudent banker in selecting and applying its credit assessment methods and informing its opinion about [the plaintiff’s] ability to repay it”. The plaintiff alleges that the defendant breached these terms.
- The plaintiff’s statement of claim goes on to plead a variety of causes of action and factual assertions to found her various claims at law, under statute and in equity. It is not presently necessary to describe these further.
- It is, however, sufficient and important to note that the defendant has defended and joined issue on many of the factual allegations and all of the legal contentions. In short, the defendant contends that:
(a)It did not make the alleged representations and had no obligation to warn about the Storm risks;
(b)It did not breach its contractual obligations when it lent money to the plaintiff;
(c)Any loss suffered by the plaintiff was not caused by any breach by the defendant but by the plaintiff’s decision to “step up”, i.e. increase the amount she had borrowed under the margin loans.
- Issues arose between the parties concerning disclosure by the defendant. In short, the plaintiff contended that there were some 23 categories of documents which the defendant should have but had failed to disclose. Under directions made in the Supervised Case List, the parties corresponded with a view to clarifying these issues, but largely to no avail. The plaintiff then filed the present application, limited to seeking disclosure of some 16 classes of documents.
- When the matter came before me, I was able, with the considerable assistance of counsel and the benefit of their arguments, to determine many of the disclosure issues raised in the application. Counsel have agreed on orders to give effect to those determinations, and those orders will formally be made at the time this judgment is given. It was necessary, however, for me to give some further consideration to the plaintiff’s application for further disclosure of the following classes of documents (numbered as per the application):
“xi)Any document detailing the results of the credit risk review undertaken in or about September 2006 by Angela Morrison and/or Petar Bicanic, Manager, Credit Risk Review, Home and Consumer, in relation to the North Ward branch;
xii)Any documents detailing the results of the credit risk review undertaken in or about February 2008 by Alan Butler or anyone reporting to him, in relation to the North Ward branch;
xiii)Any documents detailing the results of informal credit risk reviews conducted by Alan Butler or anyone reporting to him relating to the Kirwan and North Ward branches between 2006 and 2008;
xiv)The report of Alan Butler, former Head of Portfolio Management and Financial Crime, dated in or about 2006 relating to the North Ward branch and correspondence attaching copies thereof to the relevant BOQ regional manager, state manager, head of retail banking, internal audit and head of risk; and
xv)Any report of Geoffrey O'Sullivan or anyone reporting to him regarding the Credit Risk Review dated in or about January 2009 and all preceding drafts of that report.
xvi)Internal documents, including but not limited to intranet records and newsletters relating to the performance of the North Ward Branch and its Owner Branch Managers, Messrs. Matthew Buchanan and Declan Carnes.”
- It should be noted that the only remaining dispute in respect of (xiii) relates to the North Ward branch, as a result of my determination at the time of the hearing that the defendant would have to provide further disclosure in relation to any documents detailing the results of informal credit risk reviews conducted by Alan Butler or anyone reporting to him relating to the Kirwan branch Storm customers in 2005.
- It is convenient to deal with categories (xi) – (xv) together, because the issues for determination are the same in each. There does not seem to be any dispute that the defendant has documents which fall within those classes. The defendant asserts, however, that the documents in those categories relate to the North Ward branch, not the Kirwan branch at which the plaintiff was a customer and where she had her dealings in 2005, and that documents relating to loans which originated in the North Ward branch are irrelevant to the plaintiff’s case. (Although category (xv) is not on its face limited to North Ward, the material before me discloses, and it was not in issue, that the documents referred to in (xv) related to the North Ward branch.)
- On the evidence before me, it appears that Mr Buchanan, with whom the plaintiff dealt, was manager of the Kirwan branch until September 2005, after which he moved to the North Ward branch where he was a part owner. It also appears (from evidence given by Mr Buchanan in public examinations conducted by the liquidators of Storm) that Mr Buchanan was the person at the North Ward branch who had the responsibility of dealing with Storm’s requests for loans to be made by the defendant through that branch, and that his involvement in this regard continued for some years. In his evidence in the public examination, he refers to this activity peaking in mid-2008.
- The plaintiff contends that the documents referred to in categories (xi) – (xv), particularly insofar as they relate to Mr Buchanan’s performance of his duties concerning the processing of Storm loan applications and his compliance with bank policies and procedures, are documents which would tend to prove or disprove the allegation that Mr Buchanan, and therefore the defendant, failed to discharge the duty of care and the contractual obligations which were owed to the plaintiff by reason of a failure to implement the bank’s own policies and procedures.
- It is argued that these documents, even though they relate to the North Ward branch and customers whose accounts were conducted at the North Ward branch, will nevertheless be circumstantial evidence which would tend to prove or disprove the plaintiff’s allegations, and should, therefore, be disclosed.
- The defendant submitted that, at best, the documents might be used by the plaintiff at trial as evidence of later conduct by Mr Buchanan at the North Ward branch which, on the plaintiff’s case, might show a tendency to comply or not comply with bank policies in approving loans. The defendant submitted that whilst tendency, or “similar fact”, evidence of this nature might be admissible in a civil trial, none of the reports or other documents in these categories would ultimately be admissible. The argument was, in effect, that what the bank, through Mr Buchanan, did with other customers in another branch does not tend to prove or disprove the question in this case, namely whether in respect of the plaintiff’s loan there was a failure to comply with bank policies. That question, so it was argued, can only be informed by an assessment of what a diligent and prudent banker would have done in the circumstance dealing with the plaintiff’s case. Allied to this argument were objections that these reports and other documents would not be admissible because they neither mention the plaintiff nor make any reference to the approval of her loan.
- Under UCPR r 211, a party is obliged to disclose each document which is “directly relevant to an allegation in issue in the pleadings”.
- When referring to the requirement that a document be “directly relevant”, Demack J in Robson v REB Engineering Pty Ltd[2] said (in reference to the cognate equivalent under the prior rules of the Supreme Court):[3]
“My opinion is that the word “directly” should not be taken to mean that which constitutes direct evidence as distinct from circumstantial evidence. Rather, “directly relevant” means something which tends to prove or disprove the allegation in issue.”
- The defendant’s objections to disclosing these documents are, it seems to me, directed to the admissibility of the documents in evidence rather than whether, for the purposes of disclosure, they are documents which tend to prove or disprove the allegations made in the statement of claim about the conduct of the defendant, through its manager Mr Buchanan. If the plaintiff, at trial, seeks to lead evidence of conduct by Mr Buchanan on other occasions as circumstantial evidence probative of a finding that he committed the breaches alleged against him in his dealings with this plaintiff, then the trial judge may be called on to make a determination as to the admissibility of that evidence at the trial. The trial judge will then, obviously, need to rule on the admissibility of that evidence, just as Gummow J (when his Honour was a judge of the Federal Court of Australia) was required to rule in the course of a case in which a bank customer sought to recover losses suffered as a consequence of entering into foreign currency loan agreements. During the course of the trial, the applicants sought to lead evidence in chief from three witnesses of conversations they had had with the loans officer in question in relation to other foreign currency loans. Gummow J was required to rule on whether this “similar fact” evidence should be received or excluded. Amongst other things, his Honour said:[4]
“The material which the applicants sought to introduce would have been circumstantial rather than direct evidence. For the applicants, it would serve two related functions. The veracity of the evidence of Mr Lyons was in dispute, and the applicants would rely upon the further material to corroborate or confirm the veracity of that evidence; secondly, the applicants would put it forward as circumstantial evidence from which one might infer the happening of the facts in issue, ie the making of certain representations to Mr Lyons by Mr Green: cf Hoch v The Queen (1988) 165 CLR 292 at 296, per Mason CJ, Wilson and Gaudron JJ.
We have it on the authority of Lord Wilberforce that in judging whether one fact is probative of another “experience plays as large a part as logic”; see Director of Public Prosecutions v Boardman [1975] AC 421 at 444. Further, it is a truism that relevance is not necessarily the passport to admission into evidence. As Toohey J emphasised in Harriman v The Queen (1989) 167 CLR 590 at 606-607, with reference to the hearsay rule as an obvious illustration, evidence relevant to a fact in issue may nevertheless be rendered inadmissible by one of the exclusionary rules. Thus, whilst evidence of a tendency or propensity to conduct of the kind alleged and in issue may be relevant and admissible as such, it is circumstantial evidence of a dangerous kind, particularly in a criminal case, because of the prejudice that it engenders; accordingly, “similar fact” evidence will be admitted only if of a sufficiently high degree of relevance to outweigh that prejudice: see Harriman v The Queen (supra), per Dawson J (at 597-602), per Toohey J (at 607).”
- His Honour then went on to review the range of authorities and texts which tended to support the notion that similar fact evidence is more readily received in civil cases than in criminal. His Honour also highlighted the primacy of the probative value or cogency of the evidence which is sought to be adduced, and also explained the necessity to enquire as to when “facts” are to be treated as “similar”, concluding:[5]
“If facts similar, in the wider understanding, to the fact in issue are irrelevant in the legal sense, they are inadmissible for that reason and there is no occasion to deal with the restrictions imposed by the “similar fact” doctrine. ... Facts similar, in the narrow meaning, to the fact in issue will be relevant thereto in the legal sense; it is only when this kind of relevance has been found that the question arises as to whether such similar facts, though relevant, are not admissible because of the operation of the exclusionary rule or discretion restricting the admissibility of “similar fact” evidence ...”
- It is unnecessary, and indeed undesirable, that I say anything further on this point in the context of the present case. It may be that there is an argument before the trial judge with respect to the admissibility of such evidence if it is sought to be led. But that is not the question which presently requires determination. The question is whether the documents in these categories are ones which tend to prove or disprove the allegations made by the plaintiff, which are put in issue by the defendant. It needs to be remembered in that regard that the plaintiff’s allegations are directed against the bank in the person of Mr Buchanan. It could not, therefore, be said that documents relating generally to the North Ward branch could be classed as documents which tend to prove or disprove allegations made against Mr Buchanan. By the same token, however, the fact that North Ward branch documents do not make reference either to the plaintiff or to the plaintiff’s loan does not mean that they are not documents which tend to prove or disprove the plaintiff’s allegations. Documents within these categories relating to the North Ward branch which go to Mr Buchanan’s conduct and performance in respect of Storm customers at that branch, however, would, it seems to me, be fairly categorized as documents which might tend to prove or disprove the allegations in issue in this proceeding.
- Accordingly, I consider it appropriate to order disclosure of documents in categories (xi) – (xv), but limited to those documents in the possession of the defendant which relate to Mr Buchanan’s management of North Ward branch Storm customers. This limitation is necessary, in my view, to ensure that the documents disclosed are directly relevant to the allegations in issue.
- That leaves, then, the documents referred to in category (xvi). This request for disclosure, it seems to me, is plainly over-reaching or “fishing”. There is simply no issue in the proceedings relating to the performance of the North Ward branch or its managers, Messrs Buchanan and Carnes. I would disallow this request for further disclosure.
- Accordingly, and having regard to the matters which were determined in the course of the hearing and on which counsel have settled forms of order, there will be the following orders:
- The defendant, by its appropriate officer or officers, file and serve an affidavit deposing to whether any documents:
(a)within the scope of paragraphs 1(i), 1(iii), 1(iv), 1(v), 1(vi), 1(ix) of the application, or
(b)comprising reports to ASIC pursuant to s 912D of the Corporations Act 2001 (Cth) that relate to the defendant’s Kirwan branch Storm customers in 2005,
are in the possession or under the control of the defendant or the circumstances in which those documents cease to exist or passed out of the control of the defendant;
- Paragraph 1(vii) of the application be dismissed;
- The defendant shall disclose to the plaintiff any documents in its possession or under its control which record, comprise or evidence any:
(a)compliance checks and reports;
(b)internal and external audit reports;
(c)operational risk reports; and
(d)fraud/investigations/financial crime reports
that relate to the defendant’s Kirwan branch Storm customers in 2005.
- Paragraph 1(x) of the application be dismissed.
- The defendant disclose to the plaintiff any document in its possession or under its control detailing the results of the credit risk review undertaken in or about September 2006 by Angela Morrison and/or Petar Bicanic, Manager, Credit Risk Review, Home and Consumer, in relation to the North Ward branch but only insofar as such documents refer to or relate to the defendant’s North Ward branch Storm customers managed by Mr Matthew Buchanan.
- The defendant disclose to the plaintiff any documents in the possession or under the control of the defendant detailing the results of the credit risk review undertaken in or about February 2008 by Alan Butler or anyone reporting to him but only insofar as such documents refer to or relate to the defendant’s North Ward branch Storm customers managed by Mr Matthew Buchanan.
- The defendant disclose to the plaintiff any documents in the possession or under the control of the defendant which:
(a)detail the results of informal credit risk reviews conducted by Alan Butler or anyone reporting to him relating to the defendant’s Kirwan branch Storm customers in 2005;
(b)detail the results of informal credit risk reviews conducted by Alan Butler or anyone reporting to him relating to the defendant’s North Ward branch Storm customers managed by Mr Matthew Buchanan between 2006 and 2008.
- The defendant disclose to the plaintiff the report of Alan Butler, former head of portfolio management and financial crime, dated in or about 2006, but only insofar as such report refers to or relates to the defendant’s North Ward branch Storm customers managed by Mr Matthew Buchanan.
- The defendant disclose to the plaintiff any report of Geoffrey O'Sullivan or anyone reporting to him regarding the credit risk review dated in or about January 2009 and all preceding drafts of that report, but only insofar as such report and such drafts refer to or relate to the defendant’s North Ward branch Storm customers managed by Mr Matthew Buchanan.
- Paragraph 1(xvi) of the application be dismissed.
- The costs of and incidental to this application be reserved.