Re Clive Richard Warnock and Josephine Elizabeth Warnock v Australia and New Zealand Banking Group Limited [1989] FCA 1 (13 January 1989)

FEDERAL COURT OF AUSTRALIA

Re: CLIVE RICHARD WARNOCK and JOSEPHINE ELIZABETH WARNOCK
And: AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED
No. G 322 of 1987
Trade Practices Act
(1989) 5 ANZ Insurance Cases 60-897

COURT

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Burchett J.(1)

CATCHWORDS

Trade Practices Act - Misleading conduct - Implied warranty that services will be rendered with due care and skill - Statement by manager of bank acting as agent for insurance company that medical condition need not be disclosed in proposal for insurance against sickness - Damages - Gates v. City Mutual Life Assurance Society Limited [1986] HCA 3; 68 FLR 101; 160 CLR 1 distinguished Evidence of availability of desired insurance peculiarly within knowledge of the respondent bank which had made an agency contract with the insurance company and was promoting its policies - Appropriate relief - Whether cross-claim upon separate debt fell within accrued jurisdiction - Whether cross-vesting legislation could be applied, cross-claim having been filed before that legislation came into effect.

Trade Practices Act 1974, ss.52, 74, 87

Federal Court of Australia Act 1976

Jurisdiction of Courts (Cross-vesting) Act 1987

Jurisdiction of Courts (Cross-vesting) Act 1987 (N.S.W.)

HEARING

SYDNEY
13:1:1989

Counsel for the Applicants: Mr N.F. Francey

Solicitors for the Applicants: Slade Manwaring & Co.

Counsel for the Respondent: Mr P.M. Wood

Solicitors for the Respondent: Greaves Wannan & Williams

ORDER

The applicants bring in short minutes of orders for relief in conformity with the reasons of the court upon a date to be fixed.

The cross-claimant bring in short minutes of orders to be made in respect of the amount due under the overdraft referred to in the cross-claim.

Costs reserved for consideration upon the bringing in of short minutes.

NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

DECISION

On 24 July 1986 the first applicant (to whom I shall refer as Mr. Warnock) visited the Cessnock branch of his bank, the respondent Australia and New Zealand Banking Group Limited, where he saw the manager, Mr. Buttery. Mr. Warnock was involved, in partnership with the second applicant, his wife, in a business known as Rothbury Textiles. He and Mrs. Warnock wished to refinance certain existing obligations to the bank. As it happened, the time was opportune, since the bank was engaged in a promotional campaign designed to boost a particular category of lending, insured personal loans. In fact, the manager of the Cessnock branch subsequently won an achievement award for his efforts in this campaign, his prize being a free trip to Western Australia to see the America's Cup Challenge. One of the insured personal loans in his tally was arranged that day with Mr. Warnock in liquidation of the pre-existing indebtedness. The amount of the loan was $39,600, of which $942-60 was applied as a premium for insurance, to the details of which I shall now turn.

2. Insurance against the contingencies of accident or illness (and also insurance in respect of unemployment and death), in order to cover the monthly instalments due under the loan agreement, was an integral part of the loan arrangements featured in the bank's promotional campaign. It was not insurance with any insurer, but a specific insurance policy to be taken out with Western Underwriters Insurance Limited, by mutual arrangement between the bank and the company. A document entitled "'CHALLENGE '87' - INSURED PERSONAL LOANS STRATEGY PAPER", issued by the bank's marketing department in June 1986, contained the statement:

"In addition to boosting PLA (i.e. personal
loan application) volumes we see this
campaign as an excellent opportunity to
increase valuable commission income from the
existing Consumer Credit Insurance scheme
(CCI) and have set a target of 4000 new CCI
policies which will yield $217,000 in
commission to the ANZ (as at the end of May
ANZ Commission was $147,000 on 2062
policies)."

Under the heading "PRODUCTS", the strategy paper stated:

"Personal loans with Consumer Credit Insurance
(CCI) (are) underwritten by Western
Underwriters Insurance Ltd. (Personal loans
$2,500 - $99,000)."

Under the heading "OBJECTIVES", it was stated:

"...
5. Motivate Branch management and staff to
actively sell personal loans with CCI on an
ongoing basis.
6. Hone staff selling skills for future
campaigns. In selling insurance with our
loans new skills are being drawn out and will
be relevant in an increasingly aggressive
market."

Under the heading "STRATEGY", it was stated:

"...
CCI cover rates offered by ANZ (through
Western Underwriters) are very competitive
and are well below existing Westpac rates.
CCI is formally up to $50,000 cover however
WU have informed us that they are prepared to
exceed this as and when specifically
required.
All Area Managers/Branch Managers will be
receive (sic) a CCI folder with policies etc.
including a selling skills kit on how to
handle objections to CCI. (attached)".
(Emphases added.)

Under the heading "ENTRY PROCEDURES", it was stated:

"1. Entry forms are to be filled in at the
time of completion of the personal loan
application. CCI policy is also to be
completed at that time. Premium may be
financed in the loan or paid separately
at time of drawdown in terms of current
normal operating procedures.
2. Entry forms are to be validated by the
interviewing officer who is to complete
the 'Bank use only' panel.
3. Completed entry forms are to be
despatched weekly via the internal
courier system to Marketing Department
NSW Administration in a sealed envelope
addressed ... ." (Emphasis added.)

The strategy paper also referred to the setting of sales targets. In that context, it contained the following:

"The State target is to write $60M in new
loans over the period of the campaign and
4,000 CCI policies."

3. A number of the statements made in the strategy paper suggest that the bank was not merely promoting the insurance policies, but was actually writing them, utilizing forms provided by the insurance company.

4. In the case of Mr. Warnock, a printed form of policy was filled out by Mr. Buttery, who obtained Mr. Warnock's signature, as applicant for the policy, to a declaration included in the form. The form was headed "CONSUMER CREDIT INSURANCE". Under that heading appeared a statement: "Underwritten By Western Underwriters Insurance Limited." The policy commenced:

"WHEREAS the Insured has entered into a
finance agreement with the ANZ BANK details
of which are set out in the Schedule AND
WHEREAS the Insured desires to insure the due
repayment of such finance agreement.
It is hereby agreed that if during the Period
of Insurance any of the selected Events
Numbered 1 to 4 set out below happen to the
Insured, Western Underwriters Insurance Ltd.
(hereinafter called 'the Company') will pay
the ANZ Bank the compensation referred to
after each of the nominated Events. This
policy of insurance is subject to the terms
and conditions and exclusions as set herein
or hereover."

The details completed by Mr. Buttery appear to include the policy number, which has been written in in a similar hand to that appearing on the document generally. Also shown are the premium of $942-60, contract date 24 July 1986, period of insurance 84 months, monthly instalment (this relates to the loan agreement) $834-20, and amount of loan $39,600. The insured is named as "Clive Richard Warnock." The events insured include the following:

"EVENT 2 - ILLNESS:
Total and continued disablement from engaging
in or attending to profitable employment of
any kind caused solely and directly and
independently of any other cause by any
illness which shall require the person
insured to be regularly treated by a legally
qualified medical practitioner approved by
the Company so long as such continued
disablement is certified by such medical
practitioner."

5. The policy includes a proviso specifying that the total amount of compensation shall be the equivalent of the amount of the repayments due under the loan during the period of insurance "but in any event not to be greater than the sum of FIFTY THOUSAND DOLLARS ($50,000)." This proviso is of more than academic interest, since the total of 84 monthly instalments of $834-20 is $70,072-80, and thus well exceeds the limit of the policy. There does not appear to be any suggestion in the evidence that Mr. Warnock was warned about the inadequacy of the coverage provided by the policy, but no claim was made by the applicants based on this aspect of the matter.

6. The policy contains an explicit note, as follows:

"NOTICE: The Insurance (Agents and Brokers)
Act 1984 requires that you be advised that in
arranging this Insurance the ANZ Bank is
acting under the authority of and as agent
for Western Underwriters Insurance Ltd."

This may be important in relation to the applicants' claim of collateral warranty, and generally.

7. What has led to the litigation is the completion of the declaration under the circumstances which existed at the time. The declaration reads as follows:

"DECLARATION
I Declare That I Am:
i) Actively employed and regularly
perforing (sic) all the usual duties of
a full time gainful occupation.
ii) In good health and unaware of any
illness, disease or physical defect
which could result in a claim.
iii) And a copy of this policy has been
handed to me prior to entering into
this contract of Insurance. This
Policy includes the Duty of Disclosure
which I have read and fully
understand."

This declaration was signed by Mr. Warnock immediately at its foot, in the space provided for the signature of the applicant, and is dated 24 July 1986, the date of the policy.

8. The fact was that Mr. Warnock had, since 1981, been undergoing regular treatment at three monthly intervals for the serious progressive condition of rheumatoid arthritis. He had been given large doses of appropriate drugs, including immuno-suppressants. Although for some months up to 24 July 1986 his disease had been relatively quiescent, it remained an ongoing medical problem, of which Mr. Warnock was aware.

9. Mr. Warnock's evidence is that Mr. Buttery told him the bank could arrange sickness and accident insurance for him, and then filled out the policy document in his presence. This account is confirmed by an entry in the manager's diary: "manager applied Western Underwriters CCI Insurance to the loan ... ." In the course of the interview, Mr. Buttery left the room for a few minutes during which Mr. Warnock looked at the declaration, although he did not read right through the document. When Mr. Buttery came back into the room, Mr. Warnock "told him I could not sign it because I had rheumatoid arthritis." However, Mr. Buttery responded that "that only pertained to life cover." He asked some questions about the effect of the condition upon Mr. Warnock, being given truthful replies, and then "told (Mr. Warnock) not to worry about it and he would fix it and just sign it." Mr. Warnock then signed the form. Mr. Warnock impressed me as an honest witness who was doing his best to recall what was said, and I accept his evidence. I also conclude on the basis of his evidence that, if he had been told a higher premium was required to cover disabilities contributed to by his "pre-existing condition" of rheumatoid arthritis, he would have taken the insurance and paid the higher premium.

10. A different version was given by Mr. Buttery in evidence, though he conceded that Mr. Warnock made express reference, in relation to the signing of the declaration, to his rheumatoid arthritic condition. Indeed, according to Mr. Buttery, they had discussed that condition on a number of occasions. Mr. Buttery said:

"I explained to him that any previous
conditions were not applicable to this
particular consumer credit insurance, that
only sickness and accident from the date of
the policy was applicable. To my
recollection he said something to the effect,
'O.K., I will sign it,' and he voluntarily
signed it... . The documentation was
completed and I think Mr. Warnock received a
copy of this documentation for his records."

I do not think Mr. Buttery's account of the conversation is reliable. It suggests what would have been a surprising view for him to have taken in respect of the completion of the documents, but in any case I prefer the evidence of Mr. Warnock. I was not impressed by the evidence of Mr. Buttery, which I thought was lacking in frankness, and in several respects self-contradictory. It was also somewhat inconsistent with his manager's diary; according to that, he held out to Mr. Warnock some hope "that the arthritic condition would be subject to assessment by the insurance company if that created a problem."

11. On the evidence I accept, I find the applicants were seriously misled. The response of Mr. Buttery to Mr. Warnock's disclosure was likely to, and did, produce the impression that the existing rheumatoid condition was not a matter of concern in relation to the sickness and accident insurance cover. It was said to be pertinent only to life insurance cover, and in any case the bank manager "would fix it". In the circumstances, that meant, I think, that he could and would procure a full sickness and accident cover, notwithstanding the underlying, but not then actually disabling, rheumatoid condition.

12. So far as concerns s.74 of the Trade Practices Act 1974 (which was pleaded in addition to s.52), I think negligent advice was given on a matter material to the rendering of financial services in the course of the business of the bank. At the same time, those services were not "provided, granted or conferred under ... a contract of insurance" (see s.74(3)), but in the course of the business of banking and as ancillary to that business - indeed, the obtaining of the contract of insurance was itself a part of the services provided.

13. So far as s.52 is concerned, the bank's conduct, through its manager, was misleading. It is important to note that the bank, as agent for the insurance company and by virtue of the special arrangements under which it offered this insurance, was in a position particularly apt to lend credibility to any suggestion it made about the insurance cover which it was procuring and which was bound up with its own offer of an insured loan. To this feature of the situation must be added the fact that Mr. Warnock was, as I find on his evidence, offered no real opportunity to read the documents, accepted by him as in conformity with Mr. Buttery's express and implicit representations.

14. The policy contained an exclusion in the following terms:

"Subject to the provisions of the Credit Act
1984 the company shall not be liable to make
any payments for death, disablement or
unemployment caused directly or indirectly as
a result of:-
(a) illnes (sic) or unemployment which
exists at or commences within 28 days
of the commencement of this insurance."

No attention was drawn to this clause by Mr. Buttery. It was, in the circumstances, at least misleading or likely to mislead, and involved lack of due care and skill on the part of Mr. Buttery, to make the statements he made and to proffer the policy document and declaration for signature without informing Mr. Warnock of this exclusion. Even if the explanation which Mr. Buttery claims to have made had in fact been made, it would have been inadequate; an understanding that the cover was limited to "sickness and accident from the date of the policy" would have been far from an appreciation of the strictness of the exclusion in question. But I am satisfied that no explanation at all was given, and I also reject Mr. Buttery's claim to have invited Mr. Warnock to take the personal loan documentation away and have it read by anyone of his choice - on the contrary, I accept Mr. Warnock's account that he was simply asked to sign, having had no more than an accidental opportunity to look at the declaration, and perhaps skim the document, while Mr. Buttery was out of the room.

15. The sequel to the conclusion of the loan agreement and contract of insurance was not long delayed. About the beginning of September or in the last few days of August 1986, Mr. Warnock suffered a rupture of his knee joints on both sides, which had been produced by what was described by a rheumatologist, in a report tendered in evidence, as a "flaring" of Mr. Warnock's rheumatoid arthritis. Mr. Warnock was admitted to hospital some time after 10 September, and his disease has remained relentlessly active since then. Upon the evidence, I am satisfied that since the beginning of September 1986, Mr. Warnock has remained totally and continuously disabled from engaging in or attending to profitable employment of any kind, and that this disablement has been caused solely and directly and independently of any other cause by his renewed illness, which has required regular treatment, will continue to do so, and will continue to disable him totally from any such employment. Mr. and Mrs. Warnock were cross-examined about his capacity, and a number of matters were put to Mr. Warnock, and denied by him, which could have been the subject of evidence if it had been desired to challenge his answers. No such evidence was tendered.

16. The terms of the declaration and of the policy made it virtually inevitable that the applicants would be refused indemnity, and they were. Hence the present proceedings.

17. This case naturally invites comparison with Gates v. City Mutual Life Assurance Society Ltd (1983) 68 FLR 101; and on appeal, Gates v. The City Mutual Life Assurance Society Limited [1986] HCA 3; (1986) 160 CLR 1. There are some points of distinction. The representations which I have found to be misleading were made, not by the insurance company itself, but by the bank through its manager. Although the bank was acting as agent for the insurance company, it also had an independent interest in the insurance which protected the stream of repayments due to it under its loan agreement; and payments were to be made, in accordance with the policy, by the insurance company directly to the bank. In those circumstances, it might be easier to imply a collateral warranty than in Gates's case. A point of distinction more immediately relevant to the claims made under the Trade Practices Act is that, in the present case, I have accepted Mr. Warnock's express evidence to the effect that, if he had been told the truth and insurance had been available at a higher premium, he would have paid the higher premium to obtain the insurance. Mr. Gates gave no such evidence, and this gap in the proofs required for a tenable case played a significant role in the reasoning of the Federal Court and of the High Court: see 68 FLR at 104; 160 CLR at 14.

18. A crucial question is whether, on the evidence, it would have been possible to obtain cover in respect of the risk of the disablement suffered by Mr. Warnock. In the joint judgment of Mason, Wilson and Dawson JJ. upon the appeal to the High Court in Gates's case (160 CLR at 13), it is stated:

"(I)f the appellant were able to establish
that, but for his reliance on Mr. Rainbird's
representation, he could and would have
entered into policies of insurance containing
a disability clause of the kind represented
by Mr. Rainbird, he might then succeed in
obtaining an award of damages equal to the
benefits which would have been payable under
such policies less the premiums paid or
payable in respect of them."

The earlier discussion in the joint judgment demonstrates that this would have been on the basis of deprivation of "the opportunity of entering into a different contract". As was made clear at p 14, Mr. Gates failed because there was "nothing to suggest" that the representation had deprived him of any opportunity, since he neither asserted he would have sought appropriate insurance, if he had been told the truth, nor that any such insurance was available. It was not that there is some legal impediment to the establishment of a case for damages on the basis of deprivation of an opportunity of entering into a different contract, but that there was no attempt by Mr. Gates to make out any such case.

19. I have already referred to evidence of what Mr. Warnock would have done if he had not been misled and an appropriate policy had been available; the remaining issue is whether such a policy would have been available. There was no satisfactory evidence suggesting it would not, but the respondent relied upon the proposition that the onus was upon the applicants to show the availability of such a policy, and that this onus had not been discharged. However, counsel for the respondent, in the course of cross-examining Mr. Warnock as to what Mr. Buttery had said at the time the contract was entered into, put the following question:

"Do you remember him saying to you that if
your pre-existing illness was to be covered
the insurance company would apply a hefty
premium loading to your policy?"

Mr. Warnock replied:

"In January that was stated."

This reply referred to evidence that, after the insurance company had declined payment under the policy, and when Mr. Warnock was attempting to sue the insurance company upon the policy, the bank manager in January 1987 called out with a Mr. Sales to see Mr. and Mrs. Warnock with a proposal to refinance them "if (they) dropped the proceedings against Western Underwriters." According to Mr. Warnock, Mr. Buttery on that occasion said that the insurance company was not told about his rheumatoid arthritis "because, had they been told, there would have been a loading on the premium which would have cost us a lot of extra money." Mr. Buttery conceded that he did go out to the premises of Mr. and Mrs. Warnock in January 1987 with a Mr. Sales, who was a principal banking officer and was his manager's assistant at the branch of the bank at Cessnock. He conceded that the call was not an arranged call. He described it as "a cold call." His explanation of the reason for making it was that Mr. and Mrs. Warnock "gave the impression it was difficult to get into the bank together to talk to (him)." This explanation is a little difficult to reconcile with the evidence of the previous banking arrangements during the course of the immediately preceding year, particularly as Mr. Buttery could not recall putting any particular proposals at that meeting to Mr. and Mrs. Warnock. I did not find Mr. Buttery's representation of his motives for his call with Mr. Sales to see Mr. and Mrs. Warnock convincing. In all the circumstances, and bearing in mind my impression of Mr. Warnock's truthfulness as a witness, I accept his evidence on this point also. That involves the conclusion that there was a clear statement made on behalf of the bank, in January, to the effect that Mr. Warnock's pre-existing illness could have been covered upon payment of "a hefty premium loading."

20. There was also, in the course of Mr. Buttery's evidence at the hearing, a more general admission. After he had described himself as "being fairly knowledgeable as regards the insurance industry," he was asked in cross-examination:

"You are aware that in relation to sickness
and accident insurance, if a proponent of
insurance suffers some sort of illness that
could recur, the insurance company may impose
a higher premium?"

He answered:

"That is possible."

21. It is legitimate to bear in mind the respondent's peculiar position, in relation to the question of the circumstances in which, and the terms upon which, insurance could be obtained. The insured personal loans were entered into pursuant to arrangements the bank had made. It was the agent of the insurance company in respect of them. The insurance was for its benefit as well as for the benefit of the borrower, and was vigorously promoted by it. The evidence demonstrates that the bank was putting a very large amount of business in the way of the insurance company, and it is inevitable that the bank's bargaining power must have been correspondingly great. Accordingly, even if a particular policy could not have been obtained by an ordinary proposer, it might have been obtainable by the bank. The practical effect of these considerations is a matter peculiarly within the knowledge of the bank itself, and of the insurance company of which it had contracted to become an agent. In those circumstances, the principle applies which was stated by Isaacs J. in Morgan v. Babcock and Wilcox Limited [1929] HCA 25; (1929) 43 CLR 163 at 178, quoting Lord Mansfield, that "all evidence is to be weighed according to the proof which it was in the power of one side to have produced, and in the power of the other to have contradicted." As Fullagar J. (with whom Kitto J. agreed) said in Tozer Kemsley & Millbourn (A'asia) Proprietary Limited v. Collier's Interstate Transport Service Limited [1956] HCA 6; (1956) 94 CLR 384 at 403:

"The silence of one party cannot, of course,
fill the place of actual evidence on an
issue, but it may serve to resolve a doubt or
an ambiguity, especially where the facts are
peculiarly within the knowledge of the silent
party."

22. In the present case, Mr. Buttery did not make any clear denial of the statement attributed to him by Mr. Warnock as having been made in the January 1987 conversation, and the question asked by the respondent's counsel in cross-examination of Mr. Warnock positively suggests that the statement was made, though on a different occasion. Mr. Sales was not called by the respondent. In my opinion, the evidence is capable of sustaining an inference that cover could have been obtained in Mr. Warnock's case, either as a matter of insurance practice or by virtue of special arrangements between the bank and the insurance company, though it may have involved a higher premium. In this context, I do not think it would be consonant with a reasonable understanding of the evidence to regard the possibility of a higher premium, expressed in general terms, as involving more than double the premium in fact charged. The silence of the bank assists me in resolving any doubt about that. I also note that there was no dispute about Mr. Warnock's evidence that he had been able to obtain life insurance after disclosing his rheumatoid arthritis.

23. For these reasons, I think the applicants are entitled, under ss.52 and 74 of the Trade Practices Act 1974, to relief measured by the cover Mr. Warnock said he would have obtained had Mr. Buttery told him the truth instead of misrepresenting the situation.

24. There is a complication, insofar as the policy is in any event limited to $50,000. As I have already mentioned, the policy provides for the monies payable under it to be paid to the bank. Had those monies been so paid, it is at least unlikely there would have been any relevant default under the loan agreement. It would be possible to compensate the applicants for the loss or damage sustained by the respondent's breaches of ss.52 and 74 by making an order, under s.87(2)(b) of the Trade Practices Act, varying the loan contract so as to delete the obligation to make payments which have fallen or will fall due over the period during which the insurance company would have had to make those payments if the insurance had provided effective cover. However, there are other questions, to which I shall turn, and it may be that when the parties have had an opportunity to read these reasons they may prefer the making of orders in a different form. Accordingly, I shall reserve the precise form of the relief to be granted, and direct the applicants to bring in short minutes in the form for which they contend. The orders should provide for the deduction from the sum of $50,000 of an amount of $1,000, to take account of the additional premium which the applicants may have had to bear to obtain appropriate insurance.

25. The applicants also put forward claims under s.52A of the Trade Practices Act and, as was done in Gates's case, upon an alleged collateral contract, in this case one containing a warranty that there was no need to disclose the condition of rheumatoid arthritis to the insurance company, and also a warranty that the condition would not prevent a claim under the policy. I do not think it is necessary, in view of the conclusions to which I have come, to consider the questions raised by these claims. The applicants would not be entitled to any greater relief upon either of the bases postulated. In particular, I do not think I could find, in the circumstances of this case, that there was any collateral warranty in terms which would exclude from the calculation of damages any allowance for the possibility of a premium loading by reason of Mr. Warnock's condition.

26. There remains for consideration a cross-claim which was filed on behalf of the respondent. By the cross-claim, two separate sums were claimed: an amount of $16,713.08, together with interest, alleged to be due under an overdraft arrangement by virtue of a demand made on 17 July 1987, and the sum payable under the personal loan agreement, pursuant to which it was alleged payment had been accelerated by virtue of the applicants' default.

27. The personal loan agreement presents no problem. On the view which I have taken, the default relied upon was a consequence of the respondent's own breaches of ss.52 and 74 of the Trade Practices Act. The relief to be granted to the applicants should include an order under s.87 varying the agreement from its inception in order to avoid the obligations alleged to have been so breached as to entitle the respondent to call up the loan, or otherwise giving the applicants relief against the calling up of the loan.

28. Other questions are raised by the claim in respect of the overdraft. During the hearing, I pointed out that that claim did not seem to me to form part of "a single justiciable controversy" involving both it and the federal claim made by the applicants. It seemed to me to be in truth a quite separate justiciable controversy involving separate contractual arrangements with which the federal claim had no connection. In McMahon v. Smith (1986) 69 ALR 527 at 531-532 I discussed the law governing the relevant distinction, and it is unnecessary to repeat that discussion. I do not think the accrued or attached jurisdiction of the court would extend to enable me to deal with the claim made under the overdraft arrangements. That claim involves a separate controversy not touched by any federal matter.

29. But after I had reserved judgment, the cross-vesting legislation became operative, and in particular the Jurisdiction of Courts (Cross-vesting) Act 1987 of the Commonwealth and the Jurisdiction of Courts (Cross-vesting) Act 1987 of New South Wales, both of which came into effect on 1 July 1988. I was thereupon asked to hear further argument on the question whether the cross-vesting legislation had conferred jurisdiction in this matter, where the application and cross-claim were both filed prior to the legislation coming into force. That argument was heard on 17 October 1988, when counsel for the respondent sought leave to file a fresh cross-claim, and counsel for the applicants informed me that he could not suggest any prejudice would be suffered by a grant of leave. In the absence of prejudice, I think leave should be given to file a fresh cross-claim in the same terms. The grant of that leave, of course, renders it unnecessary to decide the debate as to whether the cross-vesting legislation has retrospective effect, or whether to make an order upon the cross-claim, as originally filed, would really be to give the legislation a retrospective effect. There being no answer to the cross-claim, so far as it arises out of the overdraft arrangements, the respondent is entitled to relief, and I direct it to bring in short minutes of appropriate orders on the same date which I shall fix for the bringing in of short minutes by the applicants.

30. I shall hear the parties on questions of costs when the short minutes are brought in.