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Brokenshire Ventures Pty Limited v Commonwealth Bank of Australia [2019] NSWSC 1471 (28 October 2019)

Last Updated: 29 October 2019



Supreme Court
New South Wales

Case Name:
Brokenshire Ventures Pty Limited v Commonwealth Bank of Australia
Medium Neutral Citation:
Hearing Date(s):
23 – 24 October 2019
Decision Date:
28 October 2019
Jurisdiction:
Common Law
Before:
Adamson J
Decision:
(1) Judgment for the defendants.

(2) Order the plaintiffs to pay the defendants’ costs of the proceedings.
Catchwords:
BANKING AND FINANCE – banks – liabilities – negligence – nature of joint accounts – joint account usually operated by husband – sale of shares and withdrawal of proceeds by wife – whether CommSec and bank obliged to prevent transaction – relationship governed by terms of contract – no duty of care imposed
Legislation Cited:
Cases Cited:
Albrighton v Royal Prince Alfred Hospital [1980] 2 NSWLR 542
Astley v Austrust Ltd (1999) 197 CLR 1; [1999] HCA 6
Burden v Ainsworth (2004) 59 NSWLR 506; [2004] NSWCA 3
Codelfa Construction Proprietary Limited v State Rail Authority of New South Wales (1982) 149 CLR 337; [1982] HCA 24
Connor v Blacktown District Hospital [1971] 1 NSWLR 713
Rippon v Chilcotin (2001) 53 NSWLR 198; [2001] NSWCA 142
Simms Jones Ltd v Protochem Trading NZ Ltd [1993] 3 NZLR 369
Tai Hing Cotton Mill Ltd v Liu Chong Hing Bank Ltd [1985] UKPC 22; [1986] AC 80
Toll (FGCT) Pty Limited v Alphapharm Pty Limited (2004) 219 CLR 165; [2004] HCA 52
Tomlin v Ford Credit Australia Ltd [2005] NSWSC 540
Category:
Principal judgment
Parties:
Brokenshire Ventures Pty Limited (ACN 615 897 017) (First Plaintiff)
Peter Hatch (Second Plaintiff)
Commonwealth Bank of Australia Limited (ABN 48123 123 124) (First Defendant)
Commonwealth Securities Limited (ABN 60067 254 399) (Second Defendant)
Representation:
Counsel:
E Cohen (Plaintiffs)
J Hynes (Defendants)

Solicitors:
Dentons (Defendants)
File Number(s):
2017/324184

JUDGMENT

Introduction

  1. By further amended statement of claim filed on 23 March 2018, Brokenshire Ventures Pty Limited (Brokenshire), the first plaintiff, and Peter Hatch, the second plaintiff, claim damages against Commonwealth Bank of Australia Limited (CBA), the first defendant, and Commonwealth Securities Limited (CommSec), the second defendant. The plaintiffs, who commenced the proceedings on 26 October 2017, allege that they suffered loss as a result of the defendants’ negligence arising out of transactions which occurred in late October and early November 2011. The defendants deny that they were negligent and say, in the alternative, that, if one or both of them was negligent, the plaintiffs ought fail because they have not proved that they have suffered any loss.
  2. I consider that the resolution of the ultimate issue in the proceedings depends on the contractual relationship between the parties, to which much of the evidence adduced in the proceedings is irrelevant. However, in order to address submissions made by Ms Cohen on behalf of Mr Hatch, it is necessary to set out the facts in some detail. The evidence is largely documentary and comprises the defendants’ business records. There is a small number of disputed conversations but otherwise the narrative is established by objective evidence.

The facts

The Peter Hatch Fund

  1. In about 1992, Mr Hatch ceased his employment with Olivetti and began investing in companies. In about the mid-1990’s he commenced an intimate relationship with Bernadette O’Regan which resulted in their marriage and the birth of two children. Mr Hatch and Ms O’Regan resided together in Sydney from about that time until their separation at the end of October 2011.
  2. It is common ground that, by deed of trust dated 8 March 1999, Mr Hatch declared himself as the trustee of a self-managed superannuation fund known as the Peter Hatch Fund. Only the first page and the execution page of the Trust Deed have been tendered. Accordingly, I have not been privy to the terms of the trust. I understand that no issue arises in relation to them. By Deed of Appointment of New Trustee and Amendment dated 18 March 2000, Ms O’Regan was appointed as a joint trustee of the Peter Hatch Fund with Mr Hatch. In the Deed of Appointment of New Trustee and Amendment, Mr Hatch was described as the “Current Member” and the “Original Trustee” and Mr Hatch and Ms O’Regan were together referred to as the “Replacement Trustee”.
  3. On 24 February 2003, Mr Hatch opened an account in his own name with CBA. The account number ended with the numbers “2013” (the 2013 account).

The CommSec account and the linked accounts

  1. In March 2003, Mr Hatch and Ms O’Regan applied for a CommSec account which Mr Hatch intended to use to buy and sell shares for the Peter Hatch Fund. CommSec provided Mr Hatch and Ms O’Regan with a bundle of documents described as a “Welcome Kit”. The kit contained information about how the CommSec account would work. Four methods of trading were set out: online, voice broker, by phone to a Client Service Officer or in person by visiting a Share Shop.

The Welcome Kit

  1. The “Welcome Kit” also included a document entitled “Client Application Form”. Instructions were given for joint accounts and for superannuation funds. Applicants were instructed to read the “General Conditions of Trade” before completing the application. They were also given instructions as to how to apply for joint accounts or trust accounts as follows:
“Account to be opened
Sections you must complete
Optional sections
...
Joint
A, B, E, F, G, H
I, J
Trust
A or D, and C, E, F, G, H
I, J
Notes:
...
2. Joint Accounts: if you elect to open a joint account, all transactions will be registered in both names i.e. in the name of the individuals in Sections A & B, and we can accept instructions from either person. Both applicants must sign the Application Form.
3. Superannuation Fund, Family Trust or Minor (person under 18): Section A or D must be completed by the legal owner (individual or company). If you wish to identify the name of the fund or trust, then please complete Section C. In Section C, please use the word "account” in place of “trust” eg. "Mary Smith Family Trust" should read "Mary Smith Family Account". Shares for minors should be bought in the name of the parent or guardian by completing Section A, and the full name of the minor should be recorded by way of an account designation in Section C.
...”
[Emphasis added.]

The application for the CommSec account and the 2013 account

  1. By CommSec application dated 1 March 2003, which was received by CommSec on 5 March 2003, Mr Hatch and Ms O’Regan applied for a CommSec account. Mr Hatch was identified in section A of the form as “Client 1”. His address, telephone number, date of birth, occupation and email address were included. Ms O’Regan was identified in section B of the form as “Client 2”, a section which was only relevant for joint accounts. She was only required to state her full name, occupation and date of birth. No email address for Ms O’Regan was provided. The Fund was identified in section C, which applied to superannuation or other trust funds, by its name “Peter Hatch Fund”. Applicants for a CommSec account were required to nominate a “linked account” from which the funds for share purchases would be drawn and into which the funds from share sales would be deposited. In their application Mr Hatch and Ms O’Regan nominated the 2013 account (which Mr Hatch had opened in his own name on 24 February 2003) as the account to be linked to the Joint CommSec account.
  2. The CommSec account, the account number for which ended “1812”, was put in the names of “Peter John Hatch and Ms Bernadette O’Regan – Peter Hatch Fund Account” (the Joint CommSec account).
  3. At the time of opening the Joint CommSec account, Mr Hatch created two passwords for the account which permitted him to buy and sell shares online. Mr Hatch invariably used the online method when he was using the CommSec account to buy and sell shares. Ms O’Regan did not create a password to trade online. It was common ground that all share trades on the Joint CommSec account prior to 31 October 2011 were conducted by Mr Hatch.
  4. Mr Hatch regarded the Joint CommSec account as being his own account and, as such, within his exclusive control. He maintained that Ms O’Regan was included in the application for the account only because she was a joint trustee with him of the Peter Hatch Fund. This view is inconsistent with the terms and conditions of the account which are addressed below.

The terms and conditions of the Joint CommSec account

  1. The terms and conditions that governed the Joint CommSec account at the time it was opened, included, of present relevance:
“GENERAL CONDITIONS OF TRADE
GENERAL
1. These General Conditions apply to all dealings between you (the Client) and us (CommSec) Commonwealth Securities Limited.
...
YOUR INSTRUCTIONS
...
14. If more than one person constitutes the Client, then they are jointly and severally bound by these arrangements and we are entitled to act upon the instructions of any one of those persons.”
  1. It was common ground that Mr Hatch was notified of these terms and conditions and the subsequent terms which applied from October 2011. He admitted in cross-examination that he read them in accordance with his practice to read terms and conditions before he signed applications.

The second linked account: the 6175 account

  1. On 25 November 2004, Mr Hatch and Ms O’Regan opened another account with CBA in their joint names, the number for which ended in the numerals “6175” (the 6175 account). The method of operation of the 6175 account was said to be “one signature”, which was accepted to mean that it could be operated by either one of the joint account holders. The account was known as a streamline account and was used by Mr Hatch and Ms O’Regan individually for household expenses, individual expenses and expenses relating to their children. Mr Hatch accepted in cross-examination that the 6175 account was a joint account which either he or Ms O’Regan could use and from which either could withdraw funds without recourse to the other.
  2. In mid-February 2005 CommSec wrote to Mr Hatch and Ms O’Regan and informed them that it was necessary for the Joint CommSec account and the linked account to be in the exactly the same names as in the application for the Joint CommSec account. It informed them that, until this was the case, it would make payments to them by cheque drawn in the names listed for the Joint CommSec account.
  3. At about this time, Mr Hatch and Ms O’Regan signed a CommSec “Direct Debit and Credit Request” in which they requested CommSec to use the 6175 account as the account linked to the Joint CommSec account. The 6175 account remained the linked account until 15 August 2011.

A further joint account in the names of Mr Hatch and Ms O’Regan: 6183

  1. From 2008 until 2011, Mr Hatch and Ms O’Regan operated another joint account with a number ending in “6183” (the 6183 account).

Ms O’Regan’s membership of the Peter Hatch Fund

  1. On 14 May 2008 Mr Hatch and Ms O’Regan signed a minute of meeting of the Peter Hatch Fund which resolved that Ms O’Regan be admitted as a member of the fund effective on 14 May 2008. On 19 May 2008, in a letter addressed “To Whom It May Concern”, Mr Hatch wrote to CBA as follows:
“This letter serves as notification of the following:
1) The Peter Hatch Superannuation Fund ... has been in operation since 1999 and is ATO compliant under the Superannuation Industry (Supervision) Superannuation Act 1993.
2) The Peter Hatch Superannuation Fund can accept contributions from the Commonwealth Bank of Australia from Bernadette O'Regan who is a member of the fund (member PH0052) via Electronic Funds Transfer to the [6175 account].”
  1. The letter dated 19 May 2008 was recorded as having been received by CBA on 29 May 2008.
  2. Mr Hatch accepted in cross-examination that there was no minute recording that Ms O’Regan ceased to be a member of the fund at any time prior to November 2011.

Ms O’Regan’s superannuation contributions to the Peter Hatch Fund

  1. It was common ground that Ms O’Regan was employed by CBA at least during the period from August 2006 to November 2008. On 21 May 2008, Ms O’Regan sent a “Choice of Superannuation Fund Standard Choice Form” to CBA in which she requested that all future superannuation guarantee contributions be made to the Peter Hatch Fund and provided her member number “052”.
  2. On 29 May 2008, an ADP Employer Services Client Deduction Form recorded that payments of Ms O’Regan’s superannuation were to be made to the 6175 account. In 2012, Ms O’Regan contacted “HR [Human Resources] Direct” concerning superannuation payments she had made while she was an employee of CBA. HR Direct sent an email dated 2 August 2012 in response to her query which said, of present relevance:
“I can confirm that you were Salary Sacrificing $195,000 annually from the 06/06/2008 until you left on the 07/11/2008. This was Salary Sacrificed to the Peter Hatch Superannuation Fund.
In relation to your bonus paid during this time I can confirm you were paid the below amounts:
14/09/2006 - $30,000
16/08/2007 - $86,283
26/08/2008 - $52,000 – this was sent to your Salary Sacrificed Super.”
  1. The payments of Ms O’Regan’s superannuation which were made at her direction to the 6175 account constituted contributions to the 6175 account and the Peter Hatch Fund.

The April 2009 transaction

  1. In early April 2009 Ms O’Regan sold 1,682 CBA shares which she had acquired as a result of her employment with CBA. She sold them “on market” through CommSec, using the Joint CommSec account. The proceeds of sale, $58,167.71, were credited to the Joint CommSec account, the transaction having been effected through that account. The transaction type was referred to as “issuer sponsored” which, as Fiona Bennett, a senior manager with CBA, explained in her evidence, was a reference to the fact that Ms O’Regan was the sole owner of the shares (which were traded by reference to the “SRN”, the shareholder reference number, not the “HIN”, the holder identification number), not the account holders of the Joint CommSec account. This sum was then transferred, on 9 April 2009, by cheque (which I assume was made out to Ms O’Regan as she was the owner of the shares) to a joint account held in the names of Mr Hatch and Ms O’Regan ending in “3052” (the 3052 account). On 20 April 2009, an amount of $58,000 was withdrawn from the 3052 account and deposited into the 6175 account, which was, at that time, the linked account. Mr Hatch ultimately accepted in cross-examination that the sum of $58,000 amounted to a contribution by Ms O’Regan to the Peter Hatch Fund. Mr Hatch had previously denied that Ms O’Regan had contributed to the fund.

The third linked account: the 0392 account

  1. On 4 August 2011 Mr Hatch and Ms O’Regan opened a “Smart Access Account”, the account number of which ended in “0392” (the 0392 account). The account was in both of their names. The method of operation was that “any account holder can operate on the account”. At the foot of the account confirmation, Mr Hatch and Ms O’Regan signed under a heading “Customer Agreement”, which included the following:
“I have received and accept a copy of the product terms and conditions”.
  1. On 15 August 2011, Mr Hatch signed a “Direct Debit/Direct Credit Request Form” which was addressed to CommSec in which he nominated the 0392 account as the linked account for the Joint CommSec account which replaced the 6175 account which had previously been linked to the Joint CommSec account.

Further account opened by Mr Hatch in his name: the 0384 account

  1. On or prior to 1 October 2011, Mr Hatch opened an account in his own name with an account number which ended with the numbers “0384”. The first statement of the 0384 account is not in evidence but the second statement covers the period from 1 October 2011 to 30 December 2011. The account was referred to as a “cash investment account”.

New terms and conditions for CommSec accounts from October 2011

  1. In October 2011, CommSec notified its customers of new terms and conditions applicable to their accounts. Ms Bennett gave evidence that it was CommSec’s usual practice to provide new clients with the then current terms and conditions and to post online new terms and conditions when they became applicable. She identified a new set of conditions which applied from October 2011 to CommSec accounts. Clause 22 of the terms and conditions provided (as the previous term had done, as set out above):
“If more than one person constitutes the Client, then they are jointly and severally bound by these arrangements and we are entitled to act upon the instructions of any one of those persons.”
  1. Mr Hatch could not recall receiving these terms and conditions but accepted that he might have done. As there is no material difference which is relevant for present purposes between the new terms and conditions and the terms and conditions which were provided to Mr Hatch and Ms O’Regan when they opened the Joint CommSec account, nothing turns on this. As referred to above, it is common ground that Mr Hatch was notified by CommSec of the terms and conditions when they became current.

CommSee Interaction and Progress Export

  1. Hariyadi Wijaya was the manager of CBA’s Edgecliff branch from about 2009 until December 2011. Mr Wijaya gave evidence about what he described as an “information storage programme” kept by CBA, known as “CommSee Interaction and Process Export” (CommSee). CommSee allows bank officers to record interactions with clients. Only bank officers can access and enter information in CommSee. CommSee automatically records the date and time at which a bank officer begins to enter an interaction with a client and the time at which that entry has been completed.
  2. It is possible for searches of CommSee to be undertaken. On 7 February 2018, Mr Wijaya conducted a search of CommSee for all interactions between Mr Hatch and himself. His searches revealed that Mr Hatch had three customer identification numbers (Client IDs), of which two, 385 and 459, had been used in interactions with Mr Wijaya. CommSee recorded that Mr Wijaya had three interactions with Mr Hatch: the first on 2 November 2011; the second on 3 November 2011; and the third on 9 November 2011. Although Mr Wijaya remembered Mr Hatch’s name, he could not remember Mr Hatch himself and had no recollection of any of these three interactions with Mr Hatch.
  3. There were 44 pages of interactions between Mr Hatch and CBA referable to his Client ID 385. As referred to above, the CommSee record for Client ID 385 recorded only three interactions between Mr Hatch and Mr Wijaya, on 2, 3 and 9 November 2011, each of which appeared on page 7 (of 44). There were only two pages of interactions between Mr Hatch and CBA referable to his Client ID 459. The single “interaction” between Mr Hatch and Mr Wijaya for Client ID 459 was recorded on page 1 (of 2) and related to the interaction on 3 November 2011. It was recorded as a “file note” and corresponded with the “in person” interaction for the same date which Mr Wijaya recorded in CommSee for Client ID 385. Because of the way in which the data was extracted by Mr Wijaya, there were other interactions between Mr Hatch and bank officers recorded on those pages. Only these two pages of CommSee’s records were tendered (page 7 for Client ID 385 and page 1 for Client ID 459), these being the only two pages on which interactions between Mr Hatch and Mr Wijaya were recorded.
  4. I accept that the CommSee records are an accurate record of interactions between Mr Hatch and Mr Wijaya. Although Mr Wijaya did not recall any interaction with Mr Hatch, I accept his evidence that he recorded all such interactions in CommSee at the time they occurred. Evidence of usual practice is admissible and probative to prove systematic conduct: Connor v Blacktown District Hospital [1971] 1 NSWLR 713 at 721 (Asprey JA, Mason JA agreeing). Business records can be more reliable than human recollection since they constitute a contemporaneous record of what has occurred and are not affected by hindsight or the vagaries of memory. The reason why such records are "of great importance in the search for truth" was explained by Hope JA in Albrighton v Royal Prince Alfred Hospital [1980] 2 NSWLR 542 at 548-549, in the context of clinical notes, as follows:
"...Any significant organization in our society must depend for its efficient carrying on upon proper records made by persons who have no interest other than to record as accurately as possible matters relating to the business with which they are concerned. In the every-day carrying on of the activities of the business, people would look to, and depend upon, those records, and use them on the basis that they are most probably accurate. This position applies to hospitals, as to any other form of business; indeed, hospital records provide an excellent example of the basis, and of the usefulness, of Pt IIC [of the Evidence Act 1898]. If a busy honorary such as the second respondent wished to remind himself what the appellant's precise problem or medical condition was, or to learn what had happened since he last saw her, he would undoubtedly refer to the records, and would act upon the basis that they were correct. If, for some reason, a new honorary had to take over the case, it is to the records that he would go to find out what had happened or what he had to do. No doubt mistakes may occur in the making of records, but I would think they occur no more, and probably less often, than in the recollection of persons trying to describe what happened at some time in the past. When what is recorded is the activity of a business in relation to a particular person amongst thousands of persons, the records are likely to be a far more reliable source of truth than memory. They are often the only source of truth."
  1. I regard the defendants’ business records to be the most reliable evidence in these proceedings, not only as to what occurred but also as to what did not occur. An absence of record is sufficient, in cases such as the present, to prove that an interaction did not occur: s 69(4) of the Evidence Act 1995 (NSW). There is no doubt that each entry in CommSee was contemporaneous. The entries were made by persons, including Mr Wijaya, who had, at the time the record was created, no interest in doing other than making a record of what had occurred. By contrast, Mr Hatch’s memory is affected by time, hindsight and interest. For the reasons given below, I consider Mr Hatch’s evidence to be, to the extent to which it is at odds with the defendants’ business records, unreliable.
  2. The evidence, including the relevant entries on CommSee, will be referred to in chronological sequence below.

The period from end October 2011 until mid-November 2011

The weekend of 29-30 October 2011

  1. Mr Hatch’s evidence was that on Sunday 30 October 2011, his daughter emailed him from the family’s residence in the Sydney suburb of Paddington and asked him when he was coming home. I infer that he had been absent from those premises at least on the night of Saturday 29 October 2011. On 29 October 2011, Mr Hatch changed both of the passwords which he used to trade on the Joint CommSec account, to guard against the possibility that Ms O’Regan had become aware of them and would use them to trade on the account. According to Mr Hatch, he came home to the Paddington residence on 30 October 2011 and discovered that Ms O’Regan had changed the locks on the house, thereby preventing his entry.

Monday 31 October 2011

  1. On Monday 31 October 2011, CommSee recorded that branch staff, on behalf of Mr Hatch, phoned CBA’s Credit Cards and Travel Money line for information about a credit card and that a file note was made by Michael Buddingh. Although Mr Hatch did not recall making such a call, he accepted that he may have done. CommSee does not record whether Mr Hatch visited a branch to make the request which resulted in the call or which branch was visited or phoned by him. I accept Mr Wijaya’s evidence that he did not have any interaction with Mr Hatch on that day and that Mr Buddingh did not work at CBA’s Edgecliff branch.

The sale by Ms O’Regan of shares in Saracen

  1. At some stage on 31 October 2011, Ms O’Regan, without recourse to Mr Hatch, rang CommSec to give instructions over the telephone to sell 400,000 shares in Saracen Mineral Holdings Limited (Saracen). From about 2010, most of the income generated by the Peter Hatch Fund was derived from trading in Saracen shares. Mr Hatch said that they were mining shares which he regarded as being a good investment after the Global Financial Crisis.
  2. Ms O’Regan spoke to someone who identified himself as “Daniel”. The call was recorded and has been transcribed for the purposes of the proceedings. The uncontested transcript recorded that Ms O’Regan identified herself and provided, for the purposes of establishing her identity, her address, date of birth and other details such as other joint bank accounts, including the linked account and the types of shares held in the Joint CommSec account. Daniel asked her why she did not have a Client ID set up for online trading, to which she responded that she did not like to trade on the internet. Ms O’Regan also informed Daniel that she had another CommSec trading account which was solely in her name. She instructed him that she wanted to sell the shares at market price. Daniel informed Ms O’Regan that the estimated consideration for the trade was $296,539.98 including brokerage of $1,460.02. He also told her that settlement would take place in three trading days, that the funds would be credited to the linked account (the 0392 account) and that funds would be available the following day.
  3. CommSec issued a tax invoice confirmation relating to the transaction which recorded that the proceeds of the sale were $296,959.75 from which brokerage of $1,454.93 was deducted, resulting in net proceeds of $295,504.82 being paid to the 0392 account. According to Mr Hatch, he did not receive email confirmation of that transaction or the second transaction referred to below. I infer from the transcript of the conversation between Ms O’Regan and Daniel that an email was sent to the address that Ms O’Regan had given him. The email confirmed the transactions which she had effected. The transaction appeared on the portal to the Joint CommSec account which was accessible online.
  4. Ms O’Regan sold a further 15,000 Saracen shares, giving rise to net proceeds of $11,065.59 being transferred to the 0392 account. I infer that this tranche was sold later than the one referred to above because the confirmation number is a higher figure.
  5. It was common ground that the sales of Saracen shares on 31 October 2011 had been effected by Ms O’Regan without Mr Hatch’s knowledge or consent. Mr Hatch learned of the transactions when he went online to look at the Joint CommSec account. It was also common ground (although the defendants contended it to be irrelevant) that there were no roll-over documents which authorised a transfer from the Peter Hatch Fund to any superannuation fund for Ms O’Regan’s benefit.

Mr Hatch’s evidence about what occurred on 31 October 2011

  1. Mr Hatch gave evidence that he discovered Ms O’Regan’s sale of the Saracen shares on the day on which it occurred (31 October 2011). His affidavit evidence was that he checked the Joint CommSec account online every day. However, he said in oral evidence that he checked it only when he wanted to trade.
  2. At some stage, either on the weekend or on 31 October 2011, Mr Hatch consulted a lawyer as he suspected that Ms O’Regan would attempt to transfer the proceeds of sale of the 415,000 Saracen shares from the 0392 account (into which the proceeds would be transferred) into an account in her own name. He said that the lawyer advised him that he could go to the Supreme Court and obtain an injunction.
  3. Mr Hatch’s affidavit evidence was that, on 31 October 2011, he went into CBA's Edgecliff branch and told Mr Wijaya that his wife had locked him out of the house and sold shares from his superannuation fund. Mr Hatch’s evidence was that he told Mr Wijaya that he had been advised by a lawyer that he could go to the Supreme Court to get an injunction to restrain Ms O’Regan and that he asked Mr Wijaya whether they (presumably the Bank and Mr Hatch) could freeze “the bank account [presumably the 0392 account] and stop her from taking money out of it.”
  4. According to Mr Hatch, Mr Wijaya advised him to open a new CBA bank account in his own name and direct CommSec to deposit the proceeds of the sale of the Saracen shares into that account. Mr Hatch also gave evidence that Mr Wijaya advised him to sell all of the shares remaining in the CommSec account to stop Ms O’Regan selling the remaining shares and suggested that once the balance of the CommSec account had been transferred to an account in his name, he could purchase shares through his own CommSec account, to which Ms O’Regan would have no entitlement. According to Mr Hatch, Mr Wijaya suggested that they effect the transactions then and there on the bank’s computer in the Edgecliff branch. Mr Hatch said that the new account which he opened on that day on CBA’s computer with Mr Wijaya’s assistance was the 0384 account. Mr Hatch’s affidavit evidence was that Mr Wijaya told him that the whole of the proceeds of Ms O’Regan’s sale of the Saracen shares would be deposited into the 0384 account and that he would not need to go to court to get an injunction.
  5. Mr Hatch admitted, in a later affidavit sworn 23 July 2019, that the conversation with Mr Wijaya might have taken place on 2 November 2011 and that his first contact with Mr Wijaya might have been on 2 November 2011, rather than, as he deposed in his first affidavit sworn on 10 July 2018, on 31 October 2011. He explained his uncertainty about the dates in cross-examination as follows:
“This was the worst day of my life, I’d just lost half my assets, I’ve lost my house, I’ve lost my children and, yup, was I in a good frame of mind, no, I wasn’t...”
  1. However, later in his cross-examination, Mr Hatch relied on the significance of 31 October 2011 as bolstering the accuracy of his recall of the terms of the conversation with Mr Wijaya, in the following passage:
“Because it [31 October 2011] was probably the worst day of my life so I remember exactly what happened. I’ve been suffering for it ever since.”

Findings about what occurred on 31 October 2011

  1. For the reasons given above, I reject Mr Hatch’s evidence as to the conversation with Mr Wijaya on 31 October 2011. I accept Mr Wijaya’s evidence that he had no contact with Mr Hatch until 2 November 2011 and that, at no time, did he give financial, investment or legal advice to Mr Hatch as alleged by Mr Hatch. I also accept Mr Wijaya’s evidence that he had no power to “freeze” a joint account on the instructions of one party to the joint account.
  2. Further, CBA’s records establish that the 0384 account had been opened by Mr Hatch at least by 1 October 2011. The CommSee records for the opening of that account are not in evidence. Accordingly, I infer that Mr Wijaya was not the person who assisted in the opening of that account. The records are inconsistent with Mr Hatch’s evidence that the 0384 account was opened on 31 October 2011. I do not accept Mr Hatch’s evidence.
  3. I regard Mr Hatch’s evidence of his alleged conversation with Mr Wijaya as a fabrication as far as his evidence implicates Mr Wijaya. It is at least possible that Mr Hatch was mistaken about the identity of the person who gave him such advice and that the lawyer he consulted who advised him that he could approach this Court for an injunction had told him of an alternative course, which would involve the sale of the remaining shares, the transfer of funds from the linked account into an account in his own name and the reinvestment of the funds through a share trading account in his own name. I am satisfied, however, that neither Mr Wijaya nor anyone else at CBA or CommSec gave him such advice.

Tuesday 1 November 2011

  1. On Tuesday 1 November 2011, which Mr Hatch recalled as being Melbourne Cup Day, Mr Hatch instructed CommSec to sell 494,500 shares in Saracen for 73c each for which the net proceeds were $362,021.52. This sum was credited to the 0392 account on 4 November 2011. Mr Hatch made this sale, having become aware at some time before giving instructions to CommSec, that Ms O’Regan had made the sales referred to above.
  2. Mr Hatch’s concession, referred to above, that his first conversation with Mr Wijaya might not have occurred until 2 November 2011, is an important one. As is evident from the narrative above, Mr Hatch sold Saracen shares on 1 November 2011. If the conversation occurred on 2 November 2011, as he accepted in cross-examination was possible, then it is inconsistent with the objective facts regarding the timing of the sale by Mr Hatch of the shares.

Wednesday 2 November 2011

  1. CommSee recorded that, on 2 November 2011 (Wednesday), Mr Hatch went into CBA’s Edgecliff branch and spoke with Mr Wijaya on the subject of a change in the method of operation of internet banking. Mr Wijaya was unable to help and called a CBA central phone line in response to Mr Hatch’s request. Input of the entry began at 11.34am and was completed at 11.48am. I am satisfied that this was the first time that Mr Wijaya had any personal contact with Mr Hatch. Mr Wijaya followed his usual practice of recording his interaction with a customer in CommSee.

Thursday 3 November 2011

  1. CommSee also recorded, and I accept, that on 3 November 2011 (Thursday), Mr Hatch came into CBA’s Edgecliff branch and spoke with Mr Wijaya at about 4.50pm. He instructed Mr Wijaya that any “account maintenance” on the 0392 account had to be authorised by him. In the entry, Mr Wijaya described Mr Hatch as “party on joint account”. Mr Wijaya’s evidence was that “account maintenance” meant changes to account details and requests to print statements but not withdrawal of money. He explained that withdrawal of money amounted to “account transactions” which was a separate category from “account maintenance”. I accept that this was only the second occasion on which Mr Wijaya had personal contact with Mr Hatch. Mr Wijaya recorded this contact in relation to the CommSee report for Mr Hatch’s Client ID 385 (where the interaction type was recorded as “personal”) as well as on the report for Mr Hatch’s Client ID 459 (where the interaction type was recorded as “file note”). CommSee recorded that that the entry on the Client ID 385 was made before the one on the Client ID 459.

Friday 4 November 2011

  1. On Friday 4 November 2011, the sum of $668,591.93 (being the total proceeds of the share sales made by Ms O’Regan and Mr Hatch respectively) was credited to the Joint CommSec account and transferred to the 0392 account. Later that day, at about 7.56pm, Ms O’Regan transferred $320,000 from the 0392 account to an account in her name, the number of which ended in “4275” and which was used for her own superannuation fund.

Monday 7 November 2011

  1. According to Mr Hatch’s evidence, Mr Wijaya rang him on 7 November 2011 to apologise that Ms O’Regan had withdrawn $320,000 from the 0392 account and said, “She [Ms O’Regan] was an ex General Manager of the bank and obviously has a better knowledge of the bank procedures than I do.” I reject this evidence.

Wednesday 9 November 2011

  1. At about noon on 9 November 2011 (Wednesday), Mr Hatch attended CBA’s Edgecliff branch and spoke with Mr Wijaya. He ordered statements for three credit card accounts. This was the third and final interaction between Mr Hatch and Mr Wijaya. As referred to above, Mr Wijaya recorded this interaction on CommSee.
  2. On 9 November 2011 Mr Hatch purchased, through a CommSec account in his own name, the account number for which ended “4483” (the 4483 account), 360,000 Saracen shares at 86c each. His intention was to replenish his superannuation fund and to retain it under his exclusive control.
  3. Mr Hatch gave evidence that the loss of the money from the fund caused him to suffer depression and that he stopped trading in shares and used the money in the fund for living expenses, legal bills and paying his daughter’s school fees.

Subsequent events

  1. In January 2012, Mr Hatch became eligible to receive the aged pension. In the period from 2011 to 2015 the value of the Peter Hatch Fund reduced from about $300,000 to $1,000.
  2. In 2012 Mr Hatch commenced property settlement proceedings under the Family Law Act 1975 (Cth) against Ms O’Regan (the Family Law Proceedings).
  3. On 3 December 2012, Mr Hatch contacted Hiep Mai of CBA, who asked him, in an email sent at 11.45am to forward any questions by email. Mr Hatch made various complaints to CBA about various accounts, most if not all of which are not relevant to these proceedings. At about 2pm that day, Mr Hatch wrote to Mr Mai and said:
“Thank you for seeing me today. It would be helpful if you explain to me what does ‘a breach’ mean. And secondly what steps the Bank is taking.
Secondly it would be useful if you could confirm our discussion on why my name appears on the Comsec contract notes even though [Ms O’Regan] actually authorized the transactions.”
  1. On 14 August 2013 Mr Hatch lodged a complaint with CBA. Mr Hatch wrote to CBA by email on 24 August 2013 and maintained that his “complaint” had been lodged on 3 December 2012 with Mr Mai (see above). Mr Hatch accepted in cross-examination that no part of that complaint related to Mr Wijaya’s conduct or what had occurred on the CommSec account in October or November 2011.
  2. However, in a letter dated 18 November 2013, Mr Hatch sought from CBA copies of documents relating to the sales by Ms O’Regan of Saracen shares on 31 October 2011 and alleged (in an email to CBA on 28 December 2013) that they constituted unauthorised activity on his CommSec account. These documents were provided by CommSec under cover of a letter dated 13 January 2014.
  3. On 20 November 2016, Brokenshire executed a minute of resolution in which it consented to act as the trustee of the Fund and agreed to execute a Deed of Variation of the Fund.
  4. As referred to above, the present proceedings were commenced on 26 October 2017.

The Family Law Proceedings

  1. The hearing of the Family Law Proceedings commenced on 29 October 2015 before Kemp FCCJ. It was also heard on 30 October 2015, 2 and 3 May 2016, 23 June 2016, 29 March 2018, 22 May 2018, 6 June 2018, 7 September 2018, 21 September 2018 and 4 February 2019. On 7 May 2019 reasons for judgment were given and orders made.
  2. On 10 January 2017 orders were made by Kemp FCCJ which included an order which required the parties to do all acts and things necessary to establish and ascertain the member’s account for Ms O’Regan in the Fund “for the period from November 2008 to November 2011 so as to determine the nature of the payment of $320,000.00 made by [Ms O’Regan] on 4 November 2011 out of [the Fund] and into [her own superannuation fund].”
  3. Richard Rodgers, chartered accountant, gave evidence on behalf of Ms O’Regan in the Family Law Proceedings and on behalf of the defendants in the present proceedings. He was not required for cross-examination in the present proceedings. I accept his evidence, which was relevantly unchallenged. Mr Rodgers valued Ms O’Regan’s member’s interest in the Peter Hatch Fund as at 1 November 2011 (being the date on which it was held that the parties separated) at $332,588.41. He calculated this figure by deducting from $639,158.82, being the value of Ms O’Regan’s interest immediately prior to the sale of 415,000 Saracen shares on 31 October 2011, the proceeds of sale of the shares, being $306,570.41. Her interest in the fund had, in turn, been calculated by reference to her contributions to the fund, which were made during the period from 23 June 2008 to 24 April 2009 and amounted to a total of $198,736.19. This figure included the contribution of $58,000 referred to above from the sale of Ms O’Regan’s CBA shares in 2009. In a supplementary report dated 18 October 2019, prepared for the purposes of these proceedings, Mr Rodgers revised his opinion to conclude that the value of Ms O’Regan’s member balance in the Peter Hatch Fund was $337,175.95 as at 4 November 2011 (rather than $332,588.41, as he had earlier indicated).
  4. Mr Hatch accepted that in the Family Law Proceedings he had sought to have added back into the “pool” of matrimonial assets the $320,000 which Ms O’Regan had withdrawn from the 0392 account on 4 November 2011. He accepted that Kemp FCCJ had determined that this sum would not be “added back” to the pool because they had been accounted for in the “BO Fund” (Ms O’Regan’s own superannuation fund). His Honour did so on the basis of Mr Rodgers’ evidence referred to above, as appears from the following passage from the judgment:
“81. The husband also sought to have ‘added back’ to the superannuation pool the sum of $320,000.00 removed by the wife from the PH fund in November 2011 and paid into the BO fund. However, the Court accepts that these funds have now been accounted for in the BO fund. They will not be dealt with by way of ‘add back’ into the superannuation pool, as referred to below. Further, the husband says that there has been a dissipation of monies in the BO fund which should be ‘added back’. This is also dealt with further below.”
  1. In the reasons given on 7 May 2019, Kemp FCCJ determined that the parties’ contribution to the property and superannuation pools was equal and that each was entitled to receive $220,664.20 of the “property pool”. Kemp FCCJ also determined that Mr Hatch would be entitled to $164,337.81 of the “superannuation pool” and that Ms O’Regan was entitled to the balance in the same amount ([240]-[241] of the reasons).
  2. Kemp FCCJ dealt separately with the outcome of the present proceedings, in respect of which a 65/35% split was found to be appropriate, as appears from the following order made by Kemp FCCJ on 7 May 2019:
“(12) In the event the husband receives any monies (‘the settlement sum’) by way of settlement or judgment in the proceedings between [Brokenshire] and the husband as plaintiffs and the Commonwealth Bank of Australia Ltd (‘CBA’) and CommSec as defendants in the Supreme Court of New South Wales (proceedings number 2017/324184), then the husband shall forthwith notify in writing the wife of the settlement sum and that sum (after taking into account the payment of any reasonable costs and disbursements as incurred by the husband in those proceedings), shall be divided 65% to the husband and 35% to the wife. The wife be permitted to provide a copy of this order to the legal representatives of the CBA and CommSec in the said Supreme Court proceedings.”
  1. The reasons for the 65/35% split for any proceeds of the present proceedings appear from the following passage:
“[323] ...The Court is of the view that, in accordance with its reasoning as set out above, any split of such monies received would be in the proportion 50/50; however, an adjustment of 15% in favour of the husband should be provided given what would be a greater contribution made by him towards the acquisition of those monies, in the post separation period. The Court is of the view that the wife would, otherwise, be entitled to at least 35%, given the impact that the recovery of such monies would have on the parties' overall property pool. The damages sought by the husband relate to a complaint made by him that the defendants in those proceedings were negligent or in breach of contract in facilitating the removal of funds after the sale of Saracen shares from the PH fund as orchestrated by the wife.”
  1. In other words, his Honour found that, as Mr Hatch had commenced these proceedings and conducted them, his share of any proceeds ought be greater.

The credibility of witnesses

Mr Hatch’s credibility

  1. I regard Mr Hatch’s evidence as to the alleged conversations with Mr Wijaya to be fabrications. I am not satisfied that there was any contact between them prior to the sale by Mr Hatch of the Saracen shares on 1 November 2011. I also reject that Mr Wijaya ever gave Mr Hatch advice to the effect alleged.
  2. As to much of the balance of Mr Hatch’s evidence, I formed the view that he has come to believe a version of events which was untrue and inconsistent with objective facts. For example, according to Mr Hatch’s general practitioner, Dr Mackenzie, Mr Hatch was suffering from depression and anxiety in mid-2011 which led to his taking an anti-depressant from August 2011. However, Mr Hatch attributed his depression to the loss of money from the Peter Hatch Fund on 31 October 2011. Further, his evidence was that he stopped trading after the events of late October/early November 2011 although the evidence established that he continued to trade, albeit sporadically, in subsequent years, using the services provided by CommSec.
  3. Mr Hatch’s evidence was also internally inconsistent. He gave evidence in his affidavit that he looked at the Joint CommSec account online every day because of the importance of the investments to the maintenance of his income. However, in cross-examination, he said that he did not view them every day at all but would only look at his investments online when he needed to trade. I apprehend that he was conscious, during cross-examination, that there would be little substance in his complaint that CommSec had not informed him of the sales made by Ms O’Regan on 31 October 2011 if he were otherwise aware of them.
  4. Mr Hatch initially denied several matters put to him but later conceded them. Examples include that Ms O’Regan was a member of the Peter Hatch Fund; that she made contributions to the Peter Hatch Fund; and that her income contributed to the family’s living expenses. Mr Hatch’s perspective was notably self-centred. For example when he was asked whether he and Ms O’Regan shared a number of joint accounts, he said:
“Ms O’Regan shared my joint account, yeah, shared an account with me. I never shared an account with her.”
  1. His subjective views as to the Joint CommSec account were at odds with its terms. For example, he said of the Joint CommSec account in cross-examination:
“It was not in both names and neither of us could operate on it, both of us could not operate on it and Ms O’Regan never did operate on it because she was never a client.”

The credibility of the defendants’ witnesses

  1. I found Mr Wijaya to be a credible witness. He was frank in admitting that he did not recall Mr Hatch. He gave evidence, which I accept, as to his usual practice with respect to the CommSee records. He was adamant in denying that he said anything to the effect attributed to him by Mr Hatch as to the giving of financial advice. I accept that he appreciated that he had no capacity to alter arrangements on a joint account.
  2. There was no challenge to the credibility of the other witnesses on whose evidence the defendants relied: Fiona Parker (CBA’s senior legal counsel, who gave evidence about various bank statements), Ms Bennett or Mr Rodgers (referred to above). Of the defendants’ witnesses, only Mr Wijaya and Ms Bennett were cross-examined.

Liability

The parties’ submissions

  1. The plaintiffs claimed that the defendants owed them a duty of care to avoid financial harm to them. Ms Cohen’s primary submission was that Ms O’Regan was not a “client” of CommSec and that therefore she was not entitled to conduct a transaction using the Joint CommSec account. Ms Cohen submitted that the defendants were negligent in allowing Ms O’Regan to sell the Saracen shares on 31 October 2011. In the alternative, Ms Cohen submitted that the defendants had a duty to inform Mr Hatch of the proposed sale by Ms O’Regan of the Saracen shares and to prevent her from effecting it if he did not consent to the transaction. Ms Cohen submitted that the defendants were obliged to consult Mr Hatch because of the course of conduct which he had engaged in for the 8 years since the opening of the Joint CommSec account, during which he was the sole trader on that account, as was evident from CommSec’s records which indicated that each of the trades made on the account from 2003 up until 31 October 2011 were made by Mr Hatch online. Ms Cohen contended that, in these circumstances, CommSec ought to have been alert to ensure that Mr Hatch was aware of the exceptional trade by Ms O’Regan on 31 October 2011 and ought to have acted to prevent it, unless Mr Hatch consented to the transaction.
  2. Ms Cohen further submitted that CBA ought not to have allowed Ms O’Regan to withdraw $320,000 from the 0392 account, in circumstances where she was not entitled to sell the Saracen shares and neither of the defendants had consulted Mr Hatch about the transaction. She submitted that the defendants knew, from the application for the CommSec account, that the purpose of the Joint CommSec account was to provide for the Peter Hatch Fund, and that they had derogated from their duty to protect the fund and Mr Hatch’s interest in the fund.
  3. Although the defendants are separate entities and separate allegations are made against them, Mr Hynes, who appeared on their behalf, contended that their position was, in substance, the same. Mr Hynes submitted that neither defendant owed a duty of care to Mr Hatch or Brokenshire. He contended that the relationship between each of the defendants and Mr Hatch was exhaustively governed by the terms and conditions of the contracts between them and that no duty of care ought be imposed on them. Further, he submitted that the alleged conversation with Mr Wijaya on 31 October 2011 did not occur, either on that date or at all. Mr Hynes submitted that neither of the plaintiffs has suffered any loss as a consequence of any conduct attributable to any alleged breach by either of the defendants or both of them. Mr Hynes also contended that the issues between Mr Hatch and Ms O’Regan had been conclusively determined in the Family Law Proceedings which made it an abuse of process for Mr Hatch to seek to re-agitate them in these proceedings: Burden v Ainsworth (2004) 59 NSWLR 506; [2004] NSWCA 3 at [38] (Ipp JA, Sheller and Giles JJA agreeing). He submitted further that subsidiary issues, such as Ms O’Regan’s membership of the Peter Hatch Fund, had been determined in the Family Law Proceedings and could not be controverted by Mr Hatch in these proceedings.

The alleged breaches

  1. It is convenient to address the plaintiffs’ case by reference to the following particularised breaches alleged in the further amended statement of claim:

The contractual relationship between the parties

  1. As referred to above, it was common ground that the terms and conditions which applied to the Joint CommSec account had been received and read by Mr Hatch and formed part of the contract to which he, Ms O’Regan and CommSec were parties relating to the conduct of the account. It was also common ground that it was a term of the 0392 account that either account holder (Mr Hatch or Ms O’Regan) could operate the account independently of the other.
  2. It does not follow from the circumstance that one party’s conduct might result in detriment to another party, that the law will impose a duty of care on the first party. For example, where parties have regulated their conduct by entering into a contract, particularly a commercial contract, the terms of the contract will generally govern their legal relationship: Tai Hing Cotton Mill Ltd v Liu Chong Hing Bank Ltd [1985] UKPC 22; [1986] AC 80 at 107. This principle is subject to any applicable legislation or equitable principles.
  3. In some instances, a duty of care which is parallel to a contractual relationship will be imposed, such as for professionals providing services to their clients. In such cases, a term will be implied in the contract for the provision of professional services that the services be provided with reasonable care and skill and there will be a corresponding duty to provide such services with reasonable care and skill. This concurrency will give rise to liability in both tort and contract: Astley v Austrust Ltd (1999) 197 CLR 1; [1999] HCA 6 at [44] (Gleeson CJ, McHugh, Gummow and Hayne JJ).
  4. However, a purely commercial relationship, such as between Mr Hatch and the defendants in the present case, does not fall into the category of cases where parallel duties in contract and in tort will arise. In Tomlin v Ford Credit Australia Ltd [2005] NSWSC 540 McDougall J, at [127], cited with approval the following passage from Tipping J in Simms Jones Ltd v Protochem Trading NZ Ltd [1993] 3 NZLR 369 at 377:
“Where parties are in a contractual relationship, it will, in the absence of special circumstances be a normal, natural and reasonable inference that they intend and expect their relationship to be governed solely by the contract and the law relating to contractual obligations. If an asserted obligation does not arise under the express terms or by clear and necessary implication, a party to the contract can reasonably expect the Court to take the view that there is no such obligation. If the obligation does arise expressly or by implication there is no need to rely on the suggestion that some concurrent or coexistent obligation of the same kind also arises in tort.”
  1. Clause 22 of the contract, which governed the Joint CommSec account at the relevant time, created the following rights and obligations:
  2. The following rights and obligations were created by the terms of the joint CBA accounts, including the 0392 account:
  3. There is no issue about the terms and conditions of the relevant contracts, or whether a separate document was incorporated into the contract between the parties. Nor has any relief been sought under the Contracts Review Act 1980 (NSW) or by reason of any alleged misrepresentation or unconscionable conduct. I do not suggest by referring to these other avenues for relief that there was any arguable basis for any such allegations in the present case. Where there is no challenge to the contractual terms or their enforceability, there is no basis for imposing a duty of care which would be at odds with the legal relationship which the parties have created between themselves in contract.
  4. Further, Mr Hatch’s subjective belief about his entitlement to control the Joint CommSec account, which appears to have been based on its original purpose of providing an income stream for his retirement, is irrelevant. The terms of the contract and the parties’ presumed intention are to be determined objectively and are not to be construed by reference to the subjective views, wishes or hopes of the parties: Codelfa Construction Proprietary Limited v State Rail Authority of New South Wales (1982) 149 CLR 337 at 352-353 (Mason J); [1982] HCA 24; Toll (FGCT) Pty Limited v Alphapharm Pty Limited (2004) 219 CLR 165; [2004] HCA 52 at [35]- [36] (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ).
  5. The effect of the plaintiffs’ submissions is that the defendants were obliged, in respect of the Joint CommSec account, to act on the instructions of Mr Hatch and were not entitled to act on Ms O’Regan’s instructions. To impose a duty of care which included such an obligation would be inconsistent with the legal rights and obligations created by the contractual arrangements between the parties set out above. Accordingly, I reject the submission that there was any duty of care which required the defendants to act other than as they did in accordance with the relevant contracts. Indeed, had CommSec refused to act on the instructions Ms O’Regan gave on 31 October 2011, CommSec would have been in breach of its contractual obligation to act on her instructions. Had CBA stopped Ms O’Regan from withdrawing $320,000 from the 0392 account on 4 November 2011, CBA would have been in breach of the terms of the account, which allowed either joint account holder to operate the account.
  6. In so far as it is alleged that CommSec owed a duty to inform both account holders of each share transaction, this duty would arise, if at all, as a matter of contract. In circumstances where the parties had online access to the Joint CommSec account 24-hours a day, it is difficult to conceive of there being any breach of this obligation, even if the obligation could otherwise be made out.
  7. For these reasons, the plaintiffs have failed to establish their claim against either or both of the defendants.

Damages

  1. Notwithstanding my findings on liability, I am obliged to set out my findings on damages despite the fact that it is an artificial exercise in the circumstances of the present case.
  2. The plaintiffs claimed damages on various bases. It was submitted on behalf of Mr Hatch that, as at 31 October 2011, the Peter Hatch Fund was the holder of 909,500 shares in Saracen which would have (by reason of the increase in the share price from 73c on 31 October 2011 to 86c on 9 November 2011) had a value as at 9 November 2011 of $782,170. The plaintiffs submitted that, by reason of the sale of the Saracen shares by Ms O’Regan and the removal of the funds by 9 November 2011, the value of the fund was, as at 9 November 2011, reduced to $311,912.84, being a loss of $470,258. The plaintiffs submitted that, but for the withdrawal by Ms O’Regan of $320,000, this amount would have preserved and which would have remained under the control of Mr Hatch, as Ms O’Regan would not have been able to spend the money.
  3. It was further argued that, as the value of Saracen shares at the time Mr Hatch swore his affidavit of 10 July 2019 had increased, the value of 909,500 shares as at that date was $1,928.140 and that his loss ought be calculated as at that date. In the alternative, Ms Cohen invited me to consult public records to ascertain the value of Saracen share as at the date of this judgment to calculate the loss as at the date of the judgment. It is not necessary to address the question whether judicial notice could be taken of the price of shares of publicly listed companies, since I do not consider any such calculation to be consistent with principle.
  4. Mr Hatch also claimed a capital sum of $1,334,000 being the sum which he contended would be required to provide him with an annual income of $120,000. He contended, but for the sale by Ms O’Regan of the Saracen shares in October 2011, he would have been able to maintain an income at this level from trading the shares held by the Peter Hatch Fund.
  5. The measure of damages in tort is to be determined by reference to the position in which the plaintiffs would have been had the tort not been committed. In order to establish a claim for damages in tort, the plaintiffs must prove that they, or either one of them, are in a worse financial position as a consequence of the defendants’ tort.
  6. By reason of the three alleged breaches set out above, there are various possible counterfactuals. Had CommSec not allowed Ms O’Regan to trade on the Joint CommSec account, the shares in Saracen which she sold on 31 October 2011 would, on this hypothesis, have remained in the account. Had CommSec sent an email to Mr Hatch informing him of the trade effected by Ms O’Regan on 31 October 2011, he would have been in no different position since he found out about the trade soon after it occurred. Had CBA not permitted Ms O’Regan to withdraw $320,000 from the 0392 account, the money could presumably have been used by Mr Hatch to re-purchase Saracen shares.
  7. It is neither practical nor principled to disregard the circumstance that the transactions effected by Ms O’Regan took place in the context of the breakdown in the marriage between her and Mr Hatch which resulted in the Family Law Proceedings. Because the only members of the Peter Hatch Fund were Mr Hatch and Ms O’Regan, the Federal Circuit Court was entitled, in the exercise of its jurisdiction under s 79 of the Family Law Act 1975 (Cth), to have regard to the contributions made by each party to the marriage to the Peter Hatch fund, as well as other funds and property of the marriage. Kemp FCCJ expressly took into account the contributions made by Ms O’Regan to the Peter Hatch Fund, the sale of the Saracen shares on 31 October 2011 and her withdrawal of the $320,000 on 4 November 2011 in arriving at the finding that the property and superannuation pools ought be divided 50/50 between Mr Hatch and Ms O’Regan.
  8. Brokenshire’s interest in any shares held by the Peter Hatch Fund was a legal interest as trustee. Its interest was, in substance, disregarded by Kemp FCCJ because it was treated as property of the marriage and available for liquidation and distribution in accordance with the court’s orders. In these circumstances, any loss suffered by Brokenshire was sustained as a consequence of the Family Law Proceedings and is not compensable. Mr Hatch has failed to establish that he would have been in a worse position as a consequence of the sale by Ms O’Regan of the Saracen shares on 31 October 2011 and the withdrawal of the $320,000 by Ms O’Regan from the 0392 account. Ms Cohen failed to postulate any alternative scenario in the Family Law Proceedings which would have resulted in a greater return for Mr Hatch, than that reflected by the orders which were made by the Federal Circuit Court.
  9. In any event, the uncontroverted evidence of Mr Rodgers was that, at the time of the sale and the withdrawal of $320,000, the value of Ms O’Regan’s equitable interest as a member of the Fund (as determined by the contributions she had made and what had been acquired with such contributions), exceeded $320,000. Thus, she was entitled to restitution of that amount from the fund. For Mr Hatch to have retained it would amount to unjust enrichment in respect of which he would have been obliged to account to her.
  10. For these reasons, I am not persuaded that either plaintiff has suffered any loss as a result of the defendants’ conduct, even if such was, contrary to my findings set out above, tortious. As loss is the gist of the cause of action in tort, the defendants are entitled to judgment, even had the plaintiffs otherwise established a duty of care and its breach. In these circumstances, it is not necessary to address the question whether these proceedings involve an abuse of process, as submitted by the defendants, within the principles considered in Burden v Ainsworth or whether it was open to Mr Hatch to attempt to re-litigate issues determined against him in the Family Law Proceedings in accordance with the principles established in Rippon v Chilcotin (2001) 53 NSWLR 198; [2001] NSWCA 142 at [28]- [36] (Handley JA, Mason P and Heydon JA agreeing).

Costs

  1. The parties agreed that costs ought follow the event in accordance with the general rule: Uniform Civil Procedure Rules 2005 (NSW), r 42.1.

Orders

  1. For the reasons given above, I make the following orders:

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