Saxby Bridge Mortgages P/L & 1 or v Saxby Bridge P/L

MASON P: I agree with Meagher JA.

MEAGHER JA : This is an appeal from a judgment and order of Simos J. His Honour presided over a piece of litigation which was, from the start, if I may say so, doomed to failure. And the appeal, likewise, in my view, should also fail.

At all material times the defendant/respondent Saxby Bridge Pty Limited (“SB”) carried on and still does carry on, the provision of investment and insurance advice, and, in particular, advice about investment properties, superannuation policies and funds, life and general insurance products, managed funds and shares. It does so through consultants, some of them employed and others appointed on a sub-contract basis. In about February 1995, one of the appellants, Mr J B Kingston, reached an arrangement (to use a neutral term) with Saxby Bridge to incorporate a new company, which would arrange mortgages for its own clients and clients of Saxby Bridge. It was done, and that new company is the first appellant. It was owned 80% by Mr Kingston and 20% by Saxby Bridge. It used a name which was similar to Saxby Bridge’s name, it used Saxby Bridge’s premises, and Saxby Bridge’s consultants continually referred to the new company clients who wanted mortgages on residential premises. Four years later in February 1999 Saxby Bridge terminated (if that be an appropriate word) the agreement.

The February 1995 arrangement was alleged by the plaintiffs/appellants to constitute a legally binding contract, and the February 1999 “termination” to be a breach of that agreement. This argument is untenable.

The term of the alleged agreement was that: “the defendant would instruct its employees and consultants to refer to the new company clients who were contemplating borrowing money for investment and other purposes.”

Without some such term, the plaintiffs’ case would be pointless, because the damage the plaintiffs were complaining about was loss of a steady stream of clients. The alleged term, however, did not materialise until the morning of the trial, as paragraph 6 (aa) of a Further Amended Statement of Claim. This term was pleaded as an express term. As such, it was alleged to arise partly from conversations between the plaintiff Kingston and the managing director of Saxby Bridge, and partly from certain letters.

As far as the conversations are concerned, no term remotely like that pleaded was evident. Both parties to the conversation gave evidence, and his Honour so held. Indeed, from the plaintiffs’ point of view, things were worse still: Mr Kingston admitted that nothing like the alleged term was said by either party. Insofar as the term was alleged to have arisen from the letters, those letters are set out in extenso in his Honour’s judgment, and no approximation to the alleged term is contained in them. So much for the alleged express term.

It is, of course, true that in fact Saxby Bridge did channel most of its clients who sought mortgages through to the new company; it is possible that it intended to do so for as long as it existed. But what is in question is whether it made a legally binding promise to do so, and that question must be answered in the negative.

The plaintiffs then made an effort to recast the same term as an implied term. There are, of course, insurpassable objections to any such contention. One can hardly have an implied term if there is no contract, and it is difficult to see how any contract at all existed. But there are further objections: could such a term be implied in the case of clients who wanted to go to a different mortgage broker? Or in cases where the consultants thought it inadvisable to refer the clients to the new company? Or in the case where the consultants had obliged themselves (as in some cases they always had) to refer their clients to a different mortgage broker? So much for the alleged implied term.

And if there was no term there cannot have been breach of a term.

Nor do the appellants’ incantations about a breach of a supposed fiduciary duty make any sense once the contract relied upon has disappeared.

The appeal should be dismissed with costs.

HANDLEY JA: I agree generally with the reasons of Meagher JA, and I agree with the orders he has proposed.