ANZ McCaughan Limited v Perball Pty L td

[1995] HCATrans 234

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Adelaide  No A13 of 1995

B e t w e e n -

ANZ McCAUGHAN LIMITED

Applicant

and

PERBALL PTY LTD, GEORGE STANLEY COPPING, FAYE JOYCE COPPING, LAYTON SAXON COPPING, NEVILLE GEORGE COPPING and WAYNE MALCOLM COPPING

First Respondents

GALLIOTT PTY LTD, KERRY STIRLING HANEL, TILLETT NOMINEES PTY LTD and FEDOR KOVALEFF

Second Respondents

Application for special leave to appeal

DEANE J
GAUDRON J
McHUGH J

TRANSCRIPT OF PROCEEDINGS

AT ADELAIDE ON MONDAY, 21 AUGUST 1995, AT 2.21 PM

Copyright in the High Court of Australia

MR W.H. NICHOLAS, QC:   If the Court pleases, I appear with my learned friend, MR N.G. ROCHOW, for the applicant.  (instructed by Knox & Hargrave)

MR S.W. TILMOUTH, QC:   If the Court pleases, I appear with my learned friend, MR W.S DeGARIS, for the respondent.  (instructed by Wallace DeGaris & Co)

DEANE J:   I should note that the Senior Registrar has certified that she has received a letter dated 28 July 1995 from Messrs Piper Alderman, solicitors, advising that they do not have instructions to appear or make submissions at the hearing of this application on behalf of their clients, Mr K.S. Hanel and Galliott Pty Ltd.  The Senior Registrar has also certified that she has received a letter from Mr Fred Kovaleff advising that neither Mr Kovaleff nor Tillett Nominees Pty Ltd wish to make any representation at the hearing of this matter and will submit to any order of the Court save as to costs.  Yes, Mr Nicholas.

MR NICHOLAS:   Thank you, your Honour.  Your Honours will have seen from the papers, with respect, that this is a case in respect of which the trial judge found that there was no reliance placed upon the relevant representation by the plaintiffs and, indeed, your Honours, he went on to find that the evidence was to the effect that none of the plaintiffs established the case as to reliance, and not only did he find that reliance had not been established, but on the case that was sought to be made, principally through the evidence of the father, Mr George Copping, he rejected that evidence.

So, your Honours, the situation came about that at each step in the way, and there were several in a chronology of events leading up to the actual entry into the transaction in October of 1984, his Honour made findings based on his assessment of the evidence that was given orally in coming to a conclusion that what was said as to state of mind, awareness, understanding of the risks involved and as to the intention and purpose for which the transaction was to be undertaken, he rejected the plaintiffs’ case.

Your Honours, it was put against us in the Full Court that his Honour’s conclusions and findings as to no reliance depended upon him drawing inferences upon certain facts, and the whole of the case, in substance, against us in the Full Court and, ultimately, the way in which the majority of the Full Court dealt with the matter, was upon the basis, erroneous we say, entirely erroneous, that his Honour’s conclusion was the result of him drawing inferences on identified matters, and that the basis for him so doing was flawed and, therefore, the foundation for those inferences were gone and that, therefore, enabled the Full Court to come to its own conclusion about this situation.  Your Honours, shortly stated - and we have endeavoured to be as concise as we can in our summary of argument - but shortly stated, with respect, we say that the several points which would attract this Court’s intervention is, firstly, that the Full Court was manifestly wrong in the conclusion that it came to and in the process which it undertook to get there.

Secondly, that as a consequence of their Honour’s conclusion, the question as to assessment of damages, which goes beyond my client and exposes third parties to apportionment and contribution, has been re-opened and sent back to the trial judge for further assessment, and not only obviously as to quantum, but at the entitlement of the several plaintiffs as well as, of course, the question that may well arise as to contribution and apportionment.

So the next matter that we would put to your Honours, that in the interests of finality, it would be appropriate that this case should be brought to an end and, with respect, we would submit that this is an appropriate set of circumstances where such a consideration would find favour with this Court. 

Thirdly, your Honours, the additional ground we would rely upon is this.  We recognise at once that this Court has made very plain, in cases such as Abalos, Devries, Louth v Diprose, in recent times the principles which govern the scope of an appellate court’s review and that this Court, with respect, could say, “Well, we have made it very plain in recent times on a number of occasions it is really not appropriate to remind judges of what we said so recently in those cases”.  Our response to that, with great respect, would simply be this.  Our case has presented a slightly different situation, and it is the situation which this Court considered in Dearman v Dearman as long ago as 1908, and I will take your Honours to the particular passage of that in a moment, but the essence of it was that where a trial judge has rejected the case sought to be made by the person upon whom the onus lies, then, I think, to use his Honour, and I think it was Chief Justice Griffith’s observation, “Interference by a Court of Appeal is virtually hopeless”.

I should say this to your Honours, that we looked very carefully through the cases put for argument and considered by the various Justices in their various judgments in Abalos, Devries, and those cases, and Dearman v Dearman was not referred to, as far as we could see, either in argument or in the course of judgments.  That is readily explicable because Abalos, Devries and Louth v Diprose were all matters in which the trial judge found for the plaintiff.

McHUGH J:   I am just relying on my recollection, but is not Dearman referred to in Brunskill, or one of those cases?

MR NICHOLAS:   I think in Brunskill it may be, your Honour, with respect, and in - I think, not Louth v Diprose, the other one, in Devries - I think there was a passage taken from Dearman v Dearman, but it did not deal with the point that we are seeking to deal with, your Honour.  So perhaps what I put to you is technically incorrect in the sense that it did get into a footnote, but an entirely different point, and what I am endeavouring to put to the Court is this, that in those other cases, it has been a situation where the trial judge has found for the plaintiff and based his findings substantially, or almost entirely, on matters of credit and so on, and that in some of those cases, I think two out of those three cases, the appellate court interfered with the result that the plaintiff, successful below, was deprived of his or her verdict.  Then this Court restored those verdicts with regard to the principles which yet articulated in them.

McHUGH J:   Mr Nicholas, is not your difficulty in this case that rightly or wrongly, the majority of the Full Court took the view that the trial judge had misused his position in the sense that he made errors and, therefore, it is a question of the application of principle, absent those errors as they were seen by the majority, there to be no interference.  Now, the Court may be right or wrong about that, but is that not the difficulty?  Why should we take on this case in those circumstances?

MR NICHOLAS:   Well, your Honour, the difficulty that the Full Court, with respect, ran into is this.  They said nothing about his misuse of his position in relation to his findings of credit, which were crucial to his decision in relation to Mr George Copping.  They said nothing about that.  What they did turn their mind to was the, I think, three or four identified matters which went to his, Mr Copping’s, failure to protest after the event when demands were made of him, and their Honours there approached the matter on the basis that the judge’s conclusion that he was aware of the risk all along was dependent upon the findings and conclusions he drew from the evidence which went to lack of protest.

The judgment, your Honours, and, given the opportunity, I will take you to the passages, make it very plain that his Honour the trial judge referred to those matters not to suggest that his conclusions as to non‑reliance were dependent upon them, quite to the contrary.  He referred to those matters, if you like, to reconcile the conclusions as to Mr Copping’s understanding and intention earlier arrived at, and he identified those items as matters by which he could test the conclusion that he had already come to, and he expressed it this way - and I think it is at page 54 of the book, and I will come to it in a moment - was that his awareness of the risk provides the explanation for circumstances in which there was no protest which would otherwise have been, and again his Honour’s words, “inconceivable and implausible”.

So that what I am putting to your Honour, with respect, is that it was not a situation where the Full Court came to a view that his Honour’s findings were the product of some palpable misuse of his position.  They directed their minds to, if you like, a subordinate question which was entirely independent of his Honour’s conclusion.

McHUGH J:   Except that the Chief Justice said in his judgment - the passage is at page 122, I think - that it was a case where the challenge finding was affected by identified error of principle or demonstrated mistake or apprehension about the relevant facts.

MR NICHOLAS:   Yes, but, your Honour, he was referring to the four facts, which were totally divorced from the conclusions that he had come to as to intention and awareness.

McHUGH J:   Well, I appreciate that and I must say, speaking for myself, I find the dissenting judgment more persuasive than the majority, but accepting that, why is it a case for special leave?

MR NICHOLAS:   Well, your Honour, we can demonstrate, we would say, that the conclusion of the majority has, with respect to it, completely misunderstood the basis upon which the trial judge reached his conclusions.  Now, if that be right, then, shortly stated, my client, and possibly the third parties, will suffer a very clear injustice as a result if that finding remains and, your Honours, it would also leave open for the future, we would suggest, the prospect, I suppose, that the principles that this Court has recently articulated and the cases to which I have referred, may be regarded in a fairly flexible and elastic way, and it gives them, perhaps, some licence to substitute their own assessment of the situation for the conclusions reached by a trial judge in the circumstances to which we have referred.

Your Honours, we do not want to take this Court’s time up unnecessarily because I am conscious of the fact that the Court is familiar with the material, but we would certainly want to, if the Court had any doubt about it at all, take you to the passages which make it very plain that his Honour’s conclusions as to George Copping’s appreciation of risk and the extent of it was based directly upon his observations of Mr Copping in the witness box, and he makes it plain in several passages that he heard Mr Copping give evidence as to, for example, a lack of understanding about the terms of an important letter, and then his Honour goes on in the next sentence to say, “I reject that and I find, as a matter of fact, he did understand it.”

Now, there are four illustrations of that process in the judgment, your Honours, and we have endeavoured to identify them in our summary, and if I may, can I just perhaps give some examples as briefly as I can of his Honour’s process?  Your Honours will remember that at page 2 of the application book, the learned trial judge made very plain how he was approaching the task that he had in hand, and at page 2, line 5, he says:

I have taken account of all of the issues raised in the pleadings and of all of the arguments which have been put on each side.

This is the end of a 21 or three day trial, your Honours.

It is not possible in an already long judgment to canvass every point which was taken.  It may be assumed that I have rejected the evidence which is inconsistent with the findings of fact which I reach, and that I have accepted the arguments which support the final conclusions to which I come, to the exclusion of arguments to the contrary.

And an illustration of what he did, your Honours, may be found at page 13.  At page 13 is the first example of rejection of Mr Copping’s evidence.  Page 13, line 1:

George Copping said in his evidence in chief that he really did not understand it.

This was one of the letters setting out the terms of the offer which included a reference to the risk:

Other evidence suggests that it was not the subject of any discussion by George Copping with anyone else, such as Harrap or Hanel.  I am satisfied, however, that George Copping did read the document carefully and understood it.

And at page 89, just building on that particular aspect, your Honours, he came back to this matter as he gets to a summary of the situation, and I will bring the Court to it in due course.  At page 89, line 17, he says this:

But even if George Copping was misled by what was said by Irvin about the operation of the sinking fund, the effect of the statement in the mind of George Copping was corrected by his perusal of the offer document from AIL dated 28 August 1987.  I have already drawn attention to the clause within that document in which the foreign exchange risk was explained in terms which made it plain that there would be a “clawback” if the exchange rate buffer of $A85,000 was exceeded.

As I have already pointed out, that document was carefully perused by George Copping, and despite some of his evidence to the contrary, understood by him.

So we would say to that, your Honour, as to his understanding, his finding about that, that he had read it, carefully understood it, was not an inference, it was based on George’s evidence. 

Can I give the Court another example?  At page 90, your Honours - and this is convenient to go to because he really sums up matters about which he had made findings of the kind that we are inviting the Court to consider - perhaps it will save time if your Honours go back to the last few lines on the preceding page:

It seems to me that at the time when the contractual documents were executed, insofar as they relied, as they clearly did, on the understanding of George Copping of the transaction, the plaintiffs were aware that there was a risk, albeit not rated very highly by Irvin, that the 10% fluctuation could be exceeded, and that if it was, the plaintiffs would have to pay the excess of any fluctuation over $85,000.

I reject the evidence of George Copping that he would not have been party to the taking out of the foreign currency loan if he had realised that the liability under it might exceed the sinking fund.  Similarly, I reject the evidence of Neville Copping to much the same effect.

It follows, even assuming (against my finding to the contrary) reliance in fact at the time in the relevant sense upon what was said by Irvin on the occasion of his trip to Redbank on 4 August 1984, that reliance did not extend beyond George Copping’s perusal of the letter of offer dated 24 August 1984.

We would say about those things, your Honour, that, once again, his Honour’s findings are not matters of inference drawn upon the matters that the Full Court looked at and found flawed; it was based upon Mr Copping’s evidence and the judge’s assessment of it.  Indeed, if your Honours wished for a further illustration of the significance of the finding as to reliance at line 6, the text of Mr Copping’s evidence in fact is given at page 37 of the book, and one, from looking at that, gets a very clear picture, we would say, of what the judge was being invited to accept and which he, quite plainly, found unacceptable.  It is at page 37, line 25, and he was asked, and this is evidence in-chief:

Q.       From your point of view, would you have been prepared to enter into a foreign currency loan if you had understood that the cost might be equivalent to a domestic loan of the same amount?

A.       No way.

Q.       Had you been told that the liability on the foreign currency loan might exceed the amount of money in the sinking fund, would you have entered into such a loan?

A.       No, we wouldn’t have taken it on.”

And his Honour plainly rejected that.  Your Honours, at page 54, at line 20 ‑ ‑ ‑

DEANE J:   You have run out of time, Mr Nicholas.

MR NICHOLAS:   Your Honour, may I then, with 60 seconds to go, if I may ask for that, with respect, just simply ask the Court to go to page 55, line 16, and I do so for this reason, because, with the greatest respect to your Honour Mr Justice McHugh, we would submit that it answers the question that you posed.  At line 16, his Honour says:

Those findings, and in particular the awareness of the risks involved, explain the conduct of the plaintiffs when in early 1985 the downward spiral of the Australian dollar against the Swiss franc had reached the point at which the sinking fund had been exhausted, and in response to demand.....for $6,864, being the amount of the overrun beyond the sinking fund, Perball paid that amount, without demur.

And he goes on to deal with, “why there was no protest at that stage” because the Copping’s “had been well aware of the risk all along”, and he

repeats the effect of that in the next few lines, and then over on the page, your Honours, he says:

I think it is inconceivable, if they had been given some sort of assurance or guarantee that the sinking fund would cope with any fluctuations -

that the demand would have been paid “without protest”, and, to like effect, the remaining matters on that page.  So what we are saying, with respect, your Honours, is it is perfectly clear that his Honour had come to his conclusion totally independent of the matters with which the Full Court, or the majority, were preoccupied in their judgment.  Those are our submissions, your Honours.

DEANE J:   Thank you, Mr Nicholas.  The Court need not trouble you, Mr Tilmouth.

Notwithstanding the submissions advanced by Mr Nicholas QC in relation to the appropriate role of an appellate court, we consider that an appeal in this matter would ultimately turn upon the particular facts and would not give rise to any question of general principle appropriate to attract a grant of special leave to appeal to this Court.  Accordingly the application for special leave to appeal is refused.

MR TILMOUTH:   I apply for costs, if the Court pleases.

DEANE J:   The application is refused with costs.

AT 2.44 PM THE MATTER WAS CONCLUDED