Arbest Pty Ltd & Ors v State Bank of NSW

[1997] HCATrans 44

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S67 of 1996

B e t w e e n -

ARBEST PTY LIMITED

First Applicant

THE ESTATE OF THE LATE GEORGE PATSIADAS by his Administrator AMALIA PATSIADAS

Second Applicant

AMALIA PATSIADAS

Third Applicant

and

STATE BANK OF NEW SOUTH WALES LIMITED

Respondent

Application for special leave to appeal

TOOHEY J
GAUDRON J
McHUGH J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 14 FEBRUARY 1997, AT 9.32 AM

Copyright in the High Court of Australia

MR D.A. COWDROY, QC:   May it please your Honours, I appear with MS C.A. MARLOW for the first-named applicant and the third-named applicant.  (instructed by James Soulos)  The second-named applicant has passed away and letters of administration of his estate have been granted to the third-named applicant.  That was granted by the Supreme Court of New South Wales on 17 December 1996.

TOOHEY J:   Are you seeking to amend the title of the proceedings? 

MR COWDROY:   I do, your Honour, to read “The Estate of the Late George Patsiadas by his Administrator Amalia Patsiadas”.

TOOHEY J:   There will be an order accordingly.

MR A.J.L. BANNON, SC:   I appear for the respondent, if the Court pleases.  (instructed by Hunt & Hunt)

TOOHEY J:   I take it you have no objection to that course?

MR BANNON:   None whatsoever.

TOOHEY J:   Yes, Mr Cowdroy.

MR COWDROY:   Your Honour, the issue arising in this application is a very short one.  Your Honours, it raises for determination whether the judgment of the Court of Appeal of New South Wales, in its conclusion, is correct.  Your Honours will recall from the application book and from the summary of arguments that the applicants sought relief in the Supreme Court of New South Wales for relief against action by the respondent Bank against certain loans made to the applicants.  In brief summary, your Honours, the applicants sought funds, something in excess of $600,000, to purchase a commercial building at Yagoona for the purpose of renovating the building or remodelling it - - -

TOOHEY J:   You can take it we are familiar with the facts, Mr Cowdroy.

MR COWDROY:   If the Court pleases.  Would your Honours be familiar with the fact that Justice Young dismissed the cross-claim to the applicants; the matter proceeded to the Court of Appeal where the appeal was upheld; Justice Powell dissented; Justice Kirby found in favour of the applicants and was prepared to grant relief as from a date being July 1989, he believing that was when the misleading and deceptive conduct under the Fair Trading Act occurred?

GAUDRON J:   His conclusion was essentially, was it not, a conclusion as to fact?

MR COWDROY:   Yes, your Honour, it was.

GAUDRON J:   And that is the difference between President Kirby and Justice Priestley, a difference as to factual findings?

MR COWDROY:   Your Honour, that blends a little bit into the question of fact and law as to whether the interpretation of the facts leads to the conclusion that there was misleading and deceptive conduct.

GAUDRON J:   Nobody is doubting that, because both judges of the Court of Appeal found that in your favour.  The question is the date at which it commenced, is it not?

MR COWDROY:   That is the sole issue, your Honour.

GAUDRON J:   That is a factual issue.

MR COWDROY:   Yes, it is, your Honour.

GAUDRON J:   Why would not the proper course have been quite contrary to what has happened, to remit that to a single judge to determine on a rehearing?

MR COWDROY:   Your Honour, that is a course which we would not have any dispute with.

TOOHEY J: Except you have a more fundamental proposition, have you not, that turns on section 45 of the Supreme Court Act?

MR COWDROY:   Your Honour, our simple submission is that section 45 of the Supreme Court Act appears to have been totally ignored and - - -

TOOHEY J:   Perhaps that was because it was totally irrelevant.

MR COWDROY:   Your Honour, in our respectful submission, there was a clear division of opinion.

TOOHEY J:   That is not what the section speaks of.  It speaks of “equal division of opinion”.

McHUGH J:   It speaks of a provision of opinion among the judges present.

MR COWDROY:   Your Honour, if there was no decision at all by Justice Powell on the issue because he found that there was no liability at all, the court is left with two judgments, each of which differ.

TOOHEY J:   No, it is not, not for the purposes of the section, is it?

MR COWDROY:   Your Honour, it comes down to a fine line as to what “equally divided” means.

McHUGH J:   No, you have to take into account “the Judges present”.  You cannot ignore the third judge.

MR COWDROY:   Your Honour, the course that was adopted in this type of case by the learned President, at the time, Justice Moffitt in Ross v Esanda, was he was aware in that case, which is referred to in our authorities, of a similar division and to resolve the issue he assumed, for the purposes of the matter, that he would make a decision against his decision to try to arrive at a decision that was compatible with the other judges.

TOOHEY J: But that is a different question, is it not? This is what troubles me about the reference to section 45. I mean, section 45, if it operates, has a mandatory operation. There is no scope for how the matter will be dealt with because the section dictates that. How do you get an equal division of opinion among three judges?

MR COWDROY:   Your Honour, that arises, in our respectful submission, when there is no common agreement amongst the judges as to their final result.

TOOHEY J:   But that ignores the word “equal”, does it not?

MR COWDROY:   Your Honour, equally it can mean, again, in our submission, each one deciding differently.  There is no commonality.  In our submission, to suggest that one can take into account what Justice Powell has decided really is a contortion of the language to say that he decided - he made a decision on this issue.

McHUGH J:   Your theory has some very strange results because supposing what had happened here is that the President had taken the same view as Justice Powell.  On your theory of section 45(2), the President’s view would prevail even though he was a dissenter.

MR COWDROY:   On the scope of possibilities, I cannot rule out that is a possibility, your Honour.

McHUGH J:   That is absurd.  If two judges are in favour of allowing an appeal and the President is against it, your argument leads to the conclusion that the minority judgment prevails.

MR COWDROY:   Your Honour, we would suggest and submit that in those circumstances it would be unthinkable that would ever occur.  It is a possibility but it is unthinkable that that would be the result.

McHUGH J:   But it must be.  As the presiding Judge put to you, the section operates in terms.  It is mandatory.  If the circumstances attract this operation, that is the result.

MR COWDROY:   With respect, we would submit that if one comes to the conclusion because each judge had a different view that is equal division, and section 45(2) would operate so that the learned President’s decision would prevail, and that is the result we content for to have happened in this case.

The question of what is equally divided does not necessarily mean, in our submission, that there must be two against one.  It can apply in situations where each judge has a different view.  They are equally divided because each have a different view of the final result, and that is exactly the case that occurred here.  Not one judge concurred with the other as to the final result and, in our submission, that is clearly an equal division.  It does not have to be two against one.  We simply say that - - -

McHUGH J:   Take a case like Verwayen:  one judge decided in favour of the appellant on estoppel; another judge on waiver; a third judge is in favour of the appeal being dismissed ‑ assume it is the President, does the President’s view prevail?

MR COWDROY:   We would submit, yes, your Honour, in that circumstance, if that is what the President’s view was, yes.  Your Honour, this happened in the case of Pippos, which is referred to, the Victorian Supreme Court, and the court grappled with what they called “the least satisfactory result” and your Honours will recall that in that case the Chief Judge agreed to have the matter referred back to a new trial.

TOOHEY J: Was that in a statutory context comparable to section 45?

MR COWDROY:   There was an equivalent section to section 45 which the court did not rely upon.

TOOHEY J: Because your argument seems to take up section 45 and then proceed independently of it as what was the appropriate course for the court to take.

MR COWDROY:   Your Honour, we submit, in principle, that is the course we suggest the court should have adopted.  There are two scenarios:  either that was the appropriate course or, alternatively, when his Honour Justice Kirby said in his judgment, “It falls to myself and Justice Priestley to resolve the issue”, at that point the more senior judge’s view should have prevailed.

TOOHEY J: Because of section 45?

MR COWDROY:   No, independently of that, your Honour, under traditional doctrines.  If, as his Honour said, “It falls to Justice Priestley and myself to resolve this issue”, there was a clear division at that point and that is the point at which Justice Kirby’s view should have prevailed.  That appears at page 112, line 25, when he said:

It therefore falls to Priestley JA and myself to resolve the difference.  Each of us favours allowing the appeal - - -

GAUDRON J:   Was there argument between the first reasons for judgment and the second judgment, as it were?

MR COWDROY:   Yes, there was, your Honour.

GAUDRON J:   What courses did you press upon the Court of Appeal?

MR COWDROY:   Your Honour, we pressed on the Court of Appeal that the decision of the learned President should prevail.

GAUDRON J:   And that is the only course you pressed?

MR COWDROY:   Yes, your Honour.

GAUDRON J:   You did not press any alternatives?  You did not press that Justice Powell, for example, should proceed on the basis of the majority reasoning and see what - - -?

MR COWDROY:   Your Honour, I do not recall that that was put.  I frankly cannot recall that being argued.

GAUDRON J:   And you did not press not press that the matter, being a question of fact, should be returned for decision by a single judge?

MR COWDROY:   Your Honour, that was not put because the matter had just had a long history of litigation and here the parties were, as it were, following one hearing before Justice Young, a long hearing before the Court of Appeal and yet a second hearing before the Court of Appeal, so that matter was not addressed, it being thought the most convenient and cost‑effective result was to urge upon the President that his view ought to be the one that prevailed.

GAUDRON J:   It did, in a sense.  His view was that you should have regard to the lowest common denominator, or whatever it is.

MR COWDROY:   Your Honour, it has led to a very curious result because, if I could take your Honours to page 58 of the application book, lines 20 to 30, your Honours will see a passage where his Honour the Acting Chief Justice said:

The adoption of the respondent’s submission that the only pertinent representations made by the Bank were to be confined to the latter stage of the redevelopment proposal would result in a plainly unnatural application of s42 of the Fair Trading Act.  It would divert attention from the investigation of the whole context which in my view is required by the Act and pertinent authorities on its application. 

Your Honours, that is an important passage because the result of the case now is that because his Honour Justice Priestley’s view has prevailed, in effect, the very thing that Justice Kirby sought as being an obvious vice has occurred, that is, the relief that was granted by Priestley J was confined to events at the latter stage of the redevelopment proposal.  So, in effect, the result is a contortion of the law.  We do not have the result which the President said was plainly the only result that was just.  Because he deferred to Justice Priestley’s decision, in effect, we are back at the very stage which he said was contrary to the authorities and contrary to the view required by the Act.  Now, that is, in our respectful submission, a most undesirable result.  It has happened in a way which is unfortunate.

We submit, your Honours, that his Honour Justice Kirby was correct in all his findings and in his conclusions and it is just by an unfortunate event that, in effect, the last hearing or the last judgment miscarried and that, in effect, that result has not been achieved.

McHUGH J:   But that is your only real ground, is it not?  The order that was made does not reflect the facts of the case in so far as they have been found by the Court of Appeal, but that is not a special leave point.  You have tried to dress it up as a special leave case by referring to 45(2) and high principles of whether one judge should defer to another, but once you get outside that area, the case has nothing special about it.

MR COWDROY:   Your Honour, it is special in the sense that it leaves unresolved the question of whether section 45(2) had any application at all. 

McHUGH J:   I understand that but that is a different point.  What I am putting to you is that your only real ground is to say that the ultimate order of the Supreme Court of New South Wales does not reflect the facts of the case and that is not a special leave point.

MR COWDROY:   Your Honour, the other subsidiary matter which is inevitably intertwined with it is that, in effect, it has the impact upon when misleading and deceptive conduct occurs.  In other words, in this case it was found by Justice Kirby to have taken place in July 1989 - commencing - and with Priestley some many months later. 

McHUGH J:   Justice Priestley was November 1989 and Justice Kirby July 1989.

MR COWDROY:   Yes.  But, your Honour, those dates have a very distinct bearing upon the ramifications of the case.

McHUGH J:   Yes, I understand.

MR COWDROY:   Your Honours, we respectfully submit that what the term “equally divided” means, means an equal division amongst the judges, that is, there were three separate judgment all leading to a different result;  in those circumstances, 45 to have application.  One cannot say because there was two in favour, that that was unanimity.  Those judgments were not unanimous at all.  The judgments of Kirby and Priestley show that in the result they came to different conclusions.  You cannot say that they are the same.

TOOHEY J:   You do not have to be able to say that, do you?  I am not sure that is the obverse of what you were putting to us a moment ago.

MR COWDROY:   Your Honour, I think it comes back to the question of whether one can say that they were equally divided.  We submit - - -

TOOHEY J:   Once you move outside section 45(2) you are in an area where the court has to resolve the matter in the most satisfactory way it can.  It is hard to see that one could lay down any sort of principle that dictated what should happen in those situations.

MR COWDROY:   Yes.  Well, your Honour, the simple submission is that that was an error of law; that that has led to an unjust result.  The result has regressed to the position which the learned President considered was both an unnatural application of the Act and contrary to the authorities.  Those matters, in our submission, warrant the review of this Court.

TOOHEY J:   Thank you, Mr Cowdroy.  We need not trouble you, Mr Bannon.    

The Court is not persuaded that this is a case in which there was an equal division of opinion in the Court of Appeal. Accordingly section 45(2) of the Supreme Court Act 1970 (NSW) has no application. Whether it may have been appropriate to remit the matter to a single judge or to take some other course was not raised in the Court of Appeal. In the circumstances, this is an inappropriate vehicle for the elucidation of any question of principle. Accordingly the application is refused.

MR BANNON:   I would seek costs, your Honour.

TOOHEY J:   Costs, Mr Cowdroy?

MR COWDROY:   Your Honour, the only matters I can say in relation to costs are set out in our argument.

TOOHEY J:   The application is refused with costs.

AT 9.53 AM THE MATTER WAS CONCLUDED