Ausn Consolidated Investments Ltd & Anor v England

[1997] HCATrans 128

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Adelaide  No A1 of 1997

B e t w e e n -

AUSTRALIAN CONSOLIDATED INVESTMENTS LIMITED and MANCHAR HOLDINGS PTY LIMITED

Applicants

and

RICHARD ANTHONY FONTAYNE ENGLAND and SOUTHERN EQUITIES CORPORATION LTD (IN LIQ)

Respondents

Application for special leave to appeal

DAWSON J

TOOHEY J
KIRBY J

TRANSCRIPT OF PROCEEDINGS

FROM ADELAIDE BY VIDEO LINK TO CANBERRA

ON FRIDAY, 30 MAY 1997, AT 9.34 AM

Copyright in the High Court of Australia

MR D.F. JACKSON, QC:   If the Court pleases, I appear with my learned friend, MR R.A. DICK, for the applicants.  (instructed by Freehill Hollingdale & Page)

MR D.A. TRIM, QC:   If the Court pleases, I appear with my learned friend, MR M.R.D. CLAYTON, for the respondents.  (instructed by Finlaysons)

DAWSON J:   Yes.

MR JACKSON:   Your Honours, as is apparent from the summaries of argument, this application turns ultimately on a matter that relates to the conduct of the case itself and that is whether Full Court failed to deal with an argument advanced by the applicants on the hearing of the appeal.  Your Honours, may I identify what the argument was first; that was that the primary judge could not have arrived at the conclusion that a proposal had been assented to during a conversation between two gentlemen, Mr Hoffman, on the other side of the case, and Mr Loewenthal, on 5 October 1993 and that he could not have done so because the evidence from which assent might be drawn was evidence that demonstrated that there had to be intervening events, namely, approval by the boards of the two companies that are the applicants and communication of that approval.

If I could just take your Honours very briefly to the evidence in relation to this issue and what your Honours will see is that the evidence of Mr Hoffman - and Mr Hoffman’s evidence was accepted as to what had taken place in the conversation, two passages, the first at page 62 line 11.  Your Honours will see the passage going through to line 25.  Your Honours will see about line 12:

He said that he would go to his board and see if the sums of money that we had discussed would be acceptable to them and he’d find out about this $500,000 security deposit.....he thought he would be able to persuade the board of ACIL to agree, and as to the other issues, he didn’t think that there would be a problem with them.  And the conversation was left on the basis he said to me he would call me back and let me know.

The other passage of evidence from Mr Hoffman is at page 57, commencing at about line 36, your Honours, just to give it some context, and it goes through to page 58, about line 30.  Your Honours will see that Mr Hoffman there on page 58 at about line 15:

He said that those sorts of figures may be an amount that he could persuade the ACIL board to accept as an appropriate payment.....he didn’t know about the cost security and would need to go back and consider that issue.

Then at about line 30:

and said he would need to get back to us on that.

Your Honours, it is true that there was later communication of an acceptance but there had been intervening correspondence, to which I will come in just a moment.

Could I just say that it is clear that the primary judge, if I could deal with his position first by two brief references, treated the proposal as having been agreed to in the conversation on 5 October.  That that is so appears first at page 18 of the application book.  Your Honours will see lines 46 to 50 where his Honour arrives at the conclusion that the release in question:

was agreed to by Mr Loewenthal in the conversation of 5th October.

He refers to the same matter on a number of other occasions.  May I take your Honours over to one more and that is at page 32, lines 20 to 21, where he sets out his conclusion that the relevant document:

should be rectified to effect the agreement of 5th October 1995.

Your Honours, although the issue of the correctness of that finding in the light of the piece of evidence to which I referred was a matter in issue before the Full Court - and I will demonstrate to your Honours where that was so in just a moment - the Full Court appears to have treated it as accepted that an agreement was arrived at at the conversation on 5 October.  Your Honours, may I indicate to your Honours three passages in the Full Court’s reasons that make that clear.  The first is page 226 and your Honours will see a heading there, “The crucial events” and at about line 35 his Honour says:

the following occurrences are crucial -

and your Honours will see then paragraph 3.  At about line 50 Mr Loewenthal orally agreed with this proposal.  Your Honours will see the bracketed little part in parenthesis:

(The trial Judge accepted Mr Hoffmann’s evidence on this point -

Your Honours will also see at page 229, about the bottom of the page, the last two lines, by way of introduction to what is at the top of the next page.  Your Honours will there see a reference to the consensus reached on 5 October 1993.  Finally, your Honours, page 233, at the bottom of the page, about line 49:

In this case a common intention was reached and common agreement communicated.....on 5 October 1993 in the course of the telephone conversation -

Your Honours will see that the Full Court - if I could take your Honours just back one page, to page 232, lines 14 to 16 referred to the fact that Mr Loewenthal - that is not Mr Hoffmann, to whose evidence I referred a moment ago but the other part of the conversation:

Mr Loewenthal gave evidence that agreement was reached -

But if one looks at the evidence which he gave it too was to the effect that the matter would still have to go back to the board.  Your Honours, the relevance of that - although it was clear that it would be approved ultimately because he, Loewenthal, held in effect the right to vote for 96 per cent of the shareholding, but it was clear from the actual passage that - this is at page 72, Your Honours, where your Honours will see the passage commencing at line 30.  He says then at about line 37:

Yes, we had agreed, I thought we had agreed on the terms of the settlement.

Then he was asked:

You just have to take it back to your respective companies and so on.

Your  Honours will see the reference to the 96 per cent at about line 50.  Now, your Honours, what the evidence on the point indicated, in our submission, was that the communication of acceptance of the proposal was one that remained subject to the decision of the board.

DAWSON J:   Did it go back to the board?  It did.

MR JACKSON:   Yes, it did, your Honour.  What I was going to say as the next thing was this; that the - your Honours, I am sorry, may I just say one further thing before coming back to that, and it is this; it is clear that this argument, namely, that no agreement could have been arrived at on 5 October because of the stated need to get board approval, was advanced to the Full Court.  One sees that, your Honour, in the written submissions that were made to the Full Court at page 74 in the application book, and your Honours will see, about line 40 on that page, paragraph 2.1 a) ‑ ‑ ‑

KIRBY J:   Which page, Mr Jackson?

MR JACKSON:   Page 74, your Honour.  I will not take your Honours to the passages, but pages 108 and 109, it is referred to in the oral argument.  The Full Court does not deal with it, your Honours, and the Full Court’s view is on the assumption that there was such an agreement on 5 October.  Now, your Honours, the issue is not academic and is of importance, because there was not any communication of an acceptance until after an intervening event.  The intervening event was the sending by the respondent of the letter, a copy of which appears at page 255 of the application book.  Now, your Honours will see, if I could ‑ ‑ ‑

TOOHEY J:   But when you speak of “importance”, Mr Jackson, you are speaking of importance for the resolution of this particular piece of litigation, are you?

MR JACKSON:   Yes, your Honour.

TOOHEY J:   The application is not put on any footing other than administration of justice in a particular case?

MR JACKSON:   No, your Honour.  I eschew that, your Honour.  I rely on the administration of justice in a particular case, your Honour.

DAWSON J:   Why was there not a condition precedent, which is simply the approval of the board and, when that was given, the contract which was made on 5 November had effect.

MR JACKSON:   What I was going to say was that what your Honours will see is that the document which came - which is at page 255 - was a letter which was faxed under cover of the fax at page 259 which set out the terms of settlement, and the terms of settlement are there referred to, as your Honours will see at 255, between lines 30 and 35.  What was put there, your Honours, was, in our submission, the terms of what was said to be the matter that had been discussed and the offers and counter offers, or whatever it might be, that were being made.

Your Honours, it was not until after receipt of that document that there was a communication of an acceptance of the proposal and the discussion that took place on 5 October was not one that in any way was put, in our submission, as being one subject to a condition subsequent.  It was a question of whether there was an agreement arrived at at that time or not.

DAWSON J:   But it was in a situation where Mr Hoffman, was it, said he could control the decision of the board ‑ ‑ ‑

MR JACKSON:   Mr Loewenthal.

DAWSON J:   ‑ ‑ ‑ and it was just a formality and that he would obtain that approval.

MR JACKSON:   Your Honour, it did not appear that he had said that he had control of the board.

DAWSON J:   But he had 96 per cent.

MR JACKSON:   I am sorry, that was communicated to the other side.  That is what he said when giving evidence, that he was confident of it, because of that, of course, but at the same time that was not the way in which he put it to Mr Hoffman on the other side.

DAWSON J:   But what is the point of principle, Mr Jackson?

MR JACKSON:   Your Honour, what we are suggesting is that this is a case where the contention that there was an agreement arrived at on 5 October was a matter which was very much in issue.  It was not dealt with at all by the Full Court and, rather ‑ ‑ ‑

DAWSON J:   It was.  They came to the same conclusion as the trial judge.

MR JACKSON:   Your Honour, without referring to the question of ‑ ‑ ‑

DAWSON J:   No doubt it was put in argument to them, the matters that you are now putting to us.

MR JACKSON:   Yes, your Honour, and I have given your Honours some references to that, but the point that I am seeking to make about it is that the way in which the judgment of the Full Court reads makes it apparent, in our submission, that whilst the matter was put to the Full Court, it is a matter that was overlooked, if I may say so with respect, by the Full Court ‑ ‑ ‑

DAWSON J:   That is unlikely because it was central, was it not, to the argument?

MR JACKSON:   Your Honour, it appears not.  If it were central, your Honour, one would expect to see some reference to it in the reasons of the Full Court, but the reasons of the Full Court really work on the assumption that there was an acceptance of the proposition that there had been an agreement arrived at on the 5th and there is no reference at all to the fact that on any view of the evidence the situation was one where the parties had to come back.  Now, maybe, your Honour, at the end of the day one possible argument would be this was just a condition subsequent, but that issue was one that was ‑ ‑ ‑

DAWSON J:   I am sorry, I think I said condition precedent.  I meant condition subsequent.  Did I?  Yes, I did.

MR JACKSON:   Yes, your Honour.  Your Honour, what I am seeking to say about it is this, that perhaps at the end of the day that one argument might have been advanced by the other side, perhaps not, and maybe in the end that might find favour with one or more judges, but the issue simply was not dealt with by the Full Court and it is one with which, in our submission, the Full Court should have dealt.

DAWSON J:   But even if you are right, what you are asking this Court to do is to pick up the matter and decide the issue of fact afresh.

MR JACKSON:   Your Honour, we would be content in the end if the matter were to go back to the Full Court for that court to determine the issue.

TOOHEY J:   It would have to, would it not?  If your appeal succeeded, it is hardly the sort of case in which this Court could then proceed to make findings of fact for itself.

KIRBY J:   The only basis on which we could send it back would be to say that they did not discharge their appellate function correctly, but that is a very hard thing to push upon us, I think.

DAWSON J:   I think you have already done it.  Can you take us to the part of the Full Court’s judgment where they reach a conclusion on this issue?

MR JACKSON:   Your Honour, the passages I have given your Honours already are page 226.  Could I just say I gave your Honours three passages which indicated that the Full Court really treated this as a matter that was not in issue or did not refer to it, but may I just indicate to your Honours where those are.

DAWSON J:   It is not a matter on which they did not reach a conclusion.  They did.

MR JACKSON:   Your Honour, that is right, but it depends, if I may say so with respect, on the degree of abstraction in a sense one adopts in relation to it because, of course, to arrive at the conclusion which the Full Court did that issue should be taken as being decided against us, I suppose, but if one looks to see what the Full Court said about that issue, they do not appear to have dealt with it.

KIRBY J:   And that is the essence of your argument?

MR JACKSON:   Yes, your Honour.

KIRBY J:   You say because they failed to deal with it in their reasons that they, therefore, must not have dealt with it, but, as Justice Dawson said, in order to come to their conclusion one would have thought they had to.

MR JACKSON:   Your Honour, the indications are that they treated it as a matter that was not really an issue.

DAWSON J:   We do not have a transcript of the argument, but what, do you mean they just closed their ears to the argument and did not appreciate it?

MR JACKSON:   Well, your Honour, in the time that ‑ ‑ ‑

DAWSON J:   I mean, this point was crucial, was it not?

MR JACKSON:   Indeed, your Honour.  That is why we are here.

DAWSON J:   If they reached a conclusion on it, one cannot imagine that they did not appreciate the argument that was being put.

KIRBY J:   Was there a long reserve in this case?

MR JACKSON:   I am sorry, I do not have the dates just to hand, but I will endeavour to find out, your Honour, in just a moment.

KIRBY J:   It is possible sometimes to forget arguments if you have reserved for months and months and months, but I did not get that impression in this case.

MR JACKSON:   In answer to what your Honour the presiding Judge said, I give your Honours three references.  One was page 226, around line 50, where they set out the following occurrences, particularly:

Mr Loewenthal orally agreed with this proposal.

KIRBY J:   It was August to December.

MR JACKSON:   Yes, it is not an especially long time, your Honour.  I do not mean to suggest that but ‑ ‑ ‑

TOOHEY J:   The transcript is presumably available anyhow of argument.

MR JACKSON:   Yes, part of it is ‑ ‑ ‑

KIRBY J:   I think the transcript argument in the Full Court is reproduced.

MR JACKSON:   I think perhaps the whole lot is, your Honour, yes.  I gave your Honours a reference to the written submission at page 74.

KIRBY J:   How would one fashion a principle here to deal with the case?  You would say, “Well, they didn’t deal with it in their reasons.  It was central, it had been put and therefore we infer that they didn’t consider it”, but then you are, as it were, laying down a principle that every argument that is put up has to be dealt with in the written judgments.

MR JACKSON:   No, your Honour.  What very frequently happens is that the plethora of arguments sometimes advanced are subsumed and the approach taken by a Full Court, intermediate appellate - that very frequently happens and one is entitled to arrive at the view that in consequence, the Full Court or the intermediate appellate court has dealt with that issue, although it may not have dealt with it very fully or perhaps at all.  But if one goes to a case where there is a matter that seems to be crucial and where all one sees in relation to it is that it is not referred to at all and the way in which the judgment is given is one that indicates no particular reference to it or rather suggests that it has not been referred to, then, in our submission, that is the kind of case where special leave should be granted for the limited purpose.  If I could add one further factor, really all that the other side say about it in their submissions one can see at page 272, paragraph (iv), about line 39.

KIRBY J:   They say what the Court has been saying to you.  There is no important principle of law and so you do not have to mention everything in written submissions and it should not be inferred that the Full Court overlooked this crucial matter.

MR JACKSON:   Your Honour, I do not want to parse and analyse what they say, but what they simply say is really that the judge’s finding was expressed as the common understanding reached.  What we would say about it is that the terms in which it was reached made it apparent that it was itself subject to further communication.  Your Honours, those are our submissions.

DAWSON J:   Thank you, Mr Jackson.  The Court need not trouble you, Mr Trim.

The Court is not persuaded that the Full Court of the Supreme Court of South Australia failed to discharge its appellate function in accepting the relevant finding of fact of the trial judge.  Otherwise this matter turns on its own facts and raises no point of principle which would warrant the grant of special leave.  Accordingly, special leave to appeal is refused.

MR TRIM:   May it please the Court, I seek an order as to costs.

MR JACKSON:   Nothing I can say to that, your Honour.

DAWSON J:   It is refused with costs.

AT 9.55 AM THE MATTER WAS CONCLUDED