Australian Automotive Repairers* Association (Political Action Committee) Inc (In liquidation) v Insurance Australia Limited
[2006] FCAFC 33
•22 March 2006
FEDERAL COURT OF AUSTRALIA
Australian Automotive Repairers’ Association (Political Action Committee) Inc (In liquidation) v Insurance Australia Limited [2006] FCAFC 33
TRADE PRACTICES – exclusive dealing – whether there has been a refusal to supply services
EVIDENCE – exception to credibility rule
NATURAL JUSTICE – procedural fairness – apprehended bias
Trade Practices Act 1974 (Cth) ss 4(1), 4(2)(c), 47(1), 47(7)
Evidence Act 1995 (Cth) ss 102, 103, 106
Associations Incorporation Act 1987 (WA) s 31Re J. R. L.; Ex parte C.J.L. (1986) 161 CLR 342
AUSTRALIAN AUTOMOTIVE REPAIRERS’ ASSOCIATION (POLITICAL ACTION COMMITTEE) INC (IN LIQUIDATION) & ANOR v INSURANCE AUSTRALIA LIMITED (FORMERLY NRMA INSURANCE LIMITED) ACN 000 016 722
NSD 964 OF 2004EMMETT, ALLSOP & GRAHAM JJ
22 MARCH 2006
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NSD 964 OF 2004
ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA
BETWEEN:
AUSTRALIAN AUTOMOTIVE REPAIRERS’ ASSOCIATION (POLITICAL ACTION COMMITTEE) INC (IN LIQUIDATION)
FIRST APPELLANTPANEL BEATERS OF AUSTRALIA INCORPORATED
SECOND APPELLANTAND:
INSURANCE AUSTRALIA LIMITED (FORMERLY NRMA INSURANCE LIMITED) ACN 000 016 722
RESPONDENTJUDGES:
EMMETT, ALLSOP AND GRAHAM JJ
DATE OF ORDER:
22 MARCH 2006
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1. The appeal be dismissed.
2. The Second Appellant pay the Respondent’s costs of the appeal.
3.To the extent necessary the parties bring in short minutes of order dealing with the disposition of moneys held on account of security for costs.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NSD 964 OF 2004
ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA
BETWEEN:
AUSTRALIAN AUTOMOTIVE REPAIRERS’ ASSOCIATION (POLITICAL ACTION COMMITTEE) INC (IN LIQUIDATION)
FIRST APPELLANTPANEL BEATERS OF AUSTRALIA INCORPORATED
SECOND APPELLANTAND:
INSURANCE AUSTRALIA LIMITED (FORMERLY NRMA INSURANCE LIMITED) ACN 000 016 722
RESPONDENT
JUDGES:
EMMETT, ALLSOP AND GRAHAM JJ
DATE:
22 MARCH 2006
PLACE:
SYDNEY
REASONS FOR JUDGMENT
THE COURT:
The Respondent, formerly known as NRMA Insurance Limited (‘NRMA Insurance’), has since 1 March 2002 had in place a scheme for the discharge of its obligations to its insured in relation to damage to motor vehicles which involved the retainer of Preferred Smash Repairers (‘PSRs’) and Associate Smash Repairers (‘ASRs’).
Smash repairers with whom NRMA Insurance had not established a business relationship i.e. those who had not entered into either a PSR agreement or an ASR agreement were referred to by NRMA Insurance as ‘Non-Accredited Repairers’ (‘NARs’). Prior to about June 2003 they were referred to as ‘Unauthorised Repairers’ and prior to 1998 they were classified as unknown repairers or repairers other than ‘Known Repairers’.
Following an assessment of repairers in the period October 2000 to June 2001, NRMA Insurance identified certain ‘Known Repairers’ whom it had classified as ‘Partnered Repairers’ and whom it regarded as appropriate for PSR status by reference to various criteria including cost, quality of repairs, relationship with NRMA Insurance, ‘strategic need’ and ‘potential’. PSR status was conferred upon such repairers upon their entry into a National Preferred Smash Repairer Agreement with NRMA Insurance.
In November 2001 NRMA Insurance proposed to create a new category of repairer known as ‘Associate Smash Repairers’. ‘Partnered Repairers’ and ‘Known Repairers’ who had not become PSRs were invited to become ASRs. To accept such invitations repairers were required to enter into Associate Smash Repairer Service Level Agreements with NRMA Insurance.
As from March 2002 there were only two categories of repairer ‘recognised’ by NRMA Insurance – PSRs and ASRs.
THE STANDARD MOTOR VEHICLE INSURANCE POLICY
As from November 2001 NRMA Insurance’s standard Motor Vehicle Insurance Policy booklet made provision for three types of cover - Comprehensive Insurance, Third Party Fire and Theft Insurance and Third Party Property Damage Insurance. It was a matter for an insured to choose the desired cover from the three alternatives.
Comprehensive Insurance cover applied where it was so recorded on an insured’s current Certificate of Insurance; similarly with Third Party Fire and Theft Insurance cover and Third Party Property Damage Insurance cover.
The Comprehensive Insurance cover provided for claims for ‘Accidental or malicious damage’, ‘Theft’, ‘Windscreen and window glass damage only’ and ‘Storm, flood or fire’. The policy also provided ‘Liability cover’ for damage which an insured’s vehicle causes to someone else’s property.
The Third Party Fire and Theft Insurance cover provided for claims for ‘Fire’, ‘Theft’ and ‘Uninsured motorist damage’. It also provided for ‘Liability Cover’ for damage which an insured’s vehicle causes to someone else’s property.
The Third Party Property Damage Insurance cover simply provided ‘Liability Cover’ for damage which an insured’s vehicle causes to someone else’s property.
For present purposes it is sufficient to address the situation where under the comprehensive insurance cover an insured’s vehicle suffers accidental or malicious damage. The policy provides:-
‘Damage you can claim for
Accidental or malicious damage
If your vehicle suffers accidental or malicious damage, we may decide to
·repair your vehicle
·pay you the cost of repairing your vehicle, or
·pay you the:
– agreed value or
– market value
depending on the cover shown on your current Certificate of Insurance
An excess may apply to this type of claim …’
Similar wording applies in respect of a vehicle which has been stolen and found damaged. Similar wording also applies under the third party fire and theft insurance cover where a vehicle suffers loss or damage as a result of fire or has been stolen and is found damaged or is damaged in an attempt to steal it.
In relation to ‘Claims’ the policy wording includes a section under the heading ‘Paying your excess’ as follows:-
‘Paying your excess
After you have lodged your claim we will contact you as soon as possible to tell you when and how to pay your excess. You must pay the excess when we request it or we will be unable to pay your claim.’
In the same section of the policy the following appears under the heading ‘If your vehicle can be repaired’:-
‘If your vehicle can be repaired
If your vehicle can be repaired, we will advise you of a suitable repairer/s or repair centre If your vehicle is not driveable, we can arrange for it to be towed there. You may choose to have your vehicle repaired at another repairer not nominated by us. In this instance we decide whether we will:
· pay you what it would have cost us to repair your vehicle at one of our nominated repairers
· pay you the fair and reasonable cost to repair your vehicle at your nominated repairer, or
· authorise the fair and reasonable cost of repairs at your nominated repairer.
Lifetime guarantee
If you use a repairer of our choice, the workmanship for the repairs to your vehicle will be guaranteed for the life of your vehicle.
Parts used when repairing your vehicle
Your vehicle will be repaired using either:
·new parts (if they are available), or
·parts which are consistent with the age and condition of your vehicle.
If extensive delays and difficulties occur in obtaining these parts and you incur extra costs, these costs are not covered by this Policy.
Method of repair
We will choose the method of repair which is most suitable for the type of damage to your vehicle.
You may have to contribute towards repairs
If the repairs to your vehicle put it in a better condition than it was before the incident, we may require you to contribute to their cost.’
Putting to one side cases where vehicles are so damaged that they are treated as having been ‘written off’, it can be seen that where an insured’s vehicle is damaged NRMA Insurance is bound under the terms of its policy to either repair the damaged vehicle or to pay its insured the cost of repairing such vehicle in one form or another.
Repairs to an insured’s vehicle may be effected either by a repairer of NRMA Insurance’s choice or by a repairer of the insured’s choosing. In the latter case NRMA Insurance may authorise the fair and reasonable cost of repairs and indemnify its insured for such cost or, at its option, effect payment of an amount of money being what it would have cost NRMA Insurance to repair the vehicle at a repairer of its choice or an amount representing the fair and reasonable cost to repair the insured’s vehicle at the insured’s nominated repairer.
THE APPELLANTS’ STANDING
The applicant (the now First Appellant) in these proceedings was the sole appellant prior to its entry into liquidation. As its name suggests, it was an incorporated association of motor vehicle repairers. It attacked the then current scheme operated by NRMA Insurance and described above whereby the majority of damaged vehicles owned by NRMA Insurance’s insured were repaired by repairers of NRMA Insurance’s choice, that is to say PSRs or ASR’s.
On 4 February 2005 the First Appellant was wound up pursuant to orders made in the Supreme Court of the Australian Capital Territory under s 31 of the Associations Incorporation Act 1987 (WA).
By orders of this Court made on 22 July 2005 the Second Appellant, Panel Beaters of Australia Incorporated, was joined as an Appellant without prejudice to any argument as to the inutility of the joinder or of the effect or lack thereof of any purported assignment under an undated agreement between the First Appellant and the Second Appellant.
When this matter was called for hearing Mr B Levet of counsel announced his appearance for the ‘Appellants’ and Mr A J L Bannon SC announced his appearance with Mr S T White SC and Mr I S Wylie for NRMA Insurance. Mr Levet, who had formerly appeared for the First Appellant, indicated to the Court that the liquidator of the First Appellant did not wish to be heard and that he appeared for the First Appellant only to advise the Court that it would ‘abide the orders of the Court save as to costs’.
Mr Bannon SC informed the Court that NRMA Insurance did not wish to be heard on the question of the standing of the Second Appellant. At NRMA Insurance’s invitation the Court proceeded to consider the appeal without regard to any question as to such standing.
THE APPELLANTS’ CASE
The Appellants’ case is that NRMA Insurance has engaged in the practice of exclusive dealing in contravention of s 47(1) of the Trade Practices Act 1974 (Cth) (‘the Act’). In particular the Appellants rely upon s 47(7) which provides as follows:-
‘47(7)A corporation … engages in the practice of exclusive dealing if the corporation refuses:
(a) to supply goods or services to a person;
(b) to supply goods or services at a particular price to a person; or
(c)to give or allow a discount, allowance, rebate or credit in relation to the supply of goods or services to a person;
for the reason that the person or, if the person is a body corporate, a body corporate related to that body corporate has not acquired, or has not agreed to acquire, goods or services of a particular kind or description directly or indirectly from another person.’
The word ‘refuses’ is not defined in the Act however, by virtue of s 4(2)(c) a reference to ‘refusing to do an act includes a reference to … making it known that that act will not be done’.
Under s 4(1), unless the contrary intention appears, ‘supply’, when used as a verb includes:-
‘(a)in relation to goods – supply (including re-supply) by way of sale, exchange, lease, hire or hire-purchase; and
(b) in relation to services – provide, grant or confer …’
Under s 4(1) of the Act, unless the contrary intention appears, ‘services’ includes:-
‘any rights …, benefits, privileges or facilities that are, or are to be, provided, granted or conferred in trade or commerce, and without limiting the generality of the foregoing, includes the rights, benefits, privileges or facilities that are, or are to be, provided, granted or conferred under:
(a) a contract for or in relation to:
(i)the performance of work … whether with or without the supply of goods;
…
(b) a contract of insurance;
…
but does not include rights or benefits being the supply of goods or the performance of work under a contract of service.’
Under s 4(1), unless the contrary intention appears, ‘acquire’ includes:-
‘(a)in relation to goods – acquire by way of purchase, exchange or taking on lease, on hire or on hire-purchase; and
(b)in relation to services – accept.’
In the Application filed 16 September 2002 the First Appellant sought an injunction restraining NRMA Insurance from contravening s 47 ‘in reference to the New South Wales and Australian Capital Territory market for repairs of motor vehicles where the costs of the repairs are met by the Respondent as an insurer of the insured contracting with the motor repairer to effect motor repairs’. It also sought an injunction restraining NRMA Insurance ‘from continuing to operate the System as defined in the Statement of Claim’. Presumably the ‘System’ was intended as a reference to ‘the Telephone Claims System’ which the First Appellant contended NRMA Insurance had developed for receiving by telephone and logging, assessing, honouring or rejecting motor vehicle claims and, if honouring the claim, authorising repairs to be done by a motor repairer in response to the making of a claim.
Under the Telephone Claims System teleclaims consultants were provided with, and generally adhered to, a set script. That script encouraged the selection of a PSR to carry out the necessary repairs to damaged vehicles for NRMA insurance. There was no evidence that any teleclaims consultant ever said that repairs must be carried out by a PSR.
The primary judge ordered that the application be dismissed and that the First Appellant pay NRMA Insurance’s costs of the proceedings including the costs of a Notice of Motion filed by the Applicant on 3 February 2004 which His Honour also dismissed.
His Honour found that the evidence did not establish conduct by NRMA Insurance which was within s 47(7) of the Act.
The primary judge’s reasoning is briefly summarised in paragraphs [58], [73], [88] and [126] of His Honour’s reasons for judgment which were as follows:-
‘58With respect to claims under a Comprehensive Insurance policy, it is stated (at page 14, with respect to claims for accidental or malicious damage, and at page 16 with respect to claims for storm, flood or fire damage):
“If your vehicle suffers [‘accidental or malicious damage’ or ‘loss or damage as a result of storm, flood or fire’] we [NRMA Insurance] may decide to:
· repair your vehicle
· pay you the cost of repairing your vehicle, or
· pay you the:
– agreed value or
– market value,
depending on the cover shown on your current Certificate of Insurance.”…
73Most claims by insureds are made over the telephone to “Teleclaims Consultants” … Much of the evidence in the case concerned the conversations which occur between these Consultants and insureds. As will appear below, however, on my analysis, the terms of the insurance policy and of the PSR Agreement and the ASR Agreement summarised above are decisive of the issue, under s 47(7) of the Act, which the Pleading poses for decision. The conversations between insureds and Teleclaims Consultants do not indicate a variation of the contractual régimes as between NRMA Insurance and its insureds, and as between NRMA Insurance and the PSRs and ASRs established by those documents.
…
88Upon a proper analysis, there is never any question of the insureds acquiring goods or services, directly or indirectly, from a PSR, and NRMA Insurance does not suggest that the insureds do so. Rather, upon that analysis, insureds agree to NRMA Insurance’s electing to repair the vehicle, a course which NRMA Insurance explains to them will involve its acquiring goods and services from a PSR. This analysis is based on the terms of the motor vehicle insurance policy … and of the ASR Agreement and PSR Agreement … and on the practice according to which a PSR or ASR provides a quote to NRMA Insurance, NRMA Insurance authorises the PSR or ASR to proceed, the PSR or ASR bills NRMA Insurance, and NRMA Insurance pays the PSR or ASR.
…
126In return for payment of a premium, NRMA Insurance supplies, and the insured acquires, a bundle of contractual rights. Relevantly, one right is a right to have NRMA Insurance either (at NRMA Insurance’s option) repair the vehicle or pay to the insured the cost of repairing it. Although the insurance policy does not oblige it to do so, NRMA Insurance allows the insured to choose between the two. There is a régime according to which NRMA Insurance “repairs” the vehicle, and a régime according to which it pays the insured the “cost of repairing” the vehicle. AARA [the First Appellant] does not suggest that either of the two régimes does not satisfy the contractual obligation. If an insured does not acquire a benefit which is an aspect of the repair régime, it is because the insured has elected in favour of the payment régime, not because NRMA Insurance has refused to supply any or all of the benefits of the repair régime. Indeed, NRMA Insurance recommends the repair régime.’
By leave of the Court and without objection by NRMA Insurance a Further Amended Notice of Appeal was filed in Court at the commencement of the hearing of the appeal. It contained some 17 grounds of appeal, but only four issues were canvassed in the Appellants’ written submissions and oral argument. These were:-
(a)the existence of a ‘tripartite agreement’ and the alleged contravention by NRMA Insurance of s 47(7) of the Act (Grounds 6, 7, 8, 9, 10, 12, 13 and 15);
(b)the alleged wrongful rejection of evidence which it was said should have been admitted under s 106 of the Evidence Act 1995 (Cth) (‘the Evidence Act’) (Ground 4);
(c)an alleged denial of procedural fairness by the primary judge by firstly failing to identify an officer of the Court who provided certain information to him and secondly failing to allow that person to be called as a witness to, inter alia, state what had been said to the primary judge (Grounds 1 and 2(a)).
(d)alleged apprehended bias on behalf of the primary judge as a result of his having discussed with an officer of the Court what the Appellants alleged was a question of fact about which the officer had information, namely the alleged ‘coaching’ of a witness and his failure to thereupon disqualify himself from further hearing the matter (Grounds 1, 2(b) and 3);
In relation to Ground 17, the Appellants made a brief written submission but no oral submissions.
As to Grounds of Appeal 5, 11, 14 and 16 the Appellants in their written submissions simply said that they are ‘largely self explanatory and are not abandoned’. None of them were addressed in the Appellants’ oral submissions.
EXCLUSIVE DEALING
Section 47(7) falls within Part IV of the Act which is headed ‘RESTRICTIVE TRADE PRACTICES’. The Part contains provisions which proscribe and regulate agreements and conduct and are aimed at procuring and maintaining competition in trade and commerce. Broadly speaking, the provisions either control or proscribe the making of certain contracts or arrangements or the reaching of certain understandings that restrict dealings or affect competition, the engaging in conduct involving a secondary boycott or a boycott affecting trade or commerce, engaging in the practices of monopolization, exclusive dealing or resale price maintenance and the increasing of market share by means of take-over or merger.
Section 47(7) of the Act is not concerned with conduct that may amount to a breach of contract for the supply of services to a person. Rather, it is concerned with a refusal to supply services to a person in circumstances where the person is willing to provide the necessary consideration.
The services which NRMA Insurance was in the business of supplying were, relevantly, contracts of insurance in respect of damage to motor vehicles under which insurance cover would be provided. The Appellants’ case fails to distinguish between the supply of services in the form of the entry by NRMA Insurance into contracts of insurance for the benefit of insured persons and the fulfilment by NRMA Insurance of its contractual obligations under existing contracts of insurance entered into by it with insured persons.
The Appellants contend that NRMA Insurance refused to, or made known to its insured that it would not, supply services in the form of:-
(a)timely assessment of claims,
(b)timely authorisation to proceed with repairs,
(c)the opportunity to secure the benefit of an early release of an insured’s motor vehicle as a result of timely assessment or timely authorisation, and
(d)authorisation to proceed with repairs
where an insured wished to have repairs to the insured’s damaged vehicle effected by what NRMA Insurance would call an NAR, for the reason that the insured had not agreed to acquire or accept the services of one of NRMA Insurance’s PSRs or ASRs to carry out the necessary repairs.
It was an essential part of the Appellants’ argument that:-
(a) timely assessment of claims,
(b) timely authorisation to proceed with repairs,
(c)the opportunity to secure the benefit of an early release of an insured’s motor vehicle as a result of timely assessment or timely authorisation, and
(d) authorisation to proceed with repairs
were characteristics of contracts entered into between the relevant insured, NRMA Insurance and NRMA Insurance’s PSRs or ASRs who may be called upon to effect repairs to damaged vehicles for NRMA Insurance and that such characteristics should also be available to NRMA Insurance’s insured in respect of contracts of repair entered into by such insured with NARs. Critically, the Appellants contended that repair contracts with PSRs or ASRs were ‘tripartite’ i.e. they included not only NRMA Insurance and the relevant PSR or ASR but also the insured as one of the contracting parties.
It was acknowledged by Mr Levet that, in the absence of a finding that repair arrangements with PSRs and ASRs involved tripartite agreements to which NRMA Insurance’s insured were parties, the Appellants’ case in respect of exclusive dealing must fail.
The basis upon which it was suggested that the Court should find that such tripartite agreements were made was the evidence of a Mr Van der Weide, whose company was one of NRMA Insurance’s PSRs. His evidence was that he considered people whose cars he repaired to be his ‘customers’, he collected the relevant excess from them, he would fix workmanship with which they were dissatisfied provided that their complaints were reasonable, and he was keen to retain his business relationships with them. His evidence was:-
‘QSo really when any car is being dealt with its in effect a third way arrangement, isn’t it? You, the customer and the NRMA?
AYes.’
There was no evidence of any offer and acceptance to which an insured was a party along with NRMA Insurance and the recognised repairer, be it a PSR or an ASR, nor was there any evidence of any consideration moving from the insured.
We are quite unable to find that NRMA Insurance’s insured were parties to any repair agreements with any PSRs or ASRs.
The Appellants did not assert that any contracts to which NRMA Insurance was a party were shams in the sense that they did not reflect the true contractual relationship between the parties to them. Furthermore, it was not contended that as a result of any oral communications or other conduct there had been an express or implied variation of any of those contracts.
It is true that PSRs recovered the relevant excess from NRMA Insurance’s insured but this was because clause 41.1(h) of the PSR agreements between the recognised repairers and NRMA Insurance provided:-
‘41 YOUR OBLIGATIONS
41.1 You must:
…
(h)if required by Us, collect any excess or other contributions from Our Customers for Us as Our agent and, if requested by Us, apply such amounts towards the cost of the Smash Repair Work;’
Clause 40.1(h) of the ASR agreements between the recognised repairers who were ASRs and NRMA Insurance was in identical terms.
No contract existed between any insured and any PSR or ASR requiring the insured to pay the PSR or the ASR, as the case may be, any excess.
In the foregoing circumstances, the Appellants have failed to establish that NRMA Insurance engaged in the practice of exclusive dealing in contravention of s 47 of the Act.
SECTION 106 OF THE EVIDENCE ACT
The Appellants submit that the primary judge should have allowed six affidavits sworn on 3 or 4 March 2004 to be read. Those affidavits sought to provide evidence of what was called ‘coaching’ of the witnesses Pemberton and Pittas. The suggestion was that when questions were asked of those witnesses, one or other of two solicitors for NRMA Insurance mouthed responses or moved their heads in such a way as to suggest an answer that the witness might give.
The evidence upon which the Appellants wished to rely was relevant only to the credibility of the witnesses. Accordingly, it was inadmissible unless covered by one or other of the exceptions to the credibility rule (s 102 of the Evidence Act). Given that the evidence was not to be adduced in cross-examination, the exception contained within s 103 of the Evidence Act had no application. In the circumstances, the Appellants sought to bring their case within the exception in s 106(e) of the Evidence Act which provided:-
‘106The credibility rule does not apply to evidence that tends to prove that a witness:
…
(e)has knowingly or recklessly made a false representation while under an obligation, imposed by or under an Australian law or a law of a foreign country, to tell the truth;
if the evidence is adduced otherwise than from the witness and the witness has denied the substance of the evidence.’
For the affidavit material to be admissible it would be necessary for the Appellants to establish, inter alia, that the witnesses in question had denied that their answers given in cross-examination had been responsive to the alleged coaching.
The case for allowing the evidence in the affidavits falls away when one turns to the transcript and finds that the suggestion was never put to the two witnesses in question that the answers given by them in cross-examination were responsive to the coaching, notwithstanding that they were expressly recalled for the purpose of being cross-examined as to any coaching of which they were aware while in the witness box. The relevant witnesses said that they did not see what was said to be coaching. They were not challenged on that evidence.
When further cross-examined on 25 March 2004 Mr Levet put to Mr Pemberton that when cross-examined on 5 February 2004 he had given the following evidence:-
‘Q.So there are numerous occasions when it is not ascertained where a customer would be told quite falsely that there would be time advantages in going to a Preferred Repairer.
A. No.’
In relation to this answer Mr Pemberton gave the following further evidence under cross-examination on 25 March 2004 which was followed by an interchange between the primary judge and Mr Levet as follows:-
‘Q.I suggest to you that that solicitor in the court room on that day audibly said the word “No” whilst looking at you after that question had been asked, what do you say about that?
A.Absolutely not.
Q.I suggest to you that that solicitor then whilst looking at you mouthed the word “No” for a second time?
A.No.
Q.And that you responded to the question with the word “No”, what do you say about that?
A.Is that two questions or one?
Q.I’m suggesting that you responded to my question with the word “No” after a solicitor instructed by your employers first said and then mouthed the word “No”?
A.No.
HIS HONOUR: I take it that all of these questions, and I will interpret the answers in this way Mr Levet, are directed to what the witness saw or heard. He can only of course answer a question from the perspective in the sense that he can’t give an absolute answer as to what somebody was doing or what was happening the court room. All that he can say is what he saw or didn’t see or heard or did not hear and I think the question made that tolerably clear that’s what you’re asking him.
MR LEVET: Ultimately I can only ask this witness what he saw or heard and then it’s up to your Honour to determine in the light of his demeanour in giving those answers plus other evidence before your Honour as to whether your Honour believes or disbelieves those answers. Yes, that’s all I have for this witness your Honour.’
Notably, it was not suggested to Mr Pemberton that his answer ‘No’ to the question asked of him on 5 February 2004 had been given because of some prompting. All that was suggested was that sequentially Mr Pemberton’s response ‘No’ came after a solicitor had said and mouthed the word ‘No’.
In the case of Mr Pittas his further cross examination by Mr Levet on 25 March 2004 included the following:-
‘Q.I suggest to you that the person in question on numerous occasions nodded prior to you giving an answer and that you then gave an affirmative answer, what do you say about that?
A.Incorrect
Q.On that (sic) numerous occasions he shook his head prior to you giving an answer and you then gave a negative answer, what do you say about that?
A.I’ll say to you it’s incorrect, I did not acknowledge this person …’
Once again it may be observed that it was not suggested to Mr Pittas that his answers were responsive to the alleged prompting.
We agree with the primary judge who, in his reasons for judgment (No 4) [2004] FCA 369 of 25 March 2004 said:-
‘[12] … the fact that some instances can be identified, by reference to the transcript, of Mr Pemberton or Mr Pittas giving an answer the same as that which a person in the courtroom attempted to suggest to him, does not demonstrate that he was in fact aware of the suggestion, let alone influenced by it. The position might be different if it were established that he was bent on a course of giving certain answers and departed from it and embarked upon a course of answering in accordance with responses suggested to him. But it is not put that this is such a case.’
The Appellants’ wrongful rejection of evidence case fails.
PROCEDURAL FAIRNESS
On 24 February 2004 when the matter was before the Court for other purposes the primary judge said:-
‘Since the hearing of this matter an officer of the court informed me that during the hearing a person in the court room was seen to mouth an answer to a question to a witness who was giving evidence at the time. The claim identified the particular question and answer. Obviously this allegation is a very serious one. On the other hand, the person against whom the allegation has been made has not been heard on the matter and I can imagine some things, apart from a flat denial, which would place a different complexion on what occurred. I have carefully read the transcript and am completely satisfied that the particular answer will have no effect whatever on the result of the case.
In the circumstances I intend to proceed to judgment in the usual way [at that stage the final day of evidence had been 6 February 2004. However, as noted above, following an application made by Mr Levet on 4 March 2004 the evidence was reopened and Messrs Pemberton and Pittas were recalled on 25 March 2004]. I have mentioned the matter only because I felt I should do so. I do not require submissions on the matter from the parties. I wanted to inform both sides what has happened. You are informed and as I have said I have read, very carefully, the relevant part of the transcript and have no difficulty myself in assuring the parties that the particular answer has no effect whatever on the result of the case.’
In Ground of Appeal 1 the Appellants allege that the primary judge erred in:-
‘(a)Failing to identify the answer which a member of the Court staff identified as having been subject to coaching; and
(b) Failing to identify such member of the Court staff.’
It seems clear that no application was made by the Appellants on 6 February, 4 March or 25 March 2004 that His Honour should have provided the identification in question. On 4 March 2004 Mr Levet in addressing the Court said:-
‘… your Honour will recall that on the last occasion your Honour did indicate without naming any persons, that it had been reported to your Honour by a court officer or a member of the court staff I think your Honour phrased it, that there appeared to have been, or could have been the possibility of some communication between a person in the court room and a witness. And your Honour indicated your Honour was aware of the question in which that was asked and that that question, of which your Honour was aware, the answer to that question ought not to effect your Honour’s deliberations …’
A little later on the same day the primary judge said to Mr Levet:-
‘So what am I expected to do … It seems to me what you want to do is to re-open the hearing and if that’s what your application is then so be it …’
After considering Mr Levet’s response, the primary judge continued:-
‘Wouldn’t the correct step be to abort the entire trial and start again, isn’t that what you are really after? What you say is that the entire trial has been corrupted and I should, in effect, declare a miscarriage?’
To this question Mr Levet responded in the negative.
Shortly after this Mr Levet in addressing the Court said:-
‘I also understand your Honour from what fell from your Honour on the last occasion that it is quite possible that a member or members of court staff might be in a position, and your Honour quite correctly did not identify either the passages or questions to which it referred or the persons who might have been involved, and it is in the conduct of this exercise quite possible that there is a member of the court staff who is able to independently verify or corroborate part or all of the allegations.’
To this his Honour responded:-
‘What I said on the last occasion was that the allegation related to a question and answer and that is my recollection of it, not of the event, I didn’t see it but we are talking in the case of the court officer about one question and one answer.’
Later still on 4 March 2004 the primary judge said to Mr Levet:-
‘… One thing is quite clear to me and that is that I think you will have to formulate very precisely what order it is that you are asking me to make and maybe that should be done by a notice of motion. I don’t necessarily say even with a view to our re-assembling but there would have to be a particular order. You seem to be quite clear that you are not asking for an order that the trial be aborted on the basis …’
To this Mr Levet responded:-
‘I made that quite clear, yes, your Honour. Your Honour, what I am asking for and I will more precisely formulate it in writing, is that as it were, the trial be re-opened and that Mr Pitas (sic) and Mr Pemberton be recalled so that that can be fairly put to them. …’
It may be observed that what later happened was precisely what Mr Levet requested.
On 5 March 2004 the First Appellant filed a notice of motion seeking, relevantly, the following orders:-
‘1. That leave be granted to the applicant to re-open its case;
2.That leave be granted to the Applicant to recall the witnesses Pemberton and Pittas for further cross examination.
…
4.That leave be granted to the Applicant to call as witnesses such member of members of the Court staff as witnessed any incidents during the course of the trial in this matter involving the coaching or apparent coaching of witnesses in the witness box.’
That notice of motion was made returnable before the Court on 15 March 2004. After a hearing occupying one half of an hour the primary judge granted leave to the Applicant to reopen its case for the limited purpose of having the witnesses Pemberton and Pittas recalled for cross-examination as to whether they observed any attempt to coach them when they were in the witness box and, if so, as to what their response to it was at the time. No order was made in accordance with paragraph 4 of the notice of motion.
On the hearing of the motion Mr Levet had opened his case by referring to, inter alia, the order sought in paragraph 4 but he did not thereafter submit that the Court should grant relief in accordance with it. He did make mention of the primary judge’s disclosure of 24 February 2004, to which reference has been made above, concerning His Honour’s discussion with an officer of the Court and later suggested that were Messrs Pemberton and Pittas to be recalled for further cross-examination he would wish to call ‘evidence in reply’ falling within two categories – ‘The first category would be the six affidavits which I can indicate to your Honour that I have and the next piece of evidence in reply would be the member or members of the Court staff that viewed something’.
At the conclusion of his submissions, Mr Levet put the following:-
‘What you are being asked to consider is whether such improper conduct did or did not occur. If you find on the balance of probability that coaching did occur then in my respectful submission one of those consequences should follow it, that is, that their evidence should be excluded in whole under a discretion to exclude improperly obtained evidence or that you would disbelieve the totality of their evidence except to the extent that it was an admission against interest on a credit basis. I would be urging one of those two upon your Honour or, alternatively, your Honour makes a finding that the trial has miscarried on the basis of such coaching and your Honour discharges, well, there is no jury in this case but your Honour aborts the trial, gives us an order for costs on an indemnity basis and orders a speedy retrial.’
After Messrs Pemberton and Pittas had been recalled for further cross-examination on 25 March 2004 Mr Levet addressed the primary judge on the question of whether or not he should be allowed to read the six additional affidavits referred to above which had been sworn on 3 and 4 March 2004. In his submissions he said:-
‘… I’m prefacing this by saying as a result of this I am not asking your Honour to abort the matter. …’
Later he repeated this by saying to the primary judge:-
‘Your Honour, we are in a position which for reasons I’ve already indicated we don’t wish to cause an abortion of this trial. …’
In the foregoing circumstances, we do not consider that the primary judge denied procedural fairness to the Appellants by failing to provide the identification sought and by denying the Appellants ‘an opportunity to make submissions and lead evidence on the matter’ (Ground of Appeal 2(a)). The truth of the matter is that no request was made that the primary judge provide the identification mentioned in Ground of Appeal 1.
Apart from suggesting that there was a member of the Court staff who could possibly provide corroboration for the Appellants’ coaching allegations (whose evidence would have been inadmissible for the same reasons as rendered the six affidavits inadmissible) no further steps were taken to call any member of the Court staff as a witness ‘in reply’. Counsel for the Appellants had on an earlier occasion specifically endorsed the primary judge’s non-disclosure of at least the passages or questions to which the member of the Court staff’s observations related. The Appellants cannot now be heard to suggest that his Honour should have followed a different course. There was no denial of procedural fairness.
APPREHENDED BIAS
The Appellants’ submission was that the primary judge formed a view about whether coaching of the witnesses Pemberton and Pittas had occurred in reliance upon a private conversation beyond the hearing of the parties where the parties were not advised as to the identity of the Court officer concerned or precisely what the Court officer told His Honour.
We would make the following observations:-
(a)Whether any representatives of NRMA Insurance ‘coached’ or suggested answers to the witnesses in question was not a matter upon which the primary judge was called upon to make determinations. No application was made by the First Appellant for the Court to direct the institution of proceedings for contempt against the parties said to be involved in the alleged ‘coaching’. The issues which fell for his Honour’s determination were the credit of the witnesses in question and whether or not they were conscious of and influenced by any alleged ‘coaching’.
The primary judge generally accepted the evidence that was given, saying at [10]:-
‘… it seemed to me that all witnesses attempted to give their best recollection of events, and, unless a different intention appears, I accept their evidence as summarised below’
(b)The primary judge disclosed to the parties on 24 February 2004 that he had had a conversation with an officer of the Court who informed him that ‘during the hearing a person in the court room was seen to mouth an answer to a question to a witness who was giving evidence at the time. The claim identified the particular question and answer’. His Honour also indicated that having carefully read the transcript he was completely satisfied that the answer given by the witness to the question would have no effect whatever on the result of the case. Indeed, he repeated this observation.
(c)As has been observed above, counsel for the Appellants informed the Court that his Honour had ‘quite correctly’ refrained from identifying the question in respect of which the third party in the court room was seen to mouth an answer.
(d)Whilst the primary judge did not make an order granting leave to the Applicant to call as witnesses such member or members of the Court staff as may have witnessed the alleged ‘coaching or apparent coaching of witnesses in the witness box’, as sought in paragraph 4 of the notice of motion filed 5 March 2004, the evidence of such witness or witnesses would have been inadmissible for the same reasons as rendered the six affidavits sworn 3 and 4 March 2004 inadmissible.
(e)When asked time and again on the appeal what findings the primary judge made in reliance upon the evidence of Messrs Pemberton and Pittas which were challenged, none was identified.
(f)No application was made by the First Appellant at any stage between 24 February 2004 and the completion of submissions in the matter on 25 March 2004 to the primary judge that he should disqualify himself in the circumstances. Indeed, the First Appellant positively resisted any suggestion that the trial should be aborted.
In the foregoing circumstances, any suggestion that an informed observer might entertain a reasonable apprehension that the primary judge might not bring an impartial and unprejudiced mind to the resolution of the issues in the case was utterly untenable. The submission should never have been put.
In our opinion nothing in Re J.R.L.; Ex parte C.J.L. (1986) 161 CLR 342 compels a different conclusion. In that case, the High Court by a majority of 3:2 held that the action of a court counsellor who approached a judge of the Family Court of Australia in the judge’s private chambers to complain about the intended adjournment of the hearing of a custody application and who proceeded to volunteer information about her qualifications as a prospective expert witness and canvass aspects of the proceedings before the judge gave rise to a reasonable apprehension that the judge would not bring an impartial mind to the resolution of the matter. At 346-7 Gibbs CJ, who with Mason and Brennan JJ comprised the majority, said:-
‘It is a fundamental principle that a judge must not hear evidence or receive representations from one side behind the back of the other …
…
The principle, which forbids a judge to receive representations in private, is not confined to representations made by a party or the legal adviser or witness of a party. It is equally true that a judge should not, in the absence of the parties or their legal representatives, allow any person to communicate to him or her any views or opinions concerning a case which he or she is hearing, with a view to influencing the conduct of the case. …… It is quite antipathetic to and subversive of the exercise of the judicial power that a judge should receive private communications from any official, however well informed and well intentioned, even if the official is an officer of the court.’
Mason J, as his Honour then was, said in his reasons for judgment at 350-352:-
‘A central element in the system of justice administered by our courts is that it should be fair and this means that it must be open, impartial and even-handed. It is for this reason that one of the cardinal principles of the law is that a judge tries the case before him on the evidence and arguments presented to him in open court by the parties or their legal representatives and by reference to those matters alone, unless Parliament otherwise provides. …
…
This proscription [of receiving or taking into account private representations from a stranger with reference to a case which the judge has to decide] does not, of course, debar a judge hearing a case from consulting with other judges of his court who have no interest in the matter or with court personnel whose function is to aid him in carrying out his judicial responsibilities. …
…
… It needs to be said loudly and clearly that the ground of disqualification is a reasonable apprehension that the judicial officer will not decide the case impartially or without prejudice, rather than that he will decide the case adversely to one party. …’Brennan J, as his Honour then was, said at 369-370:-
‘If a counsellor were given access to a judge to discuss privately a case pending in the court, the parties could have no confidence that justice would be done according to the impartial view of the judge on the evidence adduced in the proceedings. The parties to litigation are entitled to be present during the hearing of their case not merely because they have an interest in the proceedings but because confidence in the court could not be maintained if the parties are left unaware or only partially aware of the matters which affect the court’s judgment. …
…
Here, it is known that a counsellor whose views are antipathetic to the husband’s case, saw the judge privately and had a conversation with her which reinforced the counsellor’s concern … that the child ought not to be allowed to remain in the husband’s custody. The judge ascertained Ms. Bernet’s [the counsellor’s] qualifications to make a diagnosis that the child was in the early stages of a neurotic process. Ms. Bernet made a submission to the judge with reference to the order which the judge should make during the adjournment, and that submission reinforced the view she had expressed … that the wife should have the custody of the child. The judge thus had a private conversation with an expert witness whose opinion was to be challenged, and it might reasonably be thought that that conversation enhanced the witness’ credibility in the judge’s eyes. …’Wilson J, who with Dawson J constituted the minority, said, quite unexceptionally, at 359-60:-
‘It has been recognized that in a case such as the present, where there is no allegation of actual bias, the test of reasonable suspicion may be a difficult one to apply involving questions of degree and particular circumstances which may strike different minds in different ways. … A court of review must be careful not to exaggerate the significance of actions or statements made by a judge in the course of a proceeding. There must be “strong grounds” … for inferring the existence of a reasonable suspicion. …’
In his reasons for judgment Dawson J said at 372-3:-
‘Here the suggested bias is an inability to act impartially which is said to have been demonstrated by the fact that representations were made to, or evidence was heard before, the judge in the absence of the parties. Remembering that both parties were absent at the time, it does not seem to me to have been a situation which was necessarily incapable of correction either as regards fairness or as regards the appearance as well as the fact of impartiality.
The learned judge took steps to correct the situation which had arisen and I shall refer to these in a moment, but I should first observe that the conduct which is called in question took place in a somewhat special situation. The court counsellor, although in the position of a witness, was not in the position of an ordinary witness to be called by one side or the other. She was an officer of the court … performing a function akin to that of an expert witness who might be called by the court. That did not, in my view, justify the private approach which she made to the judge, but it does at least differentiate the situation from one in which she may have been in the camp of one side or the other.
…
… it seems to me that the action taken by the judge [calling counsel for the parties to her chambers], upon realizing the situation which had arisen, would have dispelled any reasonable apprehension that the judge would as a consequence of that situation favour one side unfairly in the subsequent hearing. …’In our opinion, the primary judge dealt with the matter which was drawn to his attention by an officer of the Court in an exemplary manner.
We agree with Mason J’s observation in Re J.R.L.; Ex parte C.J.L. that the proscription on receiving representations or expressions of view or opinion does not debar a judge from consulting with court personnel whose function it is to aid him in carrying out his judicial responsibilities and who have no interest in the outcome of matters.
GROUND 17
Under this ground it was alleged that the primary judge failed to consider a material issue and provide a decision upon it. The issue was said to be whether there had been a breach of s 47(7) of the Act ‘in so far as the Appellant’s claim related to “unknown repairers”’.
The simple point advanced in the Appellants’ written submissions was that His Honour’s judgment was ‘silent on the issue of “unknown” repairers’. This matter does not bear analysis. As indicated above, repairers who were not “Known Repairers” later became known by NRMA Insurance as “Unauthorised Repairers” and later still as “Non-Accredited Repairers”. His Honour clearly addressed the position of NARs in his reasons for judgment.
GROUND 5
This ground was that ‘His Honour erred in placing insufficient weight on the evidence of Ms Laura Gharibian’.
In support of it the Appellant has said that it is largely self explanatory and has not been abandoned. His Honour dealt with Ms Gharibian’s evidence in paragraphs [54] – [56] of his reasons for judgment. He concluded that her testimony was not relevant to the grounds upon which he decided that the application should be dismissed. Nothing has been advanced to suggest that His Honour’s approach to her evidence was open to doubt.
GROUND 11
Ground 11 was expressed as follows:-
‘His Honour erred in the exercise of his discretion as to the grant of an injunction by excluding from consideration the force of previous schemes of the Respondent, given the evidence of the Respondent’s witness, Mr. Pemberton, given in cross-examination that the Respondent reserved the right to return to those schemes through the use of the teleclaims scripts appropriate to those schemes, and His Honour accordingly erred in finding Ms Laura Gharibian’s evidence as irrelevant to His Honour’s decision.’
On the application for the injunctive relief contained in the Application it is apparent that relief could not be granted in the Appellants’ favour predicated upon what might happen under a possible return by NRMA Insurance to an earlier operational procedure. This ground is without any substance or merit.
GROUND 14
Ground 14 provided as follows:-
‘His Honour erred in failing to admit the Affidavit of Ms. Trish Berendsen-Simper.’
Once again, in respect of this ground the submission of the Appellants is that it is largely self-explanatory and is not abandoned.
The primary judge dealt with Ms Berendsen-Simper’s evidence in paragraphs [51]-[53] of his reasons for judgment. His Honour concluded that the evidence did not satisfy the relevance test and in any case found that it was not persuasive and should be given no weight. No error has been established. Accordingly, this ground fails.
GROUND 16
Ground 16 provided as follows:-
‘His Honour erred in not allowing the Appellant to amend at hearing plead and make claims in relation to the supply of a lifetime guarantee.’
Nothing has been advanced to indicate the manner in which it is alleged that His Honour erred. In the absence of detail the so-called ground is meaningless. His Honour clearly dealt with all of the issues that were properly before him.
CONCLUSION
In the foregoing circumstances, the appeal fails on all grounds. Accordingly, it is unnecessary to address the issues raised in the Notice of Contention which were not the subject of detailed argument.
The appeal should be dismissed and, in light of the basis upon which the appeal has been conducted, the Second Appellant should be ordered to pay NRMA Insurance’s costs. The parties should bring in short minutes of order dealing with the payment out of the security to the extent that is necessary.
I certify that the preceding ninety-seven (97) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Emmett, Allsop and Graham.
Associate:
Dated: 22 March 2006
The First Appellant:
Did not appear
Counsel for the Second Appellant
B Levet
Solicitor for the Second Appellant
Peter R Glover
Counsel for the Respondent:
A J L Bannon SC, S T White SC and I S Wylie
Solicitor for the Respondent:
Blake Dawson Waldron
Date of Hearing:
27 February 2006
Date of Judgment:
22 March 2006
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