Battaglia v Mason

[1998] HCATrans 97

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Brisbane  No B34 of 1997

B e t w e e n -

STEFAN BRUNO BATTAGLIA

Applicant

and

MYRNA A. MASON

First Respondent

ANDREW JOHN SPILLER

Second Respondent

NORCO CO-OPERATIVE LIMITED

Third Respondent

Application for special leave to appeal

McHUGH J
KIRBY J
CALLINAN J

TRANSCRIPT OF PROCEEDINGS

AT BRISBANE ON FRIDAY, 17 APRIL 1998, AT 12.33 PM

Copyright in the High Court of Australia

MR C.G.S.L. JENSEN:   If it please the Court, I appear for the applicant.  (instructed by Rogers Matheson Clark)

MR P.A. KEANE, QC:   May it please the Court, I appear for the respondents.  (instructed by Clayton Utz)

McHUGH J:   Yes, Dr Jensen?

MR JENSEN:   If it please the Court, in this case, and in Seymour v Gough, the Queensland Court of Appeal has held that in assessing economic loss in cases of personal injury, where the plaintiff was effectively running a one‑man company, one must look strictly only to the drawings externally to the plaintiff out of the company in assessing the damages.

Your Honours, in the outline, I have drawn attention to authorities in New South Wales, South Australia and the Australian Capital Territory, as well England and Canada, that suggest that this is not the uniform approach taken in the common law world, and the principal authorities to which I would draw the Court’s attention are Leveridge v Witten, the unreported decision in New South Wales, Andriolo - - -

KIRBY J:   But what is so hard about you commencing proceedings which could be heard together, one for the individual and one for the company?

MR JENSEN:   That can be done, your Honour.

KIRBY J:   Why is that not an appropriate answer to the problem, as a matter of practicality?

MR JENSEN:   Well, as I have said in the outline, your Honour, that would be a device to get around the problem that confronts this applicant.

KIRBY J:   Not getting around it; on one view, it is conceptually correct.  Each party sues for its loss.

MR JENSEN:   Yes, your Honour, and, as Luntz says, the company would recover its loss and then distribute it to the injured director.  That, however, is not the approach that has been taken in other jurisdictions, and the applicant makes the point that that may be conceptually correct, but the approach, at least at this special leave application stage, in the other jurisdictions has sufficient merit to grant special leave.

McHUGH J:   One of the problems you have, is it not, is that your opponent says that the case you now seek to make really was never put in the court below?

MR JENSEN:   Your Honour, the trial was conducted on the basis that Seymour v Gough was good law, and that approach, of course, was inevitable, as it was a recent decision of the Queensland Court of Appeal directly in point, and the case could not have been conducted on any other basis.

KIRBY J:   Was it formally reserved?  Was the point formally asked to be reserved?

MR JENSEN:   No, your Honour.

McHUGH J:   Well, see, that creates problems.  The trial judge did not make findings as to matters that almost certainly need to be made before the principle for which you contend could be applied and, in this case, it is aggravated by the judge’s adverse findings concerning the credibility of the applicant and his accountant.

MR JENSEN:   Yes, your Honour.  The point is taken that findings were not made.  But in the reply, the applicant says that the evidence was uniform to support a finding that the companies were controlled by the applicant, with the exception that his wife paid the bills and did the bookkeeping.  Now, I accept that that was not quantified in the sense that one could say that 6.3 per cent of the wealth of the empire was due to her paying the bills and keeping the books.  There was no quantification.  It was qualitative evidence.  But although there was no finding on that, there was evidence that to that effect, and that has been extracted in the - - -

CALLINAN J:   But the trouble is that the respondent might well have conducted the case entirely differently had the respondent known that this point was to be reserved.  There was never issue joined in the case on the basis that Seymour v Gough might be wrong.

MR JENSEN:   Yes, your Honour, I accept that.

CALLINAN J:   So, how can you say that the respondent may not have, or would not have, conducted the case differently?

MR JENSEN:   Well, if your Honours accepted the substantive proposition that one basically ignores the companies then, in my submission, it would have made little difference in the conduct of the trial.  If one further accepted that, one would simply take a robust and broad approach to her input.

McHUGH J:   But one never knows, you see, because it is very rarely a case of black and white, there are always border areas and, even if the principle for which you contend is correct, on the facts, it may not apply and, until one had had a contest about the relevant facts, one does not know, which tends to make it an unsuitable vehicle.

MR JENSEN:   Yes, I understand that, your Honour.  Your Honours, in response to what Justice Callinan has just said, I make the submission that even if the point had been reserved, most likely the trial judge would have refused to engage in an exploration of issues which would only have been relevant at this level, because that would have involved, for example, doing some sort of analysis as to what part the wife had played in the agglomeration of the assets of the companies.  That could have been a very difficult and wide exploration of fact and, perhaps, the answer to your Honour’s question is, no, the point was not reserved, but it is more than likely that his Honour, even if the point had been reserved, would have simply refused such an exploration in the abstract on the basis that the case might go further, because those issues, depending upon what view the respondent took, might have gone a long way.

CALLINAN J:   But we would have had the position where there might have been an attempt to cross‑examine in a certain way, or an attempt to tender evidence of a certain kind, and then there would have been objection to it and, perhaps, the trial judge might have said in view of Seymour v Gough he would not permit the evidence to be received, or would have rejected the cross‑examination.  But at least we would have had a clear indication of what was proposed in respect of evidence, and we do not have that.

MR JENSEN:   No, your Honour.  The submission I have just made is that it would have been inevitable that his Honour would have said, “This is a very recent decision of my appeal court, and I am not going to extend the trial exploring factual issues - - -

McHUGH J:   Well, that may be, but then you would be in a different area altogether, and the ground would be that the trial judge erred in rejecting this evidence, or refusing to make this particular finding, as the case may be.  But you have conducted the case on one basis, and now you come up and you say, “Well, I want to run another case altogether.  True it is there have been no appropriate findings made, but the evidence is all one way.  This Court can make the findings.”  It is not often that this Court would grant special leave to appeal, for it to be making findings of fact that were never made in the courts below.

CALLINAN J:   And you would know in Queensland there is - I do not know whether it is a practice, but it often happens that somebody would attempt to tender some evidence and, if it is in written form, as it well could be here, it would be marked for identification and we would have the benefit of that.  We would be able to look at that.

MR JENSEN:   Yes, I understand that, your Honour.  The case was conducted on the basis that Seymour v Gough was the law and, as I say, it had to be conducted that way because of the recency of the decision.

McHUGH J:   Well, it may be, but counsel have got to understand that if they want to challenge a case they have got to do it.  Sometimes counsel will do it in cases for years before they get a suitable vehicle.  I remember, a long time ago, about the doctrine of res ipsa loquitur, which was finally knocked over in this Court in  Piening v Wanless.  The point was argued at trials.  Ultimately it was taken, but you had to take the formal point.  And likewise here, if somebody wants to challenge Seymour v Gough, they have got to do it as the trial level, so appropriate issues can be raised; not come up after a trial and now say, “Well, now we want to challenge.”

MR JENSEN:   Yes, your Honour.

KIRBY J:   This often happened in the Court of Appeal when I sat there, where somebody was signalling that they were going to take a point in the High Court, they would make a formal submission, recognising the Court of Appeal could not override it, that the decision in such and such was wrong.  I do not know if that is the practice in Queensland, but if it is not, it ought to be.

MR JENSEN:   I think it is, your Honour.

KIRBY J:   This is not to encourage cavilling with, or suggestion that a judge should depart from his or her duty, but it is a matter of putting everybody on notice and thereby, perhaps, steering the trial in particular ways that might allow the matter to be given whatever thought can be given within the authorities.

MR JENSEN:   Yes.  Well, I think the practice in the Court of Appeal is that there may be written grounds that are not abandoned, but are not orally argued.  I think that is the technique by which those grounds are preserved for this Court.  I cannot add to what I have said on that point.  The case of Andriolo, if it had been decided in Queensland, under Queensland law, would have been quite different.  If I can just provocatively suggest to your Honours what would have happened to Mr Andriolo in the Australian Capital Territory Supreme Court, I submit that he would have recovered nothing at all for past economic loss, even though it was said, at page 68,490, column 2 of the Australian Torts Reports that:

At all times he has received the same wages, and his family settlement has received the same distribution, as that of his co‑directors -

which is about point 7 on the second column.  Under the Seymour v Gough regime, the Queensland court would have said that Mr Andriolo, having received exactly the same benefits since the accident, though physically incapacitated, suffered no economic loss and he would have recovered nothing.  So, there is a clear divergence between Seymour v Gough and Andriolo and between Cole v Ellis but, in the South Australia case as well, the cost of the notional substitute employee was allowed with, in effect, the company being disregarded.

McHUGH J:   Do these cases deal with what a company’s rights are and ‑ ‑ ‑

MR JENSEN:   No, they do not, your Honour, and the respondent was fearful that my argument might be based on diminution in value of the shares, but it is not, and those cases do not follow that path; they simply essentially ignore the existence of the company altogether.  In Leveridge v Witten, the applicant has referred to it as well.

KIRBY J:   I think you have demonstrated there is a disparity of law and, also, for my own part, I have some concerns about Seymour.  But the question is whether this is a suitable vehicle to allow the matter to be ventilated in this Court.  I mean, the Court might say the old principle is the right principle and, if you want to sue for a company, you bring the two actions together and there is no problem.  Or it might say you look at the realities and you follow the line of authority in Canada and elsewhere and you accept what Professor Luntz says.  I mean, there is a choice, and it is an important question.  The question is, is this a case in which to bring it up, where you have not reserved it and there is no inkling of - or there is no formal reservation and there is no conduct of the trial on a foundation that might have been different.  The point will not go away.

MR JENSEN:   No, I appreciate that, your Honour.  The only response I can make is to say that his Honour would inevitably have rejected an exploration of additional issues that were inconsistent with Seymour v Gough and this Court could order a retrial, because those issues may not turn out to be extensive at all.  Mr Hanson, who then appeared for the respondents, was basically probing and testing the evidence in relation to the companies, rather than putting anything positive, and this Court could, if special leave is granted, allow the appeal and grant a new trial.

KIRBY J:   But would we not be in a better position to do that in a case where there is no adverse credibility and the judge just deals with it as a pure legal question and says, “Well, I accept what he says, and I accept this evidence, but I just cannot give him damages for the loss of the company.”  Here we have got a messy, factual situation, and a matter where the point has not been reserved.  It does not look to be a suitable case.

MR JENSEN:   Your Honour, it is not messy, and the question of his lack of veracity does not really impinge upon this part of it, because really it would only impinge upon her input into the companies because, if one took the Leveridge v Witten Case, one would simply look at the wealth of the companies and then make some reduction for her input.  Now, there is not a finding that she is a liar, or that anything - - -

KIRBY J:   What happens if subsequently the company brings an action, if there is a change of control of the company, or something of that kind happens and they say, “Well, we do not think that other strangers should get our damages”?

MR JENSEN:   Then Leveridge v Witten - the Court, when dealing with the company’s action, referring to the substitute wages, said that matter has already been allowed for in the personal action.

KIRBY J:   As between A and B, not between C and B.

MR JENSEN:   Yes.  So, my submission would be that, although there were adverse findings of credit against the applicant, and the case was messy in that sense, the issue is not necessarily messy and diffuse when one looks at the single issue of what was her input into the company - into the company wealth.

KIRBY J:   Was special leave to appeal sought in Seymour v Gough, or not?

MR JENSEN:   I do not think so, your Honour.

KIRBY J:   No, I do not have a note to that effect, so I assume not.

MR JENSEN:   Yes.  I do think I can take it further, your Honours.

McHUGH J:   Thank you.  The Court need not trouble you, Mr Keane.

This case is not a suitable vehicle for elucidation of the question of principle that the applicant now seeks to raise.  That question concerns the correctness of the decision of the Court of Appeal of Queensland in Seymour v Gough [1996] 1 Qd R 89.

The question which the applicant now raises was not raised at the trial or on appeal.  Furthermore, the trial judge did not make findings as to matters that would need to be determined before the principle for which the applicant contends could be applied.  The applicant answers that by saying that the evidence was all one way.  However, the respondent may have conducted its case differently if the intended challenge to the correctness of Seymour v Gough had been raised before the trial judge.  In addition, the trial judge’s findings concerning the credibility of the applicant and his accountant would make it difficult for this Court to make findings of fact. 

The application for special leave must be dismissed.  It is hardly necessary to say that the refusal of the application says nothing as to the correctness of the decision in Seymour v Gough.  The application is dismissed.

MR KEANE:   We ask for costs, your Honour.

McHUGH J:   Nothing you can say, Mr Jensen?

MR JENSEN:   No, your Honour.

McHUGH J:   The application is dismissed with costs.

AT 12.53 PM THE MATTER WAS CONCLUDED