Baycrown Pty Ltd v IVI Pty Ltd

[2007] HCATrans 107

[2007] HCATrans 107

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Brisbane  Nos B42 of 2006 and B43 of 2006

B e t w e e n -

BAYCROWN PTY LTD

Applicant

and

IVI PTY LTD

Respondent

Applications for special leave to appeal

KIRBY J
CRENNAN J

TRANSCRIPT OF PROCEEDINGS

FROM BRISBANE BY VIDEO LINK TO CANBERRA

ON FRIDAY, 2 MARCH 2007, AT 1.19 PM

Copyright in the High Court of Australia

MR J.A. GRIFFIN, QC:   May it please the Court, I appear with my learned friend, MR S.S. MONKS, for the applicant.  (instructed by Walsh & Partners)

MR D.J.S. JACKSON, QC:   May it please the Court, I appear with my learned friend, MR A.M. POMERENKE, for the respondent.  (instructed by Clayton Utz)

KIRBY J:   Yes, Mr Griffin, thank you.

MR GRIFFIN:   The matter at issue at the trial, your Honours, was whether a contract for the sale of land had been formed.  The only formation issue was whether an offer to sell the land by the applicant, Baycrown, had been withdrawn prior to acceptance.  There was no doubt that an email had been sent on behalf of the vendor, Baycrown, to Cleary & Hoare, Solicitors.  That was copied to Gahan, the estate agent in the transaction, and the withdrawal email is attachment A to the applicant’s summary of argument.  It is at page 89 of the application book.  I ask your Honours to look at it briefly.  Your Honours will see that it was sent on 23 October at 5.30 pm.

At the trial it was not contended that Gahan had authority to receive that email ‑ your Honours see that Gahan is one of the addressees – but there was an issue – in fact a main issue in the case was whether Cleary & Hoare had authority.  It was held, however, that Cleary & Hoare did not have such authority and, accordingly, their mail did not operate to withdraw the offer.

Also litigated, however, was the issue of whether Moss, the alter ego of IVI, nonetheless knew of the Baycrown withdrawal of offer by reason of having been told of it by the estate agent, Gahan, before Moss sent off the acceptance at 3.25 pm on 24 October.  Gahan had spoken to Moss at 2.00 pm on that day.

Now, before speaking to Moss, Gahan had had a conversation with Van Asperen of Baycrown in which the Baycrown withdrawal was discussed, and Van Asperen asked him if he had read his emails and when Gahan said, no, told him that when he read his emails he would find that Baycrown had pulled out of the contract.  The trial judge held that Van Asperen did speak in these terms to Gahan, and it was following that conversation that Gahan spoke to Moss. 

Now, if only for those reasons, it was surprising that when the trial came, Gahan gave evidence to the effect that when he spoke to Moss he spoke in terms of Baycrown wanting to pull out of the contract, not having actually pulled out.  That evidence was inconsistent with what Van Asperen had told him but it was also inconsistent with things had been stated by Gahan himself.  An affidavit had been sworn by Gahan in interlocutory proceedings in November 2002, only a couple of weeks after the relevant events occurred, and if I could take your Honours to paragraph 12 of that.  It is attachment C at page 95, and at paragraph 12 the final sentence is, “He said that if I went to look there, there would be one there for me” – that is, an email – “and that he has pulled out of the contract.”

Additionally, a few hours after Moss accepted the Baycrown offer, Gahan had written a letter to Moss, and that letter is dated 24 October 2002.  It is at page 97, and if one looks at the third paragraph of that letter, Gahan, talking about his conversation with Van Asperen at 2.00 pm, said:

He then proceeded to inform me that he had withdrawn his offer via a e‑mail he had sent to me late last night.

It is apparent, therefore, that at various times up to the trial, Gahan was recorded as saying that what Van Asperen had told him was that Baycrown had pulled out of the contract.  When the trial came along, his evidence was that what he said to Moss was that Baycrown was wanting to pull out of the contract.  Additionally, the evidence was that the reason Moss had not to that point signed the contract was that he had been dissatisfied with the lot reconfiguration arrangements, and he had been resisting signing the contract for that reason. 

Now, all of that, of course, is suggestive of the proposition that there was a change in Gahan’s account when the evidence came to be given by him on the issue at the trial.  At the trial Moss gave evidence that matched the evidence of Gahan.  He said that Gahan had told him only that he had been advised that Baycrown was talking in terms of wanting to withdraw.  Now, the trial judge accepted their evidence and held that what Moss had been told did not prevent him from accepting the offer.  The issue was, of course, crucial to the determination of the proceedings.  Had the court held that Gahan had told Moss that Baycrown had withdrawn its offer, it would have been held that no contract had come into existence, but as it was, based on the evidence that Gahan and Moss gave, the court held that Gahan had not told Moss of the withdrawal of the offer, only that Baycrown was thinking of withdrawing.

KIRBY J:   Mr Griffin, I hope it will not seem ungracious of me to say that you have so far plunged deep into the pool of facts and that is not normally the function of the High Court of Australia.  I mean, we cannot be completely disembodied from facts, but it is not a very attractive proposition to take us into this detailed scrutiny of facts that have already had a trial, and indeed, one earlier visit to this Court.

MR GRIFFIN:   Your Honour, I am only doing this because it is crucial for your Honours to see that there was a change in evidence.

KIRBY J:   We realise that that is the way you present the matter.  We have read the application book and we know that you have an argument of collusion, but I think you have to really try to indicate that there is some important matter of principle here, because otherwise this is just facts, facts, facts and that is not the proper function of the High Court.

MR GRIFFIN:   Your Honour, the principal error made by the judges of the Court of Appeal was in their failure to accept that the conduct revealed in the costs statement was conduct which was improper and which undermined the court process.  Now, there is no High Court authority dealing with the issue of collusion of witnesses.  There is the decision of the Court of Appeal in New South Wales in Day v Perisher Blue.  Now, your Honours will have appreciated that the costs statement demonstrated that the solicitors had given the statements to the various witnesses, that Gahan had ‑ ‑ ‑

KIRBY J:   One of them was your witness.

MR GRIFFIN:   He was not really, your Honour.  He was the estate agent.  For instance, he had given that affidavit to the solicitors for the respondent.  He had been introduced to the transaction by the respondent and he was definitely in the respondent’s camp.  Your Honour, in Day v Perisher Blue a fact situation was considered where the solicitors were shown to have arranged a telephone conference with Perisher Blue’s witnesses in relation to an accident on a ski field; a lift operator had sustained personal injuries, and in the telephone conference the evidence of the various witnesses was relayed to the group, and there was discussion, and Justice Sheller, with whom the other members of the court concurred, said, this seriously undermines the process by which evidence is taken.  What was done was improper.  He said he regarded what had happened as of sufficient seriousness prima facie for the papers to be sent to the Legal Services Commissioner.

Now, their Honours in the Court of Appeal did not accept that Day v Perisher Blue was truly analogous.  Justice Mackenzie, for example, said that Day was distinguishable because there was actual impropriety in the form of an interactive discussion between witnesses of evidence, but as we read the decision in Day, that somewhat overstates the position.  What the facts show occurred was a teleconference between two solicitors and four witnesses, and which the evidence of the various witnesses was recounted, but there is no proof of anything more than that.  There is no proof of what was actually said, and in particular, there was no proof that any witness altered his evidence on account of what was learned at the teleconference.

The case is in fact far weaker than the present case, where one witness sees the evidence of the other witness, where Moss saw the evidence to be given by Gahan and made corrections to it, and various statements were sent to other people.  In relation to the Cleary & Hoare aspect of the case, Moss saw Martinez’s statement, he saw corrections that were made to Martinez’s statement, and then apparently made corrections to his own statement based on those corrections.

Looking again at Day v Perisher Blue, as in the present case, the fact that the teleconference was held, it did not prove that any particular witness had altered the evidence he proposed to give, but the vice lay in the solicitors orchestrating a facility whereby witnesses were apprised of the evidence of other witnesses and the ‑ ‑ ‑

KIRBY J:   In that case they actually had a joint conference, did they not?

MR GRIFFIN:   They did have a joint conference, but what was said at the conference was not ever demonstrated and, in particular, it was never demonstrated that any of them actually altered their evidence by reason of anything that occurred at the conference.  Whereas in the present case, there is the clear change in Gahan’s account, clearly suggestive of the proposition that it was the fact that he had learned of Moss’ account that caused him to change his account.

Now, their Honours in the Court of Appeal in the present case in one form or another said, in effect, that the entries in the costs statement did not prove anything, but of course, that was why it was a reopening that was sought.  The primary judge had been asked, inter alia, to stay the operation of the order and that form of relief was, in our submission, perfectly appropriate having regard to the impropriety that had been demonstrated.     It is true that we also asked for the issue to be retried in the specific performance proceedings which by then had been instituted by IVI, and we did that because we considered that that was a convenient way for the matter to be handled.  These proceedings are still in the pleading stages in the Supreme Court.

Furthermore, there is the rule which exists in Queensland which deals, in our submission, with this situation.  Of course, the preceding rule, rule 667, provides for the court ‑ ‑ ‑

KIRBY J:   Where do we find this rule?

MR GRIFFIN:   Rule 668, your Honour, is at 83 to 84 of the application book.

CRENNAN J:   Rule 668(1)(a).

MR GRIFFIN:   Pages 82 to 83, and it can be noticed immediately that it confers broad powers on the court to deal with the situation if facts arise or are discovered after an order is made, and we draw the Court’s attention to sub‑rule (a):

facts arise after an order is made entitling the person against whom the order is made to be relieved from it –

sub‑rule 2 enables the court to:

give other appropriate relief.

and sub‑rule (3), which is very significant, authorises the court to do a number of things, including under sub‑rule (3)(a):

direct the proceedings to be taken, and the questions or issue of fact to be tried or decided, and the inquiries to be made, as the court considers just –

The word “entitled” was referred to by the members of the Court of Appeal but that word has never been interpreted in any strict sense in Queensland.  It would not in fact be open to so interpret it if only because it is necessary to give effect to the third sub‑rule which plainly envisages the court taking intermediate steps prior to deciding what action to take, if any, with respect to the order from which the relief is being sought.  In both our primary and reply outline we have referred to in a little detail to the line of Queensland authority that shows that the word “entitled” is not to be interpreted in a strict sense. 

For example, we have quoted Rank v Agen Biomedical Ltd which shows that the rule has been customarily used in Queensland to relieve people from the effect of self‑executing orders by reason of them coming along and saying that, although the court has made the order because of their default, they are now in a position to comply.  In Rankin it was because a list of documents had not been delivered and the action was struck out.  Now, such persons could hardly be said to be entitled to a different order from that initially made.  The initial order was made because of proven default, and such a person is merely showing grounds upon which, in the discretion of the court, he might be relieved from the earlier order and the same position applies here.

In Woods v Sheriff of Queensland, an early decision referred to in Rankin, Chief Justice Griffith had said that the predecessor of rule 668 could be invoked whenever the discovery of facts would render the enforcement of the order unjust.  The inquiry authorised by 668(3) was peculiarly an appropriate course here.  One cannot assume that when the solicitors have handed out statements, as they did in this case, any future discussion about those statements would be confined to discussions orchestrated by the solicitors.  There is absolutely no reason why witnesses, having been furnished with the statements of other witnesses, might not speak directly to other witnesses on the issues independently of the solicitors, and an inquiry would enable that to be investigated. 

Now, of course, an inquiry would be a fishing exercise, to use the term, I think, used by Justice Jerrard and Justice Wilson, but it is precisely the exercise contemplated by rule 668.  The fact that Russell of Norfolk Estates had been given all the statements is a good example.  Norfolk Estates was the undisclosed principal.  Now, if one has the mere fact that Russell has been given all the statements, that on its own means nothing, and anyone placing an onus on the applicant would say, “Well, so what, Russell has been given the statements.  What does that demonstrate?”  But on an inquiry Russell could be asked why it was he came to be given the statements, what use, if any, he made of the statements and what contact he had with the authors of the statements with respect to the statements.

So the fundamental flaw, your Honours, in the judgment below, in our submission, is that none of the judges started off on the premise that what was shown in the costs statement without more, was a process that was improper and which undermined the evidence‑taking process in the case, as it had in Day v Perisher Blue.  Furthermore, without further inquiry the effect of that impropriety could not be known, and their failure to recognise that infected their approach to the whole matter.  Their Honours emphasised what the costs statement did not show as opposed to what it did show and the costs statement showed that at the very least witnesses had been given the statements of evidence of other witnesses and it also showed that the process had been conducted by the solicitors acting for the respondent.

It was not a case of witnesses spontaneously speaking amongst themselves with no encouragement or involvement on the part of the solicitor in doing so.  The provision of witness statements to other witnesses was orchestrated and effected by the solicitors.  Then we find that the case hangs on the conversation between two of these witnesses, ie, Gahan and Moss, and Moss has made corrections to Gahan’s statement.  Now, in our submission, that is then supported by the apparent change in Gahan’s account, which I have dealt with previously. 

Your Honours, I should briefly mention Quade.  Whilst there is no decision of this Court directly addressing collusion, Commonwealth Bank v Quade did deal with the situation which arises when documents are not discovered in defiance of a disclosure order, and the Bank had failed to disclose a number of documents, and the Court distinguished between two situations.  One being the simple case of the subsequent discovery of fresh evidence, and in that case the verdict could only be overturned if it was reasonably clear that fresh evidence would have produced an opposite result.

The second situation was one where the successful party had seriously failed in the performance of its obligation and thereby created the difficulty, and in that situation the Court said, first of all, a less stringent test was to be applied.  That was particularly so in cases where the impropriety was left unexplained, which of course, was the position in the present case, because no evidence was offered by the solicitors as to why they had done what they had done, nor was any evidence offered by or produced from the witnesses to say that this had had no effect.  So, your Honours, for those reasons ‑ ‑ ‑

KIRBY J:   We have studied Quade.

MR GRIFFIN:   Yes.  The Court ought to have applied the second category situation Quade spoke of and recognised also, as Quade did, what was described as the onerous burden in that situation of demonstrating to virtual certainty what would have happened in the hypothetical situation which would have existed but for the other party’s misconduct.  That statement is directly applicable, in our submission, to the circumstances of the present case.  They are our submissions, if the Court pleases.

KIRBY J:   Yes, thank you, Mr Griffin.  Mr Jackson, the Court will not require your assistance in this matter, and I will ask Justice Crennan to announce the reasons and pronounce the orders of the Court.

CRENNAN J:   The applicant seeks special leave in two matters involving an application to set aside a judgment on the basis of the discovery of fresh evidence after an order was made.

The applicant has submitted that there is a paucity of authority and no High Court authority as to the circumstances in which a judgment should be reopened when it appears there has been collusion between witnesses.  That may be correct.  However, as we see no error in concurrent findings by the primary judge and the Court of Appeal that the applicant had not demonstrated that the alleged misconduct entitled it to an order in its favour or a different order, as required by rule 668(1)(b) of the Uniform Civil Procedures Rules 1999 (Qld), this case is not an appropriate vehicle for consideration of the issue.

In both matters, special leave is refused with costs.

KIRBY J:   The Court will now adjourn in order to be reconstituted for the succeeding Brisbane cases and for the video link to Darwin that follows.

AT 1.43 PM THE MATTER WAS CONCLUDED