Bluehive Pty Ltd v Dukemaster Pty Ltd

[2003] HCATrans 391

[2003] HCATrans 391

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Melbourne  No M229 of 2002

B e t w e e n -

BLUEHIVE PTY LTD

Applicant

and

DUKEMASTER PTY LTD

First Respondent

GAN HOLDINGS PTY LTD

Second Respondent

Application for special leave to appeal

GLEESON CJ
HAYNE J

TRANSCRIPT OF PROCEEDINGS

AT MELBOURNE ON FRIDAY, 3 OCTOBER 2003, AT 2.15 PM

Copyright in the High Court of Australia

MR T.A. GAME, SC:   If the Court pleases, I appear for the applicant with my learned friend, MR R.H. MILLER.  (instructed by Taylor Splatt & Partners)

MR A. SOUTHALL, QC:   If it please the Court, I appear for the respondent, Dukemaster, with my learned friend, MR R.B. PHILLIPS.  (instructed by Kliger Partners)

GLEESON CJ:   There is a certificate from the Deputy Registrar that she has been informed by the solicitors for Gan Holdings Pty Ltd, the second respondent in the matter, that the second respondent does not wish to be heard and will abide any order of the Court.  Yes, Mr Game.

MR GAME:   That is correct, your Honour.  Your Honours may appreciate that there were two hearings before Justice Weinberg and two judgments of the Full Court.  It may or may not be of ultimate significance, but if I could take you to page 127 of the application book, you will see that the Full Court on the first occasion purported to stand over the appeal.

GLEESON CJ:   Is what is said on page 131 at line 9 correct:

it was agreed that the Court should remit the matter to the primary judge ‑ ‑ ‑

MR GAME:   Yes, your Honour, that is not the problem.  The problem is that in order for the current respondent to succeed on the second appeal it had to demonstrate error in the second judgment of Justice Weinberg because the first order had to be an order setting aside the judgment and remitting it.  So, as I say, if it is of any significance – and we say it is of some significance for this reason, that we say that the way in which the court, on careful analysis, ultimately approached the issue, it was more an exercise of, as it were, original jurisdiction carrying over from the first hearing.  But in fact, in truth, putting aside formalities, what was happening on the second occasion was a second appeal and error had to be demonstrated in order for that appeal to succeed. 

We say that the way in which the court ultimately approached the questions of fact, the question of assessing the findings of facts by Justice Weinberg, really belies that the court did such a thing.  But I will have to take the Court a little further in the argument to – as I say, it may or not be of ultimate significance, but we do say that that is one of the things that the court ultimately did.

Your Honours, if I could take you from there to pages 137 and 138 of the application book, you will see at the bottom of the page that what the court envisaged, when it remitted the matter, was for the trial judge Justice Weinberg:

to review the evidence, including the demeanour of the witnesses –

and at page 138 the court was satisfied that that was, in fact, what he had done or that he had correctly characterised the process.  Then we come to a critical passage at page 153.  After recounting an exchange with counsel by the trial judge, the majority went on to say, in effect, that this indicated that the trial judge made findings of fact not based upon assessment of credibility in the sense of assessment of demeanour and the like. 

Now, a careful reading of the passage at 153, that exchange at line 10, may be illuminating because all that Justice Weinberg was talking about when he spoke of “inherent probabilities” was “accuracy of recollection”.  In this case you could not be mistaken about whether or not a meeting had, in fact, taken place, which was at the heart of the credibility issue.

If you go to the bottom of page 153, you will see that the majority characterised this as a case, in effect, in which his Honour based his conclusions on the “inherent probabilities”.  In a careful examination of what his Honour did will show that this is anything but a Warren v Coombes type of case, in which inferences were drawn from established facts.  This was very much a case of assessing the credibility of witnesses and drawing a judgment about conflicting accounts about whether or not events occurred, including on the issue of reliance.  If I take the Court back to page 101, you can see this very clearly in Justice Weinberg’s judgment.  At paragraph 94 his Honour said:

It expected me to identify the extent, if any, to which the demeanour of the various witnesses . . . 

In my view, Bluehive’s analysis of the task expected of me by the Full Court is correct.

Then on the following page we see a whole series of different ideas, some based on probabilities and some based on assessment of the reliability of accounts.  I would just pause there, your Honours, and say that assessment of any issue of credibility will involve an assessment of probabilities.  If a client says, “I just happened to find $250,000”, that may be improbable and that may be one of the reasons why you do not accept what they say.  If they talk out of the side of their mouth when they say it, then that might help you to think that they are not telling the truth, but it is the combination.

There really is not, in our submission, an inherent probability category of Warren v Coombes type of case in which the court, as it were, can override detailed credibility assessments of the kind made by Justice Weinberg in this case, and you will see at page 102 a series of ideas.  His Honour speaks of the letter being “strongly supportive” and he puts that to one side.  Paragraph 97 he spoke about the “inherent implausibility of some of his evidence”.  He spoke at paragraph 98 of Mr Cook’s “vested interest”.  He spoke of “significant discrepancies”.  At paragraph 100 he said that Mr Gan was “a witness of truth”.  In paragraph 102 he had “serious reservations” with respect to Mr Cook’s reliability.  At paragraph 105 he had reservations regarding the credibility of Mr Hii, largely preoccupied. 

Now, you can call them what you like, but they are the things that go into the mix of making a credibility assessment about witnesses.  Likewise, at 104, paragraph 108 something is “utterly implausible”.   Paragraph 109, something is “far more likely”.  Then at 115 his Honour had:

no doubt that the case before me was conducted upon the footing that if Mr Gan and Mr Sayers were believed, and Mr Hii and Mr Cook not believed, Dukemaster would be found to have made at least representations (h), (i) and (j).

Now, critically then at page 106 we have a credibility finding accepting Mr Gan’s evidence on reliance in relation to particulars (i) and (j) and this was not even referred to by the Full Court when they said that it was improbable that reliance was placed, then made an assessment based on entirely other factors, not including the evidence of the witnesses that was accepted.

Likewise, your Honours, we find particulars (a) and (b) found to have been proven in the context in which they were made and we say in respect of particulars (a) and (b) that they are unqualified particulars about future events found in context by his Honour and by the Full Court majority really taken entirely out of context in an artificial way.  But then we find at 142 and 143 a specific finding on reliance in respect of particulars (a) and (b).  It is put against us, really at the heart of the case, that somehow or other paragraph 150 is contradictory. 

Now, it is not an all or nothing case, your Honours, and really what the Full Court in their dealing with paragraph 150 is saying that he must have known that it was terrible or a complete lemon and he can only succeed if he thought the whole thing was going to be absolutely terrific on the day that he entered into occupation.  But that is not the way in which this case was decided by Justice Weinberg.  What he has done is he has accepted particulars (a) and (b) but not accepted particular (c), but particular (c) is the particular that is said to bring down the whole case, (a), (b), (d), (i) and (j).  In our submission, what really the Full Court is doing is entering into credibility assessments in an impermissible way, not supported by Fox v Percy and not supported by Warren v Coombes.

Your Honours, if we go back to the Full Court and see what happens after the passage that I referred to at paragraph 76, because the critical conclusion is at pages 154 and 155 – sorry, just before I do that, on the question of reliance I should just draw your Honours attention to the first judgment on reliance.  His Honour made specific findings about reliance at pages 24 and 25, paragraphs 86 to 88, and they are credibility findings, in our submission, and they are credibility findings which include a qualification in paragraph 88 which is foreshadowed about problems with particular (c), which was that the 55 shops would be fully tenanted when open. 

Now, if one goes back to page 154 of the application book, it says:

In any event, the question of reliance does not depend upon resolution of conflict –

the only reason for that is that Mr Cook and Mr Hii could not give any evidence about the issue of reliance and it is quite clear that the issue of reliance followed, it was an open door once the representations had been found to have been made and it was an open door up and until the second – it was not even a ground of appeal on the first occasion.  Now, it says here that:

Rather, it depends upon an assessment of the likelihood –

Well, it may be some part of it, but it certainly does not depend on that.  Then we have “would have induced Mr Gan”, that is an overstatement, because all it has to be is a part of it, and then we have the proposition about, as it were, “without any confirmation of the statements”, but his Honour had already taken that into account on both the first and second hearings and, notwithstanding that problem, it accepted the credibility of Mr Gan.

Then a proposition is put about a submission “concerning recent invention in relation to Mr Sayers”, which was never a ground of appeal, which was a written submission only passed over and must have been of the slightest importance in this case.  Then what the court does – and this is why I introduced the issue about the remitter – at line 82 it says:

there is a strong case for concluding that the Full Court should consider afresh –

but if this is a Fox v Percy type of case, then there would have to be contrary compelling inferences.  If it is a Warren v Coombes type of case, then we have to be drawing inferences from established facts and we would submit there is no case established, if error is not shown, for the court to consider afresh the evidence in that way.  Fox v Percy, the joint judgment and all of the judgments make it clear that in a rehearing, which is what an appeal to the Full Court is, error must be established, whether it be factual, legal or discretionary.  Then the court goes on, illogically, in our submission, to say:

should consider afresh . . . whether it is more likely than not that the statements attributed  . . . were actually made –

Now, the court never considered that issue, so they decided that it is open for them to consider that issue, but then they do not go on to consider it, even though that is the issue that they have decided that they can consider.  Then we have the introduction of the inherent unlikelihood notion, which, in our submission, is contrary, as I said, to Fox v Percy and Warren v Coombes and we are back to the same representations.  The first one is representation (c) and the second one is a misstatement of what occurred in respect of particulars (a) and (b). 

There is no doubt that Mr Gan believed that there would be a three‑level retail arcade and 55 specialty shops.  He read it and he was told it in respect of the 55 specialty shops.  All that is, is that he knew at the time he took occupation that they were not there.  Then it goes on to say “That conclusion is reinforced” and, again, we are back to exactly the same ground.  Over the page at 155, where it says:

Whether or not . . . it is more likely than not that the statements played no part –

but we say, how does the court get into this exercise at all, when the trial judge has made a specific finding, a credibility finding of reliance.  Then we say we have the proposition that I put before, which is that this smacks of original jurisdiction when the court says:

we are not satisfied, on the balance of probabilities, assuming the statements . . . were made by them, that Bluehive suffered any loss –

and I take that to mean reliance, although it is a reference to loss.  Your Honours, the finding on the balance of probabilities would form no part of the court on exercising a rehearing, unless the court was satisfied that error had been established.  So the theory we have at this point then is this, that a series of important misrepresentations were made about the

shopping centre, about the occupancy of it, about the turnover, none of which necessarily depend upon full tenancy, and then we are told, although the witness said that he relied on those representations, that is not so because the court thinks the probabilities are otherwise.  In our submission, that is clearly an impermissible intrusion by the court on review of the careful findings of fact made by Justice Weinberg.

So, in short, our case is that the issue of reliance itself was also credibility based, that the exercise of the jurisdiction of the court is shown, in substance, to be de novo or original jurisdiction rather than appellate in the way in which it exercised it and that the reasons given, which I have taken the Court through at 154 and 155, are lacking in logic and persuasion.  Those are our submissions, if the Court pleases.

GLEESON CJ:   Thank you, Mr Game.  Yes, Mr Southall.

MR SOUTHALL:   May it please the Court.  Your Honours, the critical matter to identify in this case is that the Full Court at the second appellate hearing was dealing with five remaining alleged representations, two of them were oral, representations (i) and (j), and three of them were written, representations (a), (b) and (d).  What my learned friend has not mentioned, and it is not mentioned in the submission other than in passing in paragraph 25, is that the written representations were dealt with properly by the Full Court on the basis simply that they were not misleading and deceptive.

If I can take the Court to the application book at 138, representations (a), (b) and (d).  It commences at line 32.  The Full Court enter into an excursus of what was contained in the written representations (a), (b) and (d), and they find at page 139, line 7 that it comprised the following:  the brochure, a document called “the Guidelines” concerning the fit-out of the centre, and no other documentation.  The Full Court says at line 11, page 139:

In so far as the representations were said to be in writing, they were said to be found in those documents.  Thus, Bluehive’s case was that representations (a), (b) and (d) were made by the handing to Mr Gan or Mr Sayers of those three documents.

The Full Court rightly, in our submission, found that:

His Honour observed that representation (d) –

that is, Mr Justice Weinberg –

was not sufficient, standing alone, to warrant granting Bluehive the relief it sought.

So, in other words, the key written representations were (a) and (b), and (d), if you like, had a derivative significance in that it related to (a) and (b).  What the Full Court majority then found was that upon proper analysis those written representations simply were not misleading and deceptive.  It was not a case of reliance on the written representations.  They deal with that at page 140 of the application book ‑ ‑ ‑

GLEESON CJ:   Well, the conclusion is on page 142, paragraph 44.

MR SOUTHALL:   Correct, your Honour.  With the greatest respect, that is the finding that they make in respect of the written documents.  So there is simply no room, in our submission – and, indeed, this is not the proper vehicle – to overturn the majority of the Full Court’s finding in relation to the interpretation of the written documentation supporting (a), (b) and (d) and, in our submission, that is the end of the matter in terms of those representations.

When we go to the oral representations, the issue of reliance then does become relevant.  My learned friend has correctly taken you to the, if you like, critical passage at page 154, where the Full Court at paragraph 77 say:

In any event, the question of reliance does not depend upon resolution of conflict between the competing versions –

of the relevant witnesses.  Before doing that, however, your Honours, the Full Court does, correctly, in our submission, make the finding that it did, at paragraph 76:

On the other hand, where a trial judge makes observations as to his or her understanding as to the task . . . there may be some justification for having regard to those observations, if the ultimate reasons are silent as to those questions.  That appears to be the case here where, consistently with the observations made in the course of argument, his Honour appears to have based his conclusions concerning the credibility of the contending witnesses on inherent probabilities and on the vagueness of the evidence given by Mr Hii and Mr Cook.

They are there drawing a very sharp distinction between that issue and the issue of demeanour.  Demeanour is, of course, the way witnesses appear in court.  That has been the subject of the very recent decision of this Court in Fox v Percy, it was the subject of the decision in Warren v Coombes and in  Devries and all those cases concerning the importance of the Full Court respecting the role of the judge at the first instance and the unique position that judge is placed in.

But here, the Full Court, having given the opportunity to the learned trial judge on two occasions to make those observations and to make those findings on the basis of demeanour, were confronted with the situation where his Honour had specifically eschewed taking up that opportunity.  It is for that reason that they refer, at 152, to a passage of exchanges between his Honour and myself, in the course of the second appeal, where his Honour, in the middle of the page at line 15, refers to:

The judgment could have been made appeal proof –

and his Honour is conceding that –

if I had been minded to do that, simply by inserting a line or sentence, so the Full Court says, along the lines of “I was not impressed –

and so and so.

HAYNE J:   But, Mr Southall, the Full Court is right in what it says in paragraph 75, is it not, that you do not take account of this sort of exchange?  What do you get out ‑ ‑ ‑

MR SOUTHALL:   Your Honour, it is right ‑ ‑ ‑

HAYNE J:   Then why bother going to it, Mr Southall?

MR SOUTHALL:   ‑ ‑ ‑ absent the question of silence as to any other explanation upon which the court based its findings on credibility, your Honour.  With the greatest respect, it was entitled to take that into account and to recite that in the course of its judgment because, as I have said earlier, his Honour Mr Justice Weinberg did not take that opportunity up.  His Honour Mr Justice Weinberg specifically did so on the basis of the probabilities, inherent probabilities if you like, but what the Full Court then did was to engage, having been confronted with that – and, in answer to your Honour Justice Hayne, if that is right, and it is, for that reason the court then referred to paragraph 77, about the “assessment of the likelihood”.

What it did, prior to that – and we are talking about the oral representations (i) and (j) – it went into seriatim the matters which touch upon the inherent likelihoods, the inherent probabilities and the likelihood of the situation.  Commencing at page 144 it refers, firstly, to the plainly inconsistent findings made by his Honour himself at paragraph 52, when comparing paragraphs [143] of his own judgment and paragraph [150] of his own judgment and, as I understand it, it is not sought to dispute the fact that they are inconsistent findings in relation to what is said to be the turnover representations and the consequences of them.

Thereafter, their Honours go into the all important issue, and this is the issue which inevitably swayed them:  the lack of complaint.  They identify seven separate instances of either lack of complaint or recent complaint.  They say, in other words, “We are now confronted with inherent probabilities.  We are confronted with incontrovertible evidence in the form of documentation, the letter of 21 August 1996, the subsequent documents relating to lack of complaint” – and they refer to a series of correspondence sent by the applicant’s solicitors to the respondent, none of which, in the course of 17 months, raised the matters concerning the turnover representations.

Then they go into the documentation underlying the proceeding or the commenced proceeding before the Victorian Civil Administrative Tribunal.  Again, no complaints concerning that.  Then they deal with the issue of the recent invention by Mr Sayers, who was one of the witnesses called by the applicant in the case, and asked as to how he could explain not having told the solicitors, prior to the commencement of the proceeding, on the all important turnover representation, as to those representations themselves, and he had no explanation other than he forgot.

The Full Court went through those in analytical detail and said, “We are confronted with incontrovertible facts” and thereby bring in the principles in Fox v Percy, Warren v Coombes, Abalos, and those cases which say you are to respect the trial judge’s conclusions, but you must not derogate from the fact that a Full Court is required to consider afresh, as a rehearing, the views of the trial judge.  They looked at the incontrovertible facts and they made their decision on the basis of those incontrovertible facts.  In our submission, the finding they ultimately made in respect of reliance on representations (i) and (j) were correct and they were correct for the reasons that are set out in our written submissions, upon which we rely.

Now, your Honours, the point in respect of section 28(1)(c) is covered in our written submissions, but can I say this beyond our written submissions, that point has not been raised and was not raised prior to this application.  The appropriate time when that point, if it had any validity in the first place, ought to have been raised was either at the directions hearing subsequent to the first judgment of the Full Court, which was held on 4 December 2001 before the learned presiding judge, Mr Justice Sundberg.  It was not raised, and there was agreement that the matter be remitted to the Full Court for reconsideration.  Nor was it subsequently raised before the Full Court in the second appeal hearing in early 2002. 

The first time the point about the remitter, the improper procedure adopted by the remitter, as it is said to be, is in this hearing and in the application which is the basis of this hearing.  We say that that is an important point that your Honours ought to take into account.

The other point that your Honours ought to take into account, with respect, on the 28(1)(c) point is the judgment of his Honour Mr Justice Finkelstein in the CPSU v Telstra Case, where his Honour specifically found, after analysing the authorities, of which there were no contrary authorities, but after analysis of the authorities so far as they went, found that the procedure under section 28(1)(c) involved a continuation of the hearing.  That is precisely what the Full Court of the Federal Court did in this case.  They continued the hearing after having remitted back the critical issues to his Honour.  His Honour made those findings and the Full Court properly reconsidered those as part of the continuation of that same proceeding.  That is, in our submission, fully consistent with what his Honour Mr Justice Finkelstein laid down in CPSU v Telstra Case.

In our submission, in any event, the procedure adopted by the Full Court under section 28(1)(c) is squarely in accordance with the procedure outlined in that subsection.  They are at large within the parameters of that provision to reconsider afresh the matters that were heard by the judge at the first instance.

Your Honours, in our submission, this is not a suitable vehicle for the ventilation of these issues, that is to say, the matter ought not be properly brought in this Court.  It has been fully heard and determined by the Full Court of the Federal Court after two hearings within the same hearing, after two hearings before the trial judge in the same hearing.  There are no special issues such as to bring it within the ambit of an issue touching upon the administration of justice in this Court, nor is it a special matter other than an ordinary, if you like, run of the mill section 52 case involving what are commonly known as “the shopping centre cases”. 

There is nothing that takes it apart from the normal form of those cases and, moreover, in essence, the way the case is put by my learned friends on this application, it is a dispute as to facts.  There is, in our submission, no demonstrable or justiciable error of law that should attract this Court’s jurisdiction arising from the judgment of the Full Court.  They are our submissions, if the Court pleases.

GLEESON CJ:   Thank you, Mr Southall.  Yes, Mr Game.

MR GAME:   If the Court pleases.  The CPSU Case only decided what the remitted hearing was.  It says nothing about the nature of an appeal to the Full Court following a remitted hearing.  My point is a short and, in my submission, incontrovertible one, that on a second appeal you would have to establish error in the second set of reasons and jurisdictional error cannot be cured notwithstanding a misunderstanding by all concerned as to what was taking place on the second hearing.

In respect of my friend’s submission that the court found incontrovertible facts, we submit that really what this amounts to is a belated recognition that the case has to be brought within Fox v Percy type principles.  There is absolutely no suggestion whatsoever, in the judgment of the Full Court, that they had regard to the finding of incontrovertible facts whatsoever.  Rather, they treated it, we say impermissibly, as a Warren v Coombes type of situation and those two classes of cases are diametrically opposed to each other, in our submission.

Now, if I may take you back.  What has happened, in our submission, at page 153, is that the court has, erroneously and impermissibly, had regard to an exchange which should have had no weight at all with the court.  Representations (a) and (b), they have misconstrued the judge’s reasons when they say his Honour is silent as to those questions, for the reasons that I gave.  So there are two, in our submission, important errors in that passage.

If I take you back to representations (a) and (b) at page 142 – and there was no sleight of hand intended in not taking you to that – but the whole point is that Justice Weinberg found, in context, that those representations were made.  The critical thing is that they are unqualified representations as to time; they are future representations.  Therefore they bring into play section 51A.  We would take your Honours to Justice Conti’s judgment in this respect and we submit that what his Honour Justice Conti said at paragraphs 89 to 91 and then particularly at 93, when he referred to unqualified representations, that is what we have in this case – 161.

It has to be understood that the representations were not only written, they were partly oral, because Mr Cook made a representation about the 55 specialty shops and Mr Hii said that at no relevant time would there be a three‑level arcade and he had never envisaged that it would be fully let.  So even if you take the Full Court’s characterisation, there is still conduct within section 52, creating a breach of section 52.  The only way in which the respondent can avoid those amounting to conduct under section 52 is by what Justice Conti described as the disingenuous submission that that was nothing more than a statement about the space that might be occupied by this place, when what was being told to Mr Gan was that this was a great

investment.  There were going to be three levels.  There were going to be 55 shops and that the turnover was going to be X and there was going to be a bistro.  Now, that is what those representations are.

In our submission, the findings at paragraphs 43 and 44 do not stand scrutiny, for the reasons given by Justice Conti in the passages that I took your Honours to.  Those are my submissions in reply.

GLEESON CJ:   The outcome of the case in the Full Court of the Federal Court turned upon the Full Court’s reversal of certain findings of fact made by the trial judge.  On that matter the Full Court was divided.  No error of principle in the approach taken by the Full Court to the findings of fact by the trial judge has been shown and the case raises no issue of law suitable to a grant of special leave.  We are not persuaded that the interests of justice require a grant of special leave to appeal, and the application is refused with costs.

AT 2.50 PM THE MATTER WAS CONCLUDED