Bomanite Pty Limited & Ors v Slatex Corp Aust Pty Limited

[1992] HCATrans 167

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No S146 of 1991

B e t w e e n -

BOMANITE PTY LIMITED, BOMANITE

CORPORATION, JONATHON NASVIK,

JON'S DESIGNS INC, DENNIS A.

PAUL and G & M TERRAZZO co INC

Applicants

and

SLATEX CORP AUST PTY LIMITED,
SLATECRETE PTY LIMITED,

BRENDAN ROBERTS, NEIL LAURIE,

ROBBIE BURKE and COOKVILLE

PTY LTD

Respondents

Application for special leave

to appeal

Bomanite 1 5/6/92

MASON CJ

TOOHEY J

McHUGH J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 5 JUNE 1992, AT 11.46 AM

Copyright in the High Court of Australia

MR O.K. CATTERNS:  May it please the Court, I appear with my

learned friend, MR J.V. NICHOLAS, for the

applicants. (instructed by Dynon & Dynon)

MR R.J. ELLICOTT:  May it please the Court, I appear for all

of the respondents, except the second respondent.

(instructed by Abbott Tout Russell Kennedy)

MR CATTERNS:  Your Honours, is it convenient to hand up a

short outline?

MASON CJ: Yes, it is. What is the position of the second

respondent, do you know, Mr Ellicott?

MR ELLICOTT:  My instructing solicitors previously acted for

them but filed a notice of ceasing to act prior to

trial, about four months, I think, so they took no part in the ultimate trial which occurred, nor did they take any part in the motion which is the

subject of this application for leave. So they

really disappeared out of the proceedings.

TOOHEY J:  Was there a judgment against them, Mr Ellicott,

at least it would not have been a j·udgment against

them?

MR ELLICOTT:  They were not notified of the hearing date so

there was no judgment against them. I think

His Honour just left that one up in the air, and

the application was dismissed in the final order.

TOOHEY J: Yes, that is why I qualified what I said, but

there may have been orders of various sorts made

against them?

MR ELLICO1T:  I do not think there was in the end, yes.

MASON CJ: Yes, Mr Catterns?

MR CATTERNS:  May it please the Court. Your Honours, in our

respectful submission, in addition to the very

evident injustice done to the applicants in the

particular case which itself can be sufficient

grounds, there is a broader point of public

importance which, as we understand it, this Court

has not had occasion to turn its attention to - - -

TOOHEY J: Mr Catterns, before you take us to that

principle, to what extent is the application
affected by the subsequent filing of an appeal in

respect of the decision not to adjourn and the

judgment against the applicants?

MR CATTERNS:  Your Honour, in my submission, saved by that.

If we had not filed that appeal in the last two

weeks Your Honours would have said, rightly, that

Bomanite 2 5/6/92

this was purely academic. Now that an appeal has

been lodged out of time and requiring leave and is

returnable next week, if this application is

dismissed today that appeal is, of course,
hopeless. If leave is granted then, we hope, the

appeal and the application for leave to appeal out

of time from His Honour's final decision, would

then stand over and await this Court's

determination of the question which we now seek to

agitate.

TOOHEY J: Unless the appeal or application for leave to

appeal in respect of the refusal to grant an

adjournment gave rise to any orders by the Full

Court of the Federal Court?

MR CATTERNS:  Does Your Honour mean next week?

TOOHEY J: Whenever they are heard by the Full Court.

MR CATTERNS:  Your Honours, if the Full Court refused our

application to stay those proceedings, pending the

determination of an appeal by this Court, then
subject to any appeal from that, this appeal would

then become futile.

TOOHEY J: But say the Full Court decided that an

adjournment was appropriate in the circumstances

and it should have been granted?

MR CATTERNS:  It could do that, Your Honour, but it would be

unlikely to say an adjournment should be granted

for the purpose of adducing this evidence when the

Full Court had itself held that such evidence may

not be led.

TOOHEY J: Yes, I see that.

MR CATTERNS:  Your Honours, it did seem to us the most

practical way of doing it was to keep the matter

alive by that appeal from the Full Court decision,

and our submission is that this is an appropriate

vehicle now because it is a case where one can see

clearly the manner in which the case was conducted

and the deficiencies, and yet the three weeks

before the trial, as His Honour Mr Justice Pincus

said, with what we respectfully submit was an

inadequate balancing exercise, His Honour

Mr Justice Lockhart, and then the Full Court, shut

out the applicants from adducing any evidence at

all by any means - - -

McHUGH J: But there had been 17 directions hearings.

MR CATTERNS:  Yes, Your Honour, there had been faults from

both sides, no doubt about it, and more on ours.

Bomanite	5/6/92
McHUGH J: But you said you were prepared, after 17

directions hearings, your clients attention having

been drawn to this evidentiary problem in the case,

counsel who appeared said you were ready to go on.

MR CATTERNS:  He did, Your Honour, and that was after having

a week's adjournment to consider the matter.	In my
submission that is not the critical moment. At

that stage there had not been a formal order for

affidavits although affidavits had been filed on

both sides. Then, as Your Honour remembers, the

solicitors for the applicants wrote saying, "Well,

we are bringing the Americans here,	We will adduce
evidence orally".	It was relisted. The critical

error occurred, with respect, then when counsel

said - it was relisted, there was some discussion

and His Honour Mr Justice Wilcox said: "It is

proceeding by way of affidavits. I direct that.

Are you happy with that?" and counsel said that.

Your Honour, there is no doubt that was an

error in the conduct of this case. But then two

months later, perhaps three months later, three

weeks before the trial the scales fell from the

eyes, and litigants come to the court saying, "We are wrong, no doubt costs orders will follow, but

we want to recast our case.", and to be shut out at

that stage, on our submission, with an inadequate

balancing exercise is not appropriate.

In particular, we take His Honour and

Their Honours in the Full Court to have said that deviation from the case management system of

itself, His Honour says, is enough. Then he goes

on and goes through a balancing exercise - we also

submit, as His Honour Mr Justice Pincus held,

inadequately - but of itself the procedural history

was enough to disqualify us, and that has never

been - - -

McHUGH J:  It is a matter of exercise of discretion by the

trial judge and the majority of the Full Court of

the Federal Court upheld it. Where is the special

leave point?

MR CATTERNS:  Your Honours, we have to find an error of

principle. What the Full Court says in Lenijamar

and then follows here is, to put it colloquially,
we will throw away all those old principles of
allowing you to correct error unless injustice is
caused, and we will say that deviation from the

case management scheme of things, of itself - - -

TOOHEY J: You have used that expression several times. Is

that the language of the Federal Court?

Bomanite 4 5/6/92

MR CATTERNS:  Yes, Your Honour, would Your Honours mind

going to the application book, page 4 - I am sorry,

that is His Honour Mr Justice Lockhart, and then

that is picked up by Justice Gummow.

TOOHEY J: Where is that?

MR CATTERNS:  Page 4, Your Honour, line 10.

TOOHEY J: I am sorry, I - - -

MR CATTERNS:  I am sorry, it is that whole paragraph, the

words "in itself", I am sorry, Your Honour I

mislead you:

provides in itself sufficient basis -

that is at line 16, and what His Honour is

referring to - - -

TOOHEY J: But that is a bit unfair to the judge. He is not

saying deviation from some case management system

is, in itself, sufficient; he is saying, that when

you look at the whole history of this

matter, including all the directions hearings, all

the warnings that had been given, everything that

had been said by counsel about readiness to go on.

Now, that is not erecting case management system to

some sort of position where it dominates all other

questions, His Honour is simply looking at the

whole history of the matter.

MR CATTERNS:  Your Honour, in our submission, yes, he is

looking at the whole history but that whole history

is the procedural defaults on both sides, and the

matters he sets out on the previous page are the

procedural defaults on both sides, except that we

are more in default - -

McHUGH J: But there is no error of principle there,

His Honour says that in the ordinary circumstances

he would be the first to allow a party to amend its

case and file further evidence if prejudice to the

other party can be cured by costs, but then he

refers to the history of this matter and weighs

that up and says, particularly what happened before

Mr Justice Wilcox in June and July, provide in itself sufficient basis for declining to allow the fresh evidence to be given. It is just a weighing

up of discretionary factors.

MR CATTERNS:  Your Honour, His Honour does not there take

into the scales the fact that it will destroy our

case, His Honour does not, as in my submission

he -

McHUGH J: He does, look at page 5 line 8 - - -

Bomanite	5/6/92
MR CATTERNS:	Your Honour, I am sorry, he then goes on to

it, as we say in our written submissions,

His Honour goes on to, and we say that His Honour

there did not give enough weight to that.

McHUGH J: But he goes on to say, but the matter proceeds

beyond that, and then he goes on and considers

further facts and then he is well aware of what is

going to happen to your client's case.

MASON CJ: Yes, and he concedes on page 6:

though unjust to the applicants not to allow

it in one sense -

MCHUGH J:  He says:

respondents. it would be a greater injustice to the

MR CATTERNS:  Your Honours, stopping at that, it is hard to

imagine why an adjournment with costs, including if

necessary on an indemnity basis, would outweigh the

total loss of the case. It is not a case where

there had been contumelious disregard of
directions. His Honour refers again to the
history. The history was desultory compliance on

both sides and then failure to heed excellent

judicial advice.

TOOHEY J: Yes, but I think what emerges from the decision

of Justice Lockhart and the Full Federal Court, or

at least the majority, is that the old approach

that costs will cure everything is no longer good

enough.

MR CATTERNS: · Certainly, Your Honour.

TOOHEY J: There are times when a matter simply has to

proceed to trial on whatever footing, or whatever

state of preparation it then has because (a) the

injustice to the other party is one that cannot

really be cured by costs and (b) that there are

wider considerations as well, namely, the need for

courts to run their litigation efficiently. None
of these matters of itself dominates but they are

all matters that need to be taken into account.

McHUGH J:  It is not only justice in the particular case

that the court has got to have regard to, it is

justice as a continuing process, and if you just

allow litigants to do what they want to do, have 17

applications for directions, and they say they are

ready to go on and suddenly they come along and
say, "Well, now we are not ready to go along",

cases have got to be displaced, delay occurs, the

system is thrown into disrepute.

Bomanite 6 5/6/92

MR CATTERNS:  Yes, Your Honour, but for 100 years courts

allow adjournments, amendments even after - - -

McHUGH J: But they were not faced with the case loads that

they are today.

MR CATTERNS:  Yes, Your Honour, that is why, in our

submission, it is a matter that this Court needs to

look at, with respect, very carefully.

McHUGH J: And that is why the community is demanding

alternative dispute resolution systems and other

means of dealing with litigation.

MR CATTERNS:  Yes, Your Honour. Your Honour, in our

submission this is a case where this Court has an

opportunity to set the modern scene about what the

balance is between preservation of the orderly

carriage of litigation in the modern world and the
old justice between the parties.

McHUGH J: But there is also this question of costs - the

costs order does not compensate because, as

everybody knows, party and party costs are only a

fraction of the solicitor and client costs.

MR CATTERNS:  Your Honour, the court can always make a

solicitor and client - and if I may in a way

riposte to that, Your Honour, it is no answer to

say sue the lawyers, especially in a case like

this. Here, somebody owns a piece of property, on
their case, a piece of copyright, life plus

50 years, and they lose that so far as the

respondents are concerned and anybody who gets

something from the respondents for the totality of

the copyright.

TOOHEY J:· One answer to that might be a comment by

Mr Justice Lockhart, that the applicants' case was

fatally flawed, in any event.

MR CATTERNS: But, Your Honour, we do not read His Honour -

with respect, one cannot say that until one sees

what the evidence would have been.

TOOHEY J: No, of course, one cannot, but it is a comment

which no doubt His Honour only made after

consideration.

MR CATTERNS:  Is Your Honour referring to His Honour's

ultimate judgment?

TOOHEY J: Yes, in which he said, "Well, even if I had

allowed additional affidavit evidence, of the sort

which apparently was proposed to be called or to be

led, there were still fatal flaws in the

applicants' case."

Bomanite	5/6/92
MR CATTERNS:	Your Honour, my first submission is that it

would be unfortunate to govern the present appeal

by what was said later, but on the other hand one

must look at it practically - - -

TOOHEY J:  That was merely offered by way of reply to

something that you put to Justice McHugh, but it
all seems to add up in the end to a balancing

exercise and you still have to demonstrate some

error of principle.

MR CATTERNS:  Yes, Your Honour, and what we say is this: it

is a very big thing, as Justice Pincus says, to
lose your rights in this way. Against that on the

other side of the scale there is an adjournment,

say, with indemnity costs and a stay, if necessary,

till they are paid and so on. But in our

submission, the error of principle is, that should

have waned very heavily in our way; it would, it

has for 100 years in dozens of circumstances.

MASON CJ:  Why do you say 100 years, because my recollection

which goes back, I think, a good deal longer way

than anyone else in this courtroom, was that courts

were quite strict in requiring compliance with time

stipulations, and it was difficult to get an

adjournment of a case. It would have been

impossible to secure an adjournment of a case at

the time at which I am speaking, in circumstances

such as are in evidence in this case.

MR CATTERNS:  Your Honour, why I say 100 years is

Lord Justice Bowen in Cropper v Smith, 1884.

Your Honour, there has been an ebb and flow of procedural generosity, if I may use that term, and

I, needless to say, defer to Your Honour on that,

and we do not demur to the proposition that there

needs to be case management now, of course it does,

but in our submission it cannot, of itself or in

itself - - -

MASON CJ: But I do not read the judgments in this case as

indicating that per se departure from the case

management system has resulted in this order.	And
the passages have been referred to.	Now, you have

said in your outline that the Federal Court applied

this inflexible principle, that if there was a

departure from the case management system then an

application or adjournment would be refused. But

where in the judgments do we find a statement to

that effect?

MR CATTERNS:  Your Honour, my best point passage is the

passage I have referred Your Honours to, which

is - - -

Bomanite 8 5/6/92

MASON CJ: Is there any passage in the judgments that refers

to the expression "case management system"?

MR CATTERNS:	Yes, Your Honour.
MASON CJ:	Now, can you refer us to those so we see what is

said about them.

MR CATTERNS: Justice Gummow, page 34 lines 10 to 12.

MASON CJ: But that is only a narrative statement there.

MR CATTERNS:  Yes, Your Honour, but would it be convenient

if I handed up Lenija.mar and take Your Honours to

that passage that we do set out.

MASON CJ: Yes.

MR CATTERNS:  Your Honours, page 395, the passage begins at

the bottom of 394 of Lord Griffiths.	Your Honour,
395 is the passage I have in mind

McHUGH J:  I mean, that case was an illustration of the

court's departure from the case management system.

Although there had been a failure to comply the court allowed the appeal, did it not, set aside the

order dismissing the action.

MR CATTERNS:  Yes, Your Honour. I am attempting to what

Your Honour has put to me.

Mc HUGH J: Yes.

MR CATTERNS:  I draw Your Honour's attention to what

Justice Lockhart said about the "in itself".

Justice Gummow, at page 34 and then on to 35,

~ummarizes His Honour the trial judge's

considerations, and Your Honours see (i) and (ii)

"The lengthy history of the matter" and the benefit

that counsel had of His Honour Justice Wilcox's

advice. And then Your Honours see (vi) on page 36

line 10, and again His Honour Mr Justice Gummow

says "factor (ii)" ignoring Mr Justice Wilcox's

advice, I am sorry, Your Honours, I am using that

as a shorthand, of course -

TOOHEY J: It was not advice, it was a warning.

MR CATTERNS:  Yes, Your Honour, I do not mean to denigrate

it, of course, Your Honours, it was perfectly

magnificent help.

TOOHEY J:	In the ..... of terms.
MR CATTERNS:	Yes, Your Honour, it was extremely good help,

it should have been heeded, no doubt about it.

Bomanite 9 5/6/92

Your Honours note that Justice Gummow says, that

factor:

provided, in the opinion of Lockhart J., a

sufficient basis -

I take that to mean alone -

for declining to follow the course sought by

the appellants on their motion.

McHUGH J: One important point that Mr Justice Gummow made

is that in addition to the reasons that

Mr Justice Lockhart gave, there was a further

reason which would have strengthened, or supported

the conclusion he reached, and that was that beyond

the immediate interests of the parties, the public

interest, in maintaining the integrity and vigour

of the procedures of the court.

MR CATTERNS:  Yes, Your Honour. Your Honour notes at

line 8, Your Honour is at page 39, he says:

There was perhaps one relevant consideration which did not receive explicit consideration -

I take His Honour to thinking, and we read

His Honour Mr Justice Lockhart as having taken into account that matter implicitly and that is

Ketteman's case and so on.

Your Honours, what we are really saying on the

special leave point is the new way of looking at

case management since Ketteman and in the modern

way of running these cases, and its tension against

justice to individual parties, particularly where

they have not behaved contumeliously over a period
6f a very long time, this is over a year and a

half. The Federal Court having said, Full Court,

that we do not think the old principles apply, the

special leave point is what should apply?

Now, it is not just an answer to say, "Well,

take into account the interests of the parties and
the public interest". In our submission, a

considered judgment of this Court on the balancing

factors, how the public interest is to be weighed

in on that is a matter of public importance.

McHUGH J: But it is just a factor to be weighed along with

other factors in the particular case. You cannot
lay down fixed rules about these matters because

this is a discretionary judgment, the judge has got

a discretion, he has got to weigh up facts for and

against.

Bomanite 10 5/6/92

MR CATTERNS: In answer to that, Your Honour, I ask

rhetorically, then how can one get over His Honour

saying this procedural default and failing to heed

the warnings in itself was sufficient.

McHUGH J: That was a remark His Honour made on his way to

the conclusion he ultimately reached. His Honour

went on and dealt with other matters.

MR CATTERNS:  Yes, Your Honour, but then he came back to

that.

McHUGH J: But ·His Honour was not talking about case

management, he was talking about - - -

MR CATTERNS:  Your Honour, I am using the jargon but it is

really, in my submission, that is what he is

talking about.

McHUGH J: His Honour was referring, specifically, to what

occurred before Mr Justice Wilcox in June and July.

MR CATTERNS:  Yes, Your Honour, which included saying that

the affidavits were enough, trying to say, "Well, yes, the affidavits are enough but we will adduce

some more oral evidence". Perhaps if I go back a

step, Your Honours, the very heart of the case

management system is the order 10 as the Full

Federal Court says, power to give directions, and the most common one of all of those is the

direction for the filing of affidavits. It is the

heart of the case management system that, as in the

commercial division, one gets statements, so in the
Federal Court there is a regime for affidavits.

That is what the case management system is all

about. Add to that, when or when not

interrogatory - leave is granted for
interrogatories and so on, but the system by which

evidence is adduced, that is what the case

management system is. it is not just a listing
system, Your Honour.	I know Your Honour is not

putting to me that it is.

So, we do use the jargon "case management

system", Your Honour, which I think Lord Griffiths

perhaps used first, first in the papers here anyway
but, in our submission, the history of the matter

refers to its procedural history in the case

management system, and that is at page 4, as I

said, in itself, and if I could just go, finally,

Your Honours, to page 6, after looking at

considerations both ways, including the fact that

the evidence was inadmissible which, in my

submission, and as Justice Pincus held, was not a

relevant consideration, His Honour comes back to it

at line 10:

Bomanite 11 5/6/92

I hesitate to shut it out and to shut out the

applicants from the chance to adduce it but,

in my opinion -

I am sorry, perhaps if I could add in there in

square brackets, realizing that that is going to be

fatal to their case, -

but in my opinion the history of the matter -

it is "the history of the matter" that is crucial

here -

is such that, though unjust to the

applicants ..•.• it would be a greater injustice

to the respondents -

and with all respect, Your Honours, the weight of

the consideration of the respondents is not very

heavy there, so we submit that His Honour has

either allowed the case management system alone of

itself to outweigh justice to the applicants or has

let it weigh so heavily in the scales with the
relatively small damage to the respondents - of
course, we accept that there would have been damage

to the respondents - but there was no evidence that

that could not have been cured by costs, even

indemnity costs - - -

McHUGH J: This is an argument that you put to the Full

Court. In this Court the correctness or otherwise of His Honour's judgment cannot really be

litigated. It is a question whether it was open to

him or whether there was some error of principle,

and as to whether the case involved some question

of general public importance, and it is very much a

one-off case concerned with these parties. If an

order could not be made in this case it is doubtful

if it could ever be made in any case.

MR CATTERNS:  No, Your Honour, in my submission, this is a

case where the legal advisors made errors, they are

very plain. There is no evidence that the parties

were in default; maybe they were.

McHUGH J:	It would be difficult to find another case where a judge says, "Well, you had better be careful
about this, there seem to me to be some real
deficiencies in your case, go away and think about it", and there having been 17 directions, counsel
comes back one month later and says, "We have
thought about it, we are ready to go". Case is set
down for hearing and then you want to reopen the
matter.
MR CATTERNS:	Your Honour, I do not want to repeat myself.

Perhaps if I could just make this final submission

Bomanite 12 5/6/92

on that. Your Honours, that is three weeks before

the hearing, counsel comes to the trial judge and

says, "Your Honours, we realize we were wrong, it

is not a case where the damages can fall on the

legal profession. Our client will lose his or some

slice of his property right", if I can use the

shorthand, and in our submission far greater weight

should have been placed on that at least, and that

is a sufficient error of principle, and the process

that the court ought to go into in determining

these sort of matters and the principles it should

adopt are, in our submission, a special leave

point; failing that, as a matter of justice in the

individual case.

McHUGH J: Other judges may have taken a different view from

Mr Justice Lockhart, but the question is whether it

was open. Justice Pincus, for example, would

certainly have.

MR CATTERNS:  Your Honour, we submit that Justice Pincus was

right in saying that His Honour erred in the

balancing process; an error of principle, not as a

matter of discretion. May it please the Court.

MASON CJ: Yes, thank you, Mr Catterns. The Court need not

trouble you, Mr Ellicott.

In the particular circumstances of this case

the Court is not persuaded that there was any error

of principle on the part of the primary judge or on

the part of the Full Court of the Federal Court. therefore refused.

MR ELLICOTT:  I would seek costs.

MASON CJ: Yes, you do not oppose costs, Mr Catterns?

MR CATTERNS:	No.
MASON CJ: The application is refused with costs.

AT 12.19 PM THE MATTER WAS ADJOURNED SINE DIE

Bomanite 13 5/6/92