Brophy v NIAA Corporation Limited

[1995] HCATrans 169

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S45 of 1995

B e t w e e n -

KIERIN JOHN BROPHY

Applicant

and

NIAA CORPORATION LIMITED (IN LIQUIDATION)

Respondent

Directions hearing

GUMMOW J

(In Chambers)

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON WEDNESDAY, 14 JUNE 1995, AT 9.30 AM

Copyright in the High Court of Australia

MR B.W. WALKER, SC:   May it please, your Honour, I appear for the respondent in the application for special leave to appeal, the applicant on the summons.  (instructed by Corrs Chambers Westgarth)

MR D.E. GRIEVE, QC:   May it please, your Honour, I appear for the respondent to the motion.  (instructed by Berne Murray & Tout)

MR WALKER:   Your Honour, this is an application under Order 64 rule 1‑ rule 2 is the alternative we invoke as to the terms - primarily to set aside the application for special leave on the ground named in the summons, namely, that it was filed about 35 days out of time.  Alternatively, for the imposition of terms which is an attempt to do practical justice between the parties in light of the steps which have been taken, reasonably, as we would put it, by my client following the expiry of the permitted time for the filing of an application for special leave to appeal.

We move on the affidavit of Alan Max Friedlander, sworn on 18 May 1995.  Does your Honour wish me to read that?

HIS HONOUR:   No, I have read it.

MR WALKER:   As your Honour will see, the step which was taken was the not unexpected one of the preparation and issue of a bankruptcy notice, and as your Honour will have seen in paragraph 18, an additional circumstance is the fact that my client is in the course of a winding up and this is one of the matters and, obviously, the major matter which is delaying the payment of the final dividend.

HIS HONOUR:   Yes.  Does Order 64 apply to leave applications?  There is a real debate, is there not, as to whether that is yet a proceeding, relevantly, in terms of the Rules.

MR WALKER:   In terms of an irregularity, my argument is that time is, of course, a mandatory requirement with respect to the filing of an application for special leave and that if something is filed out of time, it is filed irregularly; is thus an irregularity.  If Order 64 did not apply on that ground and, in our submission, Order 64’s general application to irregularity suggests that it should, but if it were not the case then it would be an application by my learned friend, in effect, under Order 60 and what we are really doing then is bringing the matter before the Court for appropriate directions and orders.

HIS HONOUR:   Yes, that is right.

MR WALKER:   Leading, we say, to the same position, namely that the Court considers whether, as a matter of justice between the parties, time ought to be extended or the effect of an extension granted but on terms.  My primary application, as your Honour has appreciated, is to treat it as an irregularity regardless of the controversy about the nature of an application for special leave but treating any application - in this case, the application for special leave - as an irregularity of filed otherwise than in accordance with the Rules, principally, of course, time.

HIS HONOUR:   How long has your client been in liquidation?

MR WALKER:   It was some time after the receivership commenced.  Resolutions to wind up on 20 March 1992.  As is pointed out in paragraph 18(d) of the affidavit, the creditors are mostly farmers, people whose money has been tied up in this operation and we put the submission, as your Honour would expect, that they are creditors whose interests are deserving of anxious consideration by the Court.

HIS HONOUR:   Yes.  What is the date of the New South Wales Court of Appeal decision?  It is 15 March 1994, the date of judgment, I think.  No, that is Mr Justice Rolfe.

MR WALKER:   No, my friend says 28 February.  Yes, given on 28 February.

HIS HONOUR:   Yes, I have it.

MR WALKER:   Paragraph 2 of the affidavit, your Honour. 

HIS HONOUR:   I have the record sheet, have you got that, of the New South Wales Court of Appeal?

MR WALKER:   No, your Honour, I have only got - - -

HIS HONOUR:   Front cover.

MR WALKER:   I do not think I have been that privileged, your Honour.  Yes, I do.

HIS HONOUR:   That is wrong, is it?

MR WALKER:   Yes.

HIS HONOUR:   It was heard on 1 August.

MR WALKER:   Yes, it is wrong.  It is 28 February 1995.

HIS HONOUR:   Not 1994.

MR WALKER:   Having been heard last August.

HIS HONOUR:   That is why I got muddled.  Let me ask Mr Grieve two things:  what is the substantive legal point going to be that you say requires intervention?

MR GRIEVE:   Can I answer that in just one moment to say that we have an affidavit we would like your Honour to look at on the question of delay.

HIS HONOUR:   Yes.  Do you want to file it in Court now or has it already been filed?

MR GRIEVE:   No, it has been filed.  It was filed on 19 May.  It is an affidavit sworn by Brendan Francis Pendergast.  It was sworn on 17 May 1995.

HIS HONOUR:   Yes, I have it.

MR GRIEVE:   It goes to the delay and reasons for it.  With respect, my friend has overstated the delay marginally.  It was, in fact, as I calculate it, 25 days in all.  Judgment on 28 February:  the special leave application should have been filed on 21 March.  It was, in fact, filed on 26 April which sees it being, as I calculate it - no, with respect, I am wrong and my friend is right.  He sees it being something like 35 days out of time.  Mr Pendergast offers an explanation for that which can be reduced to one phrase, namely, Professor Blainey’s The Tyranny of Distance concept.

Now, could I then return to your Honour’s question.  In the special leave application we have propounded the primary question in these terms:  “Does section 52 oblige a party possessed of relevant information pertaining to the commercial viability and probity of another with whom with the knowledge of the first and third party lacking that information proposes to deal in which dealing the first party has a relevant interest devolves that information to the second party?”  Now, in short, what we have propounded is a question directed towards the definition of the duty to speak, a breach of  which would give rise to a liability under section 52.  The question that we claim to be of general importance is just how does one, as it were, define what seems to date to have been a somewhat illusive concept, namely the duty to speak.

In all the cases thus far, the courts have recognised certain fairly obvious situations where the duty arises but have, as it were, tailed off by saying, “We can’t close the class.  Each case depends on its own facts.  In this case either there was a duty or there wasn’t”.  In the instant case the Court of Appeal approached it essentially on that basis, saying that, “We find no duty; therefore no breach by silence; therefore no liability.

HIS HONOUR:   Where does this word “duty” come from?  Not in the Act.

MR GRIEVE:   It is not in the Act.  It comes from the line of cases that all started with Rhone-Poulenc and so forth.

HIS HONOUR:   Yes, I follow what you are saying.

MR GRIEVE:   Where it is said that one can be guilty of misleading or deceptive conduct by silence, the silence being in the face of a duty to speak.  I have probably put the syllogises in a rather unsatisfactory fashion.

HIS HONOUR:   Was there not some question in the Court of Appeal as to - I suppose it would be a factual matter, really - as to whether there was knowledge that the party in the middle was misconducting itself?

MR GRIEVE:   Yes, that is right.  The evidence in that regard, which was adduced at first instance and was plainly before the Court of Appeal, was that some 12 months or so prior to the incident of which my client complains, NIAA appointed an accountant to investigate and report on the affairs of the agent company, Murnane, and that accountant duly did that on a month-by-month basis and provided the respondent here with a deal of information, stage by stage, sufficient to put the respondent in at least a far superior position to that of the applicant so far as the affairs of the agent company were concerned.

Now, it may be said against us by my friend that that is an issue of fact and this Court would not be interested in it.

HIS HONOUR:   That is what I was wondering.  Will you be pressing that part of it on the leave application or just the section 52, as it were?

MR GRIEVE:   On the special leave application, the section 52 aspect of it. On a full appeal - - -

HIS HONOUR:   Yes.  But once you are in the door, you will bring the baggage with you, will you?

MR GRIEVE:   Yes, if your Honour wants a candid answer to the question.  And it may be that the door will be - the hinges will not be terribly - - -

HIS HONOUR:   That is right, it may rust the hinges in the first instance.  But can I ask you this, Mr Grieve.  There is an appointment for settling the index for the application book on 19 June.  It that Mr Fogarty’s recollection?

MR GRIEVE:   Yes.

HIS HONOUR:   If that were met and everything was done as promptly as it should be done, is there any reason why it could not be ready for - this is a leave application - the list on 14 August?

MR GRIEVE:   None whatsoever.  Indeed, we would be anxious to get into that list if we could.

HIS HONOUR:   Yes.  It may well be possible, subject to any exigencies that can happen, of course.  But if that were to happen, Mr Walker, do you have any real complaint if this motion were stood over to that date as well?
There is a real question, it seems to me, as to whether one Judge can take these steps and, even if he could, whether it would be wise.

MR WALKER:   Can I address the question of the discretion first?

HIS HONOUR:   Yes.

MR WALKER:   Your Honour is faced with the same kind of final dispositive power, as Justice McHugh had in Gallo v Dawson, for example, where, in the guise of an extension of time application, a matter was disposed of, in that case an appeal as of right from a single Justice to the Full Court.  My friend offers me a copy.  I do not want to take your Honour to it at all.  That was a frank extension of time application for an appeal as of right from a single Justice of the Court to the Full Court.  In the Full Court Justice McHugh’s decision was upheld - - -

HIS HONOUR:   Exactly, Mr Walker, that is why I mentioned it to you.  Why invite two steps?

MR WALKER:    I am not inviting two steps.  By adjourning this application to the Full Bench, we are left still in the position that our available act of bankruptcy gets closer and closer to becoming unavailable.  An August date, were we to win the special leave application, will entirely meet the position from our point of view.  But, in our submission, we ought not to be left, between now and August, in the state of uncertainty as to the administration of - - -

HIS HONOUR:   I think you doing remarkably well, frankly.

MR WALKER:   In which case I have nothing further to add, your Honour.  I apprehend from the way your Honour has put it that it is not to the point for me to say the things I would have otherwise said about, first of all, the reason advanced for the lateness and, second, the question of prospects but suffice it to say, as your Honour would expect - - -

HIS HONOUR:   Yes, what do you say about prospects?

MR WALKER:   In our submission, the central factual matter is utterly inseverable from, is integral to the section 52 issue.  It was not put below at either stage.

HIS HONOUR:   What was not put below?

MR WALKER:   We did not put below, either at trial or in the Court of Appeal, that this was a case where one had to search for something that fell within a legal category called duty and that in the absence of that Mr Brophy must fail.  It was not put that way and as your Honour has seen the use which Mr Justice Handley made of Demagogue  v Ramensky, yet this was not put as a duty or nothing case.  This was put as whether, in all the circumstances, the failure to warn amounted to misleading or deceptive conduct, without any glosses of the statute at all.

The central circumstance was what did we know and were there other aspects of the relation, a confidentiality requirement being one, plus a confidential expectation dehors the agreement being another, which destroyed any notion of it being misleading or deceptive for there to be silence and there was a combination of three matters relied upon by Mr Justice Rolfe and by all three members of the Court of Appeal.  First of all, there was a finding that actual fraud was not known; second, that the most cogent warning came, as Mr Justice Mahoney said, so - - -

HIS HONOUR:   That is the fraud of the intermediary.

MR WALKER:   Yes.  So close to the heel of the hunt as not to be relevant to the inquiry.  Next there was the fact that the contractual dealings between the parties included an express term as to confidentiality and, finally, and very importantly for section 52, quite apart from the contract, Mr Brophy had agreed in cross-examination, recorded by Mr Justice Handley at the foot of his reasons, that he did not expect that information about the financial dealings between Murnane and farmers would be disclosed to other farmers, because he was one of the farmers.

HIS HONOUR:   Which page is that, can you tell me?

MR WALKER:   That was on page 12 at the very foot of his Honour’s reasons.

HIS HONOUR:   Yes, I have it, thank you.

MR WALKER:   :  “The grazier also said”.  Now, your Honour, it is in that light, of course, that we would say - and I am, of course, anticipating what we would say on special leave - you do not have a suitable vehicle for exploring the question of duty so called even if that were a real question.  We go further:  that was never a question.  The issues between these parties never involved whether you gloss section 52 or not.  We did not gloss it; the court did not gloss it.  That is not an issue.  It does not raise a matter of general principle.  Even if it did, the facts are not such as to permit the Court either to alter the decision without going behind findings of credibility or to cast any further useful light on the meaning of section 52 because, in our submission, this Court would not be glossing section 52.  But even if it were inclined to do so, this is a most inapt case to try to do so.

HIS HONOUR:   This is really a question to Mr Grieve:  what would the relief be in this case?

MR WALKER:   In this Court, on appeal?

HIS HONOUR:   Yes.

MR WALKER:   It would be very difficult, in light of what I have just put about the facts, to see this Court reversing the decision by entering judgment because that would involve somehow going behind or ignoring, each of which would be very difficult if not impossible because of the credibility findings, the statements by Mr Brophy under cross-examination of which the major one is referred to by Mr Justice Handley.

So that in this Court there might, at most, be either a remitter to the trial judge or, query, to the Court of Appeal, although that probably would be in no better position than this Court - probably to the trial judge to reconsider the facts as found by his Honour in light of whatever different test of law this Court might come up with.  As soon as one sees it in that light, of course, it becomes a case where special leave would appear to be a very tenuous hope, indeed, because section 52 does not lend itself to substitution of the statutory words by some gloss beyond those words.  As we say, neither of these courts purported to go beyond the words of section 52.

HIS HONOUR:   But to take it a step further, would it involve the administration of some remedies under section 87?

MR WALKER:   Yes, necessarily, it would.  It would be unlikely simply to be section 82 damages.

HIS HONOUR:   Yes.  That was what I was wondering.

MR WALKER:   They would appear to be the most roundabout way of doing that which could be directly done under section 87.

HIS HONOUR:   So, it would be question of undoing the legal structure on which Mr Grieve’s client was attacked, as it were.

MR WALKER:   Your Honour, it has a little bit more complexity than that because they are, of course, relations which include three parties, at the least.  In fact, there are other parties, namely, purchasers or vendors of livestock but we can leave that out at the moment.  There are relevantly three parties and one of them might be counted as practically penniless, namely, the convicted rogue of the piece.  Section 87 would appear to be the way in which the Court would be likely to adjust rights between NIAA and Brophy and probably basically by a dissolution of liabilities by an avoidance of a liability.  Whether there are damages as well would remain to be seen.  They could, of course, be under section 87.

Your Honour, the only other point was the reason given.  In our submission, there does need to be, as Justice McHugh pointed out, some real reason given, and the reason given is one which makes one wonder how Mr Fraser was Prime Minister when the western districts of Victoria are not a remote planet.

MR GRIEVE:   He has more.resources?

MR WALKER:   Telephones are remarkable effective.  Facsimile machines are remarkable effective and 21 days is not the twinkling of an eye.  In our submission, the fact that we were not even told on the 19th or 20th day, “Hold hard, we are still considering our position” is an indication of the fact that the timing was simply, in effect, ignored.  Now, we do not have to say and I do not say contumeliously, I simply say it was ignored.

HIS HONOUR:   Yes, but it does seem to me, Mr Walker, that if, to a panel of three, it appeared that there were some substantial prospects of success, that could well go in the scales in such a way that it overcame the delayed question.

MR WALKER:   It should, your Honour.  We accept that it should. 

HIS HONOUR:   It is invidious for that question to be resolved today by me, I suspect, if it could be resolved fairly promptly.

MR WALKER:   I do not want to dissuade your Honour from “invidious” but, in our submission, appropriate that it be done.  True it is, we may simply be inviting, as your Honour says, a review of - - -

HIS HONOUR:   An interlocutory appeal of some sort.

MR WALKER:    - - - your decision but, in our submission, that is no reason why your Honour should not address the issue which is presented today, “What are the prospects on special leave?” and, in our submission, for the reasons put, your Honour is in as good a position as a Bench of three to say whether they are - - -

HIS HONOUR:   It depends what you mean by “as good as”.

MR WALKER:   Well, you are in as good a position.  It is simply that your Honour is one and they would be three, that is the only difference.  May it please your Honour.

HIS HONOUR:   Yes, all right,. thank you.  When I mentioned 14 August, gentlemen, I did have in mind that it may be necessary - and it is no more than a possibility at the moment - for some matters to go over to be heard on the 15th for leave.  So, if you are marking your diaries just make sure you have both, at the moment, available.

Am I right in thinking, although this summons, the original, bears the date 18, that is crossed out and it bears the date then 22 May 1995.  Do counsels’ copies have that?

MR GRIEVE:   Yes, that is what has happened to my copy.

MR WALKER:   And on ours.

HIS HONOUR:   On the front sheet of the court files it says it is 18 May.

MR WALKER:   I think it is the difference between filing and processing, if the latter word means anything, your Honour.  We lodged it on the 18th.

HIS HONOUR:   That was a Thursday.

Having heard what Mr Walker and Mr Grieve have said I think the position is best dealt with as follows, and I will read out what I propose to order.

1.  Direct that subject to the exigencies of the listing for that date, the application for special leave to appeal be included in the list for 14 August 1995 at Sydney.

2.  Stand over to the hearing of the special leave application the summons dated 22 May 1995, but with liberty in the meantime to restore it before a single Justice on five days written notice.

So, Mr Grieve, if there is any slackening in getting your application book ready you will be back here and in trouble.

3.  Costs of today be costs of the special leave application.

MR GRIEVE:    If your Honour pleases.

MR WALKER:  If your Honour pleases.

HIS HONOUR:   Thank you, gentlemen.  I will now adjourn.

AT 10.00 AM THE MATTER WAS ADJOURNED