Byron v Southern Star Group Pty Ltd

[1997] HCATrans 193

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S7 of 1997

B e t w e e n -

ALISTER BYRON

Applicant

and

SOUTHERN STAR GROUP PTY LIMITED

Respondent

Application for special leave to appeal

DAWSON J
GAUDRON J
McHUGH J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON MONDAY, 4 AUGUST 1997, AT 11.31 AM

Copyright in the High Court of Australia

MR A.J. SULLIVAN, QC:   May it please your Honours, I appear for the applicant.  (instructed by G.T. Down)

MR J.S. HILTON, SC:   If the Court pleases, I appear for the respondent.  (instructed by Heidtman & Co)

DAWSON J:   Mr Sullivan.

MR SULLIVAN:   Your Honours, it is conceded at the outset that this case does not give rise to any significant question of public importance, given the repeal of the statutory defence formally available under section 556(2)(a) of the Code.  However, we submit that this is one of those rare cases - and we acknowledge the difficulty of persuading the case of that - where leave should be granted because of the significant injustice of the individual concerned.

DAWSON J:   It turns on its own facts, in any event, does it not?

MR SULLIVAN:   It does, your Honour, it turns on its own facts but, in our respectful submission, the Court of Appeal and, with respect, the trial judge below, got it wrong.  To summarise our point in very brief compass, we say that once there were express findings that the applicant expressly manifested his lack of consent to the incurrence of a particular debt - - -

GAUDRON J:   But that is not what the finding was, is it, Mr Sullivan?  The finding, ultimately, is that he expressed his reluctance but that was as far as it went.

MR SULLIVAN:   Your Honour, that was the characterisation of the words which the court ultimately placed upon it.  The finding was that he said the words that he did.  In our respectful submission, those words, on their face, demonstrate a lack of consent and it was found more importantly by the trial judge that Mr Byron was a witness of credit and that, in fact, the words that he said reflected his genuine state of mind.

One then has a situation where the court, in reality, is saying no meant yes, in a situation where they have said that when the words were said, they generally reflected the state of mind.  But what the court has done, in our respectful submission - and I will take your Honours to the detail of it in brief compass - is to say, “Look, even though we accept that he said those words and he generally meant them, we are entitled to look at the underlying circumstances and see whether, in all the circumstances, the onus of proof about consent has been discharged.”

We would equate it with a situation, for instance, of trying to imply a term to a contract when the court has already found that there is an express term to a certain effect and that the court, in our respectful submission, could not go behind it and imply a term to the contrary when the expressed words have been said to have applied.

GAUDRON J:   Do you wish to go beyond the judgment of Mr Justice Young in that?

MR SULLIVAN:   Yes, your Honour.

GAUDRON J:   You need new factual findings, do you, to make good your ‑ ‑ ‑

MR SULLIVAN:   No, your Honour.  We need no primary factual findings.  It is the inference from the findings which we draw issue with.  Your Honour, it was found that before the debt was incurred, Mr Byron expressly told Mr Down that Mr Byron did not consent to its being incurred.

GAUDRON J:   Not in those words, though, did he?

MR SULLIVAN:   Your Honour, at page 35 of the application book, line 10, the actual words used which are accepted are set out:

Mr Down, the company’s managing director at the time -

and he was, on the evidence, the only person with authority to approve the debt, said:

Alec, we will purchase tapes from KGC.  The appellant said:

“I object to that -

and then went on to say in the alternative, “Well, look, if you are going to go ahead even without my consent, you must at least obtain a penalty clause”. 

Now, even that second aspect of that is only a conditional consent which, if it was accepted that way at its highest, which the law would say does not amount to a full consent when the condition is not satisfied as was the case here.  Then the very next thing, your Honour, which happened as a matter of fact; Mr Byron goes away on holidays.  The debt is incurred without his knowledge.  He comes back, and this appears at the foot of the same page:

When the appellant returned from his holidays in August 1989 he asked Mr Down “Why are you buying tapes from [the respondent]” and Mr Down said “I don’t think I have much choice.”  The appellant said “You know I don’t agree with it.”

Now, in our respectful submission, it is incorrect of a court to draw from those words an inference that all one is doing is expressing a lack or a reluctance to deal with.  The court can do things.  The court can say, “I accept those words were not said” - or three things I should say.  “I accept the words did not amount to a manifestation of lack of consent”, or “I accept that when those words were said they were not generally meant.”  None of those things were, in fact, found and, indeed, the trial judge’s dilemma in our respectful submission, occurs from the judgment at application book, page 8, lines 25 to 30 because there he makes the findings, after having set out, by the way, at the top of page 8, line 5, the “you know I don’t agree with it” finding, says at line 25:

I did not find that the cross examination of any of the defendant’s witnesses affected their credibility one whit.  Basically I accept that Mr Byron was not happy about trading with the plaintiff.  I also accept that the orders were placed without Mr Byron’s actual knowledge, and.....while he was on holidays.

And then goes on to say it was clear that Mr Byron knew of various matters, and at line 5 on page 9:

His conversation with Mr Down also shows that he was aware of the very real probability.

So what his Honour is doing is not only to accept the words were said but to accept that they reflected the genuine state of mind of Mr Byron at the time.  In our respectful submission, even though Mr Byron wore the onus of proof under section 556(2)(a), that is the clearest possible manifestation of a lack of consent, and on the balance of probabilities would need to be discharged.

DAWSON J:   Could you not look at it the other way and say, “Well look, it was clear that he did not like it but he knew that it was going to happen, and in those circumstances he did nothing to stop it, and from that you can apply unwilling consent.”

MR SULLIVAN:   Your Honour, to do that, with great respect, means that you have to say the words he used should not have had the ordinary natural meaning which was put to them.  The fact that he did nothing to do it afterwards, with great respect, is beside the point.

DAWSON J:   And he knew it was going on and did nothing.

MR SULLIVAN:   He knew at the time the debt was incurred.  Sorry, at the time of the first conversation, the finding was he knew there was a real possibility or probability it would be incurred.  In our respectful submission, in the law of consent generally, that is not a vitiating factor to an absence of consent.  One can imagine in many cases, the most obvious one is in a sexual situation, where sexual congress is inevitable but the women says, “You know I do not consent to this.”  And that the circumstances, you knew  was inevitable for various reasons, would not vitiate the lack of consent.  The consent has to be looked at, at the time of the incurrence of the relevant debt.

DAWSON J:   That is true but, you see, you are putting a construction on the events and the conversations which is a permissible construction.  But there is an alternative construction, and that is the one on which the trial judge adopted and it does not call for the intervention of this Court.  I mean, I know you have conceded there ;is no point of principle but even so, even in relation to the administration of justice in the particular case, your client has had a hearing, he has had an appeal - - -

MR SULLIVAN:   Yes, he has, your Honour.

DAWSON J:   - - - and that is all that is required for justice in the normal situation.

MR SULLIVAN:   Except, your Honour, in our respectful submission, and I do not wish to repeat myself, that when a significant injustice has been done and when a director, or anyone else who - - -

DAWSON J:   Well a significant injustice, if you adopt the interpretation which you advance, but not if you do not.

MR SULLIVAN:   But, your Honour, there was no finding made that those words were not spoken.  They have an ordinary natural meaning.  The purpose of the section is to manifest - for a director, if he wishes to escape liability, to manifest the lack of consent.  One wonders what more one can do than to say, “I object to this”.

The four factors which Acting Justice Simos, or Acting Justice of Appeal Simos in the Court of Appeal, seemed to refer to, in our respectful submission, were those of Mr Justice Hodgson in the Antico Case and they were that, “We will infer, notwithstanding the expressed words, a consent, because he did not seek to persuade the managing director.  He did not call a meeting of the directors.  He did not resign or he did not seek to have the company wound up.”

In our respectful submission - and this, in our respectful submission, conforms with the majority of which your Honour Justice McHugh was a member in Metal Manufacturers said - those are factors which really are irrelevant once one is not in a position to control the company.  If he was in a position, Mr Byron, to control the company or to revoke the authority for debt, they may be relevant factors.  But on a consent situation, in our respectful submission, once you have findings of words being said genuinely which reflected a lack of consent, then one does not, and it is not permissible for a court to go behind those words, given the circumstances.

Anything else I said, your Honours, I would be repeating myself and for those reasons, in our respectful submission, there is a significant injustice here, notwithstanding the high onus which I concede is on me to persuade the Court on such a matter on special leave, we submit this is a worthy case for it.

DAWSON J:   Thank you, Mr Sullivan.  The Court need not trouble you, Mr Hilton.

This application involves no question of special importance and turns upon its own facts.  The application does not, therefore, warrant the grant of special leave.  Special leave is accordingly refused.

MR HILTON:   I ask for costs, if the Court pleases.

DAWSON J:   Can you say anything about that, Mr Sullivan?

MR SULLIVAN:   I cannot object, your Honour.

DAWSON J:   The application is refused with costs.

AT 11.43 AM THE MATTER WAS CONCLUDED