Chilcotin PL & Anor v Lever & Anor

[2002] HCATrans 238

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S171 of 2001

B e t w e e n -

CHILCOTIN PTY LIMITED & GEMEDEN PTY LIMITED

Applicants

and

PETER LEVER

First Respondent

PAUL RIPPON

Second Respondent

Application for special leave to appeal

GLEESON CJ
McHUGH J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 21 JUNE 2002, AT 10.35 AM

Copyright in the High Court of Australia

MR T.M. JUCOVIC, QC:   May it please the Court, I appear with my learned friend, MR S.J. BURCHETT, for the applicants.  (instructed by John M. Fitzgerald & Associates)

MS C.E. ADAMSON:   May it please the Court, I appear on behalf of the second respondent.  (instructed by Phillips Fox)

GLEESON CJ:   There is a certificate from the Deputy Registrar that she has been informed by the solicitor for the first respondent that the first respondent does not wish to be represented at the hearing of this matter and will submit to any order of the Court save as to costs.  Yes, Mr Jucovic.

MR JUCOVIC:   If your Honour pleases.  The special leave questions that are raised by the decision of the Court of Appeal raise questions of the parameters of the doctrines of dismissing proceedings in limine on the basis of an abuse of process of the Court.

GLEESON CJ:   Well, the key paragraph seems to be at page 36, paragraph 28, does it not?

MR JUCOVIC:   That is so, your Honour.  Here the accountants, who are the defendants in the District Court proceedings, were not parties to the Supreme Court proceedings, nor were they privy to the parties of the Supreme Court proceedings and there was no estoppel or cause of action or issue estoppel that benefited those parties.

Your Honours, the Court of Appeal rightly found that there was no oppression or unfairness because the accountants were not parties to the earlier action.  Your Honours will see that at page 40, paragraph 36:

but these proceedings do threaten the integrity of the administration of justice and raise the prospect of conflicting judgments.

Not that there was a necessary inconsistency, your Honours, between any findings in these proceedings and the findings in the Supreme Court proceedings but simply that there was a prospect of conflicting judgments.

Paragraph 28 on page 36 makes it plain that the Court of Appeal did not reason from a precise identification of the issues in the Supreme Court proceedings but on the basis that as against the vendors in the Supreme Court proceedings, all claims whether litigated or not would have been barred by the cause of action or the Anshun estoppel.  Your Honours will see that at paragraphs 20 and 21 on page 34 their Honours deal with the Anshun and cause of action estoppels against the vendors in the Supreme Court proceedings.  Any further action would have been barred against here.  It would have been barred against them, your Honours.

May I pause here to mention a number of matters in the differences between the District Court and the Supreme Court proceedings.  The District Court proceedings were not concerned with the monthly income figures for course fees which had been part of the subject matter of the Supreme Court proceedings in Justice Brownie’s findings, nor had they been concerned with the net profit figures for 30 June 1988, 1989/1990, which were not part of the Supreme Court claim.  They had been concerned with the net profit figures for the financial year ended 30 June 1991 but the claims as to the falsity were different.  The claims in the Supreme Court proceedings were false to the extent of – the true figure was 106,000 and in the District Court the true figure was 88,000 and the reasons for the difference is that they arose out of the fact that investigations after the Supreme Court proceedings had been completed by Justice Brownie revealed another state of fact.

Your Honours, the Court of Appeal reasoning recognises that not the same matters were being litigated but makes findings of fact about what might have occurred but did not in fact occur, your Honours.

GLEESON CJ:   What about paragraph 17 on page 33?

MR JUCOVIC:   Your Honours, two things in answer to that.  The figures that I have mentioned were not litigated in the Supreme Court.  They were not the subject matter of Mr Justice Brownie’s findings.  Justice Brownie’s findings, your Honours, were encapsulated by the Court of Appeal at page 30, paragraph 8.  He held that:

Mr Hoefl had not relied upon the accuracy of any particular figure or figures in annexure D, but relied on the warranty which would provide a remedy if the figures were wrong.

Now, what the Court of Appeal did, if I could take your Honours to – that is page 34, the paragraph commencing at paragraph 22 – I am sorry, paragraph 18 first.  They say at paragraph 18:

The purchasers did not make a claim based on the figures for the earlier years in annexures A and D.  If, as Brownie J held, Mr Hoefl had not relied upon the representations in the 1991 figures he would hardly have been accepted if he had claimed to have relied on the earlier figures.

That is to say, that matter was not litigated but a finding of fact in summary proceedings, your Honours, is made about what would have happened about something that did not happen, in our respectful submission.  That is made even plainer still, if I can take your Honours to paragraph 22 at page 34:

If the claims based on the earlier figures were not worth pursuing against the vendor they were not worth pursuing against the accountants either.

Then the Court of Appeal at paragraph 27 at page 36:

However the addition of the earlier years is mere camouflage, a distinction without a difference, because the purchasers could not be bothered suing the vendor for those years and are now barred from doing so by an Anshun estoppel.

So, in effect, in these proceedings where there were no admissions about – in summary proceedings, findings are made, we say inappropriately, the matter having to go to trial, about what the issues of reliance on figures which were not the subject matter of any litigation.  That is the first thing we would say, your Honours.

The second thing we would say in answer to your Honour, the way the Court of Appeal seemed to approach the matter was if it was barred against the then vendors either because it was decided – or barred by Anshun estoppels, that was sufficient.  It was not necessary to actually closely examine what the prospect of inconsistent rulings would be.

Now, your Honours, the Court of Appeal avoided in that case, therefore, closely examining what the issues were that were ultimately decided by Mr Justice Brownie.  The case before Mr Justice Brownie depended upon the proposition that the conduct which was misleading and deceptive was the falsity of a warranty contained in a contract.  It was not a case about the falsity of the figures themselves but whether it was misleading or deceptive to make a warranty as to accuracy of figures when they were inaccurate.  The question that Mr Justice Brownie had to decide is whether that was misleading or deceptive.

Could I take your Honours, Mr Justice Brownie’s findings on that.  We have encapsulated them in our written submissions at page 52.  If I could take your Honours shortly to those and if I can encapsulate them.

McHUGH J:   But is not the critical finding of fact against you in the earlier proceedings that Justice Brownie said that Mr Hoefl did not rely on accuracy of the figures but he relied on the existence of the contractual promises?

MR JUCOVIC:   The real question is what does that mean, your Honour?  The ultimate finding was that the conduct was not misleading or deceptive.  Now, rather than take your Honours to the findings of Justice Brownie ‑ ‑ ‑

McHUGH J:   But you could not succeed in your earlier application unless you had relied on the false and misleading figures.

MR JUCOVIC:   Your Honour, we say, and we put this submission, if I can take your Honours to page 54 of the application book, as to what exactly those findings amount to.  May I just take your Honours quickly to footnote 11 on page 54.  Mr Justice Brownie’s findings were that prior to contract Hoefl knew the figures were rough and looked like rounded figures.  He wanted the security of a contractual promise upon which the parties could sue.  Mr Hoefl’s intention was to sue or threaten to sue and a difference of $1 would have been sufficient for Mr Hoefl’s purposes.

In those circumstances, your Honours, Mr Hoefl wanting to sue and knowing the figures were rough could hardly have been misled or deceived as to the accuracy of a warranty.  This is what we put in paragraph 3.5.  It was either a finding that the conduct was not misleading or deceptive.  Mr Hoefl, knowing that the figures were inaccurate, was not misled or deceived.  He wanted the security of a warranty or, because he wanted the security of a warranty, he entered into the contract.  There is no issue of causation by a statement as to the accuracy of the figures in the contract.

So there was a peculiarity in these proceedings because they arose out of a claim of a different nature.  If I could just take your Honours shortly to page 71 at line 50, your Honours will see that the conduct that was alleged was conduct that something was misleading or deceptive because there was a promise in a contract which was inaccurate and known to be inaccurate.  So that very little in terms of ultimate decision making as to inconsistency can be drawn from the nature of the proceedings before the Supreme Court and Mr Justice Brownie’s findings on it.

There is inherent dilemma, may we respectfully suggest, if one looks at the way in which the Court of Appeal treats Mr Justice Brownie’s findings on page 30, paragraph 8.  Your Honours will see at line 15 – to say that Mr Hoefl did not rely upon the accuracy of the figures but relied upon the accuracy of the warranties must mean inherently, in our respectful submission, that he relied upon those figures as to provide the basis upon which one could sue for breach of warranty.

McHUGH J:   But if you look at page 92 of Justice Brownie’s judgment, he says:

I do not accept his evidence, unless and to the extent that it is corroborated by other acceptable evidence, and, in particular, I do not accept that the plaintiffs, through him, relied upon the accuracy of any particular figure or figures mentioned in Annexure “D” or “E” . . . That is, he did not rely upon the accuracy of the figures as showing what the plaintiffs were buying, but rather he relied upon the existence of the contractual promises, as entitling the plaintiffs to sue for breach of contract, if he thought this advantageous.

MR JUCOVIC:   Your Honour, he is not misled or deceived by a warranty as to accuracy which he knows is inaccurate; he enters into the contract.  But there is a distinct difference between knowing that the figures are rough and knowing what the true figures are.  That simply has not yet been litigated and it is sought to be litigated in these proceedings.  He will either be accepted or he will not be accepted.

McHUGH J:   He has not been accepted and now you want to have a retrial and have him accepted.  It is put against you that that runs across basic principle.

MR JUCOVIC:   Your Honour, in our respectful submission, the Court of Appeal has extended the basic principles to a new situation.  The basic principles require, in our respectful submission, a close analysis of whether there is going to be a necessary inconsistency between the judgment in these proceedings and any judgment in the District Court proceedings.  The reasoning of the Court of Appeal does not proceed upon any basis of necessary inconsistency.

McHUGH J:   Yes, I know, but the most that is involved in the case is that the Court of Appeal got the application of a basic principle wrong.  That is not a ground for the grant of special leave.

MR JUCOVIC:   But, your Honour, they have extended a basic principle.

McHUGH J:   No, they have not; they have purported to apply Reichel v McGrath.  The Court of Appeal case was not decided on an Anshun estoppel; it was decided on the basis of Reichel v McGrath.  The most you can say is the Court of Appeal got it wrong.  That is not a ground for a grant of special leave.

MR JUCOVIC:   Inherent in what your Honour is saying is that Anshun estoppel principles would apply between different parties, but that is not the case, as we understand it.

McHUGH J:   What I said to you was that it seems to me, having read their Honours’ judgment, that the appeal was not decided on the basis that some form of Anshun estoppel arose.  Instead they decided it on the Reichel v McGrath point.

MR JUCOVIC:   But, your Honour, the reasoning in effect extends the principles that have been applied in Anshun in a loose sense, that these accounts could have been joined in the Supreme Court proceedings, and therefore should have been joined in these proceedings, to bar this without analysing what the inconsistency of judgment is.  There is no finding here that there is a necessary inconsistency of judgment.

McHUGH J:   Yes, but these are not special leave points.  People have to understand that this Court does not sit here as a general court of appeal and we just do not grant leave to appeal even if the cases are arguably wrongly decided.  Every litigant who comes up here claims that his or her case has been wrongly decided in the court below.

MR JUCOVIC:   We accept what your Honour says, but the principles in Reichel v McGrath are far narrower and these extend it.  May it just take your Honours to a few passages in Rogers v The Queen which we say show the true basis of Reichel v McGrath.  There are only three passages I want to take your Honours to.  Can I take your Honours to the joint judgment of Justices Deane and Gaudron at page 273 at about point 5:

There is, however, another related principle, likewise fundamental, which is embodied in the Latin maxim . . . That maxim gives expression to a rule of Roman law which has since been recognized as part of our common law.  It expressed the need for decisions of the courts, unless set aside or quashed, to accepted as incontrovertibly correct.  The same idea was expressed in Coke’s Institutes . . . That principle is not only fundamental, it is essential for the maintenance of public respect and confidence in the administration of justice.

That underlies what is the relevant abuse.  If I could ask your Honour to look at two passages from your Honour’s judgment at page 289.  Your Honour was dissenting in Rogers v The Queen.

McHUGH J:   Yes.

MR JUCOVIC:   But it makes no difference for my purposes.  At the top of 289:

Reichel was concerned with an attempt to relitigate ultimate issues.  It was a very different case –

So the question is what is the ultimate issue, your Honour?

McHUGH J:   I know I said that, but of course Rogers rejected that idea and held that a confession could not be relitigated.  That was not the ultimate issue in the case.

MR JUCOVIC:   But it still looked at what the precise identification of the issue was, your Honour.  Your Honour at the foot of page 292 going over to 293 expresses the public policy reasons why one does not litigate everything in all proceedings.  Finally, may I just take your Honours to the judgment of Justice Brennan at 262.

McHUGH J:   But it does seem to me that the question of reliance was fundamental.  You had a claim for damages under section 82 of the Trade Practices Act and you could not succeed in that unless you relied on this representation.  It was found as a fact against you.

MR JUCOVIC:   But, your Honour, it was sufficient to – may I just take your Honours to the passage of Justice Brennan.

GLEESON CJ:   Just give us a reference to it.  Your time is up, Mr Jucovic.

MR JUCOVIC:   It is 262.  It was sufficient for Mr Justice Brownie to dismiss those proceedings as long as we knew that there was an inaccuracy of $1.  The same issue has not been litigated in the Supreme Court.  At point 5:

Being so confined, the doctrine is not accorded a scope broader –

is the passage I want to take your Honours to. 

GLEESON CJ:   Thank you.  We do not need to hear you, Ms Adamson.

This case turned on the application of established principles to the facts and circumstances of the particular case and, in addition, we are not satisfied that there are sufficient prospects of success of an appeal to warrant a grant of special leave.  The application is refused with costs.

AT 10.58 AM THE MATTER WAS CONCLUDED