Fifteenth Eestin Nominees Pty Ltd & Ors v Rosenberg & Anor

[2010] HCATrans 29

[2010] HCATrans 029

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Melbourne  No M82 of 2009

B e t w e e n -

FIFTEENTH EESTIN NOMINEES PTY LTD (ACN 005 291 832)

First Applicant

SABRINA PHILIPA BERGER

Second Applicant

IAN BARRY BERGER

Third Applicant

and

BARRY ROSENBERG (AS EXECUTOR OF THE ESTATE OF EMANUEL ROSENBERG, DECEASED)

First Respondent

GLEN OAK NOMINEES PTY LTD (ACN 110 045 737)

Second Respondent

Application for special leave to appeal

FRENCH CJ
KIEFEL J

TRANSCRIPT OF PROCEEDINGS

AT MELBOURNE ON FRIDAY, 12 FEBRUARY 2010, AT 2.23 PM

Copyright in the High Court of Australia

__________________

MR G.R. RITTER, QC:   If the Court pleases, I appear with my learned friends, MR R. GREENBERGER and MS L.M. POWDERLY, for the applicant.  (instructed by Kalus Kenny)

MR P.B. MURDOCH, QC:   If the Court pleases, I appear with MR C.G.K. MADDER for the respondents.  (instructed by B2B Lawyers)

FRENCH CJ:   Yes, Mr Ritter.

MR RITTER:   If the Court pleases, there are a number of facts in this case, of course, but what we say is there are a series of oversights which have produced an unfair trial and which required a direction from the Court of Appeal for a retrial which was not given in circumstances now we find ourselves here.  The errors, in our submission, are profound, and if I might deal with the first aspect of it and that is that the defendants did not have a fair trial, and that is demonstrated in several ways.

The first is that the errors – and I first want to point to the errors to then indicate why it is that in principle in this case special leave should be granted, but if I could just point to these?  First of all, there was no fair trial, the trial judge proceeded on the footing that important evidence – and here I am referring to the evidence in the memoirs and other evidence given by Mr Fisher to the effect that Mr Rosenberg said – and we are concerned with what he said in 1990 – he said that he was dividing all of his estate in equal shares between his daughter and son.

Now, as to that we say that the judge disposed of that evidence on the basis that – at trial the judge said, well, that is virtually the only evidence supporting any of the promises, and went further and said that, however, is not – he rejects that on two grounds; the first is that it was not true in 1990.  We say that does not go to what Mr Rosenberg said at all, and we are concerned in this area with what was said or promised, represented or promised, and we say as to that, first, that it was not true or accurate because he had not disposed of his property, when really what the memoir said was that “In 1990 I decided to do that”.  So what he said was what he decided in 1990, not that which he had carried out.

So in relation to that, it was also set aside on the basis that the memoirs were referable to “the tendency of some old people to ‘cry poor’”.  Now, as to that, that treatment of that fairly significant admission, in our submission, was simply unacceptable; no one could have known that that is the case. 

Whilst on that, I probably should say that in relation to the admissions that we rely generally here, we say that where there is an admission by Mr Rosenberg, where there is an admission by Mr Rosenberg evidenced by his statements to Mr Fisher, and where there is the admission in the memoirs, in each case a litigant is entitled to treat that admission by the opposing party as binding.

In fact, it is probably in the scale of things, we submit, more binding – if there is ever such a thing – than the affidavits themselves, because you get down to the stage where an affidavit is tested in court for the first time by cross‑examination.  Where you have on cross‑examination Mr Rosenberg admitting things, where you have an admission of this kind, we say they are very important admissions and they cannot be just pushed aside on the basis of some undisclosed basis.  By undisclosed we say there was no evidence as to Mr Rosenberg’s state in 1997 when he wrote the memoirs, and nor was there any evidence that he had a poor memory or lacked a capacity in 1990 or any other time.  What he said in those memoirs he verified every word was true.

Now, that in itself, we would say, is a pretty significant thing to occur and yet that admission did not carry weight.  So we say to dispose of the memoirs on the basis of some tendency was quite – or to say that it is not true – does not go to what he said in1990 at all, and in fact is not a way of despatching that evidence at all.  The Court of Appeal, I should say, did not resort to the tendency, the Court of Appeal simply said it was not true, it was not accurate.  It referred, of course, to a further admission in evidence that Mr Rosenberg made that he had done that very thing, but that is that he had ‑ ‑ ‑

KIEFEL J:   There are a couple of matters though, are there not, that need to be weighed in the balance?  The primary judge found that at the time Mr Rosenberg gave evidence he was failing in memory.

MR RITTER:   Failing in memory, correct.

KIEFEL J:   That was upheld by the Court of Appeal.  That was not interfered with as an observation.

MR RITTER:   Absolutely.

KIEFEL J:   The primary judge also found that no reliance could be placed upon the statement in the memoirs as a representation.

MR RITTER:   Only two bases were, because of the tendency of some old people, and the second was because it was not true, but of course ‑ ‑ ‑

KIEFEL J:   Or that any reliance which they referred to had preceded the statements in the memoirs.

MR RITTER:   Absolutely, there is no doubt about that because the memoirs were written in 1997.  We do not put forward that that is the representation, we say that is evidence of what he did in 1990 and there was no suggestion that he lacked capacity in 1997 to write a very accurate account of his life.  Could I go to this failing memory point for a moment?  His Honour did say that he at times demonstrated a failing memory, but his Honour never said that when he did speak and when he did make an admission that they were not accurate.  In fact, you might recall the other passages where his Honour said that he showed glimpses of his sharp mind at times, and we are not here concerned with what he forgot, we are here concerned with what he said in the witness box.

FRENCH CJ:   His forceful or dominant personality I think was the reference, was it not?

MR RITTER:   That is right.  Yes.  I am sorry, I should not say that to your Honour, but yes.  What we say about it is that where you have an admission, at least you would expect if that was to be pushed aside – we will go to the other admissions in a moment unfortunately – but to demonstrate that he admitted that in the witness box as well in clear terms and the judge referred to that very admission but then did nothing with it ‑ ‑ ‑

KIEFEL J:   The representations upon which you rely were much earlier ones and the 1997 memoirs were seen to support ‑ ‑ ‑

MR RITTER:   Purely evidence of.

KIEFEL J:   Well, that could be the only evidence – how does that fit with the trial judge’s finding that the representations in 1990 were not made in the terms alleged?

MR RITTER:   Because he presumably says – takes it to the next stage and says, well, it was not true so therefore presumably he does not say this, he did not say it.  Our position on that is that Mr Rosenberg went further and admitted it in the witness box.  It was not just in the memoirs anyway.  I could take the Court to that if I may?

FRENCH CJ:   Incidentally, Mr Ritter, I noticed that in your – just to get clear the basis on which you are proceeding – in the draft notice of appeal in October 2009, which is at 252 in volume 2, there is a reference to a “procedural fairness” ground, and then there is “Failure to give any or any adequate reasons” and so on, but the further amended application for special leave which postdates that, which is 25 November, makes no reference at all to – and although your submissions have addressed procedural fairness do I take it that the gravamen of your argument really goes to the question of the adequacy of the findings?

MR RITTER:   Absolutely.  Yes, your Honour, and I do apologise, we had noticed that but it was in what was described as a further amended application, and in that alone we seem to have left that part out, but we say that our argument was well notified and we hope that such a thing will not happen again.  Our submission remains the same, and that is procedural fairness is denied where a judge proceeds on the basis of an assumption which is not notified to the parties and which is not in argument, and in this case that is just what has happened.  The parties had no ‑ ‑ ‑

FRENCH CJ:   These so‑called admissions went to facts in issue, did they not?

MR RITTER:   All of the admissions do, and I can go directly to those and indicate one or two of them.

FRENCH CJ:   Contested facts at trial.

MR RITTER:   Correct, but we say that with the admissions not being taken into account, not even referred to, or where they are referred to not used, we say that that is not a proper way of reasoning relevant evidence out of the way, if I could put it that way.  We rely for that, of course, on the principles both of Waterways and more recently expressed by Justice Nettle in the Court of Appeal in Hunter.  That, of course, has been applied since on several occasions, including before the Full Federal Court.  The principle is clear, that if there is relevant and cogent evidence, and it is not dealt with, that is, there is not simply a reference to it, that is not good enough, and that is very clear from the Hunter decision to which we referred – but if there is ‑ ‑ ‑

KIEFEL J:   The Court of Appeal also found that there was no detriment consequent upon the suggested reliance upon a representation.

MR RITTER:   Yes, because the Court of Appeal proceeded on the assumption that there were not the representations, therefore narrowed down the range of reliance matters with which it dealt.  For example, it did not deal with the detriment that is associated with the complete change of course over 14 years, not working without reward, but working, and as it were nailing your ‑ ‑ ‑

KIEFEL J:   This is to manage the investment trust?

MR RITTER:   Yes, and the company, for that matter, because the representations induced the Bergers to go ‑ ‑ ‑

KIEFEL J:   They received both capital and income payments from those ‑ ‑ ‑

MR RITTER:   They did ultimately.  There is no evidence that they received anything in the first couple of years.  They went in November 1990 to run the business and the first dividends that were paid to any of their company – first distributions that were paid and the first – sorry, distributions that were paid were in 1993, 30 June 1993, so three years later.  They took their risks, and true it is, it turned out to be successful, but one cannot judge that after 14 years and then terminating it against what they might have done with 14 years of experience elsewhere if it is suddenly to be cut off. 

That is the detriment, or detrimental reliance, that often is referred to as the non‑monetary kind; that is, going and working for someone.  It does not have to be monetary, it has to be seen as productive or substantial detriment, and that is our point there.  There are a whole range of them that – what also happened, and I think your Honour will have seen it, the Court will have seen it, is that when it came to detrimental reliance we had a series of – we are here dealing with reliance, not the remedy, for the detriment that – but when it came to dealing with that we had a series of – a Macquarie Bank guarantee was given, Mr Berger was subject to that, $3 million guarantee, and it was said that did not constitute detriment because it was never called on.  Well, we say that the giving – the taking of that risk is detriment per se, and the mere fact that after a few years you do not get called on does not mean that detriment was not suffered.

In that case the other answer given was, well, Mr Berger was a principal borrower, there were five borrowers.  Fifteenth Eestin, the trustee company, was the user of the funds.  In fact, the only evidence was – and that was from Mr Berger and from Mr…..who was the expert called by the plaintiffs, the only evidence was that that was – that money went to Fifteenth Eestin and was used by it and the account was in its name; it was its account, that was Mr…..evidence.  So really we say whether or not he had the role of co‑borrower and guarantor just makes it, if anything, worse, but we say that it is nevertheless detriment that suffered.

Our whole point is you cannot negate detriment, you cannot say that if someone takes a risk or if someone just decides to go in and spend some time in a business and then it is profitable, you cannot turn around and say, well, it is the best opportunity you could ever have had.  That may be so, we align that with Giumelli.  In Giumelli it was said that Mr Giumelli, of course, did not go into the business, the partnership with his brothers, for the purpose of deriving merely the rewards of partnership, which he did take all along, and presumably they may well have been sufficient, there was no suggestion they were large or small, but the critical point there was the Court said, no, he should have his expectation, that is, he should have his expectation fulfilled because he had chartered his course in that direction over a long time on the basis of the promises that were made to him about the land he received.

In that case, of course, the Court went further and said, but there is a discretionary factor here, someone else has moved into the house, you have left the partnership, the partnership still needs the land, accordingly we will not give the equivalent of specific performance, we will not see that the promise is fulfilled, we will satisfy it in another way, and the Court went ahead and gave damages to be calculated according to the value of the land itself, not according to whatever retrospective loss he had suffered.

So we say in relation to reliance you cannot just look at each one of them, take each element, and we say the Court has to look at these in globo anyway.  Even apart from that, if you take each element of reliance, we say that you cannot simply look at it and say in relation to the loan that he made of his own money at no interest (we say which he would not have made but for the relationship that was there), he got his money back, therefore he did not suffer, or to answer that by saying, well maybe for that you can have your reliance damages, that is, by looking at what you might have got by investing it elsewhere, we can give you that little bit.

That is not the way one looks at it because particularly after 14 years that is the type of – the 14 years family relationship point – that is the very thing that Justice Mason referred to in Verwayen, and he said there are three instances of reliance which perhaps might justify – or there are three instances which might justify in terms of remedy expectation relief where perhaps the view in Verwayen was tending to be that one looks at reliance damages rather than expectation, and he said you might go to the expectation where there is a long‑term relationship.  Here, 14 years, same as in Thorner, 14 or 15 years.

You can do it where it was not remediable by simply compensation.  How do you compensate someone who expected – who developed a business for 14 years and then has to go back and start again somewhere else?  How do you measure that compensation, if you are compensating?  That was again the second of the exceptions that at least Chief Justice Mason referred to in Verwayen.  The third one escapes me for the moment, but I am sure I could answer that in a second.  Yes, reliance on the assumption over long periods.  This is in Verwayen at 416:

substantial and irreversible detriment -

How is it reversible after 14 years in the case of the Bergers?  Where do they – how is it that having gone 14 years along – if they prove their case that promises were made and they act in reliance, when we come to expectation, why should not expectation relief go?  The third one is where detriment cannot be compensated or remedied itself, and it virtually fits into the same category.

Our point about that is this Court has an important role to play in determining this question that seems to be emerging, and it is in fact ventured in the Court of Appeal’s decision, and that is this, that Verwayen really posed the – virtually said that reliance damage is what you look for as a – in an ordinary case, and particularly in a commercial case.  There seems to be a divide between commercial and family type cases, but they said that is what you do in the case of promissory estoppel.  When you come to that element, that sub‑branch of equitable estoppel it is different, you there perhaps start with a prima facie presumption in favour of granting the expectation, that is Donis’ Case.

But in the end this Court has always tried to bring about a melding of these and it may well be that this Court has, in this case, that opportunity.  It will always get it so I am sure I will be told that we can get that in the next one, but our point is this, that the Court has said that this is not a proprietary estoppel case.  Our case is we can take the Court immediately to demonstrate that it is, under Mr Rosenberg, in clear evidentiary terms, made it clear, accepted and admitted that he said to his daughter, Sabrina, he promised her everything, including the corner properties.

FRENCH CJ:   I think your time is up now, Mr Ritter.

MR RITTER:   I was afraid of that.

FRENCH CJ:   Thank you.  We will not need to hear you, Mr Murdoch.

This application for special leave alleges, inter alia, breach of procedural fairness by the trial judge in relation to the rejection of what were said to be admissions or evidence of admissions made by the late Mr Rosenberg.  Other grounds of the application go to the adequacy of the reasons given by the trial judge and the Court of Appeal and to their conclusions in relation to detriment as an element of the estoppel defence raised by the applicants.

In our opinion the rejection of so‑called admission evidence was by way of findings on the evidence on matters in issue in the case which the trial judge was entitled to make and which were adequately justified in his reasons.  The special leave application otherwise seeks, in effect, to canvas findings of fact.

In our opinion, the application does not raise a question of principle or a matter going to the administration of justice sufficient to warrant the grant of special leave.  Special leave will be refused.

Do you seek costs?

MR MURDOCH:   If your Honour pleases.

FRENCH CJ:   Can you resist that?

MR RITTER:   No, we do not resist that.

FRENCH CJ:   Special leave refused with costs.

AT 2.46 PM THE MATTER WAS CONCLUDED