Geoff Layton & Co Pty Ltd v Carter

[1994] HCATrans 198

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IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Brisbane No B25 of 1993

B e t w e e n -

GEOFF LAYTON & CO PTY LTD

Applicant

and

GARTH CARTER

Respondent

Application for special leave

to appeal

MASON CJ TOOHEY J MCHUGH J

TRANSCRIPT OF PROCEEDINGS

FROM BRISBANE BY VIDEO LINK TO CANBERRA

ON FRIDAY, 11 FEBRUARY 1994, AT 11.50 AM

Copyright in ·the High Court of Australia

Layton 1 11/2/94

MR P.A. KEANE, QC:  May it please the Court, I appear with

my learned friend, MR J.C. BELL, for the applicant.

(instructed by Hopgood & Ganim)

MR G. CARTER:	May it please the Court, I appear in person.
MR KEANE:	May it please the Court, we apologize for our

non-attendance.

TOOHEY J:  It sounds as if you have run all the way,

Mr Keane.

MR KEANE:  No, Your Honour, that is just advancing age and

unfitness. We unfortunately read the published

list here as saying not before 11.30 as meaning the

time here. We apologize, Your Honours. We hope

Your Honours accept our apology.

MASON CJ:  We overlooked the fact that Queensland is always

different, Mr Keane.

MR KEANE:  Your Honour, we have proved it once again, for

which we apologize.

Your Honours, special leave is sought on the

ground that under section 35AB of the Judiciary

Act, in the interests of the due administration of

justice, the error of the Full Court in failing to

observe the established constraints upon the

interference by an appellate court with the

findings of a trial judge should be corrected.

The case was concerned with the respondent's

action to recover damages in respect of misleading

and deceptive conduct whereby he was induced by the

applicant to accept employment with the applicant.
In particular, the respondent's case was that
through the applicant's servant or agent,

Mr Layton, the applicant had misrepresented to the

respondent that the applicant would be taking legal

action to recover what was called "the client base"

of the Nashua franchise of the Gold Coast from a

third party, one Fraser; whereas in truth, the

applicant had no intention of taking such action.

By "the client base", Your Honours, is meant those

customers having service contracts with Fraser who

was the Nashua sub-franchisee on the Gold Coast,
the applicant being the Nashua franchisee for

South-east Queensland.

MASON CJ:  Mr Keane, you need not give us the background.

We are familiar with the background, so you should

proceed directly to present your arguments as to

why there was an error of principle, or as you

would say, a failure to observe the cardinal

Layton 11/2/94

principle governing findings of fact based on

credibility.

MR KEANE:  Thank you, Your Honours. Your Honours it was in

this, that the trial judge rejected the case made

by the respondent here that he had relied upon the

representations as to intention to take legal

action in taking out his contract with the present

applicant. The trial judge resolved that issue

against the present respondent finding at page 43

of the record, lines 3 to 20, that the

representation:

was not a factor in Mr Carter's decision to

accept the offer of employment -

His Honour's finding in this regard is on page 41,

at the bottom, Your Honours.

MASON CJ Was reliance a real issue at the trial?

MR KEANE:	Yes, Your Honour, it was a matter on which - the question of whether the respondent had been induced
to take up the employment was really an issue. The
Full Court of the Federal Court resolved the issue
against the present applicant on grounds that
involved their proceeding on the footing that because of the inherent likelihood to induce of the
representations, and because the learned trial
judge had accepted the evidence of Mr Carter on
some issues, he had found him generally to have
been truthful and, therefore, he ought to have
found that Mr Carter had relied on the
representations made to him.

Your Honours, the Full Court's reasoning in

that regard commences at page 82, at line 10, and

those points that we have made, that is to say the

assumption that he must have found him generally to

be a truthful witness, is at lines 15 to 18, and

then the inherent probability that the

representation would be likely to induce is

adverted to at lines 19 to 22.

TOOHEY J: That is a fairly compelling consideration, is it

not?

MR KEANE:	The inherent likelihood to induce, Your Honour?
TOOHEY J:	It would have to be viewed against the evidence

of course, but if you have a consideration that is

likely to play some part in a person entering into

a contract, ordinarily there would have to be

fairly strong evidence to show that that was not an

inducing factor as opposed to the inducing factor.

Layton 11/2/94

,,

MR KEANE: Quite, Your Honour, and the point is that the

extent to which it was an inducing factor is

something to be weighed by the judge in regard to

all the evidence. Where there is no evidence at

all from the party said to have been induced that he was, one can perhaps draw the inference as the

courts have done regularly. But, where the party

gives direct evidence on the point and that

evidence is rejected in favour of another inference

drawn or based on evidence that was given as a

result of conversations between a Mr Bremer, as in

this case, and the respondent, which looked at

objectively suggest that the respondent was relying

on other matters, and when one looks and accepts

the fact that His Honour was mindful of the

respondent's evidence that he had been induced and

has rejected it, then, in our submission, it is

inappropriate for the appellate court to substitute

its view of the probabilities and that the relevant

rule of law is quite clear in this regard. We do

not put the case as one where there is any doubt as

to the principles. We put the case as one where

the principles are clear and the departure from

them is clear.

If we may refer Your Honours briefly to just

one passage in the case of Dearman v Dearman to

which we referred in 7 CLR 553 in the judgment of

the Chief Justice Sir Samuel Griffith in the long

paragraph of text on that page. If we can take you

about 8 lines down to where His Honour said:

There is, perhaps, a distinction between a

case where the Judge has found in favour of a plaintiff, or the party upon whom the onus of

proof lies, and a case where he has found in

favour of the other party. If the Judge has

found in favour of the party upon whom the

burden of proof lies the Court of Appeal may

review the case with greater freedom, for

instance, in the case of an application to

enter a non-suit on the ground that, though	there was some scintilla of evidence, there
was nothing upon which reasonable men ought to
act. But if the tribunal of first instance,
having seen and heard the witnesses, comes to
a conclusion in favour of the party upon whom
the burden of proof does not lie, it is almost
hopeless to try to induce a Court of Appeal to
interfere with that finding unless it has
clearly proceeded upon a wrong principle.
that is the general rule of law which prevails
in Courts of Appeal.
Now, Your Honours, with respect, we submit

that that is indeed the general rule of law which

prevails in courts of appeal. In this case

Layton 11/2/94

His Honour, for. the reasons which appear at page 41

in lines 5 to 18 of the record, identifies the

reasons which comfort him in his conclusion that

the representation was not a factor in the

decision. His Honour was plainly mindful of the

evidence of Mr Bremer which suggested that there

had been conversations, both before and after the

employment had been taken up, where the poor

performance of the franchise was remarked upon and

where there was no mention of disappointment or

concern as to the absence of legal action to

recover the customers and to the circumstance that,

in the period from April 1989, when Mr Carter took

up his employment, until August 1989, when it

became clear, in the course of a conversation with

Mr Layton, that Layton would be taking no action to

recover the customer base, there were no

complaints, and more importantly, from August 1989

until May 1990, that is to say for that period of

many months after Mr Carter became aware that

Layton was taking no action to recover the customer

base, there was no complaint and indeed, even in

May 1990, the dispute between the parties came to a

head by reason of Mr Layton's indication to

Mr Carter, that he, Layton, was calling upon Carter

to exercise an option, said to be a term of the

employment to assume the sub-franchise, then

immediately Mr Carter sought more time. He

manifested a continuing interest in the operation.

TOOHEY J: When you put it that way, Mr Keane, you are

really in the area of inference, are you not? I

mean, you are complaining about the inferences that
the Court of Appeal drew from the evidence, rather
than saying that the Court of Appeal rejected
findings of credibility or clear findings of fact

made by the trial judge. For instance, in regard

to Mr Bremer, what the Court of Appeal has said,

rightly or wrongly, was, well you cannot infer too

much from the absence of any complaint made by

Mr Carter to Mr Bremer.	Now that is an inference,
really, which the Court of Appeal drew, different

to the inference that the trial judge drew.

MR KEANE:  Your Honour, and in doing that, acted, with

respect, on their own view of the probabilities of

the case; not according due weight to the findings
of the trial judge, which did involve the rejection

of the evidence given, the direct evidence given as

to inducement, on the basis of His Honour's

assessment of the credibility of that evidence and

in the light of the probabilities.

TOOHEY J:  But is it right to say that on the basis of the

credibility of that evidence, as opposed to

inferences to be drawn from other evidence? After

all, it appears that the trial judge accepted

Layton 5 11/2/94

Mr Carter generally as a truthful witness, or is

that putting it too high?

MR KEANE:  With respect, Your Honour, that is putting it a

little high. What he did was accept his evidence

in respect of a suggestion that these

representations had been made.	Now, he accepted
him on that.	He did not express a general view

favourable to Mr Carter's credit.

MASON CJ: Did he reject his evidence on any issue except

the inducement issue?

MR KEANE: Well, Your Honour, that and the issue as to

whether the representations were made and not

corrected were really the only issues in dispute.

MASON CJ:  Was there any dispute or conflict between the

evidence of Mr Bremer and Mr Carter? I am

referring to Mr Bremer's evidence as the evidence

on which the trial judge relied in rejecting

reliance.

MR KEANE:  No, Your Honour.

TOOHEY J: It is really the absence of anything said. It is

a negative sort of consideration, is it not?

MR KEANE:  No, Your Honour, it is not. It is evidence, not

so much of just of lack of complaint, it is of lack

of complaint and positive statements as to, for

example, Mr Carter's optimism that he would be able

to recover the client base by his own salesmanship

and he was saying, in a conversation with Mr Bremer
before he took up the engagement, Mr Bremer said,

"Do you not know what a mess the south coast is

in?", and he said, "Yes, but I'm confident I'll be

able to win them back." There is also the fact

that Mr Carter's own evidence of the

representations that were made to him was not

entirely without equivocation. For example, if one

goes to His Honour the trial judge's reasons, at page 21, one sees at lines 12 to 20, Mr Carter's response to questioning at the trial. His reply to

the question that begins at about line 12 was that:

Yes, I did, and Mr Layton informed me that

Archie didn't have a very good service

reputation on the coast and therefore it

wouldn't be too terribly difficult for me to
obtain the service base back.

Your Honours, these are matters, all of which were in the mind of the learned trial judge, as

indeed was Mr Carter's evidence that this was an

important matter for him. What was in the mind of

the trial judge was the equivocation, the absence

Layton 6 11/2/94

of complaint, the expressed statement of positive

views relying upon matters different from the

prospect that legal action would be taken. And,

Your Honours, in our submission it was quite wrong

for the Full Court to proceed on an assumption of a

positive view of Mr Carter's credibility when the

finding that was made in the light of express

evidence given by him was plainly inconsistent with

that favourable view on this issue.

In so far as Your Honour Mr Justice Toohey

says that we are just talking about the

probabilities and the inferences, well, of course,

Your Honour, with respect, the trial judge is

particularly favoured to weight those matters. Our
submission is that the error of the Full Court was

in substituting its view of the probabilities and

the inferences for those drawn by the trial judge

who had the, in this case, as is always said, the

inestimable advantage of seeing the witness.

TOOHEY J: Yes, but when you are in the area of

probabilities and inferences, you are in a

different area to the situation of a judge who has

seen the witnesses and said, expressly, "I accept

the evidence of X, rather than Y". That is the

sort of situation in which an appellate court

should be very loathe to interfere with.

MR KEANE:  And, Your Honour, as this Court has said in cases

like Abalos, even where a judge has not been

explicit in his rejection of a particular witness,

if it is clear that he has rejected the witness,

then an appellate court should respect the course

that has been taken. And, as we say, by reference

to the judgement of Sir Samuel Griffith, there is

no evident failure of principle, there is no

evident application of a wrong principle by the

trial judge, it is a case where the party on whom

the burden of proof lay failed, and in those

circumstances, in our submission, the rule of law

upon which justice is administered in the appellate

courts has not been observed in this case.

Unless Your Honours have something further to

raise with us, those are our submissions.

MASON CJ:  Thank you, Mr Keane. The Court need not trouble

you, Mr Carter.

The Court, by majority, is not persuaded that

there was any departure from accepted principle on
the part of the Full Court of the Federal Court.

The application for special leave is therefore

refused.

Layton 7 11/2/94

MR CARTER:  Your Honour, can I make, I think, it is a

submission for costs?

MASON CJ: Yes, we will ascertain from Mr Keane what he says

about costs. You do not oppose costs, Mr Keane?

MR KEANE:  No, Your Honour, in so far as any costs have been

incurred, we cannot oppose it.

MASON CJ:	The application is refused, with costs.
MR CARTER:	Your Honours, may I fully thank you on behalf of

me and my children, thanks very much.

MASON CJ:	We do not accept thanks, Mr Carter, we just do what we consider to be correct in accordance with
the law.

AT 12.09 PM THE MATTER WAS ADJOURNED SINE DIE

Layton 11/2/94