Honeywell Holdings Pty Ltd v Associated Newsagents Co-Operative Ltd

[1988] FCA 454

I

.	*
>	L

LIMITED DISTRIBUTION

~

CATCHWORDS

PRACTICE AND PROCEDURE - Application for leave to appeal from

the decision of a single judge refusing to vacate a trial date

- principles to be applied - weight to be given to the views

of the judge at first instance - application made to enable

simulation of a computer system - importance of simulation in

the conduct of the trial - whether simulation within	the
ordinary rules of practice and procedure adopted	by the court.

Ahern v. Deputy Commissioner of Taxation (Qld) (1987) 76

A.L.R. 137

r .

Federal Court of Australia Rules - 0.34

Federal Court of Australia Act - s.25(2) I '

HONEYWELL HOLDINGS PTY LIMITED v, ASSOCIATED NEWSAGENTS

CO-OPERATIVE LIMITED & OTHERS

No. G1056 of 1988

Davies, Sheppard and Burchett	JJ.
8 July 1988
Sydney

t

I .

I ,

I .

i

I

l

! I

LIMITED DISTRIBUTION

IN THE FEDERAL COURT OF AUSTRALIA	)
)
NEW SOUTH WALES DISTRICT REGISTRY	) No. G1056 of 1988
1

DIVISION GENERAL 1

B ETWEEN :	H	mELL HOLDINGS PTY
-	-	L	CED
-	-

Appellant

- ASSOCIATED NEWSAGENTS
CO-OPERATIVE LIMITED
(RECEIVER AND MANAGER
APPOINTED)

AND :

First Respondent

AND :	BERSAND ONLINE SERVICES
-	PTY LIMITED

Second Respondent

- BERNARD J. DAWSON

AND :

Third Respondent

- AND : EXATRON PTY LIMITED

Fourth Respondent

CORAM:	Davies, Sheppard and Burchett JJ.
-	DATE :	8 July 1988

PLACE: Sydney REASONS FOR JUDGMENT

EX TEMPORE

Davies J.:	This is an application for leave	to appeal from a
decision of a single Judge of	the Court who refused	an

application to vacate 1 August 1988 as the date of the trial of

proceedings brought by the first respondent ("Ancol"), against

L . .

the applicant ("Honeywell") and the other respondents.

The proceedings were brought by Ancol against Honeywell

and the three other respondents with respect to the supply to

Ancol of a computer based videotex system. The system was

. . . ..

intended to be accessible by newsagent members of Ancol for the

purpose of keeping their accounts, for ordering supplies and for

other purposes. The system was installed about April 1985 and

became operational in August 1985. It was abandoned by

Associated Newspapers in July 1986, being regarded by Associated

Newspapers as irredeemably unsatisfactory. The maximum

utilisation of the syst-em was in March 1986 when about 100

members of Ancol were using the system.

Honeywell had supplied the hardware and had some role

with respect to software, although the other respondents also had

I	responsibilities in that regard. In his reasons for decision,
the learned trial judge mentioned that:-

"During the period of operation there was a Honeywell : ,

officer designated as project manager. He	was employed
full time for portion of the	period. Honeywell also
kept a diary of problems notified to the company in
relation to the system	and in regard to the action taken

to meet those problems. This diary has been discovered
and apparently sets out numerous items. It also is

said, and accepted on behalf of Honeywell, that, during

this period, the company flew out experts from France.

from time to time to investigate the complaints. In
about December 1985 a newstex steering committee was
established; the word 'newstex' referring to the code

name of the system. This committee consisted of a

Honeywell representative, Mr Dawson, who is the third

respondent, and a principal of the second respondent and
an Ancol representative. This committee met regularly

and minutes were kept. Apparently the committee dealt

with problems which were being experienced."

l

3.

The trial was first fixed for 1 July 1988, but his

Honour later postponed that to 1 August 1988 to give Honeywell

more time to prepare. On 25 May 1988, counsel for Honeywell informed the trial Judge that Honeywell Intended to make application to vacate the hearing date to enable Honeywell to conduct a simulation of the computing system in order to obtain

evidence relevant to the case. On 23 June 1988, his Honour
refused the motion and it is from that decision that leave to

appeal IS sought.

The principles to be applied by this Court on such an

,-

application for leave were stated	in Ahern v. Deputy Commissioner	S	.
!

of Taxation (Qld), (1987) 76 A.L.R. 137 at pp.146-7, by Davies,

I _

I .

Lockhart and Neaves JJ. as follows:-

;. .

"The decision whether or not to adjourn	the hearing of
the petition was within the discretion of the primary	! .'
judge.	It is well established that an appellate court
will rarely interfere with	a trial Judge's exercise of

discretion upon an application for adjournment.
However, the refusal to grant an adjournment may in some
cases prevent the party seeking it from presenting his
case or defence and in some circumstances this may
result in injustice of such kind or magnitude as to
warrant interference on appeal. In Maxwell v. Keun

[l9281 1 K.B. 645 Aitkin L.J. said (-653):

"I quite agree the Court of Appeal ought to be very

slow indeed to interfere with the discretion of the.

learned judge on such a question as an adjournment of a trial, and it very seldom does do so; but, on

the other hand, if it appears that the result of

the order made below is to defeat the rights of the

parties altogether, and	to do that which the Court
of Appeal is satisfied would	be an 1nJustice to one

or other of the parties, then the Court has power to review such an order, and it is, to my mind, Its duty to do s o . "

In Bloch v. Bloch (1981) 55 A.L.J.R. 701 Wilson J. at

703, with whose Judgment Gibbs C.J., Murphy and Aickin	-
JJ. agreed, described this passage from the judgment	of
Aitkin L.J. as stating 'the rule in terms which have	won
general acceptance.'

Similarly, in Walker v. Walker 119671 1 W.L.R. 327 Sir

Jocelyn Simon P. said at 330:

'First where the refusal of an adjournment would

result in a serious injustice to the party

requesting the adjournment, the adjournment should	_.
only be refused if that is the only way that justice can be done to the other party; and, secondly, that although the granting or refusal of an adjournment is a matter of discretion, if an appellate court is satisfied that the discretion has been exercised in such a way as would result in an Injustice to one of the parties, such appellate

court has both the power and	the duty to review the	.
exercise of the discretion.'

A related principle, though derived from	a different
stream of authority, was expressed in Cameron	v. Cole
(1944) 68 C.L.R.	571 by Rich J. (at 58iTJTiTEhtheseterms:

'It is a fundamental principle	of natural justice,
applicable to all courts whether superior	or

inferior, that a person against whom a claim or

charge is made must	be given a reasonable
opportunity of appearing and	pre'senting his case.'

To similar effect, Dixon C.J. and Webb J. said in

Commissioner of Police v. Tanos (1958) 98	C.L.R. 383 at
395:

I . . . it is a deep-rooted principle of the law that

before anyone can be punished or prejudiced in his

person or property by any judicial or

quasi-judiclal proceeding he must	be afforded an
adequate opportunity of being	heard.'

See also Taylor v. Taylor (1979) 143 C.L.R.	1 per Gibbs
J. at 4.

The principles that guide a court when sitting on an

appeal from a discretionary order or judgment have been
referred to many times. The Drinciules are summarised
by Kitto J. in hstralian Coai and 'Shale Employees'

Federation v. Commonwealth (1953) 94 C.L.R. 621 at 627:

'I shall not repeat the references I made in Lovell

v. Lovell (1950) 81 C.L.R. 513, at pp.532-4 to

' ;

cases of the highest authorlty which appear to	me
to establish that the true principle limiting the	; ,
c :
manner in wich appellate jurisdiciton is exercised
in respect of decisions involving discretionary	l
judgment is that there is	a strong presumption in

favour of the correctness of the decison appealed

from, and that that decision should therefore be

affirmed unless the court of appeal is satisfied l '

that it is clearly wrong. A degree of satisfaction	L
sufficient to overcome the strength	of the
presumption may exist where there	has been an error
which consists in acting upon	a wrong principle, or

givlng weight to extraneous or irrelevant matters,

or failing to give weight	or sufficient weight to
relevant considerations,	or making a mistake as to
the facts.	Again, the nature of the error may not

be discoverable, but even so it is sufficient that

the result is so unreasonable or plainly unjust

that the appellate court may infer that there has been a failure properly to exercise the discretion

which the law reposes in the court of first

.

instance. House v.	The King (1936) 55 C.L.R. 499	I.
at pp.504-5.'

This passage was cited with approval in the joint .~,

judgment of the Full Court of the High Court in Rod ers ..

v. Rodgers (1964) 114 C.L.R. 608 at 619-20. See + a so

Niemann v. Electronic Industries Ltd [l9781	V.R. 431,
especially

See also Adam P. Brown Male Fashions Pty Ltd b. Philip Morris Inc	I
& Anor (1981) 148 C.L.R. 170 at pp.176-7 and Squire v. Rogers

(1979) 39 F.L.R. 106 at pp.103-4.

The weight which is given, in respect of the questions

arising under an application for an adjournment, to the views of the judge at first instance was emphasized by the Full Court In

.-

Mudginberri Station Pty Ltd v. Australasian Neat Industry
Employees' Union (1986) 12 F.C.R. 10 at pp.12-13.	At p.13, the
joint judgment of	the Court states:-

"Where there is no question of absence of jurisdiction,

breach of the rules of natural justice, or other

positive error, a mere refusal of an adjournment can very rarely, we thlnk, be a fit subject for a grant of leave to appeal."

The case put to his Honour for the adjournment was that

a major issue at the trial would be whether defects in the

l

6.

computing system arose from the equipment which Honeywell had

supplied or, on the other hand, from the software designed by the

third respondent, Mr B.J.	Dawson, and supplied by the second
respondent, Bersand Onllne Services Pty Limited. The case	was
put that, as the hardware and software were available in
substantially, though not entirely,	the form in which they had

been supplied, it would be possible to prepare and institute a

, .

programme which would simulate the operating conditions

encountered when the computing system was used by Ancol. It was

said that if the simulation were properly structured and

appropriate tests were devised, it should be possible to

ascertain where the faults in the system lay.

Provided that an effective and usefui simulation could

. /

be achieved, it no doubt would not matter that there would not be I

complete identity between the test equipment and that actually

used by Ancol. However, the evidence before the trial Judge left

much in doubt. The programme for the simulation had not been

worked out.	The assumptions to be made had not been agreed. The
objectives and specific goals of the simulation had	not been

finally identified or settled. The evidence was that from May to

12 August 1988, time would be spent identifying more precisely

what the model had to simulate and	what Components the model must
have in it in order to provide an effective simulation. Then,	!
from 12 August to 2 4 December 1988, time would be spent writing
programmes and runnlng the initial trials. It would then be	....
necessary for the programmes to be audited to ensure that each programme properly recreated the environment it was intended to

simulate. Mr P.K. MacGregor, the expert witness called in this

l.

I .

application on behalf of Honeywell,	was unable to say when any
decision would be taken as to whether the simulation would	be
used by Honeywell for the purpose of seeking to determine whether	. ,

op rating	the	computer	system	was running	correctly.	: I
I (

. 1 .

As to the use of the simulation, Mr MacGregor gave this

S .

evidence:-	, .
-

"And do you have a view as to whether the simulation will . ,.

have any - will give you any assistance in forming a i '

view as to the capacity of the system?---Yes it would.

Why would it do that?---It would allow us to measure the	I .
capacity of the system over	a range of rates of
submission of transactions and over	a range of different

transaction	types.	i',
I'
8 .

And why is that a significant matter in the context of	I :
the complaints that Ancol makes?---As	I understand it,

one of the complaints which Ancol makes	is that the	1 .
system had insufficient capacity to handle more	than, I	;
believe, 50 users, under certain conditions which	are	I

specified in the complaint and the simulation would

allow us to test that claim."

The trial judge came to the view that, if the simulation

!

were allowed, it would be as likely to interfere	with the fair .
trial of the proceedings as to assist it.	His Honour said:-

"It is clear to me that the development and operation of

a network load simulator would	be of assistance in
answering some of	the questions which arlse in the

proceeding. But it is equally clear -- and indeed

conceded by Mr MacGregor, who has given evidence on

behalf of Honeywell -- that the utility	of the simulator
will depend upon it being either conceded or found that	r :

the specificatlon and the program used in developing the !

simulator do fairly reflect the system which was
installed in 1985. As to that matter, one can only say
that it ought to be possible for the specification, and
subseqently the program, to be submitted for examination

by one or more experts retained by Ancol. But, in

respect of at least some	Items, Mr MacGregor has
conceded that competent people might differ	as to the

appropriateness of what is proposed. I can-only say

that the evidence	does not satisfy me that it would be
possible to avoid the undesirable situation	at a trial
of having a separate question arise as to whether	the

I .

r .

simulation is in fact a fair representation of the I .

original system. Were such an issue to arise, it could
have the effect of distracting attention from the
principal question -- the adequacy of the original
system to comply with the requlrements accepted on

behalf of the respondents -- and, of course, this

diversion could considerably extend the length of the

trial and its cost. If I were of the view that a
simulation could be undertaken which would very likely
answer all the problems of the trlal, there would be
considerable temptation in postponing the trial for
sufficient time to allow the simulatlon to occur.
However, it 1s clear that this is not so. I think that
it may turn out that the simulation provides little
ultimate assistance; and even perhaps a disadvantage in
the ultimate resolution of the issues between the

parties."

I agree with the view taken by his Honour. The

simulation would, if anything, tend to dlstract attention from what was said and done and known at the time of the transactions which are the sublect of the proceedings. The proceedings are

based principally upon representations made by or on behalf of

Honeywell. At the trial, it will be necessary for the trial I. .

Judge to determine what representations were made by or on behalf

of Honeywell and what equipment, hardware or software was

supplied by or on behalf of Honeywell o r by others within the

ambit of the Honeywell representations. And it will then be	t . .
necessary to ascertain whether the representations were false,

misleading or deceptive or likely to mislead or deceive. By

. .

directing attention of the experts away from the facts as they

occurred and the knowledge	as it stood at the time to the
assumptions in the programmes	of and the other technicalities of

the simulation, the simulation would	be likely to detract from	a
proper trial of the proceedings.

. ,'

The proposal for the simulation was outside the ordinary

rules of practice and procedure adopted by courts. The i

simulation was not intended as part of the discovery and
inspection of equipment held by an opposite party. Discovery of
equipment held by others, including software, was available. The
application for the adjournment was not sought to ascertain what

had occurred in the past but to permit further investigation to

! .

determine what were the causes	of the failures which had
occurred.

, .
i .:
. .

4.

If any such simulation were to take place, it could

appropriately take place pursuant to an order under Order 3 4 of

the Federal Court Rules, that is to say, by an expert appointed

by the Court. That is because, if the Court thought it proper

that an issue of fact in the case should be resolved by the	i '
making of further tests, it would be appropriate for the Court to appoint an independent expert who would develop the assumptions,
programmes and procedures for the carrying out	of the necessary

tests. In that way, the making of the tests would form a part of

the decision-making process and the problems which the trial

Judge foresaw under the present proposal would	be avoided. The
motion put on behalf of Honeywell	was not a motion for the

appointment of a Court expert under 0 . 3 4 . If in the course of

the proceedings it becomes appropriate to have an issue of fact
determined by an expert in some manner, as by carrying out a

simulation, that course is one which 1s still open and any party

may apply to the trial Judge under 0 . 3 4 . However, the trial

Judge would not make an order appointing a court expert unless	he
was satisfied that in all the circumstances	of the case it was

i

appropriate to do so. There may well be other means, whether by

order of the	Court or by agreement of the parties, whereby the
simulation could take place	if the trial Judge thought it

appropriate that it should do so. However, his Honour was of the

view, at the time of the appllcation before him, that the

carrying out of the simulation was not appropriate. That view

was open to his Honour on the materlal before him	and, with	' _
respect, it was correct.	.	I '
I 'I

i'

His Honour also rejected the adjournment on the basis of

delay. His Honour said:-

"Notwithstanding my comment on 9 March, it was not until

early May that a declsion was made by Honeywell to seek

a further adjournment of the trial and, if that

application was successful, to embark upon the

simulation. No program for the simulation was available

until the end of May; the feasibility study prepared by

the Preston Group Pty Llmited being dated	30 May 1988.
That document sets out	a timetable. The timetable shows

the final step -- namely the confirmation of system

performance under critical load conditions -- as being

targeted for 28 November 1988. However, Mr MacGregor

has indicated, in the course of his evidence, that this

target date is unrealistic. He has said that it will take at least until the end of January 1989 to reach

this stage and that that date wlll slip further	if there
is any delay in commencement of	the work; as indeed
there already has been.	Mr MacGregor said that it could
be April 1989 before a report was available. Assuming
that this hope was met, it would still	be necessary for
affidavits to be filed, so as to make	the report
available to the Court and	the other parties, and there

would have to be an opportunity for the other parties to

meet this new evidence. Even	lf all went as well as
could be hoped, it seems to me obvious that	a trial

could not start before the beginning of August 1989. In

other words, there would have been a full year's delay.

But even this may be a fairly optimistic view of the

position. The fact is that, in a period of only a few weeks, the likely report date has already slipped back

about four months. Bearing in mind the number of

matters which Mr MacGregor has indicated have yet to be

resolved and one's everyday experience that estimates of

completion dates -- whether in relation to the hearing

of cases in courts, the construction of buildings, or

anything else -- generally prove over-optimistic, I have

no real confidence that, if the simulation went ahead, it would be possible to start a trial even by August 1989.

..

What I do know is that the consequence of an adjournment

of the trial is to add over a million dollars to the

applicant's claim, without there being any information

before the Court as to whether any or all of the

respondents would have the ability	to pay that extra
amount.	'I

Again, with respect, his Honour's conclusions were correct.

For these reasons I am satisfied that his Honour

i approached the issue on a correct basis and in a manner

calculated to do justice between the parties by ensuring that

there would be as early a hearing of the proceedings	as was
practicable taking into account all such	steps as reasonably
ought to be taken prior to trial. NO error of principle or of	t
fact has been established.
~.
..
I J

The application for leave to appeal should therefore be

dismissed. I should not let the occasion pass, however, without emphasising that the Court 1s loath to interfere !

with

interlocutory orders of this nature. It is for a trial judge to

ensure the fair trial of the proceedings before him. This may

require the making of many orders of an interlocutory nature. It

is inappropriate that the Full Court should interfere in such

. ,

..

matters and s . 2 5 ( 2 ) was inserted into the Federal Court of

Australia Act 1976 by Act No. 72 of 1984 to make it clear that appeals may be brought with respect to such matters only when the

decision under appeal raises a significant point of principle or

i '

is calculated to defeat the rights of the parties or of one of

i

IL.

I '

them altogether seriously to or diminish them. I m '

In the present case, not only has it not been shown that c

there is any serious injustice to Honeywell by his Honour's

decision, but I am satisfied that his Honour's decision was the

_ .

just and appropriate decision in the circumstances. . I

. I

In my opinion, the application for leave to appeal . .

should be dismissed with costs.

Sheppard 3 . :  I agree with the reasons which have been given by

I .

Davies 3 . and I have nothing to add.

Burchett J.:	I also agree and I also have nothing to add.
I certify that this and the	11
preceding pages are	a true copy of
the Reasons for Judgment herein	of
Davies, Sheppard and Burchett	J 3 . .

Associate: tt89= Date :

Counsel for the appellant:  Mr A.R. Emmett Q.C.

with Miss H. Coonan

,-.

Solicitors for the appellant: Allen Allen & Hemsley 1 ,

counsel for the 1st respondent:	Mr D.E. Grieve Q.C.
with Mr P-#. Wood
Solicitors for the 1st respondent:	3.C. Behm & Associates
Date of hearing:	8 July 1988

!

i

i

, .

I '

_'

i