Monroe Schneider Associates Inc v No. 1 Raberem Pty Ltd (ACN 007 733 995)

Re: MONROE SCHNEIDER ASSOCIATES (INC) and BARRY LEE SCHNEIDER
And: NO.1 RABEREM PTY LTD; NO.2 RABEREM PTY LTD and NO.3 RABEREM PTY LTD
No. SA G13 of 1992
FED No. 166
Practice and Procedure

COURT

IN THE FEDERAL COURT OF AUSTRALIA

SOUTH AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
Wilcox J.(1)

CATCHWORDS

Practice and Procedure - Proceeding to set aside judgment entered in prior proceeding - Reliance by applicants on evidence sought to be obtained from a person who was interviewed by their solicitors prior to the earlier trial but not called - Claim by that person that he was intimidated from supplying information by threats made by officers of the respondent - Claim of intimidation made to the solicitor prior to the trial but no action taken in relation thereto - Whether it is now open to applicants to rely upon the intimidation as constituting fraud or material non-disclosure by respondents - Whether the evidence which the person can now give answers the tests of being evidence which could not previously have been obtained and which would probably occasion a different result.

HEARING

ADELAIDE

#DATE 6:4:1992

Counsel for the Applicant: N. McPhee, QC

Solicitors for the Applicant: Piper Alderman

Counsel for the Respondent: T. Gray, QC, W. Wells, QC, M. Blue and

R. Whitington

Solicitors for the Respondent: Fisher Jeffries

ORDER

The question ordered to be determined as a preliminary issue be determined in the negative.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

JUDGE1

On 8 February 1991 a Judge of this Court (von Doussa J) entered judgment against the present applicants, Monroe Schneider Associates (Inc) ("MSA") and Barry Lee Schneider ("Schneider"), in an action brought against them by the present respondents, No.1 Raberem Pty Ltd, No.2 Raberem Pty Ltd and No.3 Raberem Pty Ltd (collectively known as "Solomons"). The judgment was for A$1,695,263.65 with costs. MSA and Schneider appealed against that judgment to the Full Court of this Court. On 3 December 1991 the Court, consisting of Beaumont, Burchett and O'Loughlin JJ., dismissed the appeal with costs. MSA and Schneider thereupon applied to the High Court of Australia for special leave to appeal against the Full Courts' order. That application was dismissed on 13 March 1992.

This result may have been anticipated; for, on the same day, MSA and Schneider commenced the present proceeding by filing in this Court an Application and Statement of Claim. In their Application they sought orders setting aside the whole of the judgment of von Doussa J and requiring Solomons to pay the costs incurred by them in connection with both the trial and the Full Court appeal on an indemnity basis.
The Statement of Claim referred in some detail to the earlier proceeding. In para16 reference was made to proceedings said to have been instituted by Solomons in the United States District Court, Northern District of California, to enforce the judgment of von Doussa J. (MSA is an American company and Schneider is resident in the United States). Paragraph 17 alleged that, as a result of investigations initiated by MSA in support of its defence of the United States action, "the following evidence has come to the attention of MSA". This evidence was particularised in paras. 17.1, 17.2, 17.3 and 17.4. Paragraphs 17.1, 17.2 and 17.3 each described a document. Two of these documents bear dates in August 1986, the other is undated. In relation to these three documents, MSA and Schneider claim that:
a. none of the documents was discovered by

Solomons in the earlier proceeding;

b. each of the documents should have been discovered; and

c. there is a "real possibility" that von Doussa J

would not have found in favour of Solomons if these documents had been before him at the earlier trial.

As I understand their position, Solomons concede proposition (a). They dispute propositions (b) and (c). Those disputes need to be resolved but, as will appear, I am not presently concerned with that task.
Paragraph 17.4 particularised, as being within the category of "new evidence": "The evidence of Potter relating to the transactions between MSA and Solomons which were the subject of the Federal Court trial". The reference to "Potter" is a reference to one Stephen Potter who was National Corporate Manager of Solomons from 1984 until his dismissal in the latter half of 1986. Although Mr Potter's dealings with MSA were central to the dispute litigated in the earlier trial, he did not give evidence in that trial. By their Statement of Claim MSA and Schneider alleged a "real possibility" that, if it had been available to von Doussa J, Mr Potter's evidence would have affected the result of the first trial.
Along with their Application and Statement of Claim, MSA and Schneider filed a Notice of Motion returnable on 16 March 1992 seeking orders for an expedited hearing timetable. The motion came before von Doussa J on 16 March. At that time counsel for MSA and Schneider invited his Honour to disqualify himself from any involvement with this matter, having regard to his participation in the earlier proceeding and the strong views expressed by him in his reasons adverse to the integrity and credibility of Schneider. Counsel also indicated that objection would be taken to any participation in the case by O'Loughlin J, the other resident Adelaide judge. As already noted, O'Loughlin J was a member of the Full Court which dismissed the appeal of MSA and Schneider.
At the time when these objections were taken, I happened to be in Adelaide hearing other matters. Without accepting that either he or O'Loughlin J should be regarded as disqualified from dealing with this matter, von Doussa J adjourned the motion and arranged for it to be resumed before me on 18 March at 9am.
In order to dispose of the issue immediately, it is convenient to indicate that, during the course of that hearing, I discussed with counsel for MSA and Schneider their objections to participation by von Doussa J and O'Loughlin J. I pointed out that, if those objections were maintained and upheld, the early resolution of the matter would be made more difficult; and both parties were anxious for a prompt resolution because of the pending American action. I expressed the view that neither judge should be regarded as disqualified; that, if von Doussa J had indeed been deceived as now claimed, he would be the first to wish to put the matter right; and that, before the Full Court, the only argued issue was the question of damages, so that O'Loughlin J had not needed to form - and did not in fact express - any view about Mr Schneider's conduct or credibility. Counsel pressed their objection to the participation of von Doussa J, conceding that his Honour would not be deterred by his earlier participation from doing justice in the present proceeding but maintaining that it would be better for the sake of appearances - at least from their clients' point of view - if someone else decided the matter. They indicated that they could not rationally press any objection to O'Loughlin J.
I believe that von Doussa J should not be regarded as disqualified, applying the test enunciated by the High Court of Australia in cases such as The Queen v Watson; ex parte Armstrong (1976) 136 CLR 248 and Livesey v New South Wales Bar Association (1983) 151 CLR 288. However, I informed his Honour of the continuing opposition of MSA and Schneider to his participation in the case. He told me that, whether or not he is technically disqualified, under the circumstances and as there is a feasible alternative, he would prefer not to hear the present case. O'Loughlin J is willing to take the matter. As I am affirmatively satisfied that he should not be regarded as disqualified, I have, with his Honour's concurrence, set down for hearing before O'Loughlin J so much of the case as depends upon the documents referred to in para 17.1, 17.2 and 17.3 of the Statement of Claim. It is conceded that those documents were not discovered to MSA and Schneider in the earlier proceeding and were not then before the Court; so it is clear that the concerned, the relevant questions relate to propositions (b) and (c) above, the answer to which will require consideration of the documents themselves, the judgment and, possibly, portions of the oral and/or documentary evidence. But, as the parties agree, the answer will not require the adduction of any further evidence in this proceeding.
It seemed to me, during the 18 March hearing, that the allegation regarding Mr Potter's evidence raised different questions. It was common ground that Mr Potter did not give evidence at the earlier trial. So, in that sense, any evidence which he might now give will be "new". But it appeared from affidavits sworn by Mr George Manos, the solicitor who acted for MSA and Schneider at the trial, that, at all material times, he knew of Mr Potter's whereabouts, that he had three telephone conversations and one personal meeting with him, and that he made a deliberate decision against calling Mr Potter in support of his clients' case. It seemed to me that there was a question of principle whether, under those circumstances, anything which Mr Potter might now say should be regarded as "new evidence", within the meaning of the authorities concerning the setting aside of judgments. I also thought that it would be advantageous to dispose of this issue of principle in advance of taking evidence on the claims made by Mr Potter - which, I was informed, would be vigorously denied - that he was intimidated from co-operating more extensively with Mr Manos by threats made, and actions taken, by persons associated with Solomons. Accordingly, I directed that there be determined as a preliminary issue the question whether it is open to the applicants, MSA and Schneider, to raise in this proceeding the issue presented by them in para 17.4 of the Statement of Claim. It was agreed that the determination of this question did not require the adduction of any additional evidence and that it would be convenient to take argument on this preliminary issue later that day.
On the afternoon of 18 March I heard argument upon the preliminary issue and reserved judgment until 9am on Friday, 20 March. At that time I announced that I had reached the conclusion that the preliminary issue ought to be decided adversely to the applicants and that I would publish my reasons for that conclusion at a later date but before any further hearing of the matter. It being agreed that there was no need for any further pre-trial action in connection with the documents referred to in para 17.1, 17.2 and 17.3, I fixed the hearing of the remainder of the case for 8 April before O'Loughlin J. If O'Loughlin J reaches the conclusion that the applicants are not entitled to the relief they seek in respect of any of those three sub-paragraphs, he will no doubt dismiss the entire proceeding, relying in relation to para 17.4 upon my determination of this preliminary issue. Of course,if he finds in the applicants' favour in respect of one or more of those sub-paragraphs, my determination regarding para 17.4 may have no practical importance.
I now set out my reasons for concluding that the applicants are not entitled to rely upon para 17.4.
Both parties referred in their submissions to the judgment of Kirby P, which was concurred in by Hope and Samuels JJ.A., in Wentworth v Rogers (No.5) (1986) 6 NSWLR 534. I will return to the more significant aspect of the judgment in a moment but first it is relevant to observe that this was an appeal against a first instance order striking out a Statement of Claim. At 536 Kirby P referred to the limited circumstances in which it is proper to take that course. He mentioned the tests applied by Barwick C.J. in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 138: that the claim is "manifestly groundless", and that to allow the claim to proceed "would involve useless expense". Although the present question arises in a different procedural context, the effect of holding against the applicants on the preliminary question is to preclude investigation of the merits of Mr Potter's allegations of intimidation and the truth of what he is, apparently, now prepared to state. Accordingly, I think that it is appropriate to apply to the preliminary question the rigorous test referred to in General Steel.
The case alleged by the present applicants is pleaded in three alternative ways: as a case of fresh evidence (paras. 16-21 of the Statement of Claim), material non-disclosure (paras. 22-24) and fraud upon the Court (paras. 25-33). There may be a distinction between material non-disclosure and fraud upon the Court in connection with the documents identified in paras. 17.1, 17.2 and 17.3 - I do not stay to consider whether or not there is - but in relation to Mr Potter there is, I think, no distinction. In essence, what the applicants say in relation to both these heads is that Mr Potter - a potentially significant witness - was intimidated by persons acting on behalf of Solomons to the point of being unwilling to co-operate with, or provide information to, the solicitors for MSA and Schneider. These are, of course, extremely serious allegations. Conduct intimidating a witness from co-operating with another party to litigation, from providing information or being willing to give evidence would constitute a contempt of court. It is conduct properly describable as a fraud upon the Court resulting in material non-disclosure. If the claims of intimidation had been aired before or during the trial, whether in open court or on a confidential basis, it would have been the duty of von Doussa J to investigate them and to take steps to ensure that the effect of any intimidatory conduct was removed. (I say "any" intimidatory conduct because I appreciate that the allegations made by Mr Potter are denied. As the truth of those allegations has not been investigated, I have no opinion whatever as to whether or not they are true. I do not assume that they are true; I merely say that ordinarily they would at least merit careful investigation).
However, Mr Potter's claims were not raised with the Court, before or during the trial. This was not because the solicitors for MSA and Schneider were unaware of them; it was because they chose not to pass them on to the Court. This is apparent from the applicants' own case. Their solicitor, Mr Manos, swore two affidavits which were read in their case on the preliminary issue. The first of these, dated 6 March 1992, was filed in the High Court. It was apparently used, or intended to be used, in support of the application for special leave to appeal to that Court; but, without objection from Solomons' counsel, I permitted it to be read in this matter. In that affidavit Mr Manos states that in 1989 and 1990 he had the care and conduct of the defence, on behalf of MSA and Schneider, of the proceeding before von Doussa J, which he describes. In para 9 Mr Manos lists five "main issues for determination of the Court" in that proceeding. The first of those issues he describes as: "(a) whether or not prices had in fact been quoted by Potter to MSA". (I interpolate that this makes clear that Mr Manos was aware that Mr Potter's actions were a centrally relevant matter.) In paras. 11 to 27 of his affidavit Mr Manos deposes to his contacts with Mr Potter before and during the trial. Those paragraphs have been supplemented by Mr Manos' second affidavit, dated 18 March 1992 and filed in this proceeding. The composite material is too long to set out in full but may be summarised in this way:
a. Mr Manos decided to contact Mr Potter by

letter. He knew his Perth residential address so, on 4 January 1990, he wrote to Mr Potter at that address asking him to telephone. There was no response, so Mr Manos wrote again, on 9 February.

b On 21 February 1990 Mr Potter telephoned Mr Manos. During the

course of that conversation Mr Manos "explained to Potter in general terms the nature of the Federal Court action" and "that his testimony may be of assistance to the respondents" (i.e. MSA and Schneider). Mr Manos asked Mr Potter "if he would be prepared to talk with me about his involvement with the transactions ... and about his employment with Solomons in general". Mr Potter replied that he was unwilling to talk with Mr Manos in detail about these matters. He said that "he feared that Solomons would be vindictive and attempt to damage him." Mr Potter alleged "that Solomons had already attempted to discredit him in criminal proceedings and civil proceedings". Mr Potter said that the criminal charges had been dismissed and the civil proceedings did not proceed when he was forced into bankruptcy due to the legal costs of the criminal trial. According to Mr Manos, Mr Potter went on to make some general allegations that "Solomons had harassed his wife, children and employer" and that "he feared for his and his family's safety" and "needed some protection as Solomons had made physical threats against him". Mr Potter then apparently talked about the circumstances of his dismissal from Solomons' employment, stating to Mr Manos that when Mr Meyer Solomon had dismissed him, he told him (Mr Potter) "that he intended to see that Potter was financially ruined".

c. During the course of this conversation Mr Manos

asked Mr Potter whether he retained any documents. Mr Potter said that he had some documents and Mr Manos requested him to supply them to him. However, according to Mr Manos, Mr Potter refused to do so, saying that he would destroy the documents if Mr Manos tried to force their production.

d. Annexure "C" to the affidavit of 18 March is a

copy of Mr Manos' notes of this conversation. Without going to those notes in detail, they do contain complaints of intimidation along the lines deposed to by Mr Manos. They also include a note relied upon by the present respondents: "feels that they did not make a loss - recouped thru' Feltex and probably made a profit". (This is obviously a reference to Solomons' financial result from their transaction with MSA. The note highlights the central place in that result of the price paid by Solomons to Feltex (the manufacturer) for the carpet which Solomons supplied to MSA.)

e. On the same day as the telephone conversation,

21

February 1990, Mr Manos wrote to Mr Potter regarding documents. He confirmed his request that Mr Potter provide him with copies of the documents in his possession. He canvassed the possibility of Mr Potter perusing the List of Documents filed by Solomons and advising whether there were other documents which had not been discovered. He enclosed a copy of an affidavit of Mr Barry Solomon and asked Mr Potter to "let us have your views as to its truthfulness or otherwise". He also asked for information about other employees of Solomons who might be able to assist.

f. Mr Potter did not respond to this letter. So Mr

Manos wrote again, on 4 April, asking whether he had had "any further thoughts in relation to you further assisting us in this matter". Mr Manos requested that Mr Potter telephone him. Mr Potter did not respond.

g. On 16 May 1990 Mr Manos wrote once more. In

this letter he informed Mr Potter that he would be in Perth on Monday, 28 May and asked whether it would be possible to see him during the course of the afternoon in order to discuss the case. Mr Potter telephoned Mr Manos and said that he had received his letters but he would not assist his investigations. Mr Manos asked him if he would assist on condition that he would not be called as a witness but Mr Potter declined to co-operate. However, apparently as a result of what was then said, Mr Potter did telephone Mr Manos on 28 May while Mr Manos was in Perth.

h. During the telephone conversation of 28 May Mr

Potter agreed to talk with him on the condition that Mr Manos would not discuss with any person connected with, or representing, Solomons either the fact or substance of the conversation. Mr Manos accepted this condition and Mr Potter agreed to meet Mr Manos at his hotel that afternoon.

i. There was a face-to-face conversation between

Mr Manos and Mr Potter on the afternoon of 28 May. Mr Potter gave Mr Manos what the latter described as "a thumbnail sketch about his involvement with MSA in the relevant period". He says that Mr Potter was not prepared to give him "precise details of the events". Annexure "I" to Mr Manos'affidavit of 18 March is a note in his handwriting which apparently records matters told him by Mr Potter. It includes comments on Mr Schneider's proof of evidence. The notes in regard to the proof of evidence refer to the topic of "export credit", a matter relating to the price which Solomons had to pay Feltex for the carpet. It is not clear whether these are notes of the telephone conversation on 28 May or the conversation at Mr Manos' hotel.

j. In para 22 of his affidavit of 6 March, Mr Manos

says that, from his discussion with Mr Potter, "I formed the impression and believed that Potter feared Meyer Solomon and that Potter genuinely believed Meyer Solomon had been directing his anger over Solomon's business failures toward Potter". In para 23 he states that he believed "that Potter genuinely feared for his physical safety" and "for the general well-being and safety of his family". In particular, he says, Mr Potter was frightened that Meyer Solomon "would take steps to undermine any employment he had or may obtain".

k. After the meeting of 28 May, namely on 19 July,

Mr Manos wrote to Mr Potter reminding him about the supply of a copy of a fax from Mr Meyer Solomon to Feltex which Mr Potter had apparently mentioned during their meeting. In that letter he stated that it remainded "our present intention that we will not seek to call you as a witness in this matter". There was no reply to that letter. A further letter was sent on 9 August, the third day of the trial, confirming "that we will not be calling you as a witness" (original emphasis). The letter requested the forwarding of the "telex/letter" as a matter of urgency. Apparently this was never forwarded.

The material placed before the Court in relation to this preliminary issue includes a statutory declaration of Mr Potter made on 21 February 1992. In paras. 3 to 10 of that declaration Mr Potter deals with the question why he did not testify in the previous proceeding. He details his conversations with Mr Manos and gives an account of them which does not materially differ from that of Mr Manos. In para 6 Mr Potter says that in September 1986 Mr Meyer Solomon "fired" him and said that he would sue him and MSA. He goes on "Meyer Solomon told me that if I interfered in any way with Solomons,its clients, customers, suppliers or relationships with anybody having anything to do with Solomons, he would 'destroy' me personally. I understood him to mean that my personal safety would be in jeopardy and that he would harass my family, interfere with my career and ruin me financially". In para 7 Mr Potter says that he took the threats literally because of a prior conversation with Mr Barry Solomon referring to something which had happened to another employee. In para 8 Mr Potter refers to a telephone conversation between Mr Meyer Solomon and his wife during which Mr Solomon is said to have "reiterated the same threats he made to me along with other general slurs against me". In para 10 Mr Potter says that, when Mr Manos contacted him in 1990, he was gainfully employed and that he believed that, if he gave evidence against Solomons, Mr Meyer Solomon would seek to have him fired and harass him and his family.
As I have said, there is no doubt about the significance of the allegations made against Solomons, and particularly Mr Meyer Solomon. But there is a question whether MSA and Schneider should now be permitted to reopen the litigation because of those allegations. As the above summary makes apparent, Mr Manos was aware of the substance of the allegations prior to the trial, which commenced on 7 August 1990 and occupied 33 hearing days before judgment was reserved on 22 October 1990.
Wentworth v Rogers (No.5), was a case in which an unsuccessful party sought to set aside a jury verdict on the ground of fraud by the successful party. At 538-539 Kirby P set out some principles relevant to such an application. The second of these principles was:

"Secondly, it must be shown, by the party asserting that a judgment was procured by fraud, that there has been a new discovery of something material, in the sense that fresh facts have been found which, by themselves or in combination with previously known facts, would provide a reason for setting aside the judgment ... This rule has an ancient lineage ... It is based upon a number of grounds. There is a public interest in finality of litigation. Parties ought not, by proceeding to impugn a judgment, to be permitted to re-litigate matters which were the subject of the earlier proceeding which gave rise to the judgment. Especially should they not be so permitted, if they move on nothing more than the evidence upon which they have previously failed. If they have evidence of fraud which may taint a judgment of the courts, they should not collude in such a consequence by refraining from raising their objection at the trial, thereby keeping the complaint in reserve. It is their responsibility to ensure that the taint of fraud is avoided and the integrity of the court's process preserved".

One of the authorities cited by Kirby P in relation to this principle is the decision of the High Court of Australia in McDonald v McDonald (1965) 113 CLR 529. The judgment of Barwick C.J. in that case, with which Kitto J agreed, contains an exposition of the relationship between the discovery of new evidence and fraud. At 532-533 his Honour said:

"The discovery subsequent to verdict of admissible credible evidence, which could not have been sooner discovered by the exercise of reasonable diligence in the circumstances, and which is of such probative value and significance that, taken with the evidence already given at the trial, it will in all probability be decisive of the issues between the parties in a sense opposite to that of the verdict, is a ground for the granting of a new trial. If the Court is satisfied that the fresh evidence fulfils these requirements, it will generally conclude that, therefore, the interests of justice demand that the issues be tried afresh. In that event, the circumstances that the fresh evidence may tend to support the conclusion that the verdict was obtained by fraud, or by surprise, or by subornation of witnesses will not prevent the grant of a new trial on the ground of the discovery of fresh evidence, or require the Court to satisfy itself of the fraud, surprise or subornation of witnesses as the case may be ... Nor, in my opinion, does that circumstance lessen in any respect the stringency of any of the rules which apply to the grant of a new trial upon the ground of the discovery of fresh evidence. The fresh evidence, though it suggests fraud, surprise or subornation of witnesses, must yet fully satisfy all the criteria laid down with respect to fresh evidence warranting a new trial although it may be that, in some cases, the tendency of the evidence to show fraud may make it more likely to be conclusive. ... But if the fresh evidence does not satisfy all these requirements so that a new trial could not be ordered on the basis of the discovery of fresh evidence, but does tend to establish that the verdict was obtained by fraud or by surprise or that there has been subornation of witnesses, the Court may grant a new trial upon a motion therefor, though a separate proceeding is clearly the preferable course, if the Court itself, on a trial of such issues, finds the fact of the fraud, the surprise or the subornation of witnesses, as the case may be, to be proved to its reasonable satisfaction ... It is not necessary in that event that the evidence of the fraud, the surprise or the subornation, though it should be 'fresh', should be evidence which would be admissible on the issues between the parties in the action; or that it should be found to be probably conclusive of those issues. The Court's conclusion upon the fresh evidence before it that the verdict was obtained by fraud, by surprise or that witnesses were suborned, is sufficient to justify setting aside the verdict and ordering a new trial."

The first paragraph in this quotation is relevant to the present claim of new evidence. The second paragraph provides guidance in respect of the claim that the judgment of von Doussa J was procured by fraud. It will be noted that, according to Barwick C.J., in a case where fraud is established, it is not necessary to prove the matters required in respect of fresh evidence viz. that the evidence could not have been sooner discovered, probative value etc. The fraud itself is a sufficient basis for disturbing the judgment; it being obviously undesirable to maintain a judgment affected by fraud. However, even in such a case the evidence of the fraud (or surprise or subornation) "should be 'fresh'". It was obviously the view of Barwick C.J. that a party was not entitled to have a judgment set aside on the ground of fraud where the evidence was not "fresh", that is, where it was previously known to the moving party. Menzies J expressed himself at 540-541 to similar effect. Although neither Barwick C.J. or Menzies J gave a reason for requiring that evidence of fraud be "fresh", the explanation obviously is that referred to by Kirby P: the public interest in finality of litigation and the need to discourage litigants, having information suggesting fraud, from lying-by whilst the trial proceeds and, if it goes badly for them, then raising the complaint of fraud. The view taken by the courts is that it is better to maintain even a fraudulently-procured judgment than to allow that course to be taken.
I am of the opinion, in the present case, that it cannot be said that the material now relied upon by MSA and Schneider, in relation to the alleged intimidation of Mr Potter, is "fresh". Mr Potter's recent statutory declaration may have provided a little more detail about the alleged intimidation than was revealed to Mr Manos; but it is clear from Mr Manos' affidavits that, several months before the trial began, he was aware of: the significance of Mr Potter's evidence; his whereabouts; his unwillingness to participate in the trial or supply any information; and his claim that this unwillingness stemmed from threats allegedly made to him by Mr Meyer Solomon, including threats of physical and financial injury, interference with his employment and harassment of members of his family. In other words, he knew the substance of everything he now knows about Mr Potter's potential involvement in the case. It would have been open to Mr Manos to subpoena Mr Potter, either to produce documents or to give evidence or both. Had he been concerned that a subpoena might not have been productive, he might have reported the situation to the trial judge, with a request that he take some action to investigate the alleged intimidation and to overcome its effects. He might even have requested the trial judge to call the witness himself, making him available for cross-examination by both parties. In Obacelo Pty Ltd v Taveraft Pty Ltd (1986) 10 FCR 518 at 536-540 I reviewed the authorities concerning a judge's power to call a witness, concluding that there was such a power, although it ought to be exercised only sparingly and with great care. But a case in which a central actor in a dispute is unwilling to supply information to one of the parties because of alleged intimidation by the other is, perhaps, a case where the power should be exercised.
The present applicants' advisers took none of the above steps. Instead they elected to proceed to trial upon the basis that Mr Potter's information and evidence would not be available to their clients. Nothing new having come to light, it would be a contravention of the requirement of freshness for the Court now to permit the applicants to rely on the alleged fraud or misconduct of Solomons, in relation to Mr Potter, to impugn the judgment.
The other aspect of the matter, in relation to Mr Potter, is whether the evidence which he is able to give meets the requirements for the admission of fresh evidence in circumstances not necessarily involving fraud or misconduct; that is, whether it falls within the first of the two categories considered by Barwick C.J. In relation to that question, the critical issue, in the words of Barwick C.J., is whether the material now sought to be placed before the Court is material "which could not have been sooner discovered by the exercise of reasonable diligence in the circumstances, and which is of such probative value and significance that, taken with the evidence already given at the trial, it will in all probability be decisive of the issues between the parties in a sense opposite to that of the verdict".
It is immediately apparent that there will usually be a difficulty about saying that evidence emanating from a witness whose significance, identity and location was previously known "could not" have been sooner discovered. But I accept the submission made by counsel for the applicants that it would go too far to say, as an absolute proposition, that material emanating from an already-known witness cannot answer the test enunciated by Barwick C.J. It is possible to imagine a case where there is such a change in the issues, or course of evidence, at trial that there was no real opportunity of checking the information available from even a known witness. Such a case will be unusual, but I agree that it is not possible for the present respondents to dispose of the "new evidence" aspect of Mr Potter's proposed involvement merely by saying that he was interviewed by Mr Manos. It is necessary to consider whether what he can now say was so foreign to the issues and course of evidence at the trial as to make it appropriate to say that this evidence could not have been sooner discovered, if Mr Manos had chosen to take steps to eliminate any intimidation bearing upon Mr Potter; and, if so, whether that material would probably result in a reversal of the earlier judgment.
The content of the alleged new evidence being material, I asked counsel for the applicants to identify it. They mentioned several matters. First they said that Mr Potter would say that Solomons "never paid the invoice price" shown on the invoices sent to them by Feltex. But that was something known at the trial. At p 67 of his reasons von Doussa J referred to a discount of 22 1/2 % allowed by Feltex to Solomons. This was a discount off the marked invoice prices. There was also a sum of $400,000, sometimes described as an "export credit" but really a contribution made by Feltex towards a Solomons' advertising campaign. This sum was well known to the trial judge. He dealt with it at pp 86-90 of his reasons. The question whether this sum should be deducted from Solomons' award of damages was the main issue in the Full Court appeal.
It was then suggested that Mr Potter is able to say that there may have been a discount over and above the allowance of 22 - and the $400,000 advertising contribution. The word "may" is apt; it is not suggested that Mr Potter is able to say that there was a discount. But counsel referred to para14 of Mr Potter's statutory declaration in which he said this:

"14. The pricing structure for Feltex carpeting manufactured in New Zealand attracted even larger discounts. After taking the regular 22.5 percent discount, Solomons and Feltex negotiated on a job by job basis an additional subsidy off the price of carpeting sold by Feltex to Solomons. With respect to the MSA transactions I called this additional subsidy an 'export credit.' The exception to this pricing structure was for special orders negotiated pursuant to special net prices or off list pricing."

The contention is that this paragraph shows that Mr Potter can say that Feltex always allowed a discount off the invoice price, over and above the 22 1/2%. It seems to me, however, that para14 does not support that contention. The last sentence of the paragraph contains a major qualification. The point was understood by von Doussa J, who commented at 67:

"Whilst price discounts by mills to large customers are not uncommon in the carpet industry on standard products, particularly in the domestic carpet market, they are virtually unheard of on purchases of custom made commercial carpet - and this for the reason that each job will be separately costed by the mill, and the quoted price will be a net price."

The subject carpet was custom made.
As this extract from his reasons reveals, the question of discount was raised at the trial. Earlier in his reasons, at pp 62-63, von Doussa J set out a letter from Mr Schneider of 24 January 1986 containing calculations of the price likely to be paid by Solomons and including a "30% export credit" on top of the 22 1/2% discount. There is nothing new about Mr Potter's reference to the possibility of some additional discount.
Finally, counsel said that Mr Potter would be able to give evidence that, at a meeting in New Zealand on 17 February 1986, the Feltex representatives agreed to accept a lesser price than that upon which Solomons' claim was calculated. Counsel suggested that he would say that this price was that upon which he based his quotation to MSA, apparently $8.69 per yard. But Mr Schneider attended this meeting and, as his Honour pointed out at p 70, it was common ground between Mr Barry Solomon and Mr Schneider (and Mr Tooth of Feltex) that Feltex insisted upon the full price which it had quoted to Solomons, and which greatly exceeded the figure of $8.69 per yard. So, if Mr Potter gave the envisaged evidence, he would be in conflict with all other participants in the conversation including Mr Schneider. It is difficult to regard that evidence as having probative value.
The critical matter said to arise out of Mr Potter's evidence is not what was said in New Zealand, but what was actually paid by Solomons to Feltex. The substance of the allegation now made is that Solomons misled the trial judge on that matter and so succeeded in having damages assessed on a false basis, one unduly favourable to themselves. In that regard it is pertinent to note that the evidence at the trial included the cheques sent by Solomons to Feltex in payment for the carpet. No doubt it is true, as counsel for the applicants say, that the import of the cheques is not apparent without a process of reconciliation between invoices and cheques. But this was a very lengthy hearing. There was ample opportunity for the cheques and invoices to be reconciled. Even now it is not shown that the cheques are inconsistent with the evidence upon which von Doussa J acted. If there is an inconsistency which was not previously realised, that would not be because the question how much Solomons paid to Feltex was overlooked at the trial but because the present applicants chose not to reconcile the cheques with the invoices. If they were now to do so, and to discover a discrepancy, this could not be fairly described as new evidence which could not have been sooner discovered. And, in any event, this would not be something arising out of Mr Potter's evidence. The amount actually paid by Solomons to Feltex has always been seen as controversial.

It seems to me that, even putting aside the difficulty occasioned to the applicants by the fact that Mr Potter was available to them at the trial, in the sense described above, when his present evidence is analysed it contains nothing of probative value undermining the critical findings of von Doussa J. There are some additional matters about which he would be in conflict with Mr Barry Solomon, but it is not suggested that any of these matters go to the heart of the decision or that, if Mr Potter was accepted, the opposite result would be likely to ensue. Accordingly, even if Mr Potter's evidence was admitted and accepted, it would not justify setting aside the judgment. To the extent that the present application relies upon evidence to be obtained from Mr Potter it must fail.
The question ordered to be determined as a preliminary issue was: "whether it is open to the applicants to raise the issue presented by para 17.4 of the Statement of Claim". The reasons set out above explain why I answered that question in the negative on 20 March,
When I announced my determination of the preliminary issue I made no order about the costs of that issue. This is a matter appropriately left to O'Loughlin J to determine, in the light not only of the result of this issue but also whatever transpires at the hearing before him.

[1992] FCA 166

06 APRIL 1992