Orica Investments Pty Ltd & Ors v McCartney & Ors

[2012] HCATrans 163

[2012] HCATrans 163

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney   No S12 of 2012

B e t w e e n -

ORICA INVESTMENTS PTY LTD

First Applicant

BRONSON & JACOBS PTY LTD

Second Applicant

ORICA AUSTRALIA PTY LTD

Third Applicant

and

WILLIAM MCCARTNEY

First Respondent

INGREDIENTS PLUS PTY LTD

Second Respondent

GRAEME BRUCE LOVE

Third Respondent

Application for special leave to appeal

GUMMOW J
CRENNAN J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 22 JUNE 2012, AT 10 58 AM

Copyright in the High Court of Australia

__________________

MR I.M. JACKMAN, SC:   May it please the Court, I appear with my learned friends, MR J. STOLJAR, SC and MS J.K. TAYLOR, for the applicants.  (instructed by King & Wood Mallesons)

MR J.F. HASSETT:   May it please the Court, I appear for the respondents.  (instructed by Hassett Dixon)

GUMMOW J:   Yes, Mr Jackman.

MR JACKMAN:   Can I ask your Honours to go to application book page 190 to show your Honours how the Court of Appeal dealt with what was the most fundamental of the issues before the Court, namely, appellate review of credit findings concerning a witness called Mr Bontoux.  Paragraph 85 on page 190 refers to Fox v Percy with the statement that the constraints laid by down by that case “need not be yet again described”.  His Honour Justice Giles paraphrases some of our submissions, but does not refer to the principal one, which is that the Fox v Percy constraints stand for the proposition that findings as to witnesses’ credibility are not to be disturbed on appeal unless they are glaringly improbable or contrary to compelling interferences or contrary to incontrovertible facts or uncontested testimony. 

GUMMOW J:   Now, what you are really appealing against it the order for remitter for a new trial?

MR JACKMAN:   Yes.  If your Honours go to paragraph 89, there is a useful summary of the ‑ ‑ ‑

GUMMOW J:   So it is an interlocutory appeal really?  We do not know what will happen when there is a new trial.

MR JACKMAN:   Well, it is interlocutory in that sense, but if we had won in the Court of Appeal, then the outcome would have been final.

GUMMOW J:   It was not.  You did not.

MR JACKMAN:   No, we did not.  Paragraph 89 contains a useful summary of what the Court of Appeal has found about Justice Ball’s reasons for disbelieving Mr Bontoux and none of them rise as high as is required by Fox v Percy or any other case decided by this Court on the question.  The first point in line 3, it was said not to warrant the rejection of evidence.  In the next line, something else was said not to be well founded, then something else was said to not to be persuasive.  That is repeated on the next line.  The final line on the page refers to “the third main reason”, that was that Mr Bontoux had flatly contradicted in cross‑examination what he had said in his affidavit.  His Honour takes that point but says that it should not be given such weight as to make up for what is called “the unsoundness of the other main reasons”.  Your Honours will there note there is refer to an ‑ ‑ ‑

CRENNAN J:   Was this just an application of principle to particular facts of this case?

MR JACKMAN:   Can I show your Honour that that is not so.  What his Honour Justice Giles sets out in paragraph 87 is a growing body of case law from the New South Wales Court of Appeal, namely, that the advantage which this Court has said in Fox v Percy and other cases is enjoyed by the trial judge is countered by a contra‑advantage held by the intermediate appellate court because, as his Honour says at the foot of page 190, the appellate court enjoys a “capacity for appellate synthesis and perspective”, and if your Honours go to the middle of page 191, it is said that the Court of Appeal enjoys the “advantage of the more mature assessment of the evidence” and ‑ ‑ ‑

GUMMOW J:   Sorry, whereabouts, Mr Jackman?

MR JACKMAN:   I am sorry.  I am looking what is an internal quote from Justice Giles’ own judgment in the middle of page 191.  It is paragraph numbered [182] in the internal quotation, which refers to the Court of Appeal enjoying a “more mature assessment of the evidence” and its second thoughts being better thoughts than those of the primary judge.  Now, one does not find support for that at all in Fox v Percy and similar cases and what it leads to is a dilution of the constraints laid down by this Court to the point where, as Justice Giles says expressly, all that the intermediate appellate court need find is that the trial judge’s finding on credit be “unsound”.  That is the point at which he ends in paragraph 89, and one finds the point made earlier in the sentence at very foot of 190 going over the page, that:

If on examination the objective reasons given by a trial judge for a conclusion as to credibility and a credibility based finding are unsound, [and no more] the finding is unsound.

Now, what the Court of Appeal has found comes nowhere near what is laid down in Fox v Percy as to the glaringly improbable and so on, and that is an error of principle, we submit, which is reflected in what is now a trilogy of cases from the Court of Appeal, the two referred to in paragraph 87, together with this very case, and it is an error, in our submission, which warrants the grant of special leave.  It is an error which is illustrated by the way in which the Court of Appeal treated Justice Ball’s reasoning and the evidence. 

Now, can I illustrate that in two ways.  One is by reference to the 17 February 2005 email which was given a great deal of prominence by the Court of Appeal as reflecting error on the part of Justice Ball.  In fact, that email was never put to Justice Ball.  It was not put to Justice Ball because we had succeeded at the hearing on liability before Justice White in persuading Justice White that Mr Bontoux’ emails at that time cannot be taken at face value because they were actually composed in collaboration with the primary wrongdoer, Mr McCartney, such that they do not ‑ ‑ ‑

CRENNAN J:   Is that true of all of them?

MR JACKMAN:   Yes.  I will take your Honours to it in a moment.  Can I just stay with Justice Giles’ reasoning for the moment and go to paragraph 37?  Now, Justice Giles does not go into this evidence because Justice Giles expresses, in paragraph 37 at the foot of page 173, that his Honour understood:

the parties to have accepted on appeal that Mr Bontoux’ 17 February 2005 e‑mail was his own work and a true reflection of his concerns –

Now, that was not put to us.  No one put the 17 February email to Justice Ball and that understanding, recorded on the part of Justice Giles, was not something that we ever put.  If it had been put, we would have explained it was completely contrary to the way not only that we had run the case at first instance, but the way in which we actually succeeded in the case.  To demonstrate that point and to answer your Honour Justice Crennan’s question, can I take your Honours back to Justice White’s judgment beginning at page 57 of the application book, 

Your Honours will see at page 57 the first of Mr Bontoux’ emails being settled in collaboration with Mr McCartney.  In the middle of that page there is reference to Mr McCartney sending an email to Bontoux back in August 2004 asking him to ring him and telling him that he would tell Bontoux how to reply, that is, how to reply to us, paragraph 175 states to collaboration between the two gentlemen to assist Mr Bontoux, in effect, in undermining Bronson & Jacobs’ relationship with Mr Bontoux.  We then go to paragraph 178 which refers to our breaking the news to Mr Bontoux on 16 February that his contact at Bronson & Jacobs, Ms Nguyen, had left.  Paragraph 179 deals with Mr Bontoux’ evidence that he forwarded that email to Mr McCartney.  Paragraph 181 deals with what has now become the crucial email of 17 February.  His Honour points out that Mr Bontoux and Mr McCartney tried to keep this a secret in their affidavits and the terms of the 17 February letter are set out.  Paragraph 184 records the inference that is drawn, that Mr McCartney settled the terms of Mr Bontoux’ response.  So that is Mr Bontoux’ response which goes on 21 February to an email from Mr Cavanagh of 16 February:

At one point in his cross‑examination, Bontoux said that he send the email of 17 February to McCartney “just to make sure the wording was correct” –

But he sought to resile from that admission.  Paragraph 185 shows the way in which we got hold of that 17 February, that the two gentlemen had tried to keep from us.  Then on page 61 at about line 8 his Honour refers to “a plan to which McCartney was a party” and that plan and Ms Nguyen leaving Bronson & Jacobs:

contributed to Nguyen’s departure, and was an indirect contributing factor to Bontoux’ decision to cease –

dealing with us.

CRENNAN J:   Well, the whole of paragraph 186 is important, is it not?

MR JACKMAN:   Yes, it is.  I am going to come back to it on a separate point in a moment.  At the foot of 188 his Honour rejects both Mr Bontoux and Mr McCartney as being reliable witnesses.  Then if your Honours go through to paragraph 198 his Honour points out “Nguyen was not called to give evidence.”  He draws an inference that that would not have assisted and then that leads to:

the inference that McCartney solicited and induced Bontoux to transfer the Clos d’Aguzon distributorship from Bronson & Jacobs to Ingredients Plus.

That inference is then said to arise, in 199, from a number of things, including subparagragh (f):

McCartney’s talking and corresponding secretly with Bontoux about the terms on which Bontoux should write to Bronson & Jacobs about Clos d’Aguzon’s concerns –

Paragraph (g):

Bontoux’ email correspondence requesting McCartney and Nguyen to settle the terms of his announcement of the change of distributor, and saying he looked forward to be their principal again –

Not only did we run the case on the basis that you could not take Mr Bontoux’ emails at face value because they were settled in collaboration with Mr McCartney to give a false appearance of innocence on the part of Mr McCartney, but we succeeded on that basis.

CRENNAN J:   But there is a separate issue about whether Mr Bontoux is happy or unhappy with Bronson & Jacobs and their distributors.

MR JACKMAN:   Yes.  But the first point and the fundamental point is whether Mr Bontoux is to be believed because his Honour says if the Court of Appeal rejects Justice Ball’s finding as to credit, then that is destructive of Justice Ball’s reasoning.  That is the fundamental point, the gateway into which we have to go before we consider the probabilities and possibilities of loss of a chance reasoning. 

So the first point is that the Court of Appeal has applied an incorrect test to its ability to review credit findings and attributed to us in the process acceptance of an email that we never accepted to be a genuine independent statement of Mr Bontoux’s concerns and we succeeded in arguing against that proposition.  So the Court of Appeal’s reasoning on the credit point, in our submission, is fundamentally mistaken, but that, of course, as your Honour points out, is the first step in the analysis.  As his Honour says in paragraph 91 on page 192, the challenge to the credit finding:

is destructive of the primary judge’s reasoning to his conclusion, but leaves open whether or not the opposite conclusion should be come to and if not what conclusion should be come to.

We then we get into the Court of Appeal’s treatment of the loss of a chance, and the central point at which the Court of Appeal diverges from Justice Ball can be found in paragraph 141 on page 210.  Now, this concerns what is said by the Court of Appeal to be the important matter of whether Ms Nguyen and Ms Lynam, the Australians who dealt with Mr Bontoux historically, would have stayed on with Bronson & Jacobs in any event, that is, without the conduct in breach of contract.  Now, 141 is introduced by the linked sentence at the end of 140 that “the primary judge’s reasoning is astray”, and in 141 his Honour refers to a finding by Justice White that Mr Monahan:

told his superiors in Orica that Mr McCartney had in March‑April 2004 told him that he (Mr McCartney) might go out on his own and take B & J people with him, and that Orica changed Ms Nguyen role “apprehending that there were such plans” –

His Honour refers to paragraph [48] of Justice White’s judgment, which I will take your Honours to in a moment.

GUMMOW J:   Before you do that, Mr Jackman, if you get special leave in this case, it will be some sort of visitation case.  What do you say about the respondent’s submissions on page 266, paragraphs 4 and 5, over to 10?

MR JACKMAN:   As to Mr Bontoux’ reasons?

GUMMOW J:   The likelihood of staying on.

MR JACKMAN:   Well, the first proposition is that Mr Bontoux was disbelieved by Justice Ball just as Justice White had, so his reasons have to be treated with scepticism.  The second proposition is that objectively ‑ ‑ ‑

GUMMOW J:   Why should we get involved in that?

MR JACKMAN:   Well, for two reasons ‑ ‑ ‑

GUMMOW J:   Never stop.

MR JACKMAN:   Well, one is that there is a fundamental ‑ ‑ ‑

GUMMOW J:   Particularly when there is going to be a new trial.

MR JACKMAN:   Well, that is the problem, with respect.  On the Court of Appeal’s orders there is going to be a new trial.  Mr Bontoux will then be cross‑examined for a third time on events which have occurred more than seven years ago on cross‑examination, which will be, necessarily, a blunt instrument because it is very hard to think of questions that have not been put to Mr Bontoux on the previous two occasions on which he has been disbelieved.

CRENNAN J:   So what?  It has to be an exercise to be undertaken in relation to settling on a discount rate.

MR JACKMAN:   Well, there does.  There is a further problem, which is that it will be very difficult for a trial judge to put out of his or her mind that fact that the Court of Appeal has said in a non‑binding way that the appropriate discount is in the order of 65 per cent.  In our submission, we accept that there has to be an end to litigation, but the end should have been called by the Court of Appeal.  That should have been the end to it and that if Justice Ball’s credit findings on Mr Bontoux had been upheld, as they should have been on the Court of Appeal’s own reasoning, applying Fox v Percy, then that would have been an end to the aspect which is a said to be destructive.

I am now dealing with the point of significant difference between the Court of Appeal and Justice Ball which concerns that question of whether Mr Bontoux would have left anyway, and the most important reason given by Mr Bontoux that the Court of Appeal accepted was that his contacts, Ms Nguyen and Ms Lynam, had left and therefore he was likely to follow suit.  That is why I take your Honours to paragraph 141 to demonstrate what is a serious error in the reasoning by skipping over the most fundamental evidence leading to that decision to change their role.  What his Honour refers to in paragraph 141 is that there was not any breach by Mr McCartney in threatening to set up a rival business in March‑April 2004.

Now, that seems to be a reference to the fact that the contract which bound Mr McCartney was not signed until 31 May 2004, the following month, and one cannot obviously breach a contract that one has not yet made.  That is at the heart of Justice Giles’ reasoning.  Now, what it omits to state is that Mr McCartney had continued that talk after April 2004 and did so in a far more concrete way just before the role of Ms Nguyen and Ms Lynam was changed.  Now, can I take your Honours to a small number of paragraphs in Justice White’s reasoning beginning on page 19?  Page 19 at about line 18 your Honours will see the reference to:

Later in 2004, and in early 2005, Orica’s management changed the roles of Nguyen –

relevantly, so as not to deal with clients –

Such conduct is consistent with Orica’s apprehending that there were such plans –

by Mr McCartney to set up a rival business.  Then if your Honours go to the next page, 20, at about line 26, your Honours will see what happened in late 2004, December 2004.  Lynam tells a Bronson & Jacobs’ employee, Ms Rennie, that:

Bill [McCartney] & Graeme [Love] are going to start a business and I am going too.

So this is far more concrete than anything that had been discussed before the contract was made.  Then dropping down to line 31:

Later in December 2004, Lynam told Rennie that she needed to come up with $70,000 “to go into the business with Graeme and Bill.”  In late January 2005, Lynam told her that “Graeme and I are looking for premises to rent for the new business.”  She told Rennie that [relevantly, Ms Nguyen] would be working there.

So that is the concrete imminent plan to set up the rival business and it is at that point that Orica decides to change the role of Ms Nguyen and Ms Lynam so that they do not have contact with customers such as Mr Bontoux.  Now, that then takes us back to paragraph 186 on page 61, in the third line:

[Mr Bontoux] was also concerned that Nguyen had left Bronson & Jacobs, and this was a substantial part of his reason for moving his distributorship.  However, I also consider that there was a plan to which McCartney was a party, and which pre‑dated Nguyen’s departure, for Nguyen to leave . . . McCartney’s financing of  the establishing of Ingredients Plus contributed to Nguyen’s departure, and was an indirect contributing factor to Bontoux’ decision to cease to use Bronson & Jacobs as a distributor.

GUMMOW J:   You have been talking through the red light for a while, Mr Jackman.

MR JACKMAN:   I am so sorry.  When one goes back to paragraph 141, the reasoning in 141 skips over the essential fact that in December 2004 these plans had been given a concrete and imminent shape which led immediately to the decision to give Ms Nguyen and Ms Lynam other duties, which they were not pleased about and then they left Bronson & Jacobs.  So, in our respectful submission, on the crucial point that separates the Court of Appeal from Justice Ball on the probabilities of Mr Bontoux leaving in any event, there are serious errors of principle.

To conclude, back at paragraph 127 on page 204 there is good sense, in our submission, in what is taken by Justice Giles from:

Singer v Berghouse, namely, that a different evaluation may be no better and will come at undue expense and detraction from the finality of litigation.

In our respectful submission, that should have drawn the Court of Appeal towards the dismissal of the appeal and acceptance of Justice Ball’s conclusions.  May it please the Court.

GUMMOW J:   We do not need to call on you, Mr Hassett.

There are insufficient prospects of success in displacing the orders by the New South Wales Court of Appeal, including order 3 for a new trial on the issue whether the distributorship would have been lost in any event, to warrant a grant of special leave.  In refusing special leave, however, we are not to be taken to endorse everything that was said by the New South Wales Court of Appeal at paragraphs 85 to 88 respecting the application of the decision of this Court in Fox v Percy (2003) 214 CLR 22. Accordingly, the application is dismissed with costs.

We will now adjourn to reconstitute.

AT 11.22 AM THE MATTER WAS CONCLUDED