Palmer & Ors v Australian Estates Limited

[1990] HCATrans 108

..

.

• ~

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No S20 of 1990

B e t w e e n -

COLIN PEMBERTON PALMER,

JILLIAN COURTNEY PALMER,

JAMES RODERICK PEMBERTON
PALMER and ANDREW COURTNEY

PEMBERTON PALMER

Applicants

and

AUSTRALIAN ESTATES LIMITED

and DENNYS STRACHAN MERCHANTILE

LIMITED

Respondents

Application for special leave

to appeal

Palmer

10.ASON CJ

BRENNAN J

DEANE J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 11 MAY 1990, AT 1.05 PM

Copyright in the High Court of Australia

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MR W.W. CALDWELL, QC:  If Your Honours please, I appear with

my learned friend, MR R.D. HARRISON, for the applicants.

(instructed by Laurence & Laurence)

MR R. CONTI, QC:  I appear with MR N. HUTLEY for the respondents.

(instructed by Minter Ellison).

MASON CJ:  Mr Caldwell, we only called on PALMER at this stage

against the possibility that you might perhaps have

some outline of argument and if you have we thought it

would be of advantage to us if it were handed in at this

stage and we could consider it during the adjournment.

MR CALDWELL:  Your Honour, the outline takes the form of a

refinement of what we submit are the special leave

questions. I could hand to Your Honours four copies

of that together with four copies of the materials

that are referred to in our outline.

MASON CJ:  Very well, the Court will now adjourn until 2 o'clock.

AT 1.06 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.05 PM:

MASON CJ: Yes, Mr Caldwell?

MR CALDWELL:  Your Honour, could I hand to the Court four

copies of one of the cases referred to in our outline
that was not included in the bundle, namely, the

decision of the Court of Appeal in NRMA INSURANCE

LIMITED V TATT.

Your Honours, in the document entitled

Special Leave Questions we have sought to outline the

matters which, in our submission, make the grant of

leave in this case relate to matters of general

importance. In the first paragraph, I have referred

to the concern of judges of other States and, particularly,

Mr Justice Kennedy and Mr Justice McGarvie as expressed

in the papers. Although I have given references in
the document to the particular passages in which

reference was made to the New South Wales Court of

Appeal's approach, could I also mention to Your Honours

that at page 42 and following, Mr Justice Kennedy

referred to the situation prevailing in America about

reversing trial judges on matters of credibility and

points out the dangers which appear to have arisen in

that jurisdiction and it is that particular area that

we would submit make this Court's undertaking a review

of this area of the law at the moment a matter of general

importance.

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Palmer

MASON CJ: 

But it all depends, does it not, on whether or not

the Court of Appeal is observing the established
principles in this area and when I say "observing",

observing in this instant case?

MR CALDWELL:  Yes. Your Honours, we have sought to state in

paragraph 2 the particular questions. May I go to

them and attempt to illustrate why we submit, in this

particular case, if those questions had been put and considered by the Court of Appeal, different
answers would have been given. The first is, in

substance, whether the documents which Mr Justice Samuels
placed so much weight on were so probative of facts
contrary to inducement of the applicants to give

their assent to the sales of the cattle by the

respondents that no reasonable person could accept

that they were induced. We would submit that if that

question had been considered thoroughly by the Court

of Appeal its answer would have been "No". And could

I suggest that these matters are matters that should have been taken into account and were not taken into

account at all or	were inadequately taken into
account.

The first is this, Your Honours, that none of

documents referred to by Mr Justice Samuels suggests

that there was an intention before August 1983 to

sell more than 2500 cattle. In fact, in June 1983

the applicants' herd comprised 3570 cattle. That

appears, Your Honours, in the judgment of

Mr Justice Yeldham at page 27, line 45. I think the

same figure is repeated by Mr Justice Samuels in the

judgment in the Court of Appeal. By the conclusion of

the sales which are the subject of concern here, that

is the end of that year, the applicants had only

120 left. That appears at page 31 at line 10. If I

could ask Your Honours to look at that finding by

His Honour Mr Justice Yeldham which was not disturbed

on appeal:

I am satisfied that about 120 cattle were

Wagga properties, which had a total area left with the plaintiffs upon their three	of about 12,400 acres and which, in the
spring of 1983, "had a terrific feed ... very
big growth", about 1400 acres being under
oats.

And that, Your Honours, as was conceded by Mr Nixon,

for the respondents, was very wasteful use of those

properties indeed, only having that number of cattle

on such a large area with such excellent feed.

Now, the difference between the highest suggested

figure in the documents referred to by His Honour

Mr Justice Samuels, namely, 2500 and the herd in June 1983

of 3570 is, of course, over 1000. That would have

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permitted the plaintiffs to retain their core of breeding

cows. Now, we would submit that these documents provide

no support whatever to a suggestion that there was an

intention to dispose of that core of breeding cows except

the evidence, which remains undisturbed, as to the

conversations between Nixon and the Palmers in which the

advice was given.

Secondly, Your Honours, in relation to the docunents relied

upon, they were admissible as business records and with

the exception of two of them, to which I will come,

the author of them was not called. The accuracy of relevant parts

of their contents was denied by Mr Palmer and his credit,

of course, in relation to that was accepted by the

trial judge.

The two documents of which the author was called

are the memoranda of Mr McMahon - and I will come to them

in a bit more detail shortly, Your Honours - who gave

oral evidence but the trial judge rejected his evidence

where it conflicted with the evidence of the Palmers

and his oral evidence, of course, was in relation to the

same matters that were dealt with in the memoranda.

Further, the documents upon which Mr Justice Samuels

relied concerned proposals over a period of time between

March and July 1983, apparently put, if they be accurate,
by the Palmers to other creditors; one being Citicorp

and the other being the Bank of New South Wales.

Those creditors, of course, were seeking an assurance

that they would be paid some money and they were given

indications of proposals whereby money would be available

to pay them. We would submit that those documents

in themselves, if they were proved to be accurate, would

not justify a conclusion that there was a fixed or
determined state of mind as to particular cattle to be

sold later on, that is, between August and December in

that year.

BRENNAN J: Correct me if I am wrong, Mr Caldwell. The proposition

was that the programme of sales was one which had been

induced by the representations of the agents of the

defendants, is that correct?

MR CALDWELL:  Your Honour, there were various sales and there

were several conversations.

BRENNAN J:  But what was the plaintiffs' case? Were some of

them, as it were, legitimate sales and some not?

MR CALDWELL:  Before I answer that, could I say this,

Your Honour, and it is a matter which Mr Justice Samuels

appears to have overlooked in the judgment, that it was

part of the plaintiffs' case that in the ordinary

conduct of their operation of the breeding herd,

approximately 1000 head would have been sold that year

in any event, and the referencesto that are in the

judgment of the trial judge at page 31, the evidence

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of Mr Palmer in the middle of the page, from 15

to 23, involving a programme of selling steers -

cows and heifers that were not in

calf -

and so on. And then the numbers are crystallized at

page 64. In the extract from submissions that is

there set out at line 19:

Mr Peart's analysis, 951 of these would

have been sold in that year.

That is under the normal programme. That is:

steers, barren heifers and cows and

old cows -

Mr Justice Samuels appears, Your Honours, to have

treated the question of inducement as to whether it

was one inducement to sell all of those cattle that

were sold or none and it was part of the plaintiffs'

case at the outset that those 951, approximately,

or 1000 cattle would have been sold in any event but

what was induced was the sale of the extra cattle beyond

that figure. That is the basis on which the expert

evidence of Mr Peart, which was accepted by the trial

judge, determined the ultimate loss.

The sales took place between August and

December and the dates of them are set out on.pages 30

and 31, Your Honours. The initial sales were the

subject of inducement by a series of conversations taking place before the middle of August 1983 with

Mr Nixon. Now, those, Your Honours, are - the

evidence of Mr Palmer as to that is set out at pages 26

and following. Your Honours see at line 20 on page 26:

Q. Going on to the question of selling the

cattle off Boonoke, was there something

said on that occasion in relation to that?

And then Mr Palmer gives the conversation. Could I

say this, Your Honours, that this conversation and

the others which took place between the Palmers and

Mr Nixon remain undisturbed in the findings of the

Court of Appeal. This is one of the oddities that we

would see in a finding of the Court of Appeal, that
they can attack the question of inducement but, as

Mr Justice Samuels concedes at page 119, he cannot attack the conversations that took place and the fact

that the advice was given and it was given negligently.

But in the course of this conversation it is apparent

at line 27 that Mr Palmer was expressing reluctance to

sell:

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Palmer

What did you say to that? A. Well, I said,

'We would be better off by keeping the herd

and walking them home'.

And lower down at line 35:

did you have quite a number of further
conversations with him after you returned

to Wagga?

And he refers to those. And there is a finding at the

top of the next page by His Honour Mr Justice Yeldham

that he accepts that evidence and -

prefer it to that of Mr Nixon, where there

is a conflict.

On page 28, line 27, the evidence goes on as to the

further conversations and the evidence is, at the bottom

of the page, that after those conversations Mr Palmer

gave has assent.

Now, that assent, Your Honours, appears to relate

to the first sales, at least those that took place up

to late September. Then there is evidence as to the

expression "further reluctance by the Palmers" in a
conversation with Mr Nixon in late September and the

findings as to that, Your Honours, appear at page 36

and following in the evidence of James Palmer:

a conversation in late September or early

October at -

the property -

"Wisconsin".

And if Your Honours see at line 20:

'Why sell the cattle now?' because Mr Nixon

had said that we'll buy back cheap later on	and my comment was 'Why should we bring the	debt down now to bring it up later on? What
does it achieve other than a couple of book
entries?'

And he goes on to indicate that he became quite angry.

Now, that conversation where clear reluctance to assent

to the further sales is indicated is corroborated by the

evidence of Mr Guy and on the following page, 37,

Your Honours see that the trial judge accepted Mr Guy

in its entirety, he having considerably impressed the

trial judge. And that conversation set out on page 37

clearly indicates the reluctance of the Palmers then

to sell.

Now, if Your Honours look at the programme of

sales on pages 30 and 31 it is apparent that if that

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conversation be placed in late September or early

October, then there were at least 1300 head of cattle

still to be sold that were sold between then and

12 December and we would submit that the trial judge,

having accepted that evidence, corroborated by an

independent witness, whose credit he accepted, whatever

documents may have said concerning intentions as to sale

probative that for the trial judge to accept the

in months earlier in the year, that is between March and

conflicting oral evidence of witnesses as to their

reluctance to sell, would be such that no reasonable

person could accept it. And it is for those reasons

that we would submit that if the first question were

asked, it should have been answered, "No" by the

Court of Appeal.

We would submit that if the second question,

that is the question of failure to use or palpable

misuse were asked, the same answer would be given.	Had
that question been asked, the Court of Appeal would

have taken into account, we suggest, the findings that

were made and remain undisturbed as to Mr Nixon's

intention and purpose in giving the advice. Those

findings, Your Honours, appear at pages 52 and 53.

Starting from line 20 on page 52 - these findings

of the trial judge were undisturbed on appeal:

When giving advice to the plaintiffs

Mr Nixon did what he could to persuade
Mr Colin Palmer that it was in the best

interests of the plaintiffs to sell their

cattle, and he knew or should have known

that the plaintiffs relied upon him for

advice and acted in reliance upon that

advice. Mr McMahon -

that is Mr Nixon's superior -

had required and expected Nixon to persuade

and encourage the plaintiffs to sell their

herd.

First,"the relationship"continuing over a period and the top of page 53:

The statements made by Mr Nixon and the

advice which he gave were for the purpose

of inducing the plaintiffs to act upon them

by authorising the sale of their cattle.

So that one has, Your Honours, undisturbed findings of

the trial judge that advice was given; that the advice

was untrue or inaccurate; that the advice was given

negligently; that the action in accordance with the

advice caused losses to the plaintiffs of over $2 million

and, finally, that the maker of the statements by those

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statements intended them to be acted upon and by making

them set out to persuade the applicants to so act by

giving their assent to the sale.

DEANE J:  Mr Caldwell, at page 119 Justice Samuels set out

what he saw as the relevant question. Do you say that

his formulation was wrong or do you say that he did not

apply it?

MR CALDWELL:  He set out part of the passage on BRUNSKILL,

Your Honour -

DEANE J: - - - which, as I read His Honour's judgment, he

accepted it as binding his function.

MR CALDWELL:  Yes.

DEANE J: Well, do you disagree with the formulation of that

question at the top of page 119 or do you say His Honour

did not honour the formulation or both?

MR CALDWELL:	We say both of those things, Your Honour.
DEANE J:	You say both?
MR CALDWELL:	Yes.

DEANE J: Well then, why is the formulation wrong? If the

answer to that question is in the affirmative, why

should not an appellate court intervene?

MR CALDWELL:  Your Honour, it is included in the reasons given

in BRUNSKILL. On the same page is the formulation from

HONTEESTROOM which includes the statement that the -
on the question as to the Court of Appeal finding that
the trial judge failed to use or palpably misused his

advantage in assessing the credibility of the witness.

DEANE J:  But that expands it but if an appellate court,

examining the decision of the trial judge, is of the

view that it can be seen that that decision is clearly

wrong on grounds which do not depend merely on

credibility, why, if that is so, should not the

appellate court intervene?

MR CALDWELL:  We would submit that the asking of the questions

(a) and (b) that we have framed which do have support

in the authorities may produce a different answer.

Those questions pose or require the appellate court
to consider matters which perhaps, we would suggest,
are not sufficiently clearly expressed in the statement

at the top of page 119.

DEANE J:  So, you would say if those question produce a

different answer an appellate court should not interfere

with a decision of the trial judge that can be seen to

be clearly wrong on grounds which do not depend merely

on credibility? It just lets it stand, does it?

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MR CALDWELL:  Your Honour, we are dealing with the passage at

the top of page 119 as a global expression where the

examples are given. Perhaps I should qualify what I

have said by saying that in addition to - I withdraw that.

What we would suggest is that a gloss needs to be put

on the words at the top of page 119 by saying that it

will not be apparent that the decision of the learned

trial judge will be clearly wrong if the answers to our

questions (a) or (b) be in the negative.

DEANE J: His Honour indicates his acceptance that that is a

very stringent question by the two examples he does

adopt:

inconsistent with established facts or

was glaringly improbable.

MR CALDWELL:  Yes. Well, those, of course, are the examples

quoted in BRUNSKILL.

MASON CJ: Yes, which is the last time this Court dealt with

the principle.

MR CALDWELL:  Yes, and generally speaking, we would submit

that if concerns can arise of the sort expressed by

Mr Justice Kennedy and Mr Justice McGarvie as to the

application of those principles, then perhaps they are

not sufficiently clearly stated for intermediate

appellate courts to apply and that more emphasis needs

to be placed upon a consideration of questions such as our

(a) and (b) instead of words which may be regarded as

allowing quite a bit of latitude such as "glaringly

improbable". Now, that, we would suggest - - -

MASON CJ:  The area - - -?

MR CALDWELL:  I am sorry, "glaringly improbable". Now, that

is given as one example and as I have mentioned in the

written document, that is a question which perhaps

needs clarification by this Court.

MASON CJ:  Why? The use of that expression goes back to the

HONTEESTROOM itself, does it not?

MR CALDWELL:  But the question is - well, -an I answer

Your Honour's question in this way, that the expression
"glaringly improbable" as a test of appellate court

intervention is not expressed in HONTEESTROOM in

isolation. It is expressed along with consideration

of questions such as whether the finding attacked can

be said, in considering other material, to be so

unreasonable that no reasonable judge would accept it.

DEANE J:  But the questions you put in (a), (b), (c) and (d)

may, in some cases, be appropriate but take, for example,

(b):	in the sort of case where the question Justice Samuels
asked is answered in the affirmative,	(e) is quite likely

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to be an irrelevant question because the case His Honour

is referring to is where the decision can be seen to be

clearly wrong on grounds that do not, as it were, depend

on credibility.

MR CALDWELL:	Yes.
DEANE J:	But an affirmative answer to your (b) would say

that on those cases the decision must stand if it does

not appear that the judge has done things in relation

to credibility.

MR CALDWELL: Well, perhaps in particular cases it would be

apparent that if it can be seen to be clearly wrong

on grounds which do not depend on credibility,

then the trial judge must, if he depended upon

credibility, have failed to use his consideration of it

Tl2	properly or misused it. But, if I could put it this
way: the course of decision in the New South Wales
Court of Appeal has indicated, as we have sought to
demonstrate shortly in the document, that that court
relies not so much on the introduction of that passage,
that is, "seen to be clearly wrong on grounds which do
not depend rrerely on credibility" but look at the
examples which follow and treat them as the test. o,
if something can be seen - if a finding can be seen to
be "glaringly improbable" then that is enough. The
Court of Appeal then takes the next step or, perhaps
more accurately, some members of it take the next step
and say that therefore it is clearly wrong on grounds
that do not depend really on credibility. And the same
applies here with the meaning of the expression,
"incontrovertibly established facts".

Now, in the passage quoted, of course, it is

established fact. In this particular judgment

Mr Justice Samuels goes on to say, in the following

two lines - it is referred to as "incontrovertibly

established facts" and as mentioned in the document,

this is one question which we suggest ought to be

clarified in this Court since both expressions are used

in the last two cases where the question has been raised

in this Court, namely, URANERZ and BRUNSKILL and, on

our submission, as Mr Justice Samuels himself pointed

out in the YATES V JONES's case,which we have mentioned

in the document, it is not clear whether those facts

have to be established facts or incontrovertibly

established facts.

If the requirement be incontrovertibly established

facts, we would suggest that that means, in this case, that

the documents must establish matters which make it

impossible for any oral evidence, corroborated or not,

from the plaintiffs or any admissions or whatever might

have been the case from Mr Nixon, to overturn the conclusions

from those documents. That is what "incontrovertible" -

it is not "incontroverted", but "incontrovertible"

would mean in connection with established facts.

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BRENNAN J: That raises a problem in this case, does it not,

because the question here is one of inducement which,

as you have pointed out, is a state of mind. Well,

it is not merely a state of mind at one particular day,
it may be over a period of time with the sales

continuing, with the fluctuating financial position of

the family, no doubt, fluctuations in the price of

cattle that is to be expected on sales, perhaps some

differentiation between their condition in one month

than in another and an ongoing relationship between

the Palmers, on the one hand, or Mr Palmer on the one

hand and the representatives of the defendant and other

financial institutions on the other. It seems to me

that it is very difficult - I am not saying this is

against you necessarily - for you to be able to

dem:mstrate that the view that was taken by the Court of

Appeal does not answer whatever tests you might

formulate, having regard to that issue and that

complexity of facts which is beyond our capacity at this

stage to know about.

MR CALDWELL: Well, in my submissions, there are various matters

which the Court of Appeal apparently relied upon which

can, in a short way today, be demonstrated as being

contrary to other findings made by the trial judge

which were, in turn, not disturbed by the Court of Appeal. They

are concentration on these particular documents. I

appreciate that Your Honours do not want me to take all afternoon but I can, if necessary, go to the particular documents which are looked at in detail at pages 110

through to 118 and demonstrate, I will submit, that they

do not involve any matters which - certainly at the

first level - are inconsistent with the sale of this

last body of cattle sold after September 1983.

BRENNAN J: Well, that raises the question then, "Well, what

was the way in which this case was run? Was it on the

basis of an argument about the last sale or was it on
the basis of all the sales being induced in this

way, or all the sales after August being induced in

this way?" because if it is all the sales after August

being induced in this way, then once the wall is

breached so convincingly as Mr Justice Samuels saw it

by these documents, then perhaps there is little

of the structure left.

MR CALDWELL:  Your Honour, the inducement relied upon was

by the various conversations that occurred starting

in July and running through to October.

BRENNAN J:  And were the damages said to flow from the early

sales as well as the later ones?

MR CALDWELL: indeed, yes.

BRENNAN J: Well now, if that is so, the case must have been

conducted on the basis that the conversations that ran

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through induced all of these sales and here is

incontrovertible evidence, as Justice Samuels sees it,

in relation to the major part of the sales there was

no inducement. The question then is, "Well now,

in relation to the last part of the sales, is the

judge's finding at first instance supported?"

MR CALDWELL:  I am only giving that as one example, Your Honour,

as to why we submit that the documents relied upon do

not establish incontrovertibly a lack of inducement

and I do emphasize that none of the documents speaks

of any proposal to sell beyond 2500 and, clearly, there were many cattle sold beyond that. So that

so far as those remaining cattle are concerned, the

question of inducement, we would submit, cannot be

challeged because, as the Court of Appeal has found,

the findings as to the conversations giving the advice

and the expression of reluctance to sell were not

disturbed.

But, secondly, Your Honour, could I point out

an obvious matter? Mr Justice Samuels' conclusion

as to a fixed and determined intention to sell

depends on the documents between March and July that

I have mentioned but one of the documents referred to

is that of a memorandum of 15 July from Mr McMahon

to Mr Nixon which is referred to at page 114 and, in

its terms, makes it clear that there was no fixed

and determined state of mind at that stage.	The
document is quoted commencing at line 17:

"The essential ingredient of the income is

the sale of 2,500 cattle which must be made

before the end of September. There have

been times when it appears our client may

have been having trouble making up his mind

about the sale of these cattle, but in view

of the situation now there are no alternatives."

Now, that, being one of the documents in the chain to

which Mr Justice Samuels refers, we would suggest,	make it clear that the test of incontrovertibility
was notmade out, that there you have in the middle of July an expression of their not making up their mind
and that, of course, is consistent with the Palmers'
evidence accepted by the trial judge.

BRENNAN J:  And 10 days later there is the document on the

following page.

MR CALDWELL:  Yes, and then there is the document on the following

page of 25 July.

BRENNAN J:  And there is a sense of satisfaction about the sale

of 2500 cattle.

MR CALDWELL:  Of course, he is then speaking to a creditor and

persuading them that some money will be coming through.

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It is consistent with the finding by His Honour

Mr Justice Yeldham at pages 52 and 53 that, in response to this memorandum, which was encouraging Mr Nixon

to persaude the Palmers to agree to the sale of
their cattle, that he set about persuading them to

do so. Your Honours recall the findings made by

the trial judge that, in giving the advice, that he intended that they so act and his purpose in giving the advice was to persuade them to give their assent.

That was a finding that Mr Nixon had,with the

encouragement of Mr McMahon by this memorandum,

set about that task. The document on 25 July is

consistent with he having been effective in that role

between 15 and 25 July.

BRENNAN J: 

I see the force of your submissions, Mr Caldwell,

but the underlying difficulty that, for my part, I face
in this case is that before one could come comfortably

to the conclusion that the Court of Appeal had exceeded
their function, I would need to have mastered all the
relevant facts as well as the views expressed by the

courts below and the findings that have been made on

those facts, and only after that process is complete

could one predicate of the Court of Appeal that they had

acceded their function. That being so, the problem

which this case presents is really one of fact. It is

not so much that there is an error of principle but
that in applying the principles the court has perhaps

given lip-service only to the rule which governs their

functions and has, in the factual circumstances of the
case, gone beyond the appropriate limit of their
functions.

Now, does that not make it a fact case which makes

it, perhaps, an undesirable vehicle for raising the

points that you desire to raise?

MR CALDWELL:  That it is a fact case, of course, we cannot

resile from.	As to the question of it being an
undesirable vehicle, there are a number of considerations,
we suggest, make this a desirable vehicle for it.	The

question of the complexity of fact in this case as opposed
to others, we would suggest, is not a relevant

consideration to Your Honours.

BRENNAN J:  What about complexity and inducement as the

issue?

MR CALDWELL:  Inducement as the issue, we would submit,

indicates that this is an appropriate case as a vehicle to consider the general area. The matter of inducement

being a question of a state of mind, we suggest, is

very much more obviously so a question of credit or

credibility - assessing a question of the matter of

credibility than most other questions of fact. Whether

events took place may, of course, be the subject of

oral evidence and the subject of questions of credibility

but they can be judged objectively by an appellate court

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in a much more ready fashion. But we would suggest

that questions of inducement, the question of whether

advice has caused a party to change his mind is very

much a matter for the trial judge to assess, depending

on the credit of that witness. So, we would

suggest, it raises a more obvious application

of the requirement to test the appellate court's

interference than perhaps in other cases.

The second matter that we would seek to raise

is this, that the test of inducement as expressed by

Mr Justice Samuels at page 101 was in error and

that test of inducement is also a matter which should

be the subject of consideration by this Court. That

test is expressed at the foot of page 101, at line 24:

Accordingly, it is essential in the

present case that the respondents should

establish that their assent to the sale

of their cattle off Boonoke was contrary
to their own wishes about the management of

their business, and was forced from them

only -

and I emphasize the word "only" -

by their reliance upon, and inducement by,

the inaccurate statement -

Now, we have submitted in the affidavits, and I do not know that anything that I would say today would go

beyond that, that these matters: firstly, that the

question of inducement in this tort, relying upon

negligent advice, has not yet been considered by this

Court. Of course, the element is touched upon in

cases like SAN SEBASTIAN and SHADDOCK but the level

of inducement required has not yet been discussed in

this Court. Secondly, if the test be the same as that

required for deceit or other relief upon the basis of a

fraudulent misstatement, then the statement of it by

Mr Justice Samuels that I have just mentioned is

wrong in that it flies in the face of the principles

expressed in GOULD V VAGGELAS and, particularly, the

decisions of the New South Wales Court of Appeal in

CORBEN' s case and GIPPS V GIPPS which we have referred

to on point 5 of the document and copies of which were

included in the bundle.

We would submit that the appropriate test is

along similar lines to those cases and it would be

sufficient for the plaintiffs to establish that the

advice was one of a number of factors which influenced

the applicants' assent and that it could have been

sufficient for the applicants to have been persuaded

by the advice to persist in a course of action which

they had previously resolved upon.

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Now, in our submission, that question arises

regardless of the decision on the question of fact

that Your Honour Mr Justice Brennan has mentioned

for this reason: that the Court of Appeal could not

correctly conclude that there was no inducment unless it correctly stated what the level of inducement was.

Unless that was correctly stated, they were, as it were, aiming at the wrong target.

Your Honours, we have also mentioned in the

document the questions of a breach of fiduciary

duty which, we would submit, are also matters of

general importance which are raised by the case. The question of whether, in a context of the relationship

between a stock and station agent and its client,

where the agency is also a creditor of the client,

and advice is given, whether the agency is subject to

fiduciary duty. It, of course, Your Honours, raises

the question of whether Your Honour Mr Justice Brennan's

remarks in DALY's case are applicable in such a situation

concerning advice about the sale of cattle. That, we

would submit, is a matter of general importance to

the pastoral industry generally in this country.

Finally, Your Honours, we would suggest that

it is a case of need for the grant of special leave

to correct a substantial injustice; that the
intervention of the Court of Appeal to overturn a
finding by a trial judge in such a matter where it is

based upon findings of credit of witnesses after

rejection of competing evidence, conflicting evidence

from the respondents' witnesses, and consideration

of the documents now relied upon by the Court of

Appeal, we would submit, gives rise to a substantial injustice that needs to be rectified.

Your Honours, on Mr Justice Yeldham's decision,

these plaintiffs had a prospect of surviving financially and holding on to a family property that had been in the

family for many years.	On the Court of Appeal's
decision, they lose that property and are bankrupt

and we would submit that the Court of Appeal's

intervention here raises a matter of substantial
injustice that should be the subject of special leave.

If Your Honours please.

MASON CJ: Yes, thank you, Mr Caldwell. Mr Conti, what do you

say about the first ground advanced by Mr Caldwell for

the grant of special leave?

MR CONTI:  Your Honours, we would submit that the way in which

the High Court, this Court, framed the test in BRUNSKILL
is consistent with other ways the test has been framed

in this Court, it is consistent with the way it has been

approached - - -

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MASON CJ:  But what do you say about the alternative way in

which the case is pu4 that the Court of Appeal

misapprehended the nature of that principle, as is

to be gathered, so it is suggested, from the way in

which they dealt with the evidence?

MR CONTI:  Your Honours, we would urge upon you that the

Court of Appeal consistently and carefully and

accurately applied the test, that is the incontrovertible

test, to the facts and circumstances of the case. We

would depart from my learned friend on a number of the

matters that he has put to you today in support of his

reasons.

MASON CJ:  Can you point to what you say is the best document

that demonstrates in an incontrovertible fashion

inconsistency with the oral evidence on which the

primary judge based the.f:indingsunder attack?

MR CONTI:  Yes, Your Honour. Perhaps the best document is

a document which is not entirely reproduced and which

really shows the heart of what the case was about.

It is Mr McMahon's document and it really tells the

story.

MASON CJ:	Now, what is this document?
MR CONTI:	Your Honour, this is the document which is referred

to - it was a document, of course, in evidence before

the Court of Appeal below and it is picked up in the

narrative at pages 111 and 112. There is an extract

from it at the top of page 112.	Now, Your Honours, in
this particular document - - -

MASON CJ: This is the document prepared by your clients?

MR CONTI: That is so but His Honour stressed below, each

of the four documents in question have an internal

consistency, a similar theme to each other, including

if I may say, Your Honour, the solicitor's letter which

is the letter of the Palmers' solicitors. Your Honours,

in the fourth paragraph of this document you will see

reference to the passage which-His Honour partly

extracts on page 112. This is Mr McMahon's, as it

were, record of his interview with Mr Palmer in Wagga
on 6 May,.just after Mr Palmer's solicitor's letter
was written to Citicorp and not long before the note
was made by the Citicorp officer of Mr Palmer's

statement to her that he was going to sell 2500.

Your Honours, what it sets out, apart from a record

of the conversation, is firstly - and you can pass

by it, it is the first annexure - the stock on hand.

Your Honours, what it next importantly sets out is a

cash flow. Your Honours, what it indicates is, in

effect, what we asserted below was a corr:mercial deal:

"We will support you on this unsecured borrowing; we

will, indeed, inject another $300,000 into your operation

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of working capital, provided that you comply with this

programme." Now, part of the programme appears at
line Mon the third page of the document I have handed
to you where it says "August In ..... 1,000 Cattle ex

Boonooke" and then further down, "September In -

1,000 Cattle ex Boonooke" - that is 2000, thus far
consistent with the solicitor's letter - that is

Mr Palmer's solicitor's letter to Citicorp which was extracted in full in the judgment where it only referred to 2000. Then under the heading "Stock On Hand" there is reference to "l,570 Cattle" stock on

hand. And then under the heading "Possible Variations

to Above":

A decision may be taken to reduce the herd

of cows down to 500/700 in which case an

additional Income -

will be generated. Now, this document purports to

be the commercial arrangement and it and its

ingredients and, indeed, its detail were denied by

Mr Palmer. If I could take you to - - -

BRENNAN J: Well, how do~s that advance your case?

MR CONTI:  Your Honour, what it does, it advances our case

this way: there are two critical matters that

Their Honours below regarded as incontrovertible. One

was the financial difficulty in which the family found

themselves. They owed nearly $3 million carrying an

interest charge of 490,000, so, there was a need to

sell, and this document shows my clients organizing

a carry-on type facility. There was a need to sell

and then there was a decision to sell according to a

programme.	Now, they were the critical issues:
a programme to sell which was denied.	The existence

of a programme to sell as such was denied by the

applicants below. This material tends to show there

was a programme and it gathers strength when one adds

to it the other three materials: the statements to

the bank managers which appear on pages 106 - through

page 106, going to the top of page 107, and then

the letter of the solicitors. Your Honours, it has been said by my learned friend that only one of the authors of all four documents was called, and that

was Mr McMahon. I have given you his material. But

the author of the document which appears on page 107

was Mr Palmer's solicitors. Now, Mr Palmer did not

call his own solicitor, the author of this letter, to

say that he had got it wrong. Mr Palmer denied, when

cross-examined on sentence-by-sentence through this

particular letter written by his solicitors, that he

had given any such - in effect, had any such programme

or course of action in mind.

Now, that programme shows an intention to dispose

of stock over a period of six months from April 1983.

The document I have just shown to you shows a similar

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programme. And then we have the Citicorp letter which,

as it were, tops it all, on page 115 which indicates

a desire to increase to 2500 - an expression of

intention to increase to 2500 and that, in turn,

gathers consistency with the document I have just

produced to you.

Now, Your Honours, in the upshot there occurred

all of the sales which appear - there is altogether some

12 sales which appear on pages 30 and 31 of the

application book. If I may correct my learned friend

to say that the assertion, in effect, of inducement

was repeated in the evidence although not reproduced

as such explicitly by His Honour in the judgment,

right through to the December sale, appearing on page 31,

line 8. Although it is true that the passage my

learned friend indicated to you, Mr Palmer indicated

an intention on his part, as it were, to sell off

some of the old cows et cetera, without any specificity

being given to it, in no area does he indicate that

he disclosed that intention to the DSM people. What

he says was, in effect, "DSM induced us to enter

into that selling programme at Deniliquin and Wagga Wagga."

He repeats it in relation to the sales at Wagga Wagga

and he says that was all DSM's doing and, Your Honours,

that just cannot stand, in our respectful submission,

with four documents that explicitly spell out a plan

of action.

BRENNAN J:  But is it right to say, according to the document

that you have handed to us a short time ago, that the

last cattle sale was to be September?

MR CONTI:	December.
BRENNAN J:	December?

MR CONTI:  Yes, Your Honour. There was a sale in December on

page 31 at line 9. I am sorry, no.

BRENNAN J:  The programme - in other words, the programme

contemplated that sales would take place of cattle in

August and September.

MR CONTI:  I understand what Your Honour says. Your Honour,

why the documents are inherently contradictory and

controvertible of the applicants' case is that the

applicant said, "I was induced generally to sell my

cattle. I had in mind that I would sell, as it were,

some of the surplus but I was induced generally to

enter into all of the sales that appear on pages 30 and

31 and to undertake this plan or programme by the

prediction of DSM that within six months the price

would be cheaper and I could get in cheaper." He

said, "That induced this course of action, this programme,

generally". And these documents show that there was no

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inducement. There was a recognized need to sell and

there was also an intention to sell, a decision to

sell formed, well before the first supposed inducement in August 1983. And, Your Honour, the documents, with

respect, are so strong and carry so much weight

that His Honour was entitled to say, "This is just

such a clear case." A man could not have had in his

mind the belief of inducement against the circumstance

where he has indicated this kind of assent to these

kind of sales.

Your Honours, may I just say this: the

damages case which took three days before the Court

of Appeal and which we made a number of radical
assaults upon the reasoning and the calculations of
the expert and produced figures to show that there

would never have been - that was the argument we put below - a financial capacity to have carried out the

intentions which were said to have been expressed

upon the applicants - we put that material before the

court. We put before the court a large number of

assumptions to show that these damages were just,-as

we put, blue sky.

Your Honours, if you look at page 65 of the

application book, you will see that essentially the

way in which the case in damages has been calculated

is a case based upon the premature sale of virtually

all the cattle because Mr Peart's calculations in

relation to those smaller items were calculations

that brought them into the tail-end of the year; not

a prograrrnne as indicated in the solicitor's letter,

as it were, within three months or so - no such

prograrrnne. Mr Peart's calculations looked at the

circumstance where there would be sales which would

take place virtually at the end of the calendar year

way outside the contemplation of a programme which

was said we induced.

Your Honours, in relation to the question of the

test as to inducement:	Your Honours, His Honour did
set out the principles in GOULD V VAGGELAS.	It is

true he did use the word "only" but he did stress

that it was only because of the - - -

MASON CJ:  We need not trouble you further on that issue,

Mr Conti.

MR CONTI:  And on the issue of the fiduciary duty, Your Honours?

Your Honours, that is all we have to say.

MASON CJ: Yes. Yes, Mr Caldwell?

MR CALDWELL:  Your Honours, what my learned friend described as

his"strongest document" was rejected by the trial judge

at page 47. Mr McMahon gave evidence in relation to the

meeting described in that document, that is, the memo

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of 16 June, and starting from line 7 on page 47,

Mr Justice Yeldham found that he rejected -

the evidence of Mr McMahon that, at a

meeting in early May of Messrs Nixon

and Colin Palmer at Wagga, the latter

said that the majority of cattle would be sold in the spring. My reasons for

rejecting his evidence are basically those

set out on pages 10-14 of the plaintiffs'

initial written submissions -

and then in the following paragraph:

It follows from the foregoing that I

reject the substance of the defendants'

written submissions dealing with this topic,

commencing on page 18.

Your Honours, those written submissions are set out in

the supplementary application book. The plaintiffs'

written submissions, 10-14, at pages 190 and following,

and Your Honours will see on those pages 190 to 194

detailed reasons why Mr McMahon's oral evidence and

this document as establishing anything contrary to

inducement were rejected by His Honour the trial judge.

The memorandum which my friend says is his

strongest document is specifically dealt with at the

bottom of page 190 and Your Honours see a submission
put, accepted by His Honour was that the document was

inconsistent with Mr McMahon's oral evidence.

The document headed "Cash Flow" .....

inconsistent with any decision having

been made to sell cows.

Then further matters affecting the accuracy of the document

on page 191. And then on the top of page 192, item (iv):	Had the documents in Ex. 13 not been
business records, they would not have
been admissible. Colin Palmer had not seen them before -

that is, before the hearing, Your Honours. This cash

flow which my friend places so much store on, as those

submissions accepted by His Honour point out, were
internal documents prepared by the agency in the normal

course and there was no evidence that Mr Palmer had

ever seen them. And as the submissions point out,

they were documents prepared with a view to

encouraging clients to adhere to them but, of course,

we would submit that if the evidence is that the

Palmers had never seen them, they carry no weight at all

in establishing that the Palmers had accepted that

programme.

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Your Honours, that document was dealt with very

briefly in the Court of Appeal at pages 111 to 112

and Mr Justice Samuels expressed, at page 112, line 16,

that the arguments were implausible - asserted that

the document had considerable weight but then went on

to deal with only a couple of the reasons accepted

by the trial judge from those written submissions

that I have mentioned and does not, we would submit,

effectively deal with His Honour's finding below.

And if that is my learned friend's strongest document,

then it points up in our point why those documents

could not be said to introvertibly establish anything

contrary to inducement. Those are our submissions.

MASON CJ: Yes, thank you, Mr Caldwell.

The applicant submits that special leave should

be granted in this case on the ground that the Court of

Appeal exceeded its function as an appellate court in

substituting its finding on the issue of inducement

for that of the primary judge.

In terms, the judgment of Mr Justice Samuels

referred to the well-recognized principle stated by

this Court in BRUNSKILL's case so that the applicant's

case, in order to succeed, must depend upon showing that

the Court of Appeal not only misapplied but misapprehended

that principle. To show that would require a detailed

review of the lengthy evidence in this case. Tnere being

no other indications in the judgment that the ..::nurt of

Appeal misapprehended the true principle,

in these circumstances the case appears, at
best from the applicant's viewpoint, to be one of

misapplication rather than misapprehension of principle.

The applicant also contends that there was an

error of principle on the part of the Court of Appeal

in formulating the test which it applied in order to

determine the issue of inducement. We do not consider

that there is any substance in this argument.

The further claim for breach of fiduciary duty

depends on the particular facts of the case and would

not be likely to result in elucidation of any general

principle. The case is therefore inappropriate for

the grant of special leave and the application is

refused.

MR CONTI:	I am instructed to ask for costs.
MASON CJ:	You do not resist that, Mr Caldwell? The application

is refused with costs.

AT 3.17 PM THE MATTER WAS ADJOURNED SINE DIE

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