Parker v National Roads and Motorists' Association

[1994] HCATrans 328

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IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No SlS0 of 1993

B e t w e e n -

DAVID LEWIS PARKER

Applicant

and

NATIONAL ROADS AND MOTORISTS'

ASSOCIATION

First Respondent

and

NRMA INSURANCE LIMITED

Second Respondent

Application for special leave

to appeal

MASON CJ TOOHEY J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON THURSDAY, 12 MAY 1994, AT 9.35 AM

Copyright in the High Court of Australia

Parker 1 12/5/94

MR J.J.J. GARNSEY, QC:  May it please the Court, I appear

with my learned friend, MR B.A.M. CONNELL, for the

applicant. (instructed by Bush Burke & Company)

MR P.G. HELY, QC:  May it please the Court, I appear with my

learned friend, MR J.L.B. ALLSOP, for the

respondent. (instructed by Abbott Tout)

MASON CJ: Yes, Mr Garnsey.

MR GARNSEY: 

Your Honours, this application raises questions

of great importance for directors of corporations
which are related or otherwise form part of a
corporate group.

MASON CJ: 

It did not strike me that way on reading the

papers. I must confess it seemed to me that if you

were to succeed in an appeal, you would need to

displace concurrent findings of fact.

MR GARNSEY:  With respect, no, Your Honour. The reasoning

of the Court of Appeal depends centrally upon, in
the case of the dissenting member,

Mr President Kirby, the application of what we

respectfully say is clear and good authority, and

once that is applied the conclusion follows, we say

again most respectfully, as night the day, that

there is no need to reconsider any primary findings

of fact. There is no need to make any additional

findings by way of inference from primary facts,

and that is what I seek to convince Your Honours of

in this application.

TOOHEY J:  Mr Garnsey, do you accept Justice Clarke's

description of the issues on page 169, in

particular at line 13, where he says:

The issue raised the quality of the response

of the respondents to Parker's complaints. It

was this response which was sought to be

impugned in the present proceedings and not

the subject matter of his complaints.

MR GARNSEY:  Yes, if Your Honour pleases. What

Mr Justice Clarke says there is that the question

was raised obliquely as to whether the payments
were made in breach of fiduciary duty, that is, it

was a necessary question to decide in order to

reach the conclusion both of the trial judge and of

the Court of Appeal. We say that in relation to the incontrovertible facts, which are set out by the President in his judgment, a proper application

of the law to them necessarily results in there

being a serious question, and necessarily requires

the response to be considered inadequate. We do

not seek to go into any factual matters at all in

the course of those submissions.

Parker 12/5/94

Your Honours, if the decision of the Court of

Appeal is allowed to stand, it is an invitation to

chaos in corporate groups in the performance of

directors' duties, and it is a disincentive to

directors who wish to perform their duties

responsibly. The applicant in this case was such a

director and he has incurred a huge liability for

costs in attempting to serve the public interest in

relation to the NRMA, which is a quasi-charitable

non-profit organization which has millions of

Australians as members and customers.

Your Honours, the question is whether, in the

words of the NRMA's counsel both on appeal and the

trial, such directors can serve two masters as

agents of each concurrently. That was a submission

made by my learned friend, Mr Hely, at trial, and

referred to by Justice Hodgson at page 63 lines 19

to 25 of the application book, and was again made

in writing on appeal by my learned friends, and I

can hand up the submissions if that would assist

the Court.

Your Honour, the question of performance of the directors' duties in the circumstances were

central to the argument, both on appeal and at

trial. The appellants' outline of argument

commenced with a reference to Walker v Wimbourne

before the Court of Appeal, and a reference to the

passage from the judgment of His Honour the

Chief Justice in that case, as to the necessity for keeping members of corporate groups distinct when

one is considering what are the duties of the

directors of each member of that group. It is, in

our respectful submission, not correct to say, as

the respondent does in Part 3 of its summary of

argument, that the special leave questions raised

by the applicant did not necessarily arise for

determination.

Your Honours, Justice Clarke, in the passage

to which Your Honour referred at page 169, in our

respect submission, did say that they did

necessarily arise for determination. He said, "The

question was raised more obliquely" and the

question refers to the proceeding. Question - the

preceding sentence:

made in breach of the fiduciary duties of those receiving them?

"Were the payments to the ILC and/or the

Now, Justice Kirby, in His Honour's judgment,

referred to incontrovertible findings of fact, and referred to Walker v Wimbourne. Mr Justice Clarke

and Mr Justice Priestley did not.

Parker 3 12/5/94

Mr Justice Priestley agreed with the reasons of
Mr Justice Clarke. Why they did not is a mystery,

given the statement of issues of Mr Justice Clarke

at page 169 in the passage to which Your Honour

Justice Toohey referred. Your Honours, this was

the approach of Mr Justice Hodgson, the trial

judge, in the passage which is set out below the

passage on page 169 to which reference has just

been made, in the passage from His Honour's

judgment which Mr Justice Clarke adopts from

page 169 line 19 to page 170 line 9.

For His Honour to characterize whether the question raised was serious and the response was

adequate for the purpose of section 320, His Honour

had to decide whether the payment of fees was at

least arguably proper. We say unless clear

authority is to be displaced, clear authority of

this Court, that it is unarguably improper.

MASON CJ:  But how do you reach that conclusion without

overturning the findings that were made in the

courts below?

MR GARNSEY:  Because we accept them, Your Honour. We accept

them as set out by Mr Justice Kirby at pages 142

line 19 to 144 line 10. They are not matters which

are in any way in dispute. His Honour said:

In my view there was overwhelming

evidence which calls out for the
characterisation of the payments made to the

recipients not as payments to them in their

capacity of office-holders of Insurance but

as, and in their capacity of, members of the

Board of Management of NRMA.	The
considerations are -

and His Honour sets them out, and they go over a

page and a half. It is those facts, though not set

out in such great detail, were, in fact, accepted

by Mr Justice Clarke and as found by

Mr Justice Hodgson.

MASON CJ: But Mr Justice Hodgson found that the response of

the respondents was reasonable.

MR GARNSEY:  Your Honour, that was his conclusion.

MASON CJ: Yes.

MR GARNSEY:  We, of course, say the right conclusion is that

it was unreasonable, but the argument is this -

MASON CJ: But why should we take up a question as to

whether or not a conclusion that conduct on the

Parker 4 12/5/94

part of the respondents was reasonable or

unreasonable?

MR GARNSEY: For two reasons, Your Honour: first, we say

that the proper application of clear principles of
law, unless they are to be reconsidered by this

Court as to corporate groups, requires that unarguably on the facts as found and not in

dispute, the facts from which Mr Justice Hodgson

reached his conclusion. We say once that is

considered then, as a matter of law, the conclusion

must be reached that the response was unreasonable

and inadequate and that there has been oppression.

MASON CJ:  I do not know how, if you say that a conclusion

from facts that conduct is unreasonable, can follow
as a matter of law, and particularly in complex

circumstances of this kind.

MR GARNSEY:  Your Honour, the circumstances are long, we

submit not complex, because the history is clearly

established and not in dispute. The way the case

was put both at first instance and on appeal,

involved and required a consideration of whether

directors had properly performed their duties as

members of individual corporations within a group

while being unconscious of the fact. We do not

dispute any of the primary findings of fact of

His Honour Justice Hodgson, nor did any member of

the Court of Appeal.

TOOHEY J:  Mr Justice Priestley put the issues in a slightly

different way, Mr Garnsey. It seems from the foot

of page 160 and going over to 161, as the issues

are expressed there it is very much a question of

fact, is it not, whether this conduct was bona

fide, whether what was done was simply a device to

enable insurance to supplement the remuneration of

the directors?

MR GARNSEY:  We respectfully say no, Your Honour, because

Mr Justice Priestley, in so far as he was not in

accord with Mr Justice Clarke, we say proceeded on a misapprehension of law as to the issues that had

to be decided. The way Mr Justice Clarke put the

issues - and that was the same -way as

Mr Justice Kirby put the issues; it is just they reached diametrically different conclusions on the undisputed facts - was that consideration of the

central question, the performance of directors'

fiduciary duties in a corporate group, was raised

by these payments and had to be evaluated.

Mr Justice Kirby applied clear authority and

reached what we say is the right conclusion.

Mr Justice Clarke, having stated the issues,

avoided resolving them according to law, we most

respectfully submit.

Parker 12/5/94

Your Honours, I have referred to the passages

in the judgment of Mr Justice Clarke as to the

issues. As to the findings about the directors'

state of mind, there was no issue of fact and

Mr Justice Hodgson did not base his judgment on it.

As to the basis of Mr Justice Hodgson's judgment,
we respectfully adopt the reasoning of

Mr Justice Kirby. But in any event, we do not

dispute any of His Honour's findings.

MASON CJ: Is that correct? If you look at your draft

notice of appeal, do you not attack the findings of

fact in the last ground of appeal?

MR GARNSEY:  Your Honour is referring to (k) on page 212?

MASON CJ: Yes.

MR GARNSEY:	Your Honour, I will answer that no, except in the sense that I have already submitted, that is,
we say accepting what Mr Justice Hodgson found
about Mr Larnble and Mr Caldwell at page 71;
accepting what was said in the Court of Appeal, we say the application of the law follows so that the ultimate conclusion is that there has been
oppression, but we say that is a conclusion that
follows inevitably.

TOOHEY J: But even to the extent that the facts are not

being attacked, the grounds of appeal certainly

suggest that what this Court would be asked to do

is re-evaluate the conduct, and that is an exercise

that has been done by the trial judge and by the

Court of Appeal.

MASON CJ: For example, look at ground 2(a).

MR GARNSEY:  Your Honour, the argument that we would seek to

put on appeal is as I have indicated.	We did
not -

MASON CJ:	The notice of appeal does not seem to be entirely consistent, to say the least of it, with the
argument that you say you would be putting on the
appeal.
MR GARNSEY:	Can I give Your Honour a Jesuitical answer?
MASON CJ:	You generally do, so I am sure you can.

MR GARNSEY:  Thank you, Your Honour. We have no present

intention and would be content to amend the grounds

of appeal in any way whatsoever so as to disentitle

us from asking this Court to review any finding of

fact.

Parker 6 12/5/94

TOOHEY J: Or to carry out any evaluation of the conduct of

the directors?

MR GARNSEY: Apart from the argument of law saying that if

the payments are found to be, on the undisputed

facts, in breach of fiduciary duty, then there must

be oppression.

TOOHEY J:  When you say, "if they are found to be", that is,

in effect, inviting this Court to carry out its own

evaluation of the conduct.

MR GARNSEY:  No, Your Honour. To the extent of saying the

law requires that conduct to be evaluated as

raising a most serious question, yes, Your Honour,

but we do not seek to ask Your Honour to disturb

any finding of fact. We simply say that with the

greatest respect, two members of the Court of

Appeal did not consider a matter raised centrally

in submissions by both parties.

MASON CJ:  It seems to me you would be in difficulty even

then, because you are really asking the Court to

draw inferences different from the inferences that

were drawn from primary facts found by the trial

judge and by the Court of Appeal.

MR GARNSEY:  No, Your Honour, we do not ask the Court to

draw any inferences. Could I refer the Court

to - - -

MASON CJ:	I can only think, Mr Garnsey, that if you were to leg-rope yourself in the way that you suggested in
response to the questions we have put to you, that
the appeal would be bound to fail.

MR GARNSEY: While appreciating what Your Honour says, it

would be, of course, a much more difficult task had

the reasons of the courts below been more explicit

But we still say that given the importance of the

question both as a matter of law and in relation to

this organization, and the clear line of authority	in this country which has not been changed much in
the United States as to the corporate bail being
maintained in the case of corporate groups, that we should still have quite reasonable prospects of hoping to convince Your Honours that the conclusion
follows that the payments made were patently
improper, and that conclusion follows as night
the day. Once that happens then, with the greatest
respect, there is automatic oppression.

Could I refer Your Honours very briefly,

because I see the orange light is on, to -

MASON CJ: It is your light as well as ours. It is more a

warning to you than it is to us, Mr Garnsey.

Parker	12/5/94
MR GARNSEY:	- - - Mr Justice Clarke at page 184 line 34

over to page 185 line 10. We accept those findings
of Mr Justice Hodgson adopted by Mr Justice Clarke,

and Mr Justice Clarke finds at page 185 at lines 5

to 10 that there was unconscious performance by

directors of functions in respect of various

corporations. The matter is dealt with at greater

length by Mr Justice Hodgson, but I will not take

Your Honours to it.

We most respectfully submit, and we have

raised in the summary of argument, the other point

that we seek leave to appeal in respect of, that

is, the access to documents point. In this case,
the fact that at trial and two of the three members
of the Court of Appeal have declined to consider

the central question of law raised in relation to

an organization of national importance to millions

of Australians by a director who has incurred a

gigantic liability as to costs, that those matters

are matters which, with the greatest respect,

should very strongly incline this Court to grant

this application. Unless there are other matters

on which I can assist the Court, if Your Honours

please, they are the submissions.

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

trouble you, Mr Hely.

It is accepted that the issue raised in this

case was, as Mr Justice Clarke said in the Court of

Appeal, the quality of the response of the

respondents to the applicant's complaints. The

resolution of this issue calls for· an evaluation of

that response in the light of the concurrent

findings of fact made by the courts below. We are

not persuaded that the Court of Appeal erred in
principle in reaching the conclusion that the

respondents' conduct was not oppressive. In the

view of the Court, the outcome of the proposed

appeal would turn largely, if not exclusively, on

the findings of fact and an evaluation of those

facts. The case is therefore not appropriate to

the grant of special leave to appeal, and the

application will be refused.

You do not oppose an order for costs,

Mr Garnsey?

MR GARNSEY:  I have nothing to say in opposition - well, if

Your Honour pleases, I do. The director in this

case was acting in circumstances which are clearly

motivated by his desire to serve the public good.

An order for costs, in my respectful submission,

should not be made.

MASON CJ:	Do you apply for costs?
Parker	12/5/94
MR HELY:	Yes, if the Court pleases.

MASON CJ:  The ordinary rule must apply. The unsuccessful

party must pay the costs of the successful party.

The application is therefore refused with costs.

AT 9.58 AM THE MATTER WAS ADJOURNED SINE DIE

Parker 9 12/5/94