Sheridan v Tavener

[2001] HCATrans 38

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S48 of 2000

B e t w e e n -

ROBERT IAN SHERIDAN and TRACEY ANN SHERIDAN

Applicants

and

JAMES MAURICE TAVENER and ALEXIS LOUISE TAVENER

Respondents

Application for special leave to appeal

GAUDRON J
KIRBY J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 16 FEBRUARY 2001, AT 11.53 AM

Copyright in the High Court of Australia

MR M.J. COHEN:   May it please the Court, I appear for the applicants.
(instructed by Yandell Wright Stell)

MR A.G.H. COOK:   May it please the Court, I appear for the respondents.  (instructed by Adrian Cook QC)

GAUDRON J:   Yes, Mr Cohen.

MR COHEN:   May it please the Court.  Your Honours, the special leave point in this matter, in my respectful submission, is that if the view of the Full Court is left undisturbed and if there is no intervention by this Court, then the view will be abroad that the proper construction of a covenant in aid of protection of purchased goodwill, the type that was the case at first instance before the Chief Justice of the Supreme Court, will be then devoid of any meaningful content, having been rendered, in my respectful submission, absurdly narrow.

GAUDRON J:   But you do not challenge the construction?  Admittedly, there is not much argument for the question of construction, is there?

MR COHEN:   Save and except for this, if your Honour pleases:  there is the very vital construing of this cause by the Full Court in its reasons where, in my respectful submission, there is put up a distinction without a difference.  Clearly the clause itself focused upon the activity of the four‑wheel drive business, and then said and went on to run about a business of a similar kind.  In my submission, the construction preferred by the Full Court turns the meaning of that phrase on its head and  ‑ ‑ ‑

GAUDRON J:   But where is the question of construction posed by the Full Court?

MR COHEN:   If your Honour pleases  ‑ ‑ ‑

GAUDRON J:   Really there is no great problem of construing “or similar kind.”  Ultimately the question whether a business is of a similar kind is a question of fact, is it not?

MR COHEN:   If your Honour pleases ‑ ‑ ‑

GAUDRON J:   So you have to complain about factual findings.

MR COHEN:   We have – I am sorry?

KIRBY J:   Not a very congenial start as far as we are concerned.  I thought I got out of that after I left the Court of Appeal.

MR COHEN:   If your Honours please, we say that there was no proper jurisdictional basis for the Full Court to deal with the facts that were found at first instance in the way it did.  We say the adoption of the principles enunciated in Warren v Coombes in the way they were adopted in these circumstances merely skirted around the fact that, in our respectful submission, that Court, the Full Court, ought first to pay proper regard and deference to the findings of fact, and in merely skirting around them, as it were, then traversed all those findings of fact in a way that was, we say respectfully, not open to their Honours in the hearing of the proceedings before the Full Court.

KIRBY J:   Mr Cohen, as far as I am concerned that is a hopeless argument, but the thing that did attract my attention was your suggestion that there was some procedural unfairness to you in the way in which the primary judge made rulings, and that that led to your being at a disadvantage when the factual reconsideration took place.

MR COHEN:   That is certainly so, if the Court pleases.

KIRBY J:   Now, I am not sure that is correct, but for my own part I think you would be more advantaged by directing your attention to that.

MR COHEN:   If your Honour pleases, it is the respectful submission of my clients and to this Court that in the circumstances where at every conceivable opportunity, which is disclosed by the relevant passages that have been excerpted in the argument, every occasion where any issue as to the evidence that might be adduced about this competition was raised, his Honour foreclosed a capacity for that evidence to adduced and to be received.

GAUDRON J:   Well, that is not entirely correct, is it?

MR COHEN:   In y respectful submission, your Honour ‑ ‑ ‑

GAUDRON J:   He certainly curtailed Mr Cook’s cross-examination.  He curtailed your question about the figures being understated to ease a divorce, or something of that nature, and he curtailed some questions of yours about profitability.  But where is this other evidence you wish to put?

MR COHEN:   If your Honour pleases, it is all evidence,such as it is, that could have adduced about  ‑ ‑ ‑

GAUDRON J:   About what?

MR COHEN:   - - - the state of competition between similar business.

GAUDRON J:   What does that mean?  What does that mean?  In globo that is all very well.  I can produce to you evidence about competition between wool and synthetics or wool and cotton or wool and cotton mixtures and synthetics, to take an example.  Once one gets into the nature of competition you have to be very, very precise about what you are talking about, so I need you to be – it would seem to be not sufficient to talk about profitability, which is, of course - clearly enough there was evidence that you wanted or both parties wanted to bring out about changed profitability, but Justice Beaumont kept saying that goes to damages.

MR COHEN:   If your Honour pleases, but there was no evidence that was adduced beyond the exhibiting and the reception was tendered as exhibits of brushes, for example, the seven-day tour, there was no evidence adduced, in my respectful submission, or allowed.

GAUDRON J:   Well, was intended.

MR COHEN:   If your Honour pleases, the relevant documents were in evidence, but any endeavour by the solicitor appearing at trial on behalf of my clients, indeed, my learned friend, in the cause of the Taveners was not allowed, we respectfully submit, in respect of the very effect of that competition.

GAUDRON J:   Effect.  Effect is one thing, but actual competition may well be another.

MR COHEN:   If your Honour pleases, if I can put it this way, if I can approach the matter in this fashion:  we say that the approach adopted by the then defendants at trial was to recast or to relabel what was old wine by putting it into new bottles.  We say the seven-day tour that was focused upon was nothing more than a repackaging of another tour and the use of that as a vehicle to conduct precisely the same or similar business to what was sold to us.

KIRBY J:   You are back to your first argument.  You are back to your argument this is a factual mistake on the part of the Full Court, but that would not normally attract special leave to this Court.  What has to be shown, if you can show it, is that in doing that the Full Court acted on a record which had been limited by the primary judge, and that in some way disadvantaged you.

MR COHEN:   We say that is precisely what occurred, if your Honour pleases.

KIRBY J:   Is that correct, because at page 102 it was Mr Cook who was trying to – Mr Cook objects.  Mr Manning, who is your client, is he not?

MR COHEN:   Mr Manning was a solicitor appearing at trial.

KIRBY J:   Yes, he was for your client?

MR COHEN:   Yes.

KIRBY J:   His Honour said:

Mr Manning, your case does not depend on competition, does it?
No.  I am just ensuring the court -

gets the information.  His Honour said:

It could only arise on the second public interest, public policy defence.

Then Mr Manning said:

Yes.  Well, the thing is – well, if Mr Cook does cross-examine I would seek leave to elicit further evidence.

HIS HONOUR:   Well, we are only in-chief at the moment.

As I read the record, he did not then proceed to cross-examine on this matter, Mr Manning, that is.

MR COHEN:   Well, that is so.  But having been forewarned on a number of occasion by Justice Beaumont that this was, as Justice Beaumont’s phrase was as I apprehended on a number of occasion, “a commercial cause” and having regard to the fact that it had been split from damages.

KIRBY J:   I am not asking for the psychology, I am asking for what the record was because if you did not seek to tender it  ‑ ‑ ‑

GAUDRON J:   And you do not come here today and show us what evidence it is even by way of affidavit that might have made the difference.

MR COHEN:   If your Honour pleases, there is, I believe, before the Court an affidavit which was filed a week ago which attempted to put into evidence before this Court the supplementary submissions, the enunciation of all those items of evidence before the Federal Court.

GAUDRON J:   Not supplementary submissions?

MR COHEN:   No, but were, as it were a schedule of the evidence of just the type that  ‑ ‑ ‑

GAUDRON J:   Which you never tendered.

MR COHEN:   If your Honour please, we submit, respectfully, that we did tender the evidence.

GAUDRON J:   Where?

MR COHEN:   If your Honour pleases, the evidence in volume 2 of the application book is first disclosed starting at application book 284.  This is volume 2 of the application book.

KIRBY J:   Are you referring to an affidavit of Donald Rae Wright of 9 February of this year?

MR COHEN:   That is so.  Now, if your Honours have that affidavit  ‑ ‑ ‑

KIRBY J:   That merely attaches the respondents’ written submissions below.

MR COHEN:   There is a second annexure.  I believe it is annexure C, if your Honours please, which attaches what are characterised as supplementary submissions.

KIRBY J:   As you see in my document is “Respondent’s Further Written Submissions on Evidence,” and is in the Federal Court.

MR COHEN:   Yes, and your Honour will see the first paragraph says the submissions are responsive to a request by his Honour Justice Wilcox to provide a schedule of the evidence referred to in oral argument.  That schedule of evidence which is balance of these submissions of two or three pages is the schedule of what we said before the Federal Court was the very evidence that her Honour Justice Gaudron just challenged me a moment ago to enunciate.

GAUDRON J:   But that is evidence that was there, is it not?

MR COHEN:   Yes.  Yes, if your Honour pleases.

GAUDRON J:   It is not evidence that you were precluded from calling?

MR COHEN:   If your Honour pleases, we submit that the findings of fact that his Honour the Chief Justice, Justice Beaumont at trial arrived at and enunciated in his Honour’s judgment were at the same time broadly accepted by the Full Court, and then, we respectfully submit, ignored in a way that simply disregarded their force and effect.

GAUDRON J:   So we then come back to Full Federal Court made one factual finding; Justice Beaumont made another.  Please will the High Court make a third?

MR COHEN:   If your Honour pleases, it is nothing we say so mundane.  We say having regard to the form of the clause in the agreement for sale, having regard to the construction that is now preferred by the Full Court of the Federal Court, we say that has relevantly for this application in it a matter that is of general importance.  That is to say, everyday businesses will be bought and sold relying on this type of clause and it is relevantly a matter that is of interest publicly and is properly a basis for the - - -

KIRBY J:   Matters of general importance generally come up with a challenge to the validity of the clause or to the public interest element or other concerns.  We had such an appeal last week.

MR COHEN:   Yes, if your Honour pleases.

KIRBY J:   But they do not normally come to this Court on a construction point as to what the particular clause meant and how it applied in a fact situation of these particular litigants.  I have some sympathy for the factual proposition you are putting, but I just do not see it as a special leave matter.

MR COHEN:   If your Honour pleases, I can put it only in this way, which is to say, your Honour’s characterisation of the passage to this Court is apt, but, in my respectful submission, the effect of what the Full Court has done and the way they have construed this clause, which is not a clause that is apt to be characterised a unique and never to be repeated, it is my respectful submission to your Honours that this is a matter that does properly attract the attention of this Court, because it is a matter that has not had an outing in this Court very often.  These issues of covenants and restraint of trade and protection of goodwill is not a field that is replete with full assessment and analysis.  This is properly a matter that ought be given a grant of special leave upon that background.

KIRBY J:   Well, as I say, we had a restraint of trade case last week where issues of principle and legal principle were debated, but this is just a dispute of facts, interpretation of the clause, factual evidence, scrutinising two volumes of transcript.  That is the job of the Full Courts or the Court of Appeal.

MR COHEN:   If your Honour pleases.  The only other basis that I can assert, if your Honours please, as to why this is a proper matter that ought to be passed upon by this Court:  my learned friend Mr Cook of Queen’s Counsel, as I recall it, made much of the fact in Sanders v Snell that Norfolk Island is an external territory that really has had its causes passed upon in High Court.

GAUDRON J:   That is a matter of which it can be justly proud.

KIRBY J:   Mr Cook brought one here last year, I think, and he lost.

MR COHEN:   If your Honours please, the basis that might be asserted relevantly and properly, in my submission, is that this is a matter whereby the effect of, if I can call it, the view from Sydney upon the judicature in Norfolk Island properly should be  ‑ ‑ ‑

KIRBY J:   It is for this purpose entirely appropriate that as part of the Commonwealth it has to go through the same process of special leave and we apply it here.  Mr Cook lost through no fault of his own or of his advocacy last year, but the case was heard and determined.  This is just another case.  It is an application; goes through the same filter.  I think you have said everything you can say.

MR COHEN:   I think that is so, if your Honours please.

GAUDRON J:   Yes, thank you, Mr Cohen.  Mr Cook, we do not need to trouble you in this matter.

KIRBY J:   You have had an easy passage this time, Mr Cook.  We do not promise it next time.

GAUDRON J:   The ultimate question raised by this application is whether the respondents are in breach of a “restraint of trade” clause.  No question arises as to its validity and there is no real question as to its construction.  Thus, the question is purely one of fact.

The applicants complained that the Full Court substituted factual findings with respect to competition in circumstances where evidence on that issue had been confined by the trial judge.  However, a fair reading of the relevant parts of the transcript indicate that the evidence was confined on the question whether there had been a change in the profitability of the applicants’ business and not whether the applicants and the respondents were competing for the same business.  The Full Court was concerned with the latter issue only, and on that issue evidence was not confined.

That being so, the application raises no question which might appropriately attract the grant of special leave.  Special leave is refused, and there is no reason to depart from the usual practice with respect to costs.  Accordingly, it is refused with costs.

AT 12.10 PM THE MATTER WAS CONCLUDED