TAG Pacific Limited v McSweeney

Re: TAG PACIFIC LIMITED and TOIKAN HOLDINGS PTY LTD (formerly KELSO PTY LTD)
And: BRIAN ALBERT McSWEENEY and BRUCE WILLIAM PHILLIPS
No. N G38 of 1990
FED No. 191
Practice and Procedure
(1992) 106 ALR 651
(1992) 34 FCR 438

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Olney J.(1)

CATCHWORDS

Practice and Procedure - action for damages for misleading and deceptive conduct - order for trial of the question of liability separately from and before the question of quantum of damage - judgment given for the applicant for damages to be assessed - appeal from judgment on question of liability - whether judgment is interlocutory or final.

Federal Court Act s.24

Federal Court Rules Order 29

Town v. Australian Telecommunications Commission (1983) 67 FLR 48

Carr v. Finance Corporation of Australia Limited (1980-1981) 147 CLR 246

Computer Edge Pty. Ltd. v. Apple Computer Inc. (1984) 54 ALR 767

White v. Brunton (1984) QBD 570

Bozson v. Altrincham Urban District Council (1903) 1 KB 547

Dunstan v. Simmie and Co. Pty. Ltd. (1978) VR 669

HEARING

MELBOURNE (heard in SYDNEY)

#DATE 16:4:1992

Counsel for the applicants: Mr S.D. Robb

Solicitors for the applicants: Rosenblum and Associates

Counsel for the respondents: Mr P. Blackburn-Hart

Solicitors for the respondents: Tress Cocks and Maddox

ORDER

THE COURT ORDERS that:

1. The respondents' application for leave to appeal against the judgment given herein on 28 February 1992 be dismissed;

2. The costs of the application for leave to appeal be reserved;

3. The applicants' application for leave to tax their costs awarded by order on 27 March 1992 be dismissed with no order for costs.

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

JUDGE1

This is an application by the respondents for leave to appeal from a decision given in these proceedings on 28 February 1992. The application for leave to appeal was filed on 6 March 1992 and was initially supported by a short affidavit. Subsequently, on 3 April 1992, a further affidavit was filed annexing a draft notice of appeal.

BACKGROUND

These proceedings involve a claim for damages against the respondents for misleading and deceptive conduct and for breach of duty. The matter was listed for trial for a period of 5 days commencing on 22 July 1991 but at the commencement of the hearing counsel for the applicant raised a number of questions relating to the conduct of the trial and in particular he expressed concern as to the availability of sufficient time to hear all of the evidence. The question as to whether the trial should be split into two parts, one dealing with liability and the other with damages, was canvassed in some detail.
Senior counsel for the respondents indicated (Ts. p 4) that his clients took the view that it would be appropriate that the issue of liability be determined first and separately from the question of damages. The applicants' preferred position was that no decision should be made until the evidence touching the question of liability had been heard and if at that time it was convenient to continue with the evidence relating to the quantum of damages then that should be done but if that course proved inconvenient, the alternative course could be adopted. In dealing with the proposal of the respondents' counsel, counsel for the applicants said (Ts. p 5):

So that there is no mistake it would be our view that the question of making of representations constituting misleading and deceptive conduct and the reliance thereon by the applicants to their detriment, would be a matter of liability. What your Honour would not be concerned about is the actual quantification of how the damages arose.

The transcript records that this stage I said:

Yes, yes, that would be necessary in order to determine if there had been a breach of the act.

From my recollection, whatever words may have been used at the time, the idea intended to be conveyed, and I believe the idea which was understood, was that in order to establish liability for damages under the Trade Practices Act and the Fair Trading Act it would be necessary for the applicants to prove in addition to misleading and deceptive conduct, reliance upon that conduct by the applicants to their detriment. In other words, in order to establish that the respondents were liable the applicants had to prove the fact of damage having been suffered. This is, of course, a different question from the actual quantum of that damage.
The matter was finally resolved by my comment to the applicants' counsel (Ts. p 6):

I'm rather inclined to take the view that your friend has taken that it would be convenient to hear the evidence on liability and for me to determine that and then once that is done to convene a further hearing if it is necessary for the purpose of assessing damages. And that would be my preferred approach.

And that is how the matter proceeded. The evidence was heard over a period of 13 sitting days on the 22-25, 29-31 July 1991 and 1, 2, 5, 6 August, 1991 and 21 and 22 October 1991. On the last of those dates after hearing addresses from counsel I reserved my decision and on 28 February 1992 at Melbourne, in the absence of the parties, I gave judgment for the applicants for damages to be assessed. At the same time I published my reasons.
At p 49 of my reasons under the general heading of "THE FACTS" I said:

TAG suffered loss and damage by reason of the misleading and deceptive conduct of PMS. That loss and damage arose directly from it having been misled and deceived by PMS's conduct and it did not contribute to the amount of its loss and damage by any failure on its part to act prudently in the transaction. Nor did TAG fail to take any step reasonably open to it to mitigate its loss or damage.

This statement is followed immediately by the general heading "CONCLUSIONS". In the first paragraph under that heading I said:

Upon the facts as found, the applicants are entitled to recover from the respondents the full amount of the loss sustained by the applicants by reason of their reliance upon the misleading and deceptive conduct of the respondents. The assessment of damages has not been embarked upon in the proceedings so far.

I concluded my reasons (at p 50) as follows:

On the question of liability I find that the applicants are entitled to recover damages against the respondents pursuant to s.82(1) of the Trade Practices Act 1974 (Cth) and/or s.68(1) of the Fair Trading Act 1987 (NSW).

The orders made on 28 February 1992 were:

THE COURT ORDERS

1. that judgment be entered for the applicants against the respondents for damages to be assessed;

2. that the settlement of the Court's order, including any order in relation to costs and to the further conduct of the proceedings be referred to a directions hearing at Sydney on Friday, 27 March 1992 at 2.15 p.m.

FEDERAL COURT RULES ORDER 29

Division 1 of Order 29 of the Federal Court Rules, which is headed "Separate Decision of Questions", provides:

1. In this Order, "question" includes any question or issue in any proceeding, whether of fact or law or partly of fact and partly of law, and whether raised by pleadings, agreement of parties or otherwise.

2. The Court may make orders for -

(a) the decision of any question separately from any other question, whether before, at or after any trial or further trial in the proceedings; and

(b) the statement of a case and the question for decision.

3. Where any question is decided under this Order, the Court shall, subject to rule 4, make such order, grant such relief or give such directions as the nature of the case requires.

4. Where the decision of a question under this Order -

(a) substantially disposes of the proceeding or of the whole or any part of any claim for relief in the proceeding; or

(b) renders unnecessary any trial or further trial in the proceeding or on the whole or any part of any claim for relief in the proceeding, the Court may, as the nature of the case requires -

(c) dismiss the proceeding or the whole or any part of any claim for relief in the proceeding; or

(d) pronounce any judgment; or

(e) make any other order.

Although no formal order was made that the question of liability be tried separately from the question of quantum of damage, it is patent from the extracts from transcript recorded above and from the manner in which the hearing was conducted, as well as from the approach adopted in my reasons for judgment, that such an order in exercise of power under Order 29, Rule 2(a) was in fact made. It is also equally patent that the decision of 28 February 1992 disposed of all factual and legal matters relating to the question of liability in these proceedings. It was therefore appropriate that I should grant relief by way of giving judgment for the applicants on their claim and order that damages be assessed
THE APPLICATION FOR LEAVE TO APPEAL
The jurisdiction to hear and determine appeals from judgments of the Court constituted by a single judge is conferred by section 24(1) of the Federal Court Act. Subsection 24(1A) provides however that an appeal shall not be brought from a judgment referred to in subsection (1) that is an interlocutory judgment unless the Court or a judge gives leave to appeal.
The respondents' application filed on 6 March 1992 simply seeks an order that the respondents have leave to appeal from the decision of 28 February 1992. Although it is not so expressed, the implication is that the decision sought to be appealed against is an interlocutory judgment. Indeed, when the application came on before me for hearing on 9 April 1992, counsel indicated that it was common cause between the parties that leave was required. At this stage of the proceedings I intervened and questioned whether this was in fact the case. Following a short discussion from which it was obvious that neither counsel was in a position to argue the question of whether or not leave was in fact needed, the application proceeded on the basis that leave was required but I reserved leave to the parties to make further written submissions if they were so minded. Subsequently counsel for the applicants has made a written submission supporting the proposition that leave is required in which reference is made to the decision of the Full Court in Town v. Australian Telecommunications Commission (1983) 67 FLR 48 and to Computer Edge Pty. Ltd. v. Apple Computer Inc. (1984) 54 ALR 767.
INTERLOCUTORY OR FINAL JUDGMENT?
In Carr v. Finance Corporation of Australia Limited (1980-1981) 147 CLR 246, the High Court had occasion to consider whether an order of a State Supreme Court refusing to set aside a judgment obtained by default finally disposed of the rights of the parties. The Court decided that it did not and accordingly that the order was not a final order from which an appeal would lie as of right to the High Court. At p 248 of the judgment Gibbs C.J. said:

The respondent submits that the appeal is incompetent because the judgment appealed from is not a final judgment within s.35 of the Judiciary Act. The question whether a judgment is final or interlocutory for the purpose of the rules relating to appeals is one productive of much difficulty. The test now applied in this Court for determining whether a judgment is final or not is whether the judgment or order appealed from, as made, finally determines the rights of the parties: Licul v Corney

(1976) 50 ALJR 439, at p 444. An order refusing to set aside a default judgment does not as a matter of law finally dispose of the rights of the parties, for it is open to the disappointed defendant to apply again to have the judgment set aside: Hall v Nominal Defendant (1966) 117 CLR 423, at p 440. In practice, in some cases a second application of that kind might be successful, for example, when the first application had been dismissed on a technicality. In other cases, however, the second application would be doomed to failure because the issues of substance which it raised would have been decided adversely to the defendant in the first application. The appellants here submit that their right to make a further application is purely theoretical, since any such application must necessarily fail, and urge that in these circumstances the judgment should be regarded as a final one. In my opinion the test in Licul v Corney requires the Court to have regard to the legal rather than the practical effect of the judgment. If this were not so, the question whether a judgment is final or interlocutory would be even more uncertain than it is at present. In some cases it would be necessary for the Court, for the purpose of determining the practical effect of an order refusing to set aside a default judgment, to embark on a detailed inquiry as to the facts of the matter and the course of the proceedings already taken - an inquiry quite inappropriate when the only issue is whether a right of appeal exists. As will be seen, it would be necessary to make an inquiry of that kind in the present case if the practical test were to be adopted. The rigour of the rule that the legal effect of the judgment is decisive may of course be mitigated by the exercise of the Court's power to grant special leave to appeal. I therefore hold that the judgment appealed from is not a final judgment and that the appeal is incompetent.

The decision in Carr was referred to by Gibbs C.J. in Computer Edge Pty. Ltd. v. Apple Computer Inc. (1984) 54 ALR 767. In that case the question arose in an appeal from a judgment of the Full Court of the Federal Court which restrained the respondents to the appeal in that Court from infringing copyright and further restrained them from certain acts of importation. Both of those orders for permanent injunctions were made quia timet. There was also an order that if the appellants in the Federal Court wished to pursue claims for damages they should file and serve on the respondents notice to that effect whereupon the matter would be referred to the trial judge for findings on the evidence as it then stood in respect of certain factual matters. At p 767 Gibbs C.J. said:

What is plain is that the judgment of that court comprised two orders which, viewed by themselves and apart from the rest of the judgment, were final orders, and one order which was plainly interlocutory. The result of the judgment as a whole was that some of the questions in issue in the case were determined and others were not. The question then is whether a judgment of that kind is a final judgment within the meaning of s 33(4) of the Federal Court of Australia Act, and s 35(3) of the Judiciary Act as they stood at the material time.

The test for determining whether a judgment is final, which has been laid down in a number of cases including Carr v Finance Corporation of Australia Ltd (No 1) (1981) 147 CLR 246; 34 ALR 449, is whether the judgment finally determines the rights of the parties, and the authorities have held that the court in applying the test must have regard to the legal rather than the practical effect of the judgment. So that the question in the present case is whether the whole judgment finally determined, in a legal sense, all the rights of the parties that were at issue in these proceedings. And the answer is, plainly, that it did not, because it left undetermined the question whether any, and what, damages were payable.

In Town v. Australian Telecommunications Commission (1983) 67 FLR 48 the Full Court of the Federal Court had before it an appeal from a decision of a single judge in proceedings under the Administrative Decisions (Judicial Review) Act in which the parties had submitted certain questions for the decision of the trial judge upon an agreed statement of facts. One such question was whether it was open to the trial judge to make a particular finding which question he answered in the affirmative whereupon the unsuccessful party appealed. The question as to whether leave to appeal was required did not arise as at that time section 24 of the Federal Court Act had not been amended by the inclusion of subsection (1A). The decision in Town v. ATC does not have a direct bearing upon the matters at present under consideration except to support the view that an appeal will lie in respect of a preliminary matter or separate issue tried pursuant to the exercise of power under Order 29 Rule 2 (see Sheppard J at pp 59-60).
I have not been referred to any Australian authority which is directly on all fours with the present matter but the English Court of Appeal decision in White v. Brunton (1984) QBD 570 is a persuasive authority. The facts of that case were that the defendant had agreed to sell to the plaintiff certain land which was accessible only over an old farm track. The agreement made provision for the track to be improved and for the sharing of the costs of the improvements by the parties. An issue arose as to whether the defendant was bound to contribute to certain costs incurred by the plaintiff in relation to the track. An order was made that there be a trial of a preliminary issue as to whether upon the proper construction of the contract the defendant was under any liability for construction costs of, or maintenance expenses for, the access track. The trial judge answered the question in the negative whereupon the plaintiff gave notice of appeal and the question arose as to whether under section 18(1)(h) of the Supreme Court Act 1981 the plaintiff required the leave of the Court to appeal against the judge's decision on the preliminary issue. The particular provisions of the Supreme Court Act provides that subject to certain immaterial exceptions:

(1) No appeal shall lie to the Court of Appeal - ...(h) without the leave of the court or tribunal in question or of the Court of Appeal, from any interlocutory order or interlocutory judgment ...

In the course of giving judgment Sir John Donaldson MR reviewed a number of earlier authorities (including the case of Bozson v. Altrincham Urban District Council (1903) 1 KB 547) in which two different approaches (conveniently described as "the application approach" and "the order approach") had been adopted by the Courts at different times. At p 573 the Master of the Rolls said:

The court is now clearly committed to the application approach as a general rule and Bozson's case (1903) 1 KB 547 can no longer be regarded as any authority for applying the order approach. However, the decision in Bozson's case, as distinct from the reasoning, can be upheld on a different ground as an exception to the general rule. It was a case of a "split trial," all questions of liability and breach of contract being tried before and separately from any issue as to damages. If the two parts of the final hearing of the case had been tried together, there would have been an unfettered right of appeal, even if the judgment had been that there was no liability and that accordingly no question arose as to damages. It is plainly in the interests of the more efficient administration of justice that there should be split trials in appropriate cases, as even where the decision on the first part of a split trial is such that there will have to be a second part, it may be desirable that the decision shall be appealed before incurring the possibly unnecessary expense of the second part. If we were to hold that the division of a final hearing into parts deprived the parties of an unfettered right of appeal, we should be placing an indirect fetter upon the ability of the court to order split trials. I would therefore hold that where there is a split trial or more accurately, in relation to a non-jury case, a split hearing, any party may appeal without leave against an order made at the end of one part if he could have appealed against such an order without leave if both parts had been heard together and the order had been made at the end of the complete hearing. In effect that is the position in the present case for in directing a preliminary issue on a point of construction, the district registrar was seeking to divide the final hearing into two parts in the justified belief that it was possible that by adopting this course the expense of part of the hearing might be avoided. That the division may not have run exactly along the line dividing liability from quantum is, I think, immaterial. The decisive feature is that the "preliminary issue" was not, when analysed, an issue preliminary to a final hearing, but the first part of a final hearing.

The decision of the Full Court of the Supreme Court of Victoria in Dunstan v. Simmie and Co. Pty. Ltd. (1978) VR 669 on the face of it suggests a contrary view but it would seem that this case can be distinguished on the basis that the Court there regarded the decision on the separate question as merely an order, as distinct from a judgment, and as such not appealable without leave. The term "judgment" in the Federal Court Act is defined to mean "a judgment, decree or order" (s.4). Accordingly, the reasoning in Dunstan v. Simmie and Co. is inapplicable in the context of the Federal Court Act and Rules, particularly having regard to Order 29 Rules 3 and 4, pursuant to which judgment was given for the applicants on 28 February 1992.
With respect, I would adopt the opinion of the Master of the Rolls in White v. Brunton which in my view is entirely consistent with the High Court decisions in Carr and Computer Edge. It seems to me that the test is succinctly stated by Gibbs C.J. in Computer Edge at p .767 in the sentence:

So that the question in the present case is whether the whole judgment finally determined, in a legal sense, all the rights of the parties that were at issue in these proceedings.

The Court having exercised its power to try the issue of liability before and separately from the issue of the quantum of damages the rights "that were at issue" in the proceedings presently under review related solely to the question of liability and those rights have been finally determined as between the parties. Accordingly, in my opinion, the respondents do not require leave to appeal from the judgment given on 28 February 1992. A feature that distinguishes this case from Computer Edge is that in the latter, all of the issues which had been before the Court below had not been finally disposed of. In this case all issues which have been raised on the separate question have been finally disposed of.
THE CASE FOR GRANTING LEAVE
Lest it be later decided that the conclusion I have reached above is erroneous, I propose to make some comments on the merits of the leave application on the assumption that leave is required.
The case was argued for the respondents essentially on the basis that in the event that the appeal is successful the costs of the subsequent hearing in relation to the assessment of damages will be saved. This in my opinion involves an over-simplification and does not take into account all of the various combinations of circumstances that might arise.
Whilst it is true that a successful appeal at this stage of the proceedings against the judgment now standing against the respondents would involve a saving in costs as compared with the situation that would arise if the matter proceeds to an assessment of damages and there is then a successful appeal on the question of liability, the contrary would be so if the appeal is unsuccessful and the applicants have to bear the burden of any shortfall between their solicitor and client costs and the party and party costs that they would recover in successfully resisting an appeal. There is also some merit in the argument by the applicants that in a case such as this which involves a complicated commercial transaction in which damages of the order of several millions of dollars are being sought there is a distinct likelihood that following the assessment of damages there could well be an appeal (by either party) on the damages issue, in which case there would be a considerable overlapping between the factual background necessary to be explored by an appellate court in dealing with the two separate issues of liability and quantum of damages. In such circumstances, in terms of economy of time, it would probably be more convenient both to the parties and to the Court for the two issues, if they are to be subjected to the appeal process, to be heard at the same time.
I do not think that it is possible or even desirable to attempt a quantification of which course is likely to be the most economic in terms of costs. To do so would require that I speculate both as to the time likely to be involved in any appeals and the likely outcome. If the matter involved only the question of the cost to the parties my inclination would be to refuse leave.
It is said that on behalf of the respondents that if leave is refused then the advantage of splitting the trial will be lost. There was no real advantage to the applicants in having the trial split except that in the event that they failed on the question of liability the costs which they would have had to bear in the proceedings would be less than if they failed after a full trial. The applicants did not seek a splitting of the trial nor indeed did the respondents until the last minute when the decision was in a practical way forced upon the Court. The applicants acquiesced in the decision that I made, but as indicated earlier it was not the applicants' preferred option.
The decision having been made, for whatever reason, it seems both fair and logical that the process of having the question of liability tried and determined separate from and before the question of the quantum of damages should be allowed to run its full course. To do so could be advantageous to both parties. Apart from the question of costs to which I have already referred, there is the advantage to both parties that in the event of the appeal not succeeding, the assessment of damages would be approached in the certain knowledge that the applicants will succeed to some extent. This may well provide an incentive for the settlement of that issue without the need for the Court's further involvement, something that is highly unlikely to occur while the question of liability remains subject to testing on appeal.
CONCLUSION
On the conclusion I have reached, so far as the law is concerned, the respondents have an appeal as of right from the judgment given on 28 February 1992. They are presently out of time and would require to make application for an appropriate extension of time to file and serve their notice of appeal if they wish to pursue the matter. However, if I have taken an erroneous view of the law, I would grant the respondents leave to appeal, in which case I observe that they have complied with the necessary time limitation in seeking leave. Given the unusual circumstances, it may be that the parties can reach agreement as to the course to be followed.
I would dismiss the application for leave to appeal. As there is presently no appeal before the Court I cannot properly order that the costs of the application be costs in the appeal. In the circumstances the costs will be reserved.
THE APPLICANTS' APPLICATION TO TAX THEIR COSTS
On 9 April 1992 I also dealt with an application brought on behalf of the applicants for leave to tax their costs. This application was based upon the premise that the judgment of 28 February 1992 was interlocutory only and that costs could not be taxed at this stage of the proceedings without an order to that effect (Federal Court Rules, Order 62, Rule 3(3)).
In view of the conclusion I have reached concerning the nature of the judgment, it would seem that the applicants do indeed have a final judgment in respect of liability and that there would be no inhibition to them proceeding to tax their costs.
I would dismiss the applicants' application for leave to tax their costs, and make no order for the costs of the application.

[1992] FCA 191

16 APRIL 1992