Texxcon Pty Ltd v Porz & Anor; Texxcon Pty Ltd v Wieland & Anor; Nominexx Pty Ltd & Anor v Wieland & Ors

[2015] HCATrans 21

[2015] HCATrans 021

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Melbourne  No M102 of 2014

B e t w e e n -

TEXXCON PTY LTD (ACN 120 272 880)

Applicant

and

GEOFFREY GORDON PORZ

First Respondent

CHRISTOPHER COWAN

Second Respondent

Office of the Registry
  Melbourne  No M103 of 2014

B e t w e e n -

TEXXCON PTY LTD (ACN 120 272 880)

Applicant

and

DAVID CHARLES WIELAND

First Respondent

DAVID GOLDBERGER

Second Respondent

Office of the Registry
  Melbourne  No M104 of 2014

B e t w e e n -

NOMINEXX PTY LTD (ACN 121 396 503)

First Applicant

TEXXCON PTY LTD (ACN 120 272 880)

Second Applicant

and

DAVID CHARLES WIELAND

First Respondent

DAVID GOLDBERGER

Second Respondent

GEOFFREY GORDON PORZ

Third Respondent

CHRISTOPHER COWAN

Fourth Respondent

Applications for special leave to appeal

HAYNE J
KIEFEL J

TRANSCRIPT OF PROCEEDINGS

AT MELBOURNE ON FRIDAY, 13 FEBRUARY 2015, AT 9.29 AM

Copyright in the High Court of Australia

____________________

MR B.W. WALKER, SC:   May it please the Court, I appear with my learned friend, MR N.D. HOPKINS, QC, for the applicants in each of the three applications.  (instructed by Corrs Chambers Westgarth)

MR R.M. GARRETT, QC:   If the Court pleases, I appear with my learned friend, MR C.E. SHAW, for Mr Porz and Mr Cowan as respondents in proceeding M102 and proceeding M104.  (instructed by Logie‑Smith Lanyon)

MR A.C. ARCHIBALD, QC:   May it please the Court, I appear with MR M.P. COSTELLO in matters M103 and M104, for Mr Wieland and Mr Goldberger.  (instructed by Arnold Bloch Leibler Lawyers)

HAYNE J:   Yes, Mr Walker.

MR WALKER:   Your Honours have seen from the written submissions that there are, as it were, three layers.  They are not simultaneously presented.  For the worthiness of this case for the grant of special leave, everything depends in the first instance on what of course, as we have written in our written submissions, presents unfavourably at first sight, that is, we seek special leave to appeal against the application of the intermediate appellate court to the task of reviewing findings of fact.  That is a task which is an everyday matter governed by principles which our proposed appeals would not challenge, seek to extend or incrementally elaborate in any way.

So how could this be a matter for special leave?  The short answer is because the intermediate appellate task in this case miscarried by dint of misunderstandings of the nature of the record, principally the reasons for decision at first instance.  If that be true, then there has been a failure to accord the proper application of the familiar principles in the intermediate appeal and the interests of justice in the particular case justify the attention by this Court to that complaint.

HAYNE J:   Could I just understand the framework within which the debate occurs?  The findings of misleading and deceptive conduct depended upon the finding of oral misrepresentations?

MR WALKER:   Yes, but, and there is the document to which attention is paid in both courts below.

HAYNE J:   Oral misrepresentations lately pleaded.

MR WALKER:   Yes, your Honour.

HAYNE J:   As originally pleaded, the claim was founded wholly on the document?

MR WALKER:   Yes, your Honour, but the way in which the trial was conducted and the intermediate appeal was conducted turned on an acceptance of the testimony of witnesses concerning what was said at conversations as well as the interpretation of the document.

KIEFEL J:   The primary judge construed the funding document in light of her findings with respect to the conversations?

MR WALKER:   Quite so, yes.

HAYNE J:   The root question is whether the Court of Appeal was right to say – not their phrase; mine – intrinsically improbable?

MR WALKER:   That is right, that is exactly it, your Honour, and the passage where that is shown at its starkest is on page 128 of the application book.  Your Honours are familiar with it.  Justice Hayne’s reference, with respect, captures entirely that point in paragraph 57.  We have drawn to attention the very clear language “remarkable to the point of incredible” and a few lines further down “even more remarkable”, which is a very clear, strong finding.

KIEFEL J:   So the time period that we are looking at is between – it is October 2008 when the meetings occurred and October 2012 when the matter was first pleaded – the oral representations were first pleaded?  Is that right?

MR WALKER:   Yes, your Honour.  Now, could I take ‑ ‑ ‑

HAYNE J:   But it is not uncommon for a witness to give evidence firmly believing the truth of what the witness says.

MR WALKER:   Not in my experience, your Honour.

HAYNE J:   Where the evidence the witness gives happens to be forensically convenient to the outcome sought by the witness.

MR WALKER:   I confess that has also occurred in my experience, your Honour.

HAYNE J:   It has occurred?

MR WALKER:   Yes.

HAYNE J:   Yes, Mr Walker.

KIEFEL J:   But there was a contemporaneous note which was – and contemporaneous notes of their nature usually assume centre stage in these matters, and that was Mr Gray’s notes of the meeting ‑ ‑ ‑

MR WALKER:   Yes.

KIEFEL J:   ‑ ‑ ‑ which contained no reference at all to the representation.

MR WALKER:   I think what your Honour puts, with respect, is fair, but it is not a complete description of the way in which the trial judge, who had the advantage and burden of hearing the evidence, dealt with that matter because it is to be recalled that, contrary to what might be gathered from paragraph 57 of the appellate reasons, Mr Cowan corroborated the essential part of the message conveyed in the conversations and that appears very plainly, we submit, if one goes back into the first instance reasons, something appreciated by her Honour, starting at application book page 16.

After her Honour has on the previous pages set out degrees of common ground about these dealings, that is, there is no doubt the dealings took place, one has the evidence of Mr Cowan in paragraph 41 in‑chief noted by her Honour and there is certainly a statement there about that which was “due to be drawn down”.

In paragraph 42 there is cross‑examination which culminated, as shown by her Honour’s extract from the transcript on page 17 about line 15 or so, with material which very firmly corroborated the version given on behalf of my clients.  That, in our submission, rather removes any doubt, if there should have been in the first place, about a recollection that did not find a verbal reflection in a contemporaneous note. 

HAYNE J:   The central conundrum for you is surely that there is said to be a matter critical to the discussion.

MR WALKER:   Yes.

HAYNE J:   It is not recorded.  It is not pleaded until late in the piece.  The witnesses go into the box and perhaps entirely honestly assert that they heard it.  Now, you say it is not open to the Court of Appeal to say that that is intrinsically improbable?

MR WALKER:   Yes, I do say that, and for the following reason.  The late entry of a plea which renders relevant a recollection of a conversation will of course be a proper matter to be taken into account by the trial judge assessing the credibility of that evidence and will no doubt be the object of some cross‑examination.  Whether one calls it by terms such as recent fabrication or anything else, the timing of an allegation being brought forward which depends upon a recollected conversation will no doubt be germane.  But it is grist to the mill at first instance.  It is part of the circumstances properly to be taken into account.  They clearly were taken into account by her Honour at first instance.

The principles that this Court has pronounced so clearly in relation to the intermediate appellate consideration of an appeal factually, in an appeal by way of rehearing, from findings so grounded, do not privilege in some way the dating of a pleading, the dating of the bringing forward of an allegation for the first time as if it stood outside the whole of the circumstances, all of which are considered in the final conclusion by the trial judge about credibility.

KIEFEL J:   Well, let us not call it credibility for the moment, but reliability.

MR WALKER:   Reliability, yes.

KIEFEL J:   The task of a trial judge is not just to express perceptions of whether or not a witness appears to be reliable.  It is also to weigh all the circumstances which might affect that conclusion.  Where does her Honour deal with the question of the pleading point?

MR WALKER:   Could I take your Honours first ‑ ‑ ‑

KIEFEL J:   I should say I know her Honour mentions it, but where does her Honour weigh it in the balance in relation to reliability?  It is an ex post facto consideration, is it not?  Having made some comments which should not of course be concluded findings at that point about how witnesses appear ‑ ‑ ‑

MR WALKER:   Yes.

KIEFEL J:   ‑ ‑ ‑ her Honour turns to a written document which has to be objectively the best evidence.  Apart from saying that the document for some reason has to be construed in context – not entirely explained – how does her Honour then come to her final conclusion?

MR WALKER:   In an attempt to answer ‑ ‑ ‑

KIEFEL J:   Yes, I am sorry, that is rather a narrative.

MR WALKER:   No, not at all, your Honour.  I think it means I have got to start at page 25 and I am helped by the fact that her Honour gave it the subheading “Credit issues”.  I think Justice Kiefel has just referred to the reference about line 20.  That is where her Honour notes the date of pleading.  On my reading of her Honour’s reasons, there is no further passage that answers the description Justice Kiefel asked me – is there further consideration than that mention?  However, that is a mention which makes it very clear that her Honour is taking that into account, the date of the pleading being brought forward.

It is her Honour who says it only became part of the plaintiff’s pleaded case when it added in October 2012, and it is in that context that our learned friend’s submission is recorded at about line 25 to the effect that there had been a reconstruction, one of the polite words for a process that Justice Hayne has referred to a couple of times this morning.  One sees that therefore literally at the forefront – also figuratively surely – pervading her Honour’s reasons is that obvious question, “Look, this is a claim that depends upon a recollected conversation but you did not bring it up until four years later”, and that is a challenge for any witness whose case depends upon his or her reliability.

KIEFEL J:   But can you say that her Honour actually tested the reliability of their oral evidence weighted against other circumstances before she came to a conclusion?

MR WALKER:   Yes, you can.  I have already referred to one of them which you will find referred to on page 27 at line about 26 or so.  That is one of the references that draws on the earlier passages to which I have taken you at 16 and following.  There her Honour says:

Mr Cowan, after all, gave that same evidence.

HAYNE J:   Is her Honour saying anything more than “gave evidence which I judge he sincerely believed”?

MR WALKER:   That is Mr Cowan, of course, on the other side, yes, but in our submission, your Honour, that is a good start.  Of course it is not enough, but that is a good start and in our submission where one has, as it were, an assessment by her Honour of people trying to tell the truth, which does not guarantee against error of course, it does not guarantee against tendentious error necessarily because tendentiousness can be unconscious, but what her Honour observes is on the other side free of any such tendentious bias; indeed on the opposite side of such a possibility, there is corroboration.  That, in our submission, is a very orthodox routine way of a trial judge making a decision about credibility and the ultimate reliability which is in question.

KIEFEL J:   When you say “corroboration”, was the reference by Mr Cowan to the process that would have to be gone through any kind of relevant qualification upon the notion that it would be freely available?

MR WALKER:   No, not a relevant – it was not a relevant qualification, no, not at all.  It did not to any degree qualify the fact that, clerical matters needing to be attended to, there was a right to draw down.  The funds would be available.  That is the gist of the various ways in which the matter was put by way of recollection.  Now, that last comment is apropos the Court of Appeal’s reference in their paragraph 57 to “the precision which they” – the witnesses – “claimed so long after the meetings”.

It is a small point, but it is one we need to note.  As we have pointed out in our written submissions, they did not claim in terms any such precision.  They gave evidence, as her Honour noted, in slightly different terms.  In our submission, that is not a ground upon which in accordance with principles exemplified in decisions of this Court such as Earthline would ever have justified an intermediate court overturning the consideration of testimony by the trial judge.

Then we come on to what, in our submission, is a sign of the non‑application of the established principles on a proper basis.  In paragraph 57 on page 128 just before line 50 there is a double proposition:  first, that the defendant’s counsel’s extensive submissions were not referred to; and, second, there was no process of reasoning by which the inherent improbability of what is called the accuracy could be relied upon, et cetera.

KIEFEL J:   That is the nub of it, is it not?

MR WALKER:   Yes, it is.

KIEFEL J:   Whether or not there is exposed a process of reasoning.

MR WALKER:   Yes, that is exactly right, and without it there is no special leave point.  It is of course the passage that starts on page 25.  Paragraphs 60 through 64 do contain the reasoning.  Furthermore, they manifestly refer to submissions of the very kind that in paragraph 57 the Court of Appeal said the learned trial judge did not even refer to.  That is just wrong, and it really means that the intermediate appeal went off on a wrong basis, a misunderstanding of the record below, and that, in our submission, in the interests of justice in this case, justifies a grant of special leave in order that there be for the first time a proper consideration of a challenge to trial findings.

KIEFEL J:   But the reasoning that you refer to at paragraphs 60 onwards really appears to be a process by which attacks upon the credibility of a witness are battered away – are dealt with and battered away.

MR WALKER:   I do not know that we would adopt “battered away” but ‑ ‑ ‑

KIEFEL J:   But you know what I mean.

MR WALKER:   ‑ ‑ ‑ there are arguments raised ‑ ‑ ‑

KIEFEL J:   And they are dealt with.

MR WALKER:   ‑ ‑ ‑ considered and dealt with, and that is a routine and proper way ‑ ‑ ‑

KIEFEL J:   I say “battered away” not in terms of any disrespect, but the process that her Honour was clearly pursuing was one by which her Honour appears to have been wedded at the outset to the reliability of these witnesses and was considering then whether or not anything detracted from it, rather than weighing up all of those things before coming to a conclusion.  It is a not uncommon process in trials.

MR WALKER:   I was about to say, first of all, we accept the premise naturally that that would not answer the description of the proper way to consider and give reasons for a conclusion about reliability to start, contrary to where an onus is located, as it happens – just a coincidence – to start with the notion that a witness is to be, as it were, accepted unless reason is shown not to.  However, that is really not what her Honour was doing.  Her Honour had before her persons, none of whom she thought was trying to dissemble or trying to deceive and, as Justice Hayne points out, that is a step, certainly not the whole trip, towards acceptance, but you have to have that step.  Dishonesty is not so much a poor start as a finish.

Having found provisionally or as an intermediate step of a number of witnesses on both sides that that was the way in which they gave evidence, her Honour then notes two things relevantly – and I am obviously stripping down the reasoning in these paragraphs.  One is that Mr Cowan, an interlocutor in the alleged conversations, in effect corroborates the gist of the matter.  That is obviously very important and is not just a matter of assuming prima facie that a witness is to be accepted and dealing with an argument against that.  That is looking at a circumstance which necessarily affects an overall circumstantial consideration of whether the witness in question should be accepted.

So that is my answer to the proposition, which we respectfully oppose, that her Honour incorrectly started with, as it were, an a priori acceptance.  She did not.  She started in the ordinary way with considering the way in which people gave evidence.  Your Honours, I see the red light is on.  The other topic to which on this point I would have gone is that the reading of the undrawn $14 million in the terms sheet is not one that lends itself to mean an undrawn on lesser sum.

HAYNE J:   How long would it take you to develop that point, Mr Walker?

MR WALKER:   Not very.

HAYNE J:   Well, let us see how far we get, shall we?

MR WALKER:   Yes, your Honour.  May I take you to the particular terms, the context your Honours appreciate, in the Court of Appeal with some qualification, a little difficult to follow in terms of the weight it would be given because of a lack of relevant - a certain kind of cross‑examination.  In the Court of Appeal, this document was an important part in their Honours’ reasoning to overturn the trial findings.  It cast a light, their Honours held, in effect, contrary to the approach her Honour took to the finding about the occurrence of these conversations.

Now, at pages 20 and 21, the relevant parts are set out and could I draw to attention at the top of 21 the reference to the $14 million, a capitalisation interest facility, as it became known in the proceedings, CIF, there called interest capitalisation facility, which is there described in the document:

which at Austexx election may be drawn down as a capital contribution.

That of course fits the notion, our case theory that it was presented as money available to be drawn down.  The passage that their Honours in the Court of Appeal referred to is at the middle of that page, line 30, and one

sees in the parentheses, tellingly following the capacity for Nominexx to call up the loan at any time, as if to say - and this is informative of the possibility being met:

(Austexx to draw down the undrawn on Mirvac $14m at that time) –

Now, the Court of Appeal suggests – or finds, I should say – that that ought to be read as being the balance after drawings of $14 million, as if, for example, there were incremental partial draw downs.  Now, we know there is incremental or partial diminution, not by draw down, but by monthly capitalisation of interest.  That is what happened, exhausted at the rate of 700,000 a month.  That is not drawing down; certainly not a drawing down at election as a capital contribution as the top of the page talked about.

The “undrawn on Mirvac $14m” in short has been read by the Court of Appeal as meaning the undrawn on Mirvac less than $14 million, which of course would have presented a very different appearance had that been said on the document because in place of $14 million which may be drawn down - not incrementally; just may be drawn down – we have in the parentheses tellingly located as being an explanation of a capacity for Nominexx’s call to be paid, there is a reference to the very sum necessary to answer the call and the Court of Appeal has read it in a way which would, if true, have meant no reassurance has been given at all by the words in parentheses.

In short, that did not provide any basis consistent with the Court’s repetition of principles in Fox v Percy, Earthline, et cetera for a departure from the basal finding necessary to all other issues in the case.  May it please your Honours.

HAYNE J:   Thank you, Mr Walker.  We will not trouble you, Mr Garrett and Mr Archibald.

There is no reason to doubt the correctness of the decision of the Court of Appeal in this matter.  Each application for special leave is refused and must be refused with costs.

MR WALKER:   May it please the Court.

AT 9.55 AM THE MATTERS WERE CONCLUDED