Thornton & Ors v Equuscorp Pty Ltd & Anor

[2006] HCATrans 668

[2006] HCATrans 668

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Brisbane  No B19 of 2006

B e t w e e n -

BARRY THORNTON

Applicant

and

EQUUSCORP PTY LIMITED

First Respondent

RURAL FINANCE PTY LTD (IN LIQ)

Second Respondent

Office of the Registry
  Brisbane  No B20 of 2006

B e t w e e n -

GLENGALLAN INVESTMENTS PTY LIMITED

Applicant

and

EQUUSCORP PTY LIMITED

First Respondent

RURAL FINANCE PTY LTD (IN LIQ)

Second Respondent

Office of the Registry
  Brisbane  No B21 of 2006

B e t w e e n -

HGT INVESTMENTS PTY LTD

Applicant

and

EQUUSCORP PTY LIMITED

First Respondent

RURAL FINANCE PTY LTD (IN LIQ)

Second Respondent

Applications for special leave to appeal

KIRBY J
HAYNE J

TRANSCRIPT OF PROCEEDINGS

FROM BRISBANE BY VIDEO LINK TO CANBERRA

ON FRIDAY, 8 DECEMBER 2006, AT 11.35 AM

Copyright in the High Court of Australia

MR D.F. JACKSON, QC:   If the Court pleases, I appear with my learned friend, MR D.R. COOPER, SC, for the applicants.  (instructed by MacDonnells)

MR S.S.W. COUPER, QC:   If the Court pleases, I appear for the respondents.  (instructed by Gadens)

KIRBY J:   Is it convenient to take these three matters together?

MR JACKSON:   Yes, your Honour.  The same issues are involved.

KIRBY J:   Thank you.

MR JACKSON:   Your Honours, at the heart of the cases lies the contention, which we put shortly in our submissions in paragraph 40 at page 201, that the applicants’ case has not been properly dealt with in the courts below.  We are conscious, of course, that the case has already been once to the Court and that there is a natural tendency to bring it to an end, but the issue now in question had not been ‑ ‑ ‑

KIRBY J:   How could you discern such a natural tendency?

MR JACKSON:   Your Honour, it is one of those things, I think, that is dealt with by body language is one description of it and long experience in hard stations is another.

KIRBY J:   We were trying to disguise all body language today, but go on.

MR JACKSON:   Your Honours, the issues now in question have not been decided by any court in the earlier proceedings.  Your Honours, may I seek to highlight the way in which, in our submission, it is contended the matter has gone, if I may use the expression, rather off the rails.

HAYNE J:   Just before you do that.  You started with paragraph 40.  Can I just make sure I understand it.  Line 2 of paragraph 40 at page 201, “they entered into agreements”, the agreements being the written agreements?

MR JACKSON:   Relevantly, your Honour, yes, the loan agreement.

HAYNE J:   Yes:

on the basis of representations that, notwithstanding the terms of the [written] agreements, their liability would be more limited.

MR JACKSON:   Yes, that is so, your Honour.  That is the essence of the matter.  Your Honours, at the first trial and on the first appeal and before this Court,, the cases were decided on contractual issues and the one such contractual issue on which we, as defendants, failed was whether there had been an oral agreement, if I can put it that way, which altered the terms of the written loan agreements and this Court’s decision ordered that there be remitted to the Supreme Court the applicants’ claim that there were operative misrepresentations and contraventions of section 52 of the Trade Practices Act, issues which have not previously been determined.  Your Honours will see what the Court said about that at page 106 and it is paragraphs 59, 60 and 61.

KIRBY J:   Yes.

MR JACKSON:   Your Honours, can I refer particularly in passing to paragraph 61 where it was said that the order for remitter was not an order for retrial.  The Court, your Honours, if I could stay with this Court’s decision for a moment, decided the matter as a pure contract issue and, in so doing, at paragraph 36 on page 100 it decided that the terms of the earlier oral agreement alleged contradicted the terms of the written loan agreement and the Court used the expression that any such earlier oral agreement was discharged, and it is particularly in the last few lines of that paragraph. 

The Court also said, again speaking in terms of contract, that the only way in which it would be possible to reconcile the two oral agreements, that is, the oral agreement alleged with the written agreement, would have been to treat the oral agreement alleged as relating to a secondary liability, that is, a liability dehors the written agreement but a liability, in effect, in someone other than the lender.  Your Honours will see that in paragraph 40 at page 101.

KIRBY J:   Yes.

MR JACKSON:   Your Honours, the matter then went back for trial.  At the first trial, the trial judge, Justice Helman, had held that a promise having contractual effect that the loans were non‑recourse loans was made on 30 June.  You will see that at page 12, paragraph [9].  Your Honours will see at paragraph [9] that he referred at the top of page 13 to Mr Anthony Johnson acting as the agent of the second plaintiff, which is the company Rural Finance, the lender.  Your Honours will also see that he amplified on that finding at page 20, paragraph [26], and a challenge to that finding failed in the first Court of Appeal.  That was page 53, paragraph [58]. 

KIRBY J:   Yes.

MR JACKSON:   Now, your Honours, when the remitted matter came back before Justice Helman, he treated the Court’s observation at paragraph [40] of its reasons as requiring him to find that what was said was on behalf of a company other than the second respondent.  Your Honours will see that referred to in his second reasons at page 128, paragraph [19].  You will see, in particular, that he refers at about the tenth line of that paragraph saying:

It must now be accepted, in conformity with the reasons of the High Court (particularly paragraph 40), that it is more probable than not –

et cetera.  Now, your Honours, that approach that this Court’s reasons would lead him to that conclusion or that conformably with this Court’s reasons dealing with a quite different question that he had to arrive at this conclusion was one that permeated the whole of his judgment.  You will see that in the other relevant passages:  page 128, paragraph [20], the last four lines or so where he said:

It must now be accepted that it was the undertaking of the secondary liability together with the representation pleaded in paragraph 19(b)(ii) of the defence and counterclaim that induced the defendants to sign the loan agreements. 

Your Honours will see that also in his summary at paragraph [23] on page 129.  May I refer together to paragraphs 1 and 2 first, where he said that the representations were made but – then paragraph 2 – the representation, in effect, had to be treated as being withdrawn because of the execution of the written agreement.  To the same effect, your Honours, is the culmination of paragraphs 4 and 5 insofar as they both refer to paragraph 19(b)(i).  Paragraph 19(b)(ii) is now irrelevant.  Also paragraphs 9 and 10 on the next page of his summary. 

Now, your Honours, there was, in our submission, simply no basis for saying that this Court’s reasons required the adoption of that view and it meant that the trial on remitter was decided, in our submission, on a quite unsatisfactory basis.  Nor, your Honours, was the situation corrected by the decision ‑ ‑ ‑

KIRBY J:   The remitter was for his Honour to decide the matter conformably with the reasons of this Court.  So it was a proper exercise for his Honour, without conducting a full retrial, to endeavour to reach conclusions on the remaining issues in a way that fitted comfortably with the reasoning of this Court.

MR JACKSON:   I would accept that, your Honour ‑ ‑ ‑

KIRBY J:   That is what his Honour seems to be saying at paragraph [19].  He just says, “I should add my reading of paragraph 40, can’t be characterised in essential part of the reasoning”, so he is trying to fit comfortably into what this Court had said, which is a sensible and a natural thing to do.

MR JACKSON:   Your Honour, as a general proposition, yes; as an application of what this Court said, no.  The reason why I put it that way is that this Court’s reasons made, with respect, two things clear relevantly.  One was that paragraph 40 was something where the Court was trying to indicate how, as a matter of contract, one could only read the two agreements together.  That would involve there being another party involved.  On the other hand, the Court was saying the issues relating to misrepresentation, et cetera, have not been dealt with by any of the courts so far and it is those issues that we remit. 

What the judge did, and where his approach to it was erroneous, in our submission, was to treat the Court’s observation concerning how one might tie the two provisions together contractually, or reconcile them contractually, as something which required him to arrive at a particular conclusion when dealing with the case on the basis of, to put it shortly, representations.  Your Honours, the point I was going to seek to make was that that situation was not corrected in the Court of Appeal and, indeed, in our submission, the error was one that was compounded.  Your Honours, I am afraid there are separate reasons in the Court of Appeal and each of them is different.  I need to go to them, your Honours, and may I do so as briefly as I can.

Could I commence with the third member of the court, Justice Holmes.  I will do that, your Honours, because she would have found for us in taking the view that Justice Helman was not required by this Court’s reasons to disregard his earlier factual conclusions.  Her reasons commence at page 175 and they are relevantly at page 177.  Could I commence at paragraph [98].  In a passage commencing at paragraph [98] and going through to paragraph [105], she arrived at the conclusion in paragraph [105]:

that there is no warrant for departing from the learned trial judge’s original findings as to what was said on 30 June 1989 and on whose behalf.

I will not read it out.  Your Honours will see the nature of the remainder of what she said.

KIRBY J:   If her Honour agreed with you, how did she come to the order dismissing the appeal?

MR JACKSON:   Your Honour, I am just going to come to that matter.  Her Honour then said the case was one which could be treated as a case of promissory estoppel.  You will see that at paragraph [117] of her reasons at page 182. 

KIRBY J:   Yes. 

MR JACKSON:   But she held that such a case had not been pleaded.  You will see that in paragraph [120] at page 183.  Your Honours, it is difficult, with respect, to see why that is so.  May I take your Honours very briefly to the four passages that are germane in that regard.  First, the defence and counter claim which raised the issue.  It is at page 242.  You will see paragraph 19(b)(i), which refers to a representation that:

the liability of the Defendant pursuant to the Operative Agreement and the Loan Agreement was limited in the manner pleaded in paragraph 6 –

Paragraph 6, your Honours, is at page 238.  You will see in paragraphs (a), (b) and (c) the nature of the limitation contended for – I am sorry, the nature of the limitation is in (a), (b), and (c) in paragraph 6 on page 238. 

KIRBY J:   Yes.

MR JACKSON:   Your Honours, paragraph 6 is particularised and the particulars appear at page 247.  You will see about line 45 on the page a reference to “Request 8” and then that goes on to deal with paragraph 6.  Your Honours will see that particularised and, if I can say, in particular, at page 248, about line 32, “The substance and effect of each of the conversations was”, and your Honours will see what is set out there in those three paragraphs. 

The point we would seek to make about it, your Honours, is that it does, with respect, seem a very narrow view of the pleading and particulars to say that statements that liability and liability necessarily in the future was to be limited in particular ways was not a representation that future rights would not be enforced.

KIRBY J:   It does not sound like a High Court point, Mr Jackson, to me.  I realise you say it is a matter of unfairness and injustice, but here it is.  It is a very detailed factual situation, a pleading matter that has been here once before.

MR JACKSON:   Your Honour says it is a very detailed matter.  The whole case turns on two or three conversations and on two or three documents.  It is nothing more than that.  Whatever lengthy issues there may have been ‑ ‑ ‑

KIRBY J:   I know you say that, but then you start to explain where Justice Holmes has gone wrong.

MR JACKSON:   All I am saying is that she decided a substantive issue on a pleading point and that that was incorrect.  Now, your Honour, I would need to go to the other two judgments, but if the position is that a case for the first time relevantly was not heard properly and then was not dealt with properly in the Court of Appeal is one that comes here, then if it is otherwise appropriate it is an appropriate case for the Court to deal with.  Your Honours, one of the problems is that people are potentially liable for millions of dollars in circumstances where their case has not been, in our submission, arguably, dealt with correctly. 

Your Honours, may I say this also.  It does seem very curious for that judge – and I will come to the others in a moment – to have taken that view when one bears in mind that at the first trial it was recognised by the present respondents that the allegation did include an allegation of promissory estoppel.  You will see that referred to at page 183, paragraph [122], of Justice Holmes’ reasons.  May I say that Justice Holmes in paragraph [117] had said, in relation, I think, to conventional estoppel, “The evidence, in any event, does not really reflect any common understanding”.

Could I just say, your Honours, that the two most relevant documents are in the application book.  One is at page 206 and it is the letter written by the second respondent.  You will see that it says, at about the first line of the text, “We wish to remind you that your second (and final) loan repayment . . . falls due”, et cetera.  Similarly, the document which is at page 209 – there may be arguments about what its effect might be but it is a document which supports the contention that there was a representation of the relevant kind.

KIRBY J:   Are you going to deal with what seemed an interesting point about the need for some re‑conceptualisation of estoppel and how that would arise in the particular circumstance of this case given the way the trial judge on remitter and the Court of Appeal on the second occasion dealt with the matter?

MR JACKSON:   Yes, your Honour.  May I endeavour to put shortly what I would say about that and perhaps truncate what I was trying to say about the other judgments in the case.  What it is is this, your Honour.  The view taken by – may I just say something about the other judgments first and it is this.  They are on different bases, but if I could just go to Justice McPherson.  He appears to have taken the view that all there was was an agreement that there would be a document along the lines of something that appears, for example, at page 209, given later, and that that was the only representation.  In fact, your Honours, what the representation that was found to have been made was one saying there would be a document confirming the fact that there was only a limited recourse loan. 

The point we would make about that is to say that something confirming the effect of it recognises that that is an existing effect of it.  It has two aspects.  It is not just something saying, “We will give you a document saying this in the future”.  Justice McPherson has treated the representation as being only that such a document would be provided.  You can see that at pages 155 to 157, paragraphs [21], [24] and [26] of his reasons. 

Your Honours, what I was going to say then is that if one has a situation where what you have is a position where there is a representation made that there will be – I am sorry, I will start again, your Honours.  If there is a representation that, notwithstanding the terms of the document that is entered into, the liability will only be of a certain kind, then that provides a sufficient foundation for an estoppel.  Where the issue to which your Honour referred arose was this, that if the position be that Justice McPherson and Justice Holmes appear to have taken the view that it could not give rise to a conventional estoppel, as distinct from only promissory estoppel, and it could not give rise to a conventional estoppel because – your Honours, I see the time, may I ‑ ‑ ‑

KIRBY J:   Yes, please complete this submission.

MR JACKSON:   That what was involved was a representation as to future conduct.  You will see that referred to by Justice Holmes at page 182, paragraph [117]; Justice McPherson, page 159, paragraph[31].  That view is supported by this Court’s decisions in Con-Stan in the book of cases we have given the Court that is behind tab 1, page 244.

KIRBY J:   Yes, we have seen those series of cases.

MR JACKSON:   That view is one that has not been adopted in the United Kingdom and a different view has been taken, perhaps in a slightly wayward fashion, but by other courts in Australia.  May I give your Honours very briefly the reference to where those can be seen.  Your Honours will see the ‑ ‑ ‑

KIRBY J:   I think you have referred to these, have you not, in your written submission?

MR JACKSON:   Yes, I think some of them, your Honour, are a little later in the book.  The relevant passages are the decision of the House of Lords in Republic of India v India Steamship Co Limited (No 2), that is behind tab 5, Lord Steyn at page 913; in the New South Wales Court of Appeal, two decisions, your Honours, behind tab 6 and 11.

KIRBY J:   Is this the one of Justice Austin.

MR JACKSON:   No, your Honour.

KIRBY J:   I am sorry.

MR JACKSON:   The first one I was going to refer to behind tab 6 is M K & J A Roche Pty Ltd v Metro Edgely [2005] NSWCA 39. The relevant paragraphs are at page 15, paragraphs [68] and [71], Justice Hodgson, the other members of the court agreeing relevantly. The other decision of the New South Wales Court of Appeal is Whitehouse v BHP Steel Limited, behind tab 11, at page 9, paragraph [43]. 

One can see the conflict of views in a decision of the Full Court of the Supreme Court of South Australia, Santos v Delhi Petroleum, which is behind tab 7.  Justice Lander and Justice Williams took the view that conventional estoppel could apply to representation as to future – statements as to future conduct.  Justice Lander, the relevant paragraphs are [481] and [489]; Justice Williams, [644].  The other view was taken by Justice Besanko, paragraphs [686] to [689]. 

If I could give your Honours one reference to which I will actually go, the decision of the Western Australian Court of Appeal, Sumampow v Mercator Property Consultants, which is behind tab 9, page 30, paragraph [181].  You will see at paragraphs [180], [181] it was said by Chief Justice Malcolm, the other members of the court agreeing on this point, “It is now clear that the doctrine also extends to assumptions of law”.  Your Honours, sometimes the decisions refer to assumptions of law, sometimes they refer to future conduct. 

We would also mention the fact, your Honours, that in the seminal part of the reasons of Chief Justice Dixon in Grundt’s Case, picking up Thompson v Palmer, that one does see references to assumed conduct in a context where one would think he is speaking of things that might take place in the future.  Your Honours, that is ‑ ‑ ‑

KIRBY J:   Yes, thank you, Mr Jackson.  We are going to take a short adjournment before we ask for your assistance, Mr Couper, just to consider the future consideration of these applications.  So the Court will adjourn briefly.

AT 12.00 NOON SHORT ADJOURNMENT

UPON RESUMING AT 12.02 PM:

KIRBY J:   Mr Couper, we do not need your assistance in this matter.

These applications arise out of proceedings that were earlier before this Court:  see Equuscorp Pty Limited v Glengallan Investments Pty Limited (2004) 218 CLR 471. In that decision this Court upheld appeals by Equuscorp, set aside orders of the Court of Appeal of the Supreme Court of Queensland and of the primary judge of that court and remitted the matters to the Supreme Court of Queensland for further consideration of “the issues not decided at trial” conformably with the orders of this Court. This Court emphasised that the order of remittal was not an order for a retrial.

Now the present applicants have applied for special leave to return to this Court on the basis of alleged errors in the remitted trial and in the Court of Appeal which rejected fresh appeals to it after the remitted trial.  There is a potential issue which is raised by the applicants which could warrant a grant of special leave in a suitable case.  This concerns the suggested need for an ‘overarching’ doctrine of estoppel by conduct to provide relief to obviate any detriment caused by unconscionable conduct. 

There are divisions of opinion in the intermediate courts of Australia which have been demonstrated by the applicant.  There is also some uncertainty about the applicable principles following the successive decisions of this Court in cases such as Legione v Hateley (1983) 152 CLR 406, Waltons Stores (1988) 164 CLR 387 and The Commonwealth of Australia v Verwayen (1996) 170 CLR 394. These decisions are said to cast doubt on the current authority of some of the observations of the Court in Con-Stan Industries (1986) 160 CLR 226.

In a suitable case those issues may warrant the attention of the Court.  However, we are not convinced that the present is such a case.  Having regard to the history of the litigation and the earlier decision of this Court, we do not consider that the applicants enjoy reasonable prospects of success in disturbing the conclusions and orders entered below.  In particular, we do not consider that the complaints of procedural unfairness are sufficiently established or that the interests of justice require this Court’s intervention for a second time.  Special leave is therefore refused.  It must be refused with costs.

AT 12.05 PM THE MATTERS WERE CONCLUDED