Wickstead & Ors v Browne

[1993] HCATrans 101

..

4    .

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IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No S8 of 1993

B e t w e e n -

MARTIN THOMAS WICKSTEAD, KIM
SUZANNE MORRIS, JULIA
STEVENSON and WILLIAM HENRY

LANCASTER

Applicants

and

DOUGLAS JOHN BROWNE

Respondent

Application for special leave

to appeal

DEANE J

TOOHEY J

GAUDRON J

Wickstead 1 30/4/93

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 30 APRIL 1993, AT 11.02 AM

Copyright in the High Court of Australia

MR J.M. SPENDER, QC:  May it please Your Honours, I appear

for the applicants and my learned friend,

MR N.F. FRANCEY, appears with me. (instructed by

T.D. Kelly & Co)

MSC.A. NEEDHAM:

I appear for the respondent. (instructed

by Minter Ellison Morris Fletcher)

MR SPENDER:  Your Honours, we have some written submissions

which are not short; I hope are not long; I believe
will be helpful and some references as well of

materials which we may, in the course of argument,

be briefly referring. I hand up the materials and

I would also hand - - -

DEANE J: What, the neither short nor long submissions?

MR SPENDER:  The neither short nor long submissions,

Your Honour, are on the way. I have them now. I

hope that, unlike the curate's egg, they will not

be found to be good only in part.

DEANE J:  You might give us some warning, when you are going

to hand up a long submission, so that - - -

MR SPENDER:  Yes, Your Honour. It lengthened this morning,

Your Honour - earlier this morning - as I was doing

some redrafting. What we have sought to do is to

set out in the first page the issues of public

importance but the core issue is the approach that

the Court of Appeal took to the existence of a

remedy saying effectively that where there was a

breach of fiduciary duty available, on one view of

the facts, there was no room for any common law

duty of care.

TOOHEY J: Is that the only basis, Mr Spender, upon which

the majority refused to allow the common law claim

to proceed?

MR SPENDER:  Your Honour, the majority refused to allow the

common law claim to proceed by a process of

reasoning: first, pointing out certain
difficulties, then coming to the conclusion that it
was not open by reason of the fact that there was a

fiduciary relationship and by reason of the fact

that the applicants had only a beneficial interest

in the funds.

TOOHEY J: Are you running those two propositions together?

MR SPENDER:  They effectively, Your Honour - Their Honours

put those two propositions. Perhaps, Your Honour,

the easiest way to approach it might be to go

directly to, first of all, what His Honour

Wickstead 2 30/4/93

Mr Justice Kirby had to say and then to look at

what Their Honours had to say. The circumstances

of the case are set out on page 2, and I should point out that Mr Justice Smart has reserved on strike-out applications brought by nine other

defendants. I do not believe I need trouble

Your Honours with the facts or the references to the pleadings, although we have identified them at

page 3.

DEANE J: Did you say there are nine other applicants?

MR SPENDER: Precisely, Your Honour. There are 15

defendants. What happened was - - -

DEANE J: All fighting different cases?

MR SPENDER:  The cases, Your Honour, are, in terms of

pleading, the same.

DEANE J: But can they not all get together and have one

case?

MR SPENDER:  One would think so, Your Honour, but we are not

in charge of the way in which they run their cases.

DEANE J:  You would think somebody could call a meeting of

the lawyers to call for volunteers to stand aside.

MR SPENDER:  In these difficult times, Your Honour, it might be hard to find volunteers.

DEANE J: Yes, I say no more. Mr Spender, one problem that

you have is that the form of question which would

go to a Full Court of this Court, if you were to be

granted leave, is not really an appropriate
question for a Full Court of this Court to

consider. In the sense, the question would not be

whether there was a cause of action in negligence;

it would effectively be whether it was arguable

that there was a cause of action in negligence.

MR SPENDER:	I entirely agree, Your Honour, yes.
DEANE J:	Now, the Court of Appeal managed to deal with it

on that basis and no doubt this Court could, but it

really is not an appropriate question, on one

approach, to take up the time of this Court at the

expense of other matters because the answer that is

given to it really tells no one anything at all.

Well now, having said that, it is just something I

wanted to identify for you.

MR SPENDER: Perhaps, Your Honour, I could answer that

question or what Your Honour puts in this way, and

I might have agreed too quickly with what

Your Honour was saying: the position that the

Wickstead 3 30/4/93

court has arrived at is that there can be no duty of care owed, and what the court has said is that

the only claim which is open - this was something

which arose during the hearing before the Court of

Appeal which had not been raised or looked at

before - was one for participation in a breach of

fiduciary duty.

The court drew a distinction, which is no

doubt correct, between the tests applicable to the

two matters; one being active participation in

breach of fiduciary duty; the other being the
absence of care according to an objective standard.

Now, on that approach and the way in which the

court has handled the matter, it means that the
plaintiffs are not able to put forward a claim in

negligence and must prove active participation by

each of the defendants in a breach of fiduciary

duty. One might surmise that the answer one might

get would be that the actions of the defendants
were not participation in any breach of fiduciary

duty. These were done by other people or

beforehand. Accordingly, even though they might be

affixed with knowledge and an understanding that

there had been a breach, that funds were at risk

and that, in fact, the funds had been borrowed, so

to speak, by the company itself, that they could

say that they had no duty.

Now, if I understand Your Honour Justice Deane

correctly, what we would say is that that is a most

important question to put to the Full Court for

this reason: first, so far as this case is

concerned, or have I misunderstood Your Honour?

DEANE J:  I was not suggesting to the contrary. What I was

suggesting to you was that if leave were granted

and you succeeded on an appeal, the best you would

be entitled to expect would be, as it were, a

judgment corresponding with that of Justice Kirby

in the Court of Appeal. Now, that judgment, in

terms of the relevant question of law, really tells

one nothing.

MR SPENDER:  It does say this, however, Your Honour, and if

I could just - - -

DEANE J:  What it says is it is arguable, but there are

great legal difficulties facing the present

applicants to succeed on the argument, but they

should have been allowed their day in court.

MR SPENDER:  I would have thought, Your Honour, that there

was another position that the Full Court could take

and that was this, that it could say that in

Wickstead 4 30/4/93

appropriate circumstances such a duty of care can

exist, not just that it arguably might exist.

DEANE J: But that is the type of exercise which we are

constantly learning is ill advised. It is much

better to deal with these questions, particularly

in the area of negligence, on ascertained facts.

Well now, I am not suggesting it is an insuperable

obstacle in your path; it is something that does

militate against a grant of leave though.

MR SPENDER:  As to that, Your Honour, we would answer in

this way: what the court has done was to say,

"Well it is not open to you to mount this sort of

action, specifically by reason of the demarcation

which the court draws between equitable actions" -

if I can use that expression - "and actions at

common law". That affects, of course, not just

this action but every other action when a plaintiff

might wish to say, in not dissimilar circumstances,

that there is or should be a right at common law

against the personal defendants, the personal

agents.

DEANE J:	Mr Spender, without indicating that you are in
front at this stage, as it were, I think the Court
would be assisted by hearing what Ms Needham has to
say.

MR SPENDER: If Your Honour pleases.

MS NEEDHAM:	Your Honours, with respect, I would adopt the observations which have been made by
Your Honour that this case is an inappropriate
vehicle for such an appeal and to determine this
issue.

DEANE J: There are problems about it but, I mean, in terms

of the administration of justice and the rights of

the applicants, we must address the question

whether, in a context where the proceedings were

going to trial and where the relevant issues of

fact in a negligence action would largely be

covered in any event, it was appropriate to stop the claim in negligence from going to a hearing. If the answer to that question is in the

affirmative - and we are dealing, of course, with

an arguable case - the difficulties involving an

appeal to this Court are important but they may not

provide an answer.

MS NEEDHAM:	Yes, Your Honour. Well, addressing that matter then, if I could hand up an outline of submissions.
Paragraph 1 goes to broader discretionary factors and then paragraphs 2 through to 4 I have addressed
these other matters.
Wickstead	30/4/93

TOOHEY J: Is it clear, Ms Needham, that the addition to

this cause of action would add considerably to the

length of the trial?

MS NEEDHAM:  With respect, Your Honour, it would for the

reason that, as the history of the summary judgment

application shows, the Court of Appeal, I think,

has spent approximately four days already hearing

legal submissions mainly directed to the negligence

issue. So that if the matter were to go - and I

think there were two days before the Master and one

day before His Honour Mr Justice Grove, so that,

presumably, if the negligence issue were to go back
for trial, and bearing in mind that in the

proceedings there are 15 defendants, of which my

client is only the fourth defendant, and no doubt,

in dealing with the legal issues, as it applied to
the different facts in each case it would certainly

prolong the hearing, in my estimation.

TOOHEY J:  Do you mean by reference to the evidence to be

called or the argument, once the evidence was in?

MS NEEDHAM: In relation to both, Your Honour. Certainly

the legal argument will take some time. We have

already spent many days arguing that and no doubt

it will start afresh if it goes back to the trial

judge.

DEANE J: But if it did go back to the trial judge, since

the negligence claim was there, he would deal with

the factual matters but in a context where this

Court would have only said it was arguable and

there was a judgment of the Court of Appeal saying
negligence was not open, would it really take much

time before the trial judge?

MS NEEDHAM:  Yes, it would, Your Honour, because there will

be other issues, of course, that would be relevant

to be raised, both factual and legal.

DEANE J:  I mean, the argument about negligence?

MS NEEDHAM:  In relation to that limited issue, it is my

estimate that it would be reargued in full. That

is the way that the applicants have conducted the

litigation so far. I would not expect that it

would be a short submission. Dealing with other

factual issues which could be raised: of course,

there would be an issue of foreseeability which

would arise in relation to a negligence plea which

does not arise in relation to the equitable ground

which relies on active intervention by the

defendant with knowledge of either a breach of

trust or breach of fiduciary duty. So that the

equitable ground is more narrowly defined and

perhaps better defined and it does require proof of

Wickstead 6 30/4/93

notice and it requires proof of some active

intervention by the defendant.

In contrast, if the negligence ground were to

proceed to trial, there would be issues of
proximity; issues of foreseeability, in particular,
the foreseeability of the risk of loss to the

applicants which would involve, no doubt, an inquiry

as to whether or not my client was or ought to have
been aware at at least four different points of
time - because there were at least three different

reviews of the three applicants' investments -

whether my client was aware at, at least three

different points of time and perhaps four different

points of time, whether he ought to have known that

the company was likely to go into financial

difficulty and into provisional liquidation. That

is a very wide ranging factual inquiry which would

be thrown up by the Elections case and would

certainly belong - - -

TOOHEY J:	Ms Needham, is that cause of action, the cause of action that is sought to be pleaded against your
client, pleaded only against your client? In the
action with which we are immediately concerned?
MS NEEDHAM:	I do not appear for any of the other defendants

but my understanding is that it is basically the

same type of pleading.

MR SPENDER:  That is so. I think it is common in all cases.

MS NEEDHAM:  However, they may diverge because, of course,

in this case - - -

TOOHEY J:  I am sorry, I am not clear as to the answer. I

am speaking only of the immediate action for the present, not the other actions that are on foot.

In relation to the immediate action, is that cause

of action pleaded against other defendants?

MS NEEDHAM: In this action, Your Honour?

TOOHEY J: In this action, yes.
MS NEEDHAM:	I think the answer to that is no, because the pleading against my client at the moment seeks to
raise the issue of negligence.  He is the fourth
defendant. There are 15 other defendants. I
understand, although I have no personal knowledge of this, that the pleadings against the other
defendants are substantially in similar terms.

DEANE J: So, negligence is raised against the other

defendants?

MS NEEDHAM:  My understanding is that that is so.

Wickstead 7 30/4/93

TOOHEY J: 

And then if one moves from this action to the

other actions that are on foot, it would seem that
that cause of action is extant against some

defendants in the other actions?

MS NEEDHAM: 

At the present time, Your Honour, it is,

however, as I understand it, some of the other

defendants have followed my client's lead and have

made an application for summary judgment also and

are seeking to have the claim against them in
negligence dismissed. That matter went before

His Honour Mr Justice Smart approximately one year ago. His Honour has reserved on that matter and I

understand is awaiting the outcome of Your Honours'

decision today.

So that in practical terms it seems to be that

His Honour Mr Justice Smart will follow

Your Honours' lead today and so that all 15

defendants ought to be facing the same issues if it

goes to trial and that if the special leave

application fails today, it seems likely that

His Honour Mr Justice Smart will also strike out

that part of the pleading against the other

defendants which seeks to raise the issue of

negligence which, in my respectful·submission, is

an unarguable issue, not just in law but on the
facts, and therefore none of these defendants ought

to be subjected to an extensive and lengthy

hearing, with the attendant costs.

My client being an individual, Your Honours,

who made the summary judgment application at a time

when the other matters, the equitable grounds on

which the applicants ultimately succeeded before

the Court of Appeal, had simply not been raised in

any manner at all - my client, after taking legal

advice, after considering the pleadings, in the

circumstances where no particulars had been

provided for a period of approximately - well, over

three years, despite written requests by his

solicitors - made a judgment that he would succeed

in his summary judgment application and did so

until the matter had been before the Court of

Appeal and the Court of Appeal had effectively

reserved its decision.

So that, in my respectful submission and

notwithstanding what was said by the learned

President in the Court of Appeal, it is simply

unjust to my client to expose him to a prolonged

hearing which may be made even longer if the same

issue is agitated against 14 other defendants,

purely on the basis that if there is a remotely

arguable point, it ought to be argued. There is no

reasonable prospect of success on this aspect, in

my respectful submission, for the reasons that -

Wickstead 30/4/93

the distinction must be drawn between one of the

applicants, Mrs Stevenson, and the other three

applicants, Mr Wickstead, Miss Morris and

Mr Lancaster.

Mrs Stevenson's application is in a totally

different factual category. What the applicants

seek to allege is that when these clients of the

Trustees Executors and Agency Company invested

funds with the company, their investments went,
from time to time, before a board of review - a New

South Wales board of review. There was an initial

revi~w which decided where their funds would be

placed and then there were subsequent reviews at

certain monthly - I think it was six-monthly

intervals - perhaps a year interval. All of the

evidence in the court below was that

Mrs Stevenson's investments never had time to come

before the board of review, even for the initial

review. So that my client had no participation

whatsoever in relation to the manner in which her

funds were invested. That came about because her

funds were invested very shortly before the company

did in fact go into provisional liquidation.

So, there is no factual basis whatsoever, in

my respectful submission, for a negligence case by

that applicant. As to the other three applicants,
there was some evidence before the court below,

which is referred to in the Court of Appeal's

judgment, that their investments had come up before

the board of review at which, according to my

client's own evidence, he acted as minute secretary

and no more.	He simply presented, in a physical
sense, files to the board.	He then awaited the

board's decision. His unchallenged evidence was

that he was not asked any questions and had no

input whatsoever in relation to the way in which

their funds were invested. But when the board of

review had made its decision he recorded this as

minute secretary on the paperwork.

GAUDRON J: Is there not some difficulty about simply

proceeding on the basis of the evidence thus far?

MS NEEDHAM: There is some difficulty, yes, Your Honour, as

was highlighted by the majority judgment in the

Court of Appeal and I accept that. However, there has been a fairly extensive airing of the evidence

by now.

GAUDRON J:	Have particulars been provided?
MS NEEDHAM:	The applicant did provide some particulars the

day before the third occasion, I think, when the

matter went before the Court of Appeal.

Wickstead 9 30/4/93

GAUDRON J:  Now, why would one not proceed on the basis of

particulars provided, rather than the state of the

evidence, if the matter were to come before this

Court?

MS NEEDHAM: Perhaps historically, Your Honour, because this

was an application for summary judgment on the

evidence and we did not resile from dealing with

the evidence.

GAUDRON J:  I have some difficulty with the notion of

summary judgment on the evidence, I must say.	More
particularly, in circumstances in which the

evidence has not been fully explored. I think the

basis of summary judgment must lie somewhere other than in the nature of the evidence adduced on that application.

MS NEEDHAM:  The respondent's case perhaps took on the higher burden. He did not seek to confine his

argument to the pleadings. The pleadings, as they

stood, in my respectful submission, would not
disclose a cause of action anyway because there is

no reasonably proximate relationship between the

respondent and the applicants such as could give

rise to a duty of care. What is alleged is that he

sat by essentially at the board of review meetings

when - - -

GAUDRON J: Is that alleged in the particulars? Is that all

that is alleged in the particulars?

MS NEEDHAM: It is not. That has never been particularized,

Your Honour. The case has never been fully

particularized and still is not, in my respectful

submission. It will, I expect. The equitable

ground on which the applicant succeeded in the

Court of Appeal needs to be repleaded as well, or

needs to be pleaded.	It was not pleaded in the
statement of claim.
pleaded in the appeal book at about page 4, Your Honour sees the way in which it has been paragraphs 23 and 24.

GAUDRON J:  The difficulty with your submission about your

client sitting by as minute secretary is that that

seems to be at odds with the equitable cause of

action that has been identified and if we are to

take into account what you say now, that just does

not seem to march in harmony with the situation

that has developed.

MS NEEDHAM:  Your Honour, that is precisely one reason why,

in my respectful submission, the law of negligence

should not intrude into an area where the law of

equity has, over centuries, developed

Wickstead 10 30/4/93

well-understood and well-established principles to

effect justice between the parties.

GAUDRON J:  I was not talking about the legal principles not

marching in harmony. I was talking about the

assumed factual substratum and its relevance to the

motion to strike out.

MS NEEDHAM:  Yes. I am afraid I may not have understood

Your Honour's point.

GAUDRON J: It is this: it must be assumed for the purposes

of the equitable pleadings which stand that there
was knowledge and you now seek to resist the

application on the basis that your client was no

more than a minute secretary.

MS NEEDHAM:	Yes.
GAUDRON J:	Now, there is a factual conflict between what is

assumed for the purposes of the equitable cause of
action and what you are putting as the basis for

the strike out stand.

MS NEEDHAM:  Thank you for that, Your Honour, yes. In my

respectful submission, there is not because the
knowledge that is required under the Barnes v Addy

principle is knowledge of a breach of trust or

fiduciary duty. My client denies that he had

knowledge of any such breach of trust or fiduciary

duty and, indeed, he has put on some evidence which

was not challenged in cross-examination saying

precisely that. That appears in his affidavit

which is part of the annexure to Mr Kelly's

affidavit and which appears in the appeal book at

page 111, that is paragraphs 13 and 15 of an

affidavit. Perhaps working backwards, in

paragraph 15, my client says that far from him

having any knowledge that there was anything

untoward about these sort of investments, he had

his own young children's money - - -

GAUDRON J: Yes, but the difficulty is why does one approach

it on the basis of the evidence? Why does not one

approach it on the basis that there is an

allegation implicit in what has happened, of

knowledge?

MS NEEDHAM:  Yes. I accept, Your Honour, that that is the

correct approach, with respect, and that has not

been pleaded, of course, because the equitable

ground was never pleaded. It arose during argument

in the Court of Appeal. It was first raised by His

Honour Mr Justice Handley and it went from there.

All that is pleaded, as Your Honour sees on page 4 of the appeal book, is the statement of claim,

Wickstead 11 30/4/93

paragraphs 23 and 24, and that is as far as the

whole matter has gone.

In paragraph 23 it is alleged that each of the

defendants owed:

a duty of care to take reasonable steps to

ensure that his funds were handled in a proper

trustee and/or fiduciary manner -

and in accordance with the terms of the powers of

attorney. In paragraph 24, it is alleged that:

In breach of and in reckless disregard of such

duty -

namely, the negligence duty -

the Defendants and each of them caused,

permitted and/or allowed TEA to apply such

funds for its own purposes -

that is in other investments - non-trustee

investments. So, as Your Honour sees, that is a

long way from pleading any assistance with

knowledge in a dishonest and fraudulent design by

the company. Indeed, much of it is inferential and

clearly, those paragraphs were at first intended to

plead negligence and not equitable grounds. But if

it is assumed, and it does seem now to be common

ground, that eventually the equitable ground will

have to be pleaded and it will have to be

particularized, and when that is done that must be

done conformably with the relevant principles, so

that it must be alleged that there was knowledge

and, of course, there is some argument about

whether that means actual or constructive notice.

GAUDRON J: If that is so, then what is it, apart from the

question of your client having been no more than a

minute secretary, that makes paragraphs 23 and 24

unarguable?

MS NEEDHAM:  The matters, Your Honour, are those which are

identified in the submissions, paragraphs 2, 3 and

4. Perhaps I could address those. I have really

covered paragraph 2 already, but it would be a

useless exercise for Mrs Stevenson's allegations of

negligence to go to trial because there is no

prospect that there will be any factual support for

them.

Turning then, in paragraph 3, to the factual

evidence of the other applicants, I think I have

told Your Honours, in short, what it is expected

that the applicants' case will be and that evidence

is at the moment very weak: that Mr Browne was not

Wickstead 12 30/4/93

in any way in charge of that division of the

company which handled these persons' investments.

They were in what was called the agency division of

the company, the manager of which was a Mr Bampton. the company which was called the Trust Division and
that dealt with deceased estates essentially. So,

he had no authority or control over the applicants'

investments. There was no dealing by him with any

of their funds. There was no, so it would appear,

and it is not alleged, that he gave any advice in

relation to the way in which their funds would be

invested; and his conduct did not in any way

produce, it is respectfully submitted, the

situation which eventuated.

So that there is no relationship between my

client and any of the applicants which is

sufficiently proximate to give rise under the law

of negligence to a duty of care, bearing in mind
two matters: the first is that this is a case of
an alleged omission and, secondly, it is a case of

alleged economic loss, two categories where the

courts' willingness to extend an obligation of

reasonable care is very circumscribed. The courts

are very reluctant to extend those two categories

of negligence. And this is a case where you have

both of those features: an alleged act of

omission, a failure to warn in circumstances

causing allegedly economic loss.

So that what the applicants seek is for the

Court to allow argument that there should be

established a novel category of the law of

negligence in this situation and there is no reason

in policy or principle why the courts would do so.

It would need to come, with respect, tO this Court

again to establish such a category finally and

there is, of course, authority against it. Those

were the authorities which were referred to in the

majority judgment in the Court of Appeal to which I

will now take Your Honours.

DEANE J:  You can take it that we have read the judgments.

Of course, the basis on which you succeeded in

negligence before the Court of Appeal was on the

legal and not the factual proposition and that

really is what we are concerned with.

MS NEEDHAM:  Very good. If I can turn to the relevant

authorities then, Your Honour.

DEANE J:  I think, again, you can assume that we are

generally familiar with the authorities. Your

task, if you want to pursue it, is to sustain the

proposition that it is not arguable that a duty of

care could arise in the context of the equitable

Wickstead 13 30/4/93

principles, which strikes me as a very difficult

task.

MS NEEDHAM:  In that broad form, I accept it would be,

Your Honour, but what the respondent - - -

DEANE J:  But that is what the majority of the Court of

Appeal have held.

MS NEEDHAM:  Yes. Your Honours are familiar then with the

Privy Council's opinion in the China Bank case and the Court of Appeal's decision in the - - -

DEANE J:  If there is anything in particular that you would

like to point us to, feel quite free to do so of

course.

MS NEEDHAM:  Very good. Well, perhaps it is sufficient

then - I take it, as Your Honours are familiar with

these cases - they are the three decisions, and

reliance is also placed on that line of territory,
Your Honours, in relation to the obligations of

company directors where the courts have fairly

steadfastly said for a great number of years that

where the principles of equity have developed and

where remedies are available, that is more or less

the scope of it and the law of negligence need not
intrude and ought not to intrude into these new

areas.

It is, in my respectful submission,

unarguable, for the reasons in paragraph 4, that

any court would accept that a duty of care will

arise in this case as pleaded and I think I have

set them out in as much detail - I do not wish to

speak to them any further.	If it please,
Your Honour.

DEANE J: Thank you, Ms Needham. Ms Needham, can I raise

this with you: as I pointed out to Mr Spender, if

leave is granted in this case the question on the

appeal will not be is there a right of action,

because the likely approach would be that it is

inappropriate for the Court to deal in a definitive

matter with those questions without knowing the

facts in the context in which the question arises.

That means that the question would be, effectually, is it arguable and, if it is, should the action in

negligence have been struck out in a context where

the equitable actions were going to hearing.

Well now, I am asking you, but it concerns

Mr Spender as much:  I am concerned that if leave

were granted and an appeal were heard on that

question, it would involve a great amount of legal

costs for no ultimate final result from the

parties' point of view. The point of my query is

Wickstead 14 30/4/93

that this Court is, of course, acquainted with what
the issue is. We have read the papers. Well now,

if we were to grant leave, would your client be in

favour of this Court proceeding immediately to

dispose of the appeal?

MS NEEDHAM:	I will seek instructions.
DEANE J:	You do not have to answer the question now, in

that it is something that we could give you time to

consider if we reach that. Mr Spender, I would

address the same question to you and, needless to

say, do not need an answer now.

What we propose to do is stand this matter

down the list now so both sides can consider what

approach they would want the Bench, as presently

constituted, to take in the event that leave is

granted. I should indicate that what I had in mind

was if leave were granted, dealing with the matter

on the argument and the submissions that have been

presented to date, if the parties wish to dispose of the appeal. Otherwise, of course, if leave is

granted and the parties want to have a full

argument on whether it is arguable or not, the

matter can just take its ordinary turn in the list.

I should stress that I am not indicating a final

decision that leave should be granted.

Justice Toohey points out to me that I should

have indicated that the basis on which we would

deal with the appeal, if it did come to that, would

be whether or not the approach adopted by

Justice Kirby was the correct one.

Mr Spender and Ms Needham, feel free to

mention the matter at any time.

AT 11.45 AM THE MATTER WAS ADJOURNED

UNTIL LATER THE SAME DAY

UPON RESUMING AT 12.43 PM:

MR SPENDER:  Your Honour, we are content and very happy to

adopt the proposal that Your Honour has suggested.

I think, this morning, I omitted to hand in page 11

of my medium length submissions, Your Honour, and

if I could hand up page 11 to be added to those

submissions.

Wickstead	15	30/4/93
DEANE J:	Thank you, Mr Spender.	What is your position,

Ms Needham?

MS NEEDHAM:  If it please Your Honour. The respondent is

also content for this Court to proceed to the

appeal and does not wish to put any further

submissions except to say something very shortly on

the matter of costs.

DEANE J:  One approach to the question of costs would be, if

leave were granted, the appeal allowed along the

lines indicated by Justice Kirby, that the costs in

this Court should await the outcome of the claim in

negligence in the sense that if Mr Spender's

clients were to succeed in negligence, it would be

difficult to see why they should not get their

costs. On the other hand, if Mr Spender's clients

were to fail on the claim in negligence, there

would be a great deal to be said for the view that

your client should get costs. Well now, that is

said without any discussion with other members of

the Bench. It would seem to me to be a possibly

just approach to costs if we did reach that stage.

MS NEEDHAM: Well, that is the respondent's submission, in

effect, Your Honour, and we would simply

further - - -

DEANE J:  You would, no doubt, have put it a lot better than

I did, Ms Needham.

MS NEEDHAM:  I doubt that, Your Honour. But, Your Honour,

we would also respectfully submit that the orders

as to costs in the Court of Appeal should be

unchanged on the same basis because they have

already been phrased in such a way that they are

dependent on the outcome of the negligence issue.

DEANE J: Is there anything you can say about that,

Mr Spender?

MR SPENDER:

So far as costs here are concerned,

Your Honour, that is entirely up to Your Honours.

I would not add anything. So far as the costs

below, Your Honour, the orders were framed so as to

reflect, as it were, the way in which the result

emerged and as to costs there, we would submit that

the ordinary order would have been that in the
event that Your Honours grant special leave and
allow the appeal in the manner indicated, that the
costs below should be awarded in favour of the

applicants without the mathematical combinations

that Their Honours went into.

DEANE J: Yes, except the judgment of Mr Justice Kirby in

the Court of Appeal was on the hypothesis or was greatly influenced by the consideration that the

Wickstead 16 30/4/93

case was going forward to trial on the claims that

were not advanced by your client previously. I do

not think we should take undue time on it, but what you say does not carry compelling force so far as I

am concerned.

MR SPENDER:	That is true, Your Honour. What I would say, very quickly, in answer to that is that the matter
that attracted His Honour Mr Justice Handley had not attracted anybody's attention up until about
the second day of hearing - the first or second day
of hearing before the Court of Appeal. In the
event .that the matter had simply gone ahead on the negligence issue in any event, then the same issues
effectively, so far as a substratum of facts is
concerned, would have to be ventilated and what
is - - -
DEANE J:	A lot depends, of course, on the basis on which

you would succeed. If an essential step in the

reasoning which leads to your success, if success

you do enjoy, is that the matter is going to trial

anyway on the matters raised by Mr Justice Handley,

there is not all that much conviction in your

argument, if I might say so.

MR SPENDER:  We will be advancing both propositions,

Your Honour, in the event that Your Honours grant

leave and allow the appeal. Let me say we

certainly will not be resiling from the proposition

which His Honour Mr Justice Handley has introduced

into the proceedings.

DEANE J:  We will stand the matter down until 2 pm when we

will give a decision on the leave application.	If
leave is granted, we will then hope to dispose	of
the appeal, including the question of costs.

MR SPENDER: If Your Honour pleases.

AT 12.49 PM THE MATTER WAS ADJOURNED

UNTIL LATER THE SAME DAY

UPON RESUMING AT 2.17 AM:

DEANE J:  The Court considers that there should be a grant

of special leave to appeal in this case.

In the course of argument, there was

discussion with counsel about the appropriate

course to be followed in the event that there was a

Wickstead 17 30/4/93

grant of special leave to appeal. In circumstances

where the question on an appeal will not be whether

the applicants had a good cause of action in

negligence but whether the circumstances of the

case were such that the claim in negligence should

be struck out on a preliminary application, it is

apparent that the appropriate course is for the

appeal to be disposed of immediately if the members

of the Court, as presently constituted, have formed

a clear and unanimous view that the claim in

negligence should be allowed to proceed to trial.

We have formed such a clear and unanimous view.

Accordingly, with the consent of both sides,

we proceed immediately to deal with the substance

of the appeal. As we have indicated, we have come

to a clear conclusion that in all the circumstances

of this case, including the circumstance that the

action against the respondent will be proceeding to

trial on other counts in any event, the claim in

negligence should not have been struck out.

We note that we are in general agreement with the reasons given by Justice Kirby in the Court of

Appeal for that conclusion and that we do not dissent from His Honour's acknowledgement of:

"the force of the considerations which Handley

and Cripps J.J.A. have collected to

demonstrate that the [applicant's] cause of

action in negligence faces serious legal

difficulties and, accordingly, may fail".

We grant special leave to appeal. We allow

the appeal. We vary order 4 of the orders made by the Court of Appeal by deleting therefrom the word

"negligence" and the comma·which follows it. We

order that the costs of the appeal to this Court

(including the application for special leave to

appeal) be reserved on the basis that there will be

an order for costs in the applicants' favour in the

event that they are ultimately successful in their claim in negligence and that there will be an order	for costs in the respondent's favour in the event
that that claim ultimately fails.

In all the circumstances, we do not interfere

with the order as to costs made in the Court of

Appeal.

AT 2.20 PM THE MATTER WAS ADJOURNED SINE DIE

Wickstead 18 30/4/93