WMC Resources Ltd v Bulong Operations Pty Ltd - [2000] WASC 131

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: WMC RESOURCES LTD -v- BULONG OPERATIONS PTY LTD & ORS [2000] WASC 131

CORAM: MASTER SANDERSON

HEARD: 10 MAY 2000

DELIVERED : 19 MAY 2000

FILE NO/S: CIV 2454 of 1999

BETWEEN: WMC RESOURCES LTD (ACN 004 184 598)
Plaintiff
AND
BULONG OPERATIONS PTY LTD (ACN 008 930 881)
BULONG NICKEL PTY LTD (ACN 000 807 036)
First Defendants
RESOLUTE LTD (ACN 009 069 014)
Second Defendant

Catchwords:

Practice and procedure - Application to adduce further evidence after hearing application for summary judgment but before judgment - Principles - Application of case flow management

Legislation:

Nil

Result:

Application granted

Representation:

Counsel:

Plaintiff:     Mr M J McCusker QC & Mr N P Gentilli
First Defendants           :     Ms C J McLure QC and Mr G I Brook
Second Defendant         :     Mr M L Bennett

Solicitors:

Plaintiff:     Jackson McDonald
First Defendants           :     Minter Ellison
Second Defendant         :     Bennett & Co

Case(s) referred to in judgment(s):

Barker v Furlong [1891] 2 Ch 172
Singh v Crafter, unreported; FCt SCt of WA; Library No 8434; 15 August 1990
Smith v New South Wales Bar Association (1992) 176 CLR 256
The State of Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146
Watson v Metropolitan (Perth) Passenger Transport Trust [1965] WAR 88

Case(s) also cited:

Bank of Western Australia Ltd v Patton, unreported; SCt of WA (Sanderson M); Library No 990111; 11 March 1999
Boucat Bay Co Ltd v The Commonwealth (1927) 40 CLR 98
Camatos Holdings Pty Ltd v Neil Civil Engineering (1992) Ltd [1998] 3 NZLR 596
Carlton & United Breweries Ltd v Long [1958] VR 539
Cellulose Acetate Silk Co Ltd v Widnes Foundry (1925) Ltd [1933] AC 20
Clydebank Engineering & Shipbuilding Co Ltd v Don Jose Ramos Yzquierdo y Castaneda [1905] AC 6
Codelfa Construction Pty Ltd v State Rail Authority of NSW (1981) 149 CLR 337
Cordinup Resorts Pty Ltd v Terana Holdings Pty Ltd (1997) 143 FLR 18
Diestal v Stevenson [1906] 2 KB 345
Dunlop Pneumatic Tyre Co v New Garage and Motor Co [1915] AC 79
Forsayth NL v Northern Gold NL, unreported; FCt SCt of WA; Library No 940012; 20 January 1994
Fraser v Evans [1946] VLR 382
Hadley v Baxendale (1854) 156 ER 145
Harlow & Jones Ltd v Panex (International) Ltd [1967] 2 LI LR 509
Hughes v Hill [1937] SASR 275
Hungerfords v Walker (1990) 171 CLR 125
Jacob v Booth's Distillery Co (1901) 85 LT 262
Jones v Dunkel (1959) 101 CLR 298
Langdale v Danby [1982] 1 WLR 1123
Talley v Wolsey-Neech (1978) 38 P&CR 45 CA
Vitol SA v Phibro Energy AG (The Mathraki) [1990] 2 LI R 84
Warea Pty Ltd v Waterloo Industries Pty Ltd (1986) 66 ALR 537

MASTER SANDERSON: This is the first and second defendants' application for leave to rely upon certain affidavits in opposing the plaintiff's application for summary judgment. The affidavits in question are an affidavit of Garry Owen Frere, sworn 8 March 2000 and an affidavit of Justine Alexandria Magee, sworn 9 March 2000. The application arises in a slightly unusual fashion. The plaintiff issued these proceedings on 23 December 1999. The defendants entered their appearances and the second defendant applied for summary judgment on 4 January 2000 and the first defendants applied on 5 January 2000. The plaintiff applied for summary judgment on 11 January 2000. All summary judgment applications came on in chambers on 19 January 2000 and certain orders were made programming the matter through to hearing. At that stage only two affidavits had been filed. The first was filed by the first defendants and was an affidavit sworn by Adrian Christopher Griffin on 4 January 2000. In essence, all that affidavit did was annexe what was described as the "Sulphuric Acid Supply Deed". (There were three other annexures but, for present purposes, they are not relevant.) The plaintiff, for its part, filed an affidavit of Paul Ian Chapman, sworn 10 January 2000. Chapman swore that he believed the defendants had no defence to the plaintiff's claim and dealt in part with the plaintiff's claim for damages.
At issue between the parties was the interpretation of the Sulphuric Acid Supply Deed ("the Deed"). To background the present dispute I need to say something of the matters at issue between the parties on the summary judgment applications.
In its statement of claim, the plaintiff alleges, and it is admitted by the defendants, that on 24 August 1998 the parties entered into the Deed. Pursuant to the Deed the plaintiff agreed to sell, and the first defendants agreed to take delivery of, a certain quantity of sulphuric acid upon terms set out in the Deed.
The commencement date of the Deed was 1 October 1998. Pursuant to the provisions of the Deed the first defendants were to take delivery of sulphuric acid from time to time. For the second half of the first year of the contract period the minimum quantity of sulphuric acid to be taken by the first defendants was 95,000 tonnes. In fact, during that period the first defendant took only 57,687 tonnes. The plaintiff claims that this failure to take the required quantity of sulphuric acid was a breach of the Deed and as a consequence it suffered loss and damage. The loss and damage claimed by the plaintiff relates to costs associated with disposing of the sulphuric acid not taken by the first defendant. The second defendant guaranteed the first defendant's obligations under the Deed. Its liability is entirely derivative and it was properly joined to these proceedings only in its capacity as a guarantor.
The first defendants say that the Deed represented a "take or pay" agreement between the plaintiff and the first defendants. The first defendants say that having made payment for the untaken sulphuric acid they have met their obligations under the Deed and that they would not be liable for any damages as a consequence of costs incurred by the plaintiff in disposing of the sulphuric acid.
The plaintiff's position is that the Deed embodied a "take and pay" agreement. The plaintiff says that if the first defendants did not take the full 95,000 tonnes of sulphuric acid it was in breach of the Deed and liable to the plaintiff for damages. All parties approached the summary judgment applications on the basis that the outcome of each application depended on the construction of the Deed.
The matter came on for hearing on 29 February 2000 and was fully argued. At the conclusion of submissions I advised the parties that I would hand down my decision on 9 March 2000. On the afternoon of 8 March 2000 the affidavit of Frere was filed and the court was advised that prior to my decision being handed down both defendants would make an application, an oral application, to adduce further evidence. This duly occurred and the application was opposed by the plaintiff. I then programmed the matter so as to allow the parties to fully argue the question of whether or not the affidavits of Frere and Magee should be admitted into evidence.
There is one further matter which I should mention so as to provide a complete picture. When the court reconvened on 9 March counsel for both defendants sought leave to tender the further affidavit material. In the course of opposing the application, counsel for the plaintiff made the point that if I had reached the conclusion that the defendants' applications for summary judgment would succeed and consequently the plaintiff's application would fail, then there was no need for the further evidence and the appropriate course would be for me to deliver judgment. None of the parties wanted to go to the time and expense involved in fully arguing the question of adducing further evidence if it was irrelevant to the outcome of the applications. I then indicated to the parties that my reasons for judgment were complete and I had concluded the plaintiff should succeed. On that basis the defendants pressed their applications and the matter was programmed through to hearing.
In support of the applications for leave to adduce further evidence the defendants filed a further affidavit of Frere sworn 14 March 2000, an affidavit of Peter Kraj‑Krajewski sworn 15 March and an affidavit of David Brian Shaw sworn 16 March. The plaintiffs then filed a further affidavit of Chapman, sworn 23 March 2000. At the hearing the first defendants sought leave to rely upon an affidavit of Graham Ivan Anstee‑Brook, sworn 9 May 2000. The application for leave to rely on this affidavit was opposed by the plaintiffs. After hearing argument I indicated that I was prepared to allow the affidavit of Anstee‑Brook into evidence. The affidavit is well out of time - the programming orders that I made anticipated all affidavits being filed by mid March. However, the affidavit responds to certain queries made by the plaintiff's solicitors and its contents are not such as to require a reply from the plaintiffs. On that basis I was prepared to allow the affidavit into evidence.
The position of the defendants can be summarised in the following way. They say that subsequent to the hearing of the summary judgment application it became apparent that if the Deed, properly interpreted, had the effect contended for by the plaintiff then the Deed did not accurately reflect the agreement between the parties. The defendants say this would give rise to a claim for rectification or a right of action based in unconscionable conduct or estoppel. The defendants say these are all matters which would defeat the plaintiff's claim on summary judgment and that they should be permitted to put before the court evidence to support their position.
Anstee‑Brook is the solicitor in the firm representing the first defendants who has conduct of this file. He assumed conduct of the file on 24 December 1999, upon the departure of another solicitor from the firm. The thrust of his affidavit evidence is to the effect that at all times he was satisfied that a proper interpretation of the Deed favoured the first defendants' position. Neither he nor the solicitor dealing with the matter prior to Anstee‑Brook's involvement had turned their mind to the question of rectification of the agreement prior to the hearing on 29 February 2000. The evidence of Shaw is largely to the same effect. Shaw says, in his affidavit at par 5:
"It was not until after the applications had been argued that, after speaking to Mr Bennett [counsel briefed on behalf of the second defendant], I inspected the documents relevant to the drafting of the Deed and discovered that there was correspondence which demonstrated that the Plaintiff had agreed that the Deed was intended to operate as a 'take or pay' agreement. I therefore sought urgent instructions and prepared the affidavit of Justine Alexandria Magee which was sworn on 9 March 2000. Prior to preparing that affidavit, I had previously seen a copy of annexure 'JAM6', but had not inspected any other annexures to Ms Magee's affidavit."
Annexure "JAM6" to Magee's affidavit is a copy of a letter from solicitors Freehill Hollingdale & Page to the second defendant dated 27 March 1998. The letter encloses a draft of the Deed. It is difficult to see that viewing this letter and the draft Deed would, by themselves, give rise to any suggestion the defendants might have a claim for rectification of the Deed.
The defendants relied, in support of their applications, upon the decision of Singh v Crafter, unreported; FCt SCt of WA; Library No 8434; 15 August 1990. In this case, at first instance, the trial Judge had allowed the plaintiff (respondent) to re‑open his case at the conclusion of final addresses to prove damages. It was said that the granting of leave to re‑open was wrong, the trial Judge's discretion had miscarried, that leave to appeal should be granted and certain orders should be made on the appeal. The court, by a majority, declined to grant leave to appeal and dismissed the application.
Pidgeon J (who, with Wallace J, formed the majority) said (at 4):
"The appellant is seeking leave to appeal against the decision to re‑open. The grounds are set out in the reasons of Wallace J as are the full circumstances in which the original application was made. The normal rule in civil cases is stated in 17 Halsbury (4th Edition) at para 18:
'When the onus of proof on all issues is on one party, that party must ordinarily, when presenting his case, adduce all his evidence, and may not, after the close of his opponent's case, seek to adduce additional evidence to strengthen his own case.'
It is later stated in the text:
'There is a judicial discretion to allow further evidence to be called, even when it should have been adduced in the first place, where the judge considers it necessary in the interests of justice.' "
His Honour then goes on to examine the authorities quoted by Halsbury and other authorities referred to by Wolfe CJ in Watson v Metropolitan (Perth) Passenger Transport Trust [1965] WAR 88. His Honour concluded (at 8 ‑ 10):
"It is my view that this Court should follow the older authorities and that the effect of them is that there is a judicial discretion to allow further evidence to be called, even when it should have been adduced in the first place, where the Judge considers it necessary in the interests of justice. This in itself would have built into it the first restriction referred to by Wolfe CJ that a Judge should be cautious in admitting fresh evidence as injustice can be caused if the concept of the finality of the trial process is eroded. ...
When the evidence should be adduced is evidence to establish the plaintiff's liability it would be an important factor whether such evidence could by reasonable diligence have been discovered before, and it could in many cases, if not most cases, lead to an injustice to admit evidence of this kind, especially if it related to a substantial point of proof of the plaintiff's case. Nevertheless I do not consider that the authorities support the proposition that it is a mandatory requirement that the evidence could not by reasonable diligence have been discovered before.
If it is evidence that should have been adduced in the first place, then the reason why it is not adduced becomes a factor to consider. If it appeared that it was a deliberate decision as a matter of tactics not to have called the evidence in the first instance then that would be a ground not to admit it later. A party is bound by the way it chooses to conduct the trial and injustices could well result by intentionally changing the tactics. If, however, it was by reason of inadvertence then it would be a different matter and that could well be a ground to admit the evidence ... The term 'inadvertence' can, subject to the context in which it is used, have different meanings. In the present context I would use the term as meaning 'unintentional'. As I see the respondents' application to admit the evidence it was on the basis that it was an unintentional and in the circumstances excusable oversight not to have called this evidence on the question of damage. I have indicated that there is the discretion to admit the evidence; but it must be exercised in the interest of justice but that each case must be determined on its own facts within the general area I have indicated. As indicated by Malins VC (in Budd v Davison (1881) 29 WR 192) it is difficult to lay down any rule."
In addition to the Full Court decision in Singh v Crafter, the defendants also relied upon what was said by the High Court in Smith v New South Wales Bar Association (1992) 176 CLR 256. The facts of the case are important to understand the principle as stated by the High Court. Taken from the headnote, the facts were as follows:
"A member of the New South Wales Bar announced his appearance for a defendant in an assault case before the Local Court. His retainer was thereupon challenged by his opponent. The barrister told the magistrate that he was instructed by a named solicitor. The case was stood down for a short time, and during the adjournment the barrister was in fact briefed by the solicitor. The Bar Association instituted disciplinary proceedings against the barrister in the Court of Appeal, claiming that he had announced his appearance for the defendant without the intervention of an instructing solicitor and had not believed in the truth of his statement to the magistrate that he was instructed by the solicitor. The barrister gave evidence of a conversation in a car park in which he had told the solicitor that the case was listed for the following Tuesday and the solicitor had said that he was busy with other matters on that day. The solicitor gave evidence that he was sure that he had not spoken to the barrister about the case. The Court of Appeal rejected the barrister's account of the conversation, found him guilty of professional misconduct in that he did not believe on reasonable grounds that he was instructed to appear, and disbarred him. The Court of Appeal found that he had lied to the magistrate and to the Court of Appeal. Before the order was granted the barrister moved that the matter be re‑opened on the ground that there had been a mistake of fact on which the Court of Appeal had relied and sought leave to present further evidence, including evidence of the solicitor that there had been a car park conversation between them about another matter and evidence of his good character. The Court of Appeal allowed the matter to be re‑opened, but refused to receive the further evidence, and dismissed the application that its earlier order be set aside."
The appellant succeeded in his appeal, the High Court holding that not only should the Court of Appeal have allowed the matter to be re‑opened but that it should have admitted further evidence. The majority, Brennan, Dawson, Toohey and Gaudron JJ, put the position as follows at 266 ‑ 267:
"It is again necessary to distinguish between the considerations which may bear on a decision to re‑open and the processes involved in reconsideration once a case has been re‑opened. If an application is made to re‑open on the basis that new or additional evidence is available, it will be relevant, at that stage, to inquire why the evidence was not called at the hearing. If there was a deliberate decision not to call it, ordinarily that will tell decisively against the application. But assuming that that hurdle is passed, different considerations may apply depending on whether the case is simply one in which the hearing is complete, or one in which the reasons for judgment have been delivered. It is difficult to see why, in the former situation, the primary consideration should not be that of embarrassment or prejudice to the other side. In the latter situation the appeal rules relating to fresh evidence may provide a useful guide as to the manner in which the discretion to re‑open should be exercised. But those considerations bearing on re‑opening are not decisive of the question whether, a matter having been re‑opened by reason of error, further evidence can be called.
Not every case involving error will invite further evidence: it will depend entirely on the issue that is opened up. If the issue is one that invites further evidence, then, prima facie and subject to the ordinary rules of evidence, that evidence should be allowed. We say prima facie because there may be situations in which the particular evidence involved would cause embarrassment or prejudice such that, in the circumstances, it would be unfair to allow it."
It is interesting to note that none of the Justices make reference to Singh v Crafter (supra), although reference is made to the earlier decision of Watson v Metropolitan (Perth) Passenger Transport Trust (supra). Reference is also made by the court, apparently with approval (see 266), to the earlier English case of Barker v Furlong [1891] 2 Ch 172. In this case, after the defendant's case had closed, the plaintiff's counsel applied for leave to call as his witness a defendant whom he had expected to be called in support of his (the defendant's) own case. Justice Romer refused the application and said (at 184):
"The Plaintiffs' counsel asked me when he rose to reply to allow him to call this Defendant as his witness, because he had assumed that this Defendant would be called as a witness on his own behalf. Although most reluctant ever to exclude evidence, I did not accede to the application for this reason. In reply to my question, the counsel admitted that in closing his case without calling the Defendant, he had not been misled by anything falling from the other side to suppose that they would call him. This being so, it appeared to me that the Plaintiffs' counsel had, in the exercise of his judgment, preferred to close his case without calling the Defendant on the chance that the Defendant would appear in the box to support his own case, when he could be cross‑examined without the risk attending the calling of him as one of the Plaintiffs' witnesses; and it appeared to me that in a case like this, in granting the Plaintiffs' application after the Defendants' case had been argued and closed and a reply begun, I should be making a precedent which would, if established, lead to an improper amount of laxity in the conduct of a plaintiff's case."

Baker v Furlong is a clear case where counsel had taken a considered decision that, as a matter of tactics, he would not call certain evidence. There was no question of "inadvertence", to adopt the terminology used by Pidgeon J in Singh v Crafter. On the other hand, the decision of the High Court in Smith v New South Wales Bar Association (supra) appears to have been influenced to a large extent by the nature of the findings made by the Court of Appeal. The Court of Appeal made a positive finding that the barrister had lied, both to the Magistrate and to the Court of Appeal. Given the significance of that positive finding, the court clearly felt that the appellant should not only have been allowed to re‑open his case but to present further evidence. The failure to present this evidence at the original hearing could only be said to be "inadvertent" to the extent that, if the appellant had appreciated the significance of the findings to be made against him he would have called the evidence. In other words, the significance of the outcome of the proceedings is a factor to be taken into account when determining whether further evidence should be admitted.
Counsel for the plaintiff submitted that, given the nature of the evidence presented by Shaw and Anstee‑Brook in their affidavits, it was open to the court to conclude that both solicitors had in their possession documents which allowed them to make a decision whether or not to raise the matters they now seek to put before the court. In this sense it was said that the solicitors had taken a deliberate decision not to raise these matters and to rely upon the question of interpretation. I did not understand counsel to suggest that either of the two solicitors was misleading the court when they said that they did not turn their minds to the question of what other defences might be open to the plaintiff's claim. Rather, it was submitted that the decision to rely just upon interpretation of the Deed and to leave any other possible defences to one side was a deliberate calculated decision not one which could be said to amount to inadvertence.
In the course of his submissions, counsel for the plaintiff sought leave to cross‑examine Shaw, Anstee‑Brook and Frere in relation to their affidavits. Counsel explained that he wished to ascertain the extent of the knowledge of each of these individuals in relation to defences which might be open to the plaintiff's claim and the level of knowledge they had prior to the plaintiff's application being heard. I refused leave to cross‑examine the deponents. It is rare to allow cross‑examination of deponents in interlocutory matters. Leave to cross‑examine can be given but in my view it should only be given in special circumstances. Here, the deponents had put their evidence on oath. If they failed to address matters or explain precisely when certain documents came into their possession, then, no doubt, adverse inferences could be drawn and those adverse inferences might well undermine the defendants' application. But I could see little benefit in a wide ranging cross‑examination dealing with matters of credit and which was unlikely to take the matter much beyond what was contained in the affidavits. For these reasons I rejected the plaintiff's application for leave to cross‑examine.
Counsel for the plaintiff also relied upon case management principles. It was submitted the matter had been properly programmed, every opportunity had been given to the defendants to put their defences and they had failed to do so. To now allow further evidence to be led would run counter to case management principles and to adopt the words of Justice Romer, would be setting a precedent which would, if established, lead to an improper amount of laxity in the conduct of a plaintiff's case. Inevitably, this submission was met by the defendants' referring to The State of Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146. Counsel referred to what was said by Kirby J (at 166):
"Case management, and procedural directions, were means to the attainment of justice. They were not ends in themselves. Nor were they to be applied rigidly so as to forbid pleading amendments, adjournments or other indulgences where these were necessary for the attainment of justice."
Counsel for the defendants also pointed out that in this case proceedings had moved with remarkable expedition. The writ was issued on 24 December 1999 and the applications for summary judgment were heard on 29 February 2000. What is more, this is not a case which is without significance - the plaintiff's claim, although not fully formulated, seeks damages in the region of $1,400,000. Moreover, the contract between the plaintiff and the first defendants is ongoing. It may be the case, although this did not emerge clearly from the evidence, that further difficulties will arise and further damages claims will be made by the plaintiff. The way in which these damages claims are handled will be determined by the final outcome of these proceedings.
Dealing first with the submissions in relation to case management, I am satisfied that this is not a case where case management principles would serve to weigh against the defendants' applications. As all parties acknowledged, the case has moved with remarkable speed. Even if further evidence was admitted, it would only require a limited time for the plaintiff to respond to that evidence and a time could then be set for further submissions. I anticipate that, depending on the availability of counsel, the matter could be heard before mid June and a decision delivered before the end of June. In the absence of some particular prejudice to the plaintiff, and none has been alleged, case management principles could not serve to defeat this application.
It is relevant to note that the applications by the defendants to lead further evidence are made in the context of a summary judgment application. Singh v Crafter (supra) and Baker v Furlong (supra) both involved an application to re‑open by the plaintiff after the defendant had closed its case. The applications were made in the context of a full trial. In Smith v New South Wales Bar Association (supra) the application to re‑open was made after a hearing before three Judges of the Court of Appeal. The summary judgment process is far less formal and it follows from that, in my view, greater flexibility is warranted. That counts very much in the defendants' favour.
I also accept that the defences now raised were not put due to inadvertence on the part of the defendants' solicitors. It must be said that it is somewhat difficult to understand why the defendants' solicitors did not turn their mind to questions such as rectification, unconscionable conduct and the like when the plaintiff's application for summary judgment was made. It is not difficult to see that such considerations would not have affected an application for summary judgment by the defendants. After all, their solicitors took the view that the interpretation of the Deed they favoured was the one which would be accepted by the courts. But when the application was made by the plaintiffs it was more or less an invitation to the defendants to put to the court all possible defences to the plaintiff's claim. But, having said that, I accept, on the basis of the evidence provided by Shaw and Anstee‑Brook, that they did not turn their minds to this question.
In reaching that conclusion, I adopt what was said by Justice Pidgeon in Singh v Crafter (supra) that "inadvertence" can have a number of different meanings. This does not appear to be a case where the defendants' solicitors overlooked certain evidence, as appears to have been the case in Singh v Crafter. But I could not conclude that the decision not to call the evidence was a deliberate tactical move, as was the case in Baker v Furlong. Rather, it seems to me that for one reason or another no consideration was given to the question of other available defences. In that sense I would suggest here "inadvertence" means "overlooked".
In the end, I am satisfied that the interests of justice require this further evidence be admitted. Any inconvenience and embarrassment to the plaintiff can be compensated by an order for costs.
I will hear the parties as to the precise form of the orders and as to costs.