Zafiriou v St-Gobain Administration Pty Ltd

[2013] VSCA 383

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S APCI 2013 0118

ARTHUR ZAFIRIOU

v

SAINT-GOBAIN ADMINISTRATION PTY LTD

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JUDGES:	OSBORN and BEACH JJA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	29 November 2013
DATE OF JUDGMENT:	29 November 2013
MEDIUM NEUTRAL CITATION:	[2013] VSCA 383
JUDGMENT APPEALED FROM::	[2013] VSC 377

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PRACTICE AND PROCEDURE - Application to rely on fresh evidence - Documents not discovered before judgment - Application to add ground of appeal dealing with late discovered material - Costs - Application for leave to appeal in respect of costs order - Security for costs.

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APPEARANCES:	Counsel	Solicitors
For the Appellant	Mr G H Golvan QC with Mr R A Millar	Macpherson + Kelly
For the Respondent	Mr C B O’Grady with Mr A R McNab	Peter Vitale

OSBORN JA:

1. I will ask Beach JA to deliver the first judgment.

BEACH JA:

1. On 26 October 2010, Mr Arthur Zafiriou was dismissed from his employment with Saint-Gobain Administration Pty Ltd.  Upon his termination, Mr Zafiriou received a payment in lieu of four weeks’ notice.  Mr Zafiriou then commenced proceedings against Saint-Gobain alleging that his termination and payment in lieu of notice was in breach of the contract of employment between the parties. 

1. On 24 July 2013, following a 12 day trial, Emerton J dismissed Mr Zafiriou’s proceeding.  On 26 August 2013, her Honour ordered Mr Zafiriou to pay Saint-Gobain’s costs of the proceeding on a party party basis until 9 December 2011, and thereafter on an indemnity basis. 

1. On 7 August 2013, Mr Zafiriou filed a notice of appeal against the judgment of Emerton J delivered on 24 July 2013.  The notice of appeal contains 14 grounds and seeks orders that the judgment below be set aside and judgment be entered for Mr Zafiriou ‘for the relief sought at first instance’.

1. Before the Court this morning there are three applications:  first, an application by Mr Zafiriou for leave to rely on fresh evidence, namely a PowerPoint slide presentation identified as Exhibit RJ2 to the affidavit of Robert Jackson sworn 11 October 2013, and then to add a ground of appeal dealing with this material;  secondly, an application by Mr Zafiriou for leave to appeal against the costs order made on 26 August 2013;  and thirdly, an application by Saint-Gobain for security for costs of Mr Zafiriou’s appeal.

The fresh evidence and new ground of appeal application

1. A significant issue between the parties at trial was whether Mr Zafiriou was terminated because his position had been made redundant.  Mr Zafiriou alleged that his position had been so terminated and that he was therefore entitled, not merely to four weeks’ pay in lieu of notice, but rather to a termination payment of an amount in excess of $744,000.  On the other hand, Saint-Gobain’s case was that Mr Zafiriou was terminated because of unsatisfactory work performance and he was therefore only entitled to the four weeks’ pay in lieu of notice.

1. In dismissing Mr Zafiriou’s claims, her Honour held that Mr Zafiriou was terminated because of genuine concerns held by Saint-Gobain’s managing director, Mr Chaur, about Mr Zafiriou’s ability and preparedness to embrace Mr Chaur’s management initiatives, and to work collaboratively with Mr Chaur and other senior managers to implement them.  Those concerns were held by her Honour to include Mr Zafiriou’s performance in managing DIFOT (delivery in full on time) issues and Mr Zafiriou’s willingness to participate constructively in the reporting and accountability regime that Mr Chaur had put in place.[1]  In making these findings, her Honour rejected Mr Zafiriou’s case that he was retrenched or had been made redundant. 

   [1]Zafiriou v Saint-Gobain Administration Pty Ltd [2013] VSC 377 (‘Reasons’). [197].

1. An issue at trial between the parties concerned Mr Zafiriou’s performance in relation to, and management of, DIFOT complaints made by Blackwoods, a major customer of Saint-Gobain.  Mr Zafiriou’s case on this issue was that, properly understood, any concern Mr Chaur had in relation to Mr Zafiriou’s handling of Blackwoods’ complaints was groundless and could not have justified Mr Zafiriou’s termination.  Saint-Gobain’s case was that irrespective of the merits of any dispute between it and Blackwoods, Mr Zafiriou’s performance more generally entitled it to terminate his employment on four weeks’ notice.  Mr Zafiriou’s response to this was that the alleged concerns that Mr Chaur had about Mr Zafiriou’s work performance were contrived to conceal the true reason for his termination – namely, redundancy.

1. On 13 August 2013, after Mr Zafiriou’s notice of appeal had been filed, Mr Zafiriou’s solicitor came into possession of a set of PowerPoint slides titled ‘Blackwoods December 2010’.  Mr Zafirou contends these slides were part of a PowerPoint presentation made by Saint-Gobain to Blackwoods in December 2010, the purpose of which was to answer the various complaints made by Blackwoods.  On the other hand, Saint-Gobain puts in issue the question of whether the slides were actually used at the presentation.  That said, the PowerPoint slides were not discovered by Saint-Gobain at any time prior to judgment – this notwithstanding efforts made by Mr Zafiriou’s solicitors to obtain discovery of them, including obtaining an order from Lansdowne AsJ that Saint-Gobain make discovery pursuant to r 29.08 of PowerPoint slides presented during the Blackwoods’ meeting of December 2010 attended by Saint-Gobain’s senior managers in relation to performance complaints made by Blackwoods. 

1. Mr Zafiriou now seeks leave to rely on fresh evidence, namely the PowerPoint slides.  In addition, he seeks to add a further ground of appeal in relation to this material in the following terms:

Had the appellant been in the position to tender the PowerPoint slide presentation as an exhibit at the trial there was a significant prospect that the trial judge would have found, and the Court of Appeal should determine, that Mr Chaur did not have legitimate concerns about the performance of the appellant to justify his termination as performance based, by reason of alleged delivery complaints made by Abrasive’s major customer, Blackwoods.

1. If permitted to rely on this material and to add this ground, Mr Zafiriou would contend that so-called concerns about his work performance would be seen to be without merit – making it more likely that he was terminated as part of a redundancy plan.

1. Much has been written in the submissions of both parties as to the principles concerning the admission of fresh evidence following the conclusion of a trial and the admission of fresh evidence on appeal.  Some of what has been written appears to conflate those issues with the question of whether or not Mr Zafiriou should be permitted to put before the court that hears his appeal the PowerPoint presentation slides which ought to have been discovered before trial.  Specifically, amongst a number of submissions made by Saint-Gobain, is a submission that the information in these slides can be found in other documents that were in fact discovered by it prior to trial and therefore Mr Zafiriou should not be permitted to seek to introduce this material now.

1. In my view, none of this is to the point in the present application.  There was a failure by Saint-Gobain to make discovery.  Mr Zafiriou should be given the opportunity to put the material which should have been discovered before the court that hears his appeal for the purpose of contending that there is a relevant prospect that had this material been discovered a different result may have been achieved.  While Saint-Gobain contends that the proposed ground is hopeless in the light of the trial judge’s reasons, I am not persuaded that the point is so unarguable as to deprive Mr Zafiriou of raising it during the course of his appeal.  Any question of whether the PowerPoint slides are actually fresh evidence and related issues can be left for resolution by the court that hears this appeal.

1. It follows that I would permit Mr Zafiriou to amend his notice of appeal to add the new ground sought, and also to put before the Court of Appeal the material which supports this ground.

The application for leave to appeal the costs order

1. The proposed notice of appeal in respect of the application for leave to appeal against her Honour’s costs order made on 26 August 2013 contains four grounds and seeks an order that the order below be set aside.  Specifically, complaint appears to be made about her Honour’s ordering of indemnity costs after 9 December 2011.  Complaint also appears to have been made more generally in respect of an alleged failure to take into account Saint-Gobain’s ‘conduct of the proceeding’.

1. In my opinion, the application for leave to appeal the costs order should be referred to the court that hears the main appeal.  In the event that Mr Zafiriou succeeds on the appeal, the costs order made below will fall away.  In the event that Mr Zafiriou fails in the appeal, the court that hears the appeal will be in a much better position than this Court to determine whether or not there is any arguable error in the exercise of her Honour’s discretion.  In my view, it would not be an appropriate use of court resources for this Court to embark on an enquiry into issues that may be moot.

1. For these reasons, I would refer paragraph 2 of Mr Zafirio’s summons filed 11 October 2013 to the Court that hears the appeal from her Honour’s orders of 24 July 2013.

The security for costs application

1. Rule 64.24(2) of the Supreme Court (General Civil Procedure) Rules 2005 provides:

The Court of Appeal may in special circumstances make an order that security be given for the costs of an appeal. 

1. The grant of an order for security of costs is discretionary.  The matters that bear upon the exercise of the discretion include:

(a)       the prospects of success on the appeal;

(b)      the risk that a costs order would not be satisfied because of the appellant’s impecuniosity;

(c)       whether the making of an order would be oppressive in that it would stifle a reasonably arguable claim;

(d)      whether any impecuniosity of the appellant arises out of the conduct complained of;

(e)       whether there are other aspects of public interest which weigh in the balance against such an order;  and

(f)       whether there are any other particular discretionary matters peculiar to the circumstances of the case.[2]

[2]See Love v Roads Corporation [2012] VSCA 269, [12], and the authorities referred to therein.

1. Saint-Gobain seeks security for costs in the sum of $86,480.  This application is supported by material from a cost consultant as to the amount of costs which are said to be likely to be incurred.  However, at least in one respect, the amount claimed is excessive: the amount claimed appears to be based on an assumption that the appeal will take two days.  Having regard to the modern way in which appeals are conducted, it would be extraordinary if this appeal took more than one day.

1. In his affidavit sworn 1 November 2013, Saint-Gobain’s solicitor, Mr Vitale, deposes that he was ‘not satisfied’ that the content of a confidential affidavit with which he had been provided sufficiently addressed his concerns that Mr Zafiriou would be unable to meet any order for costs made against him in the appeal.

1. On the other hand, Mr Zafiriou’s solicitor, Mr Jackson, has sworn an affidavit deposing on information and belief to Mr Zafiriou’s current employment situation and Mr Zafiriou’s interest in two properties in Cassowary Street Doncaster East.  Mr Zafiriou’s equity in one of these properties (66 Cassowary Street) is said to be at least $354,000.  This morning, senior counsel for Mr Zafiriou, on behalf of his client, proffered an undertaking by his client not to dispose of or further encumber 66 Cassowary Street. 

1. Both sides make competing claims about the strength of Mr Zafiriou’s appeal.  Mr Zafiriou’s side assert that the appeal has strong prospects of success.  Saint-Gobain’s side assert to the contrary.  It is not possible, nor appropriate, on the limited argument that has been had before us, for one to make any definitive pronouncement about prospects of success.  That said, the judgment below appears logical, detailed and well reasoned:  it does not have any of the hallmarks of a judgment that looks like it will easily be overturned in any significant respect.  Further, none of the grounds of appeal leap out as being of any great strength.  While Mr Zafiriou might be dissatisfied with the result, it may well be that the result was one that her Honour was entitled to arrive at without any error being shown. 

1. All of that said, in my view there are no special circumstances justifying an order for security for costs to be made in this case.  While I am not persuaded that the appeal in this case has any great strength, equally I am not persuaded that it is so hopeless as, when taken with other matters, to justify an order for security for costs.  Additionally, I think that the failure to discover the PowerPoint presentation slides is a matter that tells against an exercise of discretion to grant security for costs in this case.  Further, the material does not persuade me, in the light of the undertaking given this morning, that there is any significant risk that Mr Zafiriou will be unable to pay an order for the costs of this appeal should he ultimately be unsuccessful.

1. Taking all of these matters together, I am unpersuaded that an order for security for costs should be made.  I would refuse this application.

Conclusion

1. In my view, Mr Zafiriou should have leave to add the ground of appeal set out in paragraph 1 of his summons filed 11 October 2013.  The parties should then be entitled to place before the court that hears the appeal the material relevant to this ground.  The application for leave to appeal the costs order below (paragraph 2 of Mr Zafiriou’s summons filed 11 October 2013) should be referred to the court that hears the main appeal.  Saint-Gobain’s application for security for costs should be dismissed.

OSBORN JA:

1. I agree, subject only to the following.  Although there is evidence from the respondent’s officers explaining how it came about that the documentation which the appellant now seeks to place before the Court was not discovered prior to trial either in accordance with r 29.04 or pursuant to an order made under r 29.09 of the rules of Court, that explanation does not demonstrate that the documents in issue were not material to facts in issue between the parties and in particular the appellant’s case.

1. On the whole of the evidence before the Court, I am satisfied that in strictness they should have been discovered (if only by identifying such documents as having formerly been in the possession of the respondent) and that the respondent did not give discovery in accordance with its corporate obligation.  In consequence, the appellant should be allowed to rely upon that material, and bring it before the Court that hears the appeal. 

1. I am also of the view that the fact that the judgment the respondent seeks to uphold was obtained in these circumstances is a material factor bearing on the Court’s discretion with respect to the security of costs.

1. Even if I did not share the view which Beach JA has expressed that the material does not demonstrate that there is a significant risk that Mr Zafiriou will be unable to pay an order for costs of the appeal, should he ultimately be unsuccessful, it seems to me that the circumstance of inadequate discovery does give rise to a particular discretionary matter of the type referred to in Love v Roads Corporation[3] and is sufficient to mean that what might otherwise have been regarded as special circumstances would not justify an order for security for costs in this particular case.

   [3][2012] VSCA 269.

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