Perball Pty Ltd v ANZ McCaughan Ltd A17/1997 [1997] HCATrans 421 (11 December 1997)

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Adelaide No A17 of 1997

B e t w e e n -

PERBALL PTY LIMITED

Applicant

and

ANZ McCAUGHAN LIMITED

Respondent

Application for special leave to appeal

TOOHEY J

GUMMOW J

KIRBY J

TRANSCRIPT OF PROCEEDINGS

FROM ADELAIDE BY VIDEO LINK TO CANBERRA

ON THURSDAY, 11 DECEMBER 1997, AT 10.19 AM

Copyright in the High Court of Australia

MR W.S. DeGARIS: May it please the Court, I appear for the applicant in this matter. (instructed by W.S. DeGaris & Co)

MR W.H. NICHOLAS, QC: May it please the Court, I appear with my learned friend, MR N.G. ROCHOW, for the respondent. (instructed by Knox & Hargrave)

TOOHEY J: Yes, Mr DeGaris.

MR DeGARIS: Your Honours, we do not intend to submit any further oral argument, and we rely on the summary of argument already presented to the Court, and the reply.

TOOHEY J: Mr Nicholas, in those circumstances, we would like to hear from you, if we may.

MR NICHOLAS: If the Court pleases. Your Honours, in our submission, this application involves no matter of general importance at all. The decision of the trial judge, which was upheld by the Full Court, turned on particular findings of fact. No loss was proved, and the trial judge and the Full Court, in our submission, were entirely correct in the way they dealt with the material before them.

GUMMOW J: Is there not something odd, thought, Mr Nicholas, about the Full Court in the first instance having made the findings it did, and then sent the matter back for assessment, and it comes back with a nil return? If the Full Court had thought there was to be a nil return, no doubt it would not have sent it back.

MR NICHOLAS: The answer to that is this: Your Honour will go back to the order that the first Full Court made. You will find it conveniently set out at page 306 of the book at line 9. There the Full Court said this:

"That there be a finding that the plaintiffs acted in reliance upon the negligent mis-statement found by the trial judge, in entering into the foreign currency loan transaction and that the defendant is liable to the plaintiffs for damages for the loss sustained in consequence of the negligent mis-statement."

But, as your Honours appreciate, of course what the first Full Court was concerned with was whether or not there was sufficient evidence as to establish reliance upon the particular representation identified there. What the first Full Court did, and was asked to deal with on that occasion, was the representation which they found to be relied upon which was relevant to the entry into the particular transaction. It was then sent back, as your Honours know, for assessment of damages. That, of course, depended upon whether or not any loss could be established. What the trial judge found on the assessment hearing, and what the second Full Court upheld, was that the applicants failed to prove the case that they set out to make. The case that they set out to make - - -

GUMMOW J: I know that, Mr Nicholas. What I am trying to get at is, at the very first trial, before the first Full Court, the proceeding which is the subject of the first appeal of the Full Court, were the issues at that first hearing limited in some way so that there was no material at that stage which would go to any assessment of damages if liability was established?

MR NICHOLAS: Is your Honour asking me in relation to the first Full Court?

GUMMOW J: No. The first Full Court was dealing with a trial proceeding, right?

MR NICHOLAS: Yes, your Honour.

GUMMOW J: Were the issues at that first trial proceeding limited in such a way that there was no issue before the first judge as to any quantum of recovery? Was the issue simply one of the existence of liability?

MR NICHOLAS: No, your Honour. The first trial dealt with all issues.

GUMMOW J: Yes. That is the problem.

TOOHEY J: It had to, did it not, in the sense that under the Hedge Contract claim there was an award of damages, a substantial award of damages, and the balance of the claim failed, at least failed at to recovery, because it was held to have been no reliance.

MR NICHOLAS: Yes, your Honour.

TOOHEY J: Then it goes on appeal to the Full Court. The Full Court says, "Yes, there was reliance". It goes back; and then that explains the order made on page 306. It is hard to imagine that it was to go back on the footing that the plaintiff had suffered no loss, although I understand your argument to be that was really just an open question at that stage, was it?

MR NICHOLAS: It is an entirely open question. If your Honour comes to the way in which the case was proceeded before on the assessment question, you will see the competing argument set out at page 213 of the book. If I can take your Honours, firstly, to the way in which the plaintiffs' case proceeded, line 8:

The plaintiffs' case at trial, and as it was pursued in the argument before me following the decision by the Full Court, was that if the negligent misrepresentation which I found to have been made had not been made, they would not have entered into the loan transaction with the defendant, and indeed, would not have taken up an off-shore loan at all. As I have already noted, the plaintiffs maintained that in that circumstance they would have remained "on-shore" in the sense that they would have refinanced their existing debt levels by restructured borrowings from sources within Australia. The plaintiffs' case is that if they had done so, making a comparison of their situation as it would then have been, they would have been better off to the extent of approximately $1.8 million. They invited me to assess damages in that amount.

The difficulty with that approach is that I am not satisfied with the starting point, namely, that if Mr George Copping had not been misled as to the terms of the transaction, that would have meant on the balance of probabilities, that he would have looked to alternative methods of refinancing the farming operations from on-shore as opposed to off-shore sources.

Your Honours, that was the way, also, in which Mr Justice Lander, at page 317 understood how it was that the plaintiffs conducted their case. If you would go to line 10 on page 317 you will see how the case was run:

Mr Tilmouth argued that as the first Full Court had found that the appellant Perball Pty Ltd was induced to enter into the contract by the negligent mis-statement of the respondent the measure of damages to which his client Perball Pty Ltd was entitled ought to be assessed upon the basis of restoring the appellant to the position in which the appellant was before the appellant was induced to enter into the contract. The object of tortious damages is "to place the plaintiff in the position he would have been but for the commission of the tort":

The authorities are referred to, an his Honour proceeds:

However it was not the appellants case at trial or even on appeal that but for the misrepresentation the appellant or appellants would have done nothing. That was not the way the appellant Perball Pty Ltd sought to have damages assessed at trial. Indeed the appellant sought to have damages assessed upon the basis that it would have, but for this representation, refinanced by borrowing on-shore, which borrowings it would have been capable of servicing. Contrary therefore to the primary submission made by Mr Tilmouth the appellant sought damages upon the basis that it was entitled to the difference between what this transaction ultimately cost the appellant and what it would have cost the appellant assuming it had re-financed on-shore. If that was the correct measure, approached that way, the appellant needed to establish on the balance of probabilities that it would have and could have re-financed on-shore, and could have serviced the on-shore borrowings without the need to sell land. In the end, of course, the appellant failed because the learned trial judge concluded that the appellant would not have re-financed on-shore. Implicit in His Honour's findings is the finding that the appellant would have entered into a similar transaction to that which it did enter into with the same disastrous consequences when the Australian dollar weakened against the Swiss franc.

TOOHEY J: Is that statement, or those statements, at odds with the order made by the Full Court?

MR NICHOLAS: No, your Honour, with respect.

TOOHEY J: Which remitted the matter to the trial judge on the footing that there had been reliance?

MR NICHOLAS: Yes, your Honour, and only that. So, that took you to the point, with respect, as to examine whether or not there was any material which enabled a determination that there was loss which would result in, obviously enough, an award of damages. The way in which the case was presented, quite consistently with the principles in Gates, was that the appellant would have made his borrowings onshore, and the findings of fact made were that was simply not the case. Indeed, from the evidence of the principal witness, Mr George Copping, the court found that not only would they have not refinanced onshore, quite to the contrary, they would as a matter of fact taken a foreign exchange loan and thus exposed themselves to the risks, et cetera.

Your Honour, it has a second aspect about it, of course, is that in relation to the representation found to have been negligently made, the finding of the court trial was that that representation in fact had been fulfilled. The court came to that view because - and with regard, of course, to the principle in Kizbeau in this Court - it was demonstrated on the facts that the representation that had, as it was found, induced the applicant to enter into this particular transaction, was in fact made good in the performance of the contract. As to this, may I take your Honours firstly to page 213 where you will see that that was an issue which we raised before the trial judge. At page 213 from the trial judge's judgment, at line 1, is set out the several submissions that we put.

GUMMOW J: Can I ask you this, Mr Nicholas; at the second hearing, before Justice Perry, was there further evidence?

MR NICHOLAS: No, your Honour, there was not.

KIRBY J: Is that not against you, because does that not fit in with the fact that the Full Court sent the matter back to assess damages flowing from the negligent misrepresentations which they had found and to enter judgment for those damages? So that the whole contemplation seems to have been that it would go back for that purpose, and yet it went back - it would have been futile to send it back for nil damages.

MR NICHOLAS: But, your Honour, what was sent back and what was intended to be done, having regard to the way in which the matter proceeded before the first Full Court was to leave it to the trial judge, first of all, to determine whether or not there had been any loss, and one could not, obviously enough, proceed to quantify damages unless that had been found. It was not the business of the first Full Court to embark upon that exercise.

TOOHEY J: But in those circumstances a finding that there had been no loss, is that not, in effect, a finding that there was no reliance? If that be right, how does that accord with the order which the Full Court made?

MR NICHOLAS: It worked out this way, with respect - and if I could, perhaps, endeavour to answer your Honour's question by recalling what the submissions were that we put to the trial judge, the ones at page 213. We submitted this: that there should be no award of damages; we submitted that the plaintiffs failed to prove what they would have done had they not relied on the representation - pausing there, that was not a matter which was agitated before the first Full Court. Secondly, that there should be a finding that if the plaintiffs had not relied on the representation, the likelihood is that they would still have borrowed substantially the same amount in a foreign currency loan. That was not a matter which was agitated before the first Full Court, nor could it properly have been. Thirdly, your Honours, they put the further argument - and this is the Kizbeau matter - that no loss or damage was proved by reason of the fact that in the working out of the transaction the misrepresentation was made good. Assume for the moment that all one was left with was this particular transaction, then on the facts found the representation as presented was, in the working out of the arrangement, in fact, honoured by the respondent. Thus, it enabled it to be properly held that there was no loss on that score.

GUMMOW J: Can I just ask you this, Mr Nicholas, what do you say as to the relief sought from this Court on any appeal here? It seems to be set out at page 365, and it seems to seek an order from this Court that the matter be remitted to assess damages on a particular basis. Have you page 365, paragraph 3?

MR NICHOLAS: Yes, I have it, your Honour.

GUMMOW J: What do you say about that in relation to what you have just been putting, as to that bases?

MR NICHOLAS: First of all - - -

GUMMOW J: I am worried about what would happen in this Court if leave were granted to appeal, what would the end result be up here?

KIRBY J: Maybe we could confine it to the particular issue of interpreting what the first Full Court meant and send it back once again to the Full Court to deal with it in that way.

MR NICHOLAS: Your Honours, stripped to the bone, this really is an invitation to the High Court to construe the order of the first Full Court in this case. That is what it really comes down to, with the greatest of respect.

KIRBY J: Yes, but if the second Full Court did not get it right, and if the second Full Court went ahead and did not assess damages as appears to have been indicated by the order of the first Full Court, then a serious injustice has been done here. The party has litigated; got its victory; gone back and got nothing. And, you called no extra evidence. So, all the evidence was there before the first Full Court. If your argument had succeeded, that would have been a reason not to send it back to the second Full Court.

MR NICHOLAS: No, with great respect, your Honour. What is to be remembered is the findings of the trial judge in relation to the proposition that the applicants would have acted in a particular way. That turned solely on the trial judge's assessment of the entirety of the evidence from the various individuals that was before him. No appellate court can interfere with that, with the greatest respect, and nor could the second Full Court, and nor did they seek to do so. Indeed, as the quite large slabs of evidence included in Mr Justice Lander's evidence indicated, the second Full Court were entirely satisfied that the conclusions as to fact were well supported by the evidence. In answer to your Honour Justice Gummow's question, if it comes up to this Court then it will not be any use sending it back to the Full Court of South Australia. They are not equipped, and were never equipped, to embark upon a determination as to the facts as to the course of conduct that the applicants would have taken otherwise, and that then sends you back to the trial judge who, there being no error indicated in his factual findings, brings you back to where you are, with the greatest of respect.

TOOHEY J: I can see the force of that. There is difficulty with the relief sought by the applicant in that paragraph 3 because it would seem, if that was the basis of the notice of appeal, to leave these questions to be raised afresh.

MR NICHOLAS: They have to be, with respect, your Honour. No one but the trial judge can deal with that, and he dealt with it. It is not a question of new evidence or fresh evidence; it was sent back to the trial judge who had had a six-week trial at the first round to come to a view, in light of the way the plaintiffs presented their claim for damages, as to whether or not the loss which they claimed to have been made could be established. They found that it could not be, because they could not accept - or rather the trial judge did not accept that the plaintiff satisfied him that they would have financed onshore instead of either doing nothing, or going offshore. That is a straight application of Gates, with the greatest of respect, your Honour. As I put to your Honours, the whole thing overlooks, in any event, the effect of the findings in relation to the Kizbeau aspect, given the misrepresentation being made good in the working out of, therefore, no loss flowed from the misrepresentation. That is what his Honour also found.

Either way one looks at it, in the assessment task, with no overhang from the first Full Court, the plaintiffs simply failed on the facts. I can take your Honours to further material to make that perfectly clear, but we would say that in any event it is a futile exercise to bring it up to this Court because it has an inevitable progress back down again to the only possible forum that can deal with these matters, namely the trial judge, and nobody has said that he was wrong on his findings of fact. My submission to your Honours is that this discussion has made it plain that this application involves no matter of general importance; it involves no matter beyond the four corners of this particular case. Those are our submissions, your Honour.

TOOHEY J: Thank you, Mr Nicholas. Mr DeGaris, you did say at the outset that you relied upon your written reply. Do you adhere to that position or do you want to say anything orally in response?

MR DeGARIS: No, there is nothing further I wish to add, your Honour.

TOOHEY J: Yes, thank you.

The decision of the Full Court is not attended with sufficient doubt to warrant the grant of special leave to appeal. Special leave is therefore refused.

MR NICHOLAS: I would ask for an order for costs, if your Honour pleases.

TOOHEY J: Mr DeGaris, do you wish to say anything in response to that application?

MR DeGARIS: We cannot resist that, your Honour.

TOOHEY J: It will be refused with costs.

AT 10.43 AM THE MATTER WAS CONCLUDED