Effem Foods Pty Limited v Lake Cumbeline Pty Limited and ORS S136/1997 [1999] HCATrans 1 (27 January 1999)

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No S136 of 1997

B e t w e e n -

EFFEM FOODS PTY LIMITED trading as UNCLE BEN'S OF AUSTRALIA

Appellant

and

LAKE CUMBELINE PTY LIMITED

First Respondent

IDOBOOK PTY LIMITED

Second Respondent

PETER HORROBIN

Third Respondent

RICHARD SANDS

Fourth Respondent

RAYMOND PRIDMORE

Fifth Respondent

For Mention

GLEESON CJ

(In Chambers)

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON WEDNESDAY, 27 JANUARY 1999, AT 10.17 AM

Copyright in the High Court of Australia

______________________________

MR D.F. JACKSON, QC: If your Honour pleases, I appear with my learned friend, MR R.M. SMITH, SC, for the appellant. (instructed by Deacons Graham & James)

MR J.D. HEYDON, QC: I appear with MR J. STOLJAR for the respondents. (instructed by Blake Dawson Waldron)

HIS HONOUR: The reason for arranging for this matter to be mentioned this morning was simply so that I could inquire about some practical aspects of the way in which the hearing of the appeal will proceed. It will, presumably, be unnecessary for any directions to be made but I would just like to have a clear idea myself and be able to give the other members of the Court who are sitting on the appeal an idea as to the way in which the time on the two days allotted next week will be occupied.

Mr Jackson, as I understand it, your arguments in support of your appeal look as though they are likely to take rather less time than Mr Heydon's arguments in support of his notice of contention.

MR JACKSON: Yes. Your Honour, could I just say this: our appeal involves relatively narrow issues and it will not be necessary to go beyond or perhaps much beyond the findings which are in volumes 1 and 2 of the appeal book, they are the formal documents and the judgments and so on. The order of the Full Court that we appealed from is one where the appeal was allowed in part but otherwise dismissed and the respect in which it was allowed involved three alleged breaches of section 52 of the Trade Practices Act and what we contend, if I can put it roundly and shortly, your Honour, is this, that the Full Court erred in taking the view that the judge's process of reasoning in failing to find the representations had been made were somehow flawed. But, secondly, we would say that in any event it was not just a case where the issue was representation or no, but it was one where the respondents had failed on other issues essential to the claim that in consequence it was wrong to order a new trial in any event.

So, the argument on that, your Honour, we would expect to take perhaps the morning of the first day; perhaps a little less. I say "perhaps the morning" because there are three representations involved and, as your Honour may have seen from our written submissions that have been filed, there are perhaps somewhat different issues in some respects in relation to each.

HIS HONOUR: But, presumably, you will not be concerned to support the findings on reliance other than to seek to use them in support of an argument that the course taken by the Full Court was wrong.

MR JACKSON: Yes.

HIS HONOUR: In so far as the appeal was dismissed, there is no cross-appeal, is there?

MR JACKSON: Well, there is, your Honour. That is the thing I was going to say now. There has been an application for special leave to cross-appeal and - I do not know whether your Honour has any volumes there but it is in - - -

HIS HONOUR: Only 1 and 2.

MR JACKSON: Well, it is in volume 2, your Honour.

HIS HONOUR: They are the only part of the appeal papers that I have read so far, volumes 1 and 2.

MR JACKSON: It is at page 430 of volume 2 and it is application for special leave to cross-appeal and that application - - -

HIS HONOUR: I have read the transcript of the argument on the proceedings for leave to appeal but I do not, at the moment, recollect what happened about this matter on that occasion.

MR JACKSON: Well, it has not been dealt with yet, your Honour.

HIS HONOUR: Was it raised on that occasion?

MR JACKSON: It was raised, your Honour, yes, shortly, yes. Of course, an application for special leave to cross-appeal can be made at the hearing of the appeal. Your Honour, in relation to that, that application for special leave to cross-appeal is in respect of one of the representations on which the respondents' appeal to the Full Court failed. Now, your Honour, I do not want to be particularly argumentative about it. The Court, of course, does not grant special leave to cross-appeal on a sort of "me too" basis and we will be opposing the grant of such special leave. In that regard, we would say, for example, your Honour, if one looks at page 220 in volume 1 there are some findings of fact based on credibility which are against them in any event.

What I mean by that, without labouring the point, your Honour, at page 220 your Honour will see at line 26 a finding by the judge, speaking of the respondents:

They did not direct their attention to any representation in the Heads of Agreement that they would be approached first by UBA.

That is germane to the matter that is sought to be raised.

HIS HONOUR: Was that finding of fact said to have been affected by the misdirection identified by the Full Court?

MR JACKSON: Your Honour, there will be some difficulty with that because this is an issue on which they failed. So that they would have to set that aside in some way too. Failed in the Full Court, I mean.

HIS HONOUR: What is envisaged as to the time in the proceedings at which the application for special leave to bring the cross-appeal would be considered?

MR JACKSON: Your Honour, that is a matter, in a sense, for my learned friend to make a suggestion, I suppose, but on other occasions the course that the Court has taken really seems to be one based on convenience. If I could give one example in which I unsuccessfully endeavoured to obtain special leave to cross-appeal, in WG & B v Kizbeau Pty Limited, what happened was that at the conclusion of, I think, the appellant's case the application for leave to cross-appeal was then dealt with first and that was refused and then the Court went on to hear the argument in response. But, your Honour, I will accept it is a matter for the Court to decide the point at which it is to be dealt with. We would not object to any course the Court adopted in that regard.

Could I say in relation to it, your Honour, that if the Court were to grant special leave to cross-appeal, we would see no particular difficulty in dealing with both the appeal and the cross-appeal in the time that has been allotted by the Court.

That takes one then to the notice of contention, your Honour. That is at page 417 in volume 2. We would make one observation, your Honour, at this point. I say "at this point" because one does not have yet the submissions in support of the notice. The point that we would seek to make now is that some of the matters in the notice of contention appear to be matters where, in reality, special leave to cross-appeal is necessary. What I mean by that is that - if I give an example and it may perhaps be the only one in the event - ground 45 at page 426. I will perhaps put it very shortly. You will see that what it deals with is the position relating to - and it is the second line of paragraph 45 - "the view of Mr Lees" about "the Heads of Agreement". Now, the heads of agreement are a different document from the contract, if I can put it shortly, and the heads of agreement do not appear in the representations which were referred to in the Full Court's judgment and the subject of the appeal.

Your Honour will see that from pages 402, where the Full Court's orders is: order refers to paragraph 3(b), (c) and (d) of the amended statement of claim. Those paragraphs are at page 441, and they all refer to the contract, not the heads of agreement. The point we would seek to make is that the Full Court's judgment otherwise dismisses the appeal so that the criterion of Order 70 rule 6(5) is not met in the sense that if there were success on the point, the notice of contention, it would be a case where there would have to be a variation of the Full Court's order, so that it is not an appropriate matter for a notice of contention, in our submission. It would have to be a matter for cross-appeal.

Your Honour, subject to that, and perhaps there are other instances, the matters in the notice of contention seem, and we will be submitting, largely to be complaints about the fact-finding approach of the primary judge, much of which we would be seeking to urge would be covered by Abalos and similar decisions. However, there are some aspects which would arise in any event on appeal to some degree. What I mean by that is that if your Honour goes to page 427, paragraph 46 of the notice of contention deals with the question of reliance.

Your Honour will have seen, of course, that on our appeal the question of reliance arises to a degree in the sense that we say there were findings in our favour which should not have been set aside - which was not an appropriate basis for setting aside. But ground 46 seems to endeavour to set aside the findings in a substantive way. So that, your Honour, if I could pause at this point to say this: we would - - -

HIS HONOUR: Just remind me: what did the Full Court say about those findings in relation to reliance?

MR JACKSON: What the Full Court said, your Honour, to put it shortly, was that they were affected or infected by the error that the judge had made. We have dealt with that in our written submissions.

HIS HONOUR: Was this appeal to the Full Court an appeal by way of rehearing?

MR JACKSON: Yes, your Honour, yes. Your Honour, I believe that to be so. There may be some differences in appeals to the Federal Court, I am just not sure about that, but I do not know that any particular aspect of it would be different relevantly from an appeal by way of rehearing.

HIS HONOUR: Why was not the Full Court obliged to make its own findings on these issues?

MR JACKSON: Your Honour, the Full Court was in a sense, but in the sense that the time for making its own findings came about if there were some reason for setting aside the findings made below. I do not mean they were unexaminable at all but what I was seeking to say is that the grounds of possible appellate examination were relatively limited. I mean, grounds of successful re-examination were relatively limited.

HIS HONOUR: But, as I understand it, the essence of the notice of contention is that the respondent, having sought unsuccessfully to persuade the Full Court to substitute its own findings, for example, on reliance, for those of the trial judge, will now try and persuade this Court to do the same.

MR JACKSON: Yes.

HIS HONOUR: How much time was occupied at the hearing of the appeal by that exercise?

MR JACKSON: Your Honour, perhaps I could ask Mr Smith to answer that because I was not at the appeal.

MR SMITH: I think the total appeal took four days plus; 41/2 days. It was divided up, broadly, two days for each side.

HIS HONOUR: So, the answer to my question must be "not more than two days"?

MR SMSITH: That is right.

MR JACKSON: Your Honour, what I was going to say in relation to time which is the thing I was going to move to was that it is possible the case may be able to be dealt with in toto in the two days allowed but that is really dependent on, I suppose, two things: how much of the notice of contention is ultimately pursued and, secondly, to what extent of detail it is pursued, so we really cannot say much more than that. I can, however, also say that perhaps an alternative and, from our point of view, very much a second-best way of dealing with the case because it makes it more attractive to dismiss our appeal, in a sense, would be to deal first with the appeal and the cross-appeal and then if the appeal would otherwise succeed, for the Court to deal with the matters in the notice of contention at a later hearing after written submissions from both sides.

HIS HONOUR: That does not sound very attractive to me but others may have a different view.

MR JACKSON: Your Honour, I urge that as a second preference on our part.

HIS HONOUR: Another possibility is that the matter will have two days oral hearing and no more and any further time that is required will be dealt with by written submissions. Yes, thank you. Yes, Mr Heydon.

MR HEYDON: Can I just deal with one or two matters. Your Honour obviously has not seen our written submissions in support of the application for special leave in relation to the cross-appeal - - -

HIS HONOUR: That is correct.

MR HEYDON: - - - which were filed on Monday, which can be examined. As to the time when that should be determined, like Mr Jackson, we will go along with, really, anything the Court wants to go along with, save to say this: the factual background underlying the notice of contention overlaps to some extent with the factual background underlying the cross-appeal and it is probably desirable to sort of establish by way of submission what that factual background is before one turns attention either to the merits of the application to cross-appeal or the merits of the notice of contention.

HIS HONOUR: How long would it take to do that would you expect?

MR HEYDON: My intention, as may be seen from the cross-appeal submissions, is to put in writing what the submissions are together with the evidentiary references in support of them. May I say that although the appeal books are of substantial volume, in both instances the evidence that needs to be gone to is not a large proportion of the whole and largely consists of what might be described as admissions or matters of common agreement between the parties or contemporary business records.

HIS HONOUR: Does that mean that it is possible, even at this late stage, to reduce the volume of the appeal papers that the members of the Court needs to have?

MR HEYDON: That would be a point - the answer, in a way, is yes, but it would be a pointless task. A more rational tactic might be this: that either each side or the sides together assemble into new volumes those materials which are either likely to be referred to or perhaps commonly referred to. There is the heads contract, the W contract and certain other background contractual materials, for example, and certain other bits of evidence that will probably be gone to more than once. So that the Justices would, as it were, have in their hand a folder or a volume or two which would remove the need for people to bring volume 18 and then bring volume 11 and so on.

HIS HONOUR: Let me interrupt you just to ask Mr Jackson about that: what do you think about that, Mr Jackson?

MR HEYDON: That technique was employed in the Full Court.

MR JACKSON: Your Honour, theoretically, it is possible. We do, however, before deciding on what the content of them should be, really see what is to be, at least, the argument put in support of them. What I mean by that is that if, for example, a particular matter is to be referred to, then it may be that we need to refer to documents A, B and C; if it has got some other shade, it may be E or not B or something of that kind.

HIS HONOUR: Let us deal with this matter before proceeding any further. I understand that the appellant will need to see the respondents' written submissions before committing itself to any agreement about the content of such a bundle of documents but it does seem to me desirable that the parties should jointly prepare for the members of the Court hearing the appeal an agreed bundle of those documents and portions of the transcript to which particular reference is likely to be made. If necessary, I will give a formal direction that that be done, but is that likely to be necessary?

MR JACKSON: No.

HIS HONOUR: Do you agree with that, Mr Heydon?

MR HEYDON: Yes, I am happy with that. Can I indicate without, I apprehend, the need for formal directions the course in point of time between now and 4 February that I was proposing to adopt. If this is an inappropriate time to raise it, I will not, but the practice direction requires that, as we read it - and I think the appellant reads it the same way - the following documents be filed and served on Monday: our submissions on the notice of contention and our answer to the appellant's contention on the appeal proper.

The solicitors for the appellant have been inquiring politely of us whether it might not be possible for us to give them those documents earlier than Monday and we are endeavouring to meet that request, and our intention at the moment - strong expectation is that we will be able to supply them on Friday. Our proposal for what should be in the book that your Honour was referring to would be essentially the documents we mention in those submissions, together with the documents that Mr Jackson has already mentioned in his submission in support of the appeal, which are not very many. If we perhaps prepare the volume of that character by noon on Monday, our colleagues could add to it as they saw fit in the next 24 hours and the product of those endeavours could then be duplicated in the appropriate number of copies for the Court and sent to Canberra.

HIS HONOUR: Are you content with that, Mr Jackson?

MR JACKSON: Yes.

HIS HONOUR: Then, Mr Hendon, it is the case that when five Justices of the Court each have 22 volumes of appeal papers and, on the hearing of an appeal they find that they are referred to about 25 pages out of those 22 volumes, that sometimes imposes a strain on the cordial relations that exist between Bench and Bar.

MR HEYDON: I am not so worried about that. What I was more worried about was the amount of time - because one puts up with that sort of thing. I was concerned about the amount of time just wasted in Court by someone having to put down volume 18 and pick up volume 10 as distinct from merely flipping 50 pages - - -

HIS HONOUR: I will note, without making any formal direction about the matter, that counsel have indicated that they expect that, by agreement, they will be able to produce for each member of the Court, a bundle of particular documents and particular portions of the transcript to which reference is likely to be made during the hearing of the appeal and if, for some reason, you cannot reach agreement on that by 4 o'clock on the Monday afternoon, then I will expect that counsel will make contact with my chambers and let me know so that the matter can be listed for directions about that matter in Canberra on Tuesday. Yes?

MR HEYDON: Can I deal with another subject. I just want to correct an assumption which Mr Jackson articulated. He said that the essence of the notice of contention is that the respondents, having sought unsuccessfully to persuade the Full Court to make its own findings, will now attempt to persuade the High Court to do so. That is not actually an intention underlying the notice of contention. Our submission in relation to the notice of contention is - and it is appreciated that it was put more widely to the Full Federal Court which, as a practical matter, one can take one course before an intermediate court and cannot take that course before the High Court or at least as we see it - the position is we contend essentially that the trial judge misdirected himself so radically as to deny us essentially a proper trial on representations 2 to 4. One of the errors of the Full Court - or one respect in which the Full Court did not go far enough was to deal with that type of submission and if the submissions was acceptable to it, use that as a further reason for the order it made that there be a new trial on representations 2 to 4.

Your Honour, I think, will appreciate - and Mr Jackson has been indicating this morning - that the point of the Full Court's reasoning is a very narrow point. It thought that point was sufficient to justify the order it has made. The appellant challenges the validity of the reasoning it has employed. The notice of contention merely says there are a substantial number of other reasons why it could have come to the same conclusion but none of them involve this Court deciding for itself, as it were, as a trial judge might, what the particular factual position was.

HIS HONOUR: I gather from what you say that the point of the notice of contention is not in aid of an argument that your appeal to the Full Court of the Federal Court should have been allowed as comprehensively as you contended there but rather in aid of an argument that these are additional reasons why the Full Court of the Federal Court was correct in ordering a new trial.

MR HEYDON: Yes. Paragraphs 48 and 49 really sum up the position.

HIS HONOUR: Does it follow from that, Mr Heydon, that it might be possible to adopt a course whereby you seek to make good this argument initially by presenting what you regard as the four or five best examples of grounds of contention which, if upheld, would support the conclusion that the Full Court was correct in ordering a new trial?

MR HEYDON: Yes, though what we are proposing to do and what your Honour is suggesting are not radically different courses because our complaints really boil down to about six heads. In a couple of respects his Honour misapprehended our case. In three respects there were crucial findings he should have, we respectfully submit, made one way or the other and, if made favourably to the appellant, it would have been powerful for their case and, if made in favour of us, useful for our case. And there are related errors in those areas. The detail of the notice of contention tends to relate to the related errors, but the primary points we want to make fall under the other categories.

HIS HONOUR: You would probably require no encouragement to put your best foot forward.

MR HEYDON: Yes. I would, as it were, wish to deal with our case as we wish to put it in our notice of contention document but it may well be that, in oral argument, the appropriate line to take is, as it were, to test things by seeing what the allegedly best points are and if they are not doing very well - - -

HIS HONOUR: Yes. Once again, that is probably not a matter in which directions are necessary or appropriate. But how long do you expect your argument in support of your notice of contention will require?

MR HEYDON: Before the Court?

HIS HONOUR: Yes.

MR HEYDON: Can I answer the question a little globally. I would have thought that Mr Jackson's estimate for the appeal proper of nearly a morning might be a bit long and for the cross-appeal, provided the general elements of it are grasped from the written document, that might take an hour or two on our part and that the notice of contention part of it might take three hours on our part. It is really a balance between the extent to which the argument is put in writing because the more of it that is put in writing, clearly the less time that exposition will take in oral presentation. So I think it is possible to finish in two days, but had one been asked for an estimate it would not have been two days; it might have been three. But it is quite possible it will finish in two.

HIS HONOUR: I think two days is all there is.

MR HEYDON: Yes.

HIS HONOUR: What do you say about the suggestion that the appropriate time to deal with your application for special leave to cross-appeal would be after hearing Mr Jackson's argument in support of the appeal and after you have had an opportunity, as it were, to open?

MR HEYDON: I think that probably is the appropriate time because, as I said some little time ago, there is, far from a complete overlap, there is some overlap between the background evidentiary material and once the Court has that grasped - or at least our submissions about it grasped - it will be in a position to ascertain the merits, whether there are any valid grounds on which special leave might be granted. In short, in principle, that idea is a good idea and it can be modified on the day as the argument proceeds.

HIS HONOUR: Mr Heydon, can I ask a question that probably has no relationship to the way in which the appeal will be conducted or the length of time it will take, but it occurred to me when I was reading the judgment of the Full Court, was it your case at first instance that the misleading and deceptive conduct was knowingly and deliberately misleading and deceptive?

MR HEYDON: In part; not wholly but in large part.

HIS HONOUR: Because I have not yet looked at the transcript of the cross-examination of any of the witnesses I was not sure whether the case was put to them in that way. I gather from what you say that it was put to them that their conduct was fraudulent.

MR HEYDON: I was not at the trial. It should have been and I believe it was put in respect of representations 2 and 3, which allegations of course did not succeed, and also in relation to representation 13 which is the cross-appeal representation.

HIS HONOUR: As I would understand it then, the essential complaint that was being made by your clients was fairly short and fairly blunt, that is to say that they were equipping Trawl Industries with window dressing that could be used to attract investors for the mutual benefit of Trawl and Uncle Ben's.

MR HEYDON: Yes. And that Mr Lees, the principal executive of Uncle Ben's, knew a lot about Trawl which he should appreciated, if revealed to investors, might well have scared them off. He knew there were a lot of risks in putting the money in. That, in a nutshell, is the complaint.

HIS HONOUR: I should say to both counsel that many years ago when he was a solicitor, Mr Horrobin briefed me when I was at the Bar and about 15 years ago he was a client of mine in relation to a particular matter. I do not regard those circumstances as disqualifying me, but I raise it in case either side wants to make any comment about it.

MR HEYDON: I will just correct one thing your Honour said. I think he was your client in 1981 or thereabouts. We have nothing to say about it. And I have nothing further to say, unless your Honour wishes to raise anything.

HIS HONOUR: Thank you, Mr Heydon.

MR JACKSON: We have no difficulty with your Honour sitting.

HIS HONOUR: Thank you. Is there anything that counsel wants to raise further at this stage?

MR HEYDON: Save for this perhaps, your Honour. I am not quite sure how long our notice of contention document will be. I am hopeful it will be within 20 pages, which is not a stipulated limit, just a limit adopted by analogy to other limits. If it is not possible to fit it in within 20 pages, would it be in order that it be longer, as long as it is not extortionately longer?

HIS HONOUR: Yes. I am sure that we can rely on you in relation to that.

MR JACKSON: Your Honour, two things. The first is that there were some minor errors in our written submissions. May we have leave to give the Court a document which corrects them and it necessarily shows where the corrections are. They are of a very minor kind.

The second thing is, your Honour, would your Honour certify for counsel and perhaps reserve the question of costs?

HIS HONOUR: Yes. Very well.

As requested, I will certify for counsel and reserve the question of costs. If, as I said earlier, the parties have been unable to reach agreement by Monday afternoon on the matter of the agreed documents, then I expect that they will contact me in Canberra on Tuesday and the matter may then need to be relisted for directions.

I will adjourn.

AT 10.51 AM THE MATTER WAS CONCLUDED