Lexcray Pty Ltd v Northern Territory of Australia [2004] HCATrans 171 (28 May 2004)

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Lexcray Pty Ltd v Northern Territory of Australia [2004] HCATrans 171 (28 May 2004)

Last Updated: 10 June 2004

[2004] HCATrans 171

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Darwin Nos D1 of 2001 and D7 of 2003

B e t w e e n -

LEXCRAY PTY LTD

Applicant

and

NORTHERN TERRITORY OF AUSTRALIA

Respondent

Applications for special leave to appeal

McHUGH J
KIRBY J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON FRIDAY, 28 MAY 2004, AT 9.19 AM

Copyright in the High Court of Australia

MR B.W. WALKER, SC: May it please the Court, I appear with my learned friend, MR A.S. BELL, for the applicant. (instructed by Cridlands)

MR S.R. SOUTHWOOD, QC: If the Court pleases, I appear with my learned friend, MR M.P. GRANT, for the respondent. (instructed by Solicitor for the Northern Territory)

McHUGH J: Yes, Mr Walker.

MR WALKER: May it please your Honours, on the last occasion when the first of these applications was before the Court, it was determined that it should be adjourned so as to allow an application to be made to the Northern Territory Court of Appeal for the consideration of setting aside the judgment of that court, which had been the subject of that first special leave application, on the ground of the late discovery of documents delinquently not discovered on the part of the Northern Territory, those documents having come to light after that first special leave application had been filed.

McHUGH J: Yes, well, I am more than familiar with this mass of documentation, having spent something like seven hours reading and rereading every skerrick of the material. I mean, it really does make fun of the special leave procedure, where the points should be precisely articulated and the Court should not have to look at much more than the judgments in the court below. There is a mass of material. But carry on, Mr Walker.

MR WALKER: Your Honour, there is a mass of material, much of which came about because of the circumstances, protracted, and, in our submission, reflecting persistence on our side - - -

McHUGH J: Well, there is certainly persistence on your side. There is no doubt about that.

MR WALKER: It is persistence which, in our submission - - -

KIRBY J: Well, there is a lot at stake for your client, so I think you should just press on.

MR WALKER: Yes, your Honour. It was also persistence which was met, as the painstaking record which has been assembled, regrettably, in such volume, shows, with an attitude that is not the kind of attitude that one would expect from the Crown.

KIRBY J: Well, we are wasting time, but that is inevitable. If you produce four inches, the other side will produce three inches. I mean, that is the experience of life.

MR WALKER: May I then name, on the basis of the applications to this Court, there now being two applications, and on the basis of the amendment to the motions and to the draft notices of appeal, which I have discussed with my learned friend and which, as I understand it, is met by his attitude that we may go straight to the merits of the point. There are, apart from those which were canvassed fully on the last occasion, which I am not going to repeat, these two further matters which make this case an appropriate one for special leave on a number of grounds.

The first point is a very pointed application of this Court’s command in Quade’s Case that the substance of the doing of justice be observed by refusing to reward delinquent discovery of documents in court procedure where discovery is an essential part of the armoury on both sides in adversarial proceedings involving contested facts.

McHUGH J: What use are you going to make of them? What is this motion directed at? That we should receive this further evidence or that the Court of Appeal should have received it?

MR WALKER: As to the second Court of Appeal judgment?

McHUGH J: Yes.

MR WALKER: Plainly the latter. We disavowed on the last occasion, and I freshly disavow in relation to the new special leave application, any attempt to have this Court, as it were, sit on a mini-appeal by way of rehearing to evaluate for itself what should have been the result on the merits of the contest which has never been fairly had, in light of - - -

KIRBY J: Well, in current authority we could not receive evidence by ourselves.

MR WALKER: Quite. So, of course, I disavow that this Court would receive it as fresh evidence. We, however, submit that there is nothing in Mickelberg or Eastman, nothing at all, which would cut across the straightforward approach, for example, illustrated and merely illustrated in Balenzuela v de Gail - - -

McHUGH J: I read that. Balenzuela v de Gail has nothing whatever to do with this point. It has nothing whatever to do with it.

MR WALKER: Your Honour, simply for this proposition, that this Court will always look at something which did not reach the record of the court below if that fits within a recognised head of appellate review, including for unfair procedure below. That is all.

McHUGH J: Well, bias in the way that you seek to rely on it, or in terms of these documents, is not a question of appellate review. It is a question of fresh evidence. And there are other problems. Speaking for myself, I do not think the document that you rely on would have assisted your case in any shape or form having regard to the way you pleaded contract in paragraphs 13A and 13B of your statement of claim.

MR WALKER: Your Honour, there is still with that pleading - - -

McHUGH J: It may well be the case that if the document had been discovered you could have set up another case for breach of contract, alleging a failure of an implied term of the Minister to be fair and reasonable. That is far removed from anything that was litigated in these proceedings.

MR WALKER: It was litigated below, it being common ground, what my learned friend called - - -

McHUGH J: No, it was not. It was common ground in the sense that it was used as a response to your argument. Your argument depended on 13A, 13B. The defendant said that is not the proper construction of the contract. They said, “This is the contract and it is up to the Minister’s discretion”. It would be subject to a term that he would have to - - -

MR WALKER: Quite, and it was that “subject to the term”, being common ground, which provides a basis upon which the case was litigated.

McHUGH J: Yes, but it was not your case. This is a case in which you made allegations of fraud, which you abandoned. You made all sorts of allegations, you abandoned them, and you never made the case that you are now relying on.

MR WALKER: Your Honour, the case which was decided against us was on the basis of a contract with a term where the documents – and it is more than one – the documents which were not discovered went to whether or not that term had been complied with. There was also a second case, with which your Honour is familiar, namely, the representation case which had as its threshold as what turned out to be a knockout blow against us, that there was no assuming to advise on the part of the Territory.

The latest documents, very recently come to light – and, by the way, we have the other side’s consent to refer to the documents discovered in later proceedings – those later documents show that the government intended and planned a campaign framed in terms of advice to pastoralists. So on the contract point, we had the plain admission which, on any view, would have been relevant evidence to an assessment whether the Minister had fulfilled the implied term, and on the representation claim - - -

McHUGH J: But this was a representation by whom, Dr Calley?

MR WALKER: Yes, your Honour, a senior government officer, author of the plan about which the government speaks in the campaign documents to which I have just referred.

KIRBY J: Yes, we know all that, but take us to the best point that you have that supports, assuming that it had been - - -

MR WALKER: May I take you then, in the blue application book, to page 19, which is the document that Justice McHugh first referred to and the passage is one which is, of course, familiar to your Honours from the material filed and already argued. That, in our submission, at 19, lines 41 and 42, is a passage which it is impossible to imagine could not forensically have been used to advantage in the case which was put, including the representation case, given that if - - -

McHUGH J: Could I have a concrete example? I mean, you make these general statements, Mr Walker, but tell me precisely and concretely how that statement could have been used.

MR WALKER: The first and, in our submission, best way of putting that is by Acting Chief Justice Angel on pages 27 and 28 of the blue book.

McHUGH J: Again, what the Acting Chief Justice said is framed in terms of generality. It just talks about the dynamics of the case changing, et cetera.

MR WALKER: Your Honour, that is appropriate language to use in a Quade’s Case consideration.

McHUGH J: Yes, but what was it going to go to? After all, at most - - -

MR WALKER: It went to whether the contract was performed according to its terms.

McHUGH J: The construction you put on the contract was rejected. Unless you can make good your construction of the contract, this does not help you. The way you pleaded 13B – despite all the documentation that is here, the statement of claim was not put in. What was it, 117 pages?

MR WALKER: Your Honour, the lack of fair procedure in relation to the issues that survived to be decisive in the Court of Appeal is not, ultimately, and could not fairly itself be judged by reference to an unnecessarily prolix, elaborate pleading below. That, in our submission, did nothing to excuse the delinquency of discovery. It has never been relied upon for that effect. If anything, the very diffuseness of that pleading made the failure of discovery of documents of the kind that were not discovered even more signal as a denial of the essential regularity of pre-trial and trial fairness.

Now, we do not shrink from the proposition that what the Acting Chief Justice describes as “the dynamics of the trial” include not merely the deployment of documents of this kind in cross-examination of persons who say, for example, “We never set out to advise the pastoralists”, where it would have been, in our submission, a very important tool for the cross-examiner; it also goes to the cross-examination of witnesses such as Dr Calley, who denied conveying anything in relation to an inadequacy of price, that is, warning that the price would be inadequate.

It would have been devastating, by way of cross-examining such people, and the cross-examination of witnesses where they conflicted on oral testimony cannot be said to have no realistic possibility of an opposite result when it is a question of preference between witnesses, it being, in our submission, an appropriate observation by the Chief Justice, in relation to what he calls the underlying merits of the respective parties’ positions at trial and the whole dynamics of the trial, to ask a different question in the light of the different documents which would have been available, “Whose case is better supported by the objective documentation concerning the government’s position?” Dr Calley can never be separated from the government’s position. He was a deviser and spokesman in relation to it.

Now, it is not simply, in our submission, a question of the contract claim which would have been affected. The representation claim is one to which - - -

McHUGH J: The trial judge found that both your witnesses were unreliable.

MR WALKER: Your Honour, that is precisely the kind of balance of consideration, particularly credibility findings with the possibility of intuition at play, where the science of looking at the objective documents which corroborate one side or the other is precisely what this Court has said, time and time again, needs to be taken into account. We were denied that, for reasons which have never been explained.

McHUGH J: Mr Walker, this really is an extraordinary submission. You are claiming that this document written by the Minister could throw light on representations allegedly made in June 1983 or January 1984.

MR WALKER: Yes.

McHUGH J: This document is written by the Minister what, in 1990?

MR WALKER: Your Honour, it is written as to history.

KIRBY J: It does not look like it. It does not look or feel like a ticking time bomb, Mr Walker. I mean, I am the most sympathetic one here to reopening and allowing new material - - -

MR WALKER: Your Honour, Quade’s Case does not require time bombs. It does not require explosive effect.

KIRBY J: You do get those in court, as you know.

MR WALKER: Yes.

KIRBY J: And this just falls a long way short of that.

MR WALKER: My point is that Quade’s Case does not require either.

KIRBY J: I realise that, but you are seeking special leave and you are behind the eight ball. You are trying to get new evidence in and the authority of the Court has battered even me down, so - - -

MR WALKER: Not into this Court in order to alter the result – to demonstrate to this Court not as new evidence, but as material which never became evidence, where we could never be criticised for not having adduced it because it was held back from us, in order simply to say the process was wrong.

KIRBY J: Yes, but forensically it is just not very big. I know when you saw it you probably thought, “Oh, this is the deus ex machina”, but it is just not. It is not even a little angel.

MR WALKER: I am not referring to the Acting Chief Justice, your Honour.

KIRBY J: It is strange how the mind works, is it not?

MR WALKER: Yes. On page 19 of the book, in the passage with which your Honours are, if I may say so, so familiar that there has been challenge to me before going to it - - -

KIRBY J: I cannot admit to spending seven hours.

MR WALKER: - - - that paragraph is one which is an historical survey. It does not just speak as of the instant it was written.

McHUGH J: Yes, it is by a minister. We know, arguably, another minister’s recollection as to advice he got was a fair way off the mark, from what we can see.

MR WALKER: Your Honour, may I say that that is precisely the kind of factor which required an opportunity to test at trial. That is, this Court ought not dispose in Quade’s Case style, peremptorily, at a special leave stage of a matter emanating from a minister in terms such as were set out in that document by saying, “Who would believe ministers? Why would ministers be expected to have got it right?”

McHUGH J: No, but you are seeking in some way to use this document not only in relation to contract, but also in terms of the misrepresentations that you allege were made in June 1983 and January 1984.

MR WALKER: Yes. Could I put the combination together, because, as your Honours know, there has been a creeping barrage of, finally, the Territory producing more documents. Could I take your Honours to the smaller of the affidavits of Alan John Lindsay of 12 May 2004 and behind tab D in that document the material from Cabinet records, including Dr Calley’s document at page 6. Now, paragraph 21 on that page again is providing at the most formal level within government a statement in historical terms:

The principle accepted in setting compensation values for breeding cows was to reflect a fair contribution to replacement cost. The prevailing compensation value for breeding cows is substantially below replacement cost and is a departure from the established principle.

That is 1984. That cannot be dismissed as something which, in Quade’s Case terms, could not be regarded as a realistic possibility as having altered any of the matters upon which we relied.

McHUGH J: Yes, but so far as your contract case is concerned, it depends on clause 17. You seek to rely on the recitals to bring in clause 2.2.5. Your construction was rejected, and now you are seeking to make use of these documents in some way in relation to the representations.

MR WALKER: Well, your Honour, we do not shrink from the fact that this material – and this would be usual in commercial disputes – serves at least double purpose in relation to representation claim and contract claim. In terms of contract claim, there is the 13B(d) alternative, to which I think your Honour Justice McHugh has referred, but that was a claim which simply cannot be knocked out, bearing in mind the common ground which was conceded between the parties in relation to the manner in which the Minister should act in assessing compensation, the valuation proposal.

McHUGH J: Now, you have an extension of time to bring your causes of action. I would be the last one that would want to invite these parties to continue their massive litigation, but if you are right that the document at page 19 of the book founds breach of contract, why is it not open to you to sue on that for a breach of this term and seek an extension of time?

MR WALKER: Your Honour, we would be met with a cause of action, estoppel on the contract.

McHUGH J: Well, I am not sure that that is right.

MR WALKER: I think one could guarantee that the Territory would take the position that we have had our one and only go to plead breach of contract.

McHUGH J: Well, it might, but in any event - - -

MR WALKER: In our submission, that would be, at least at first sight, a very powerful submission.

McHUGH J: That means, in effect, that you would have to get leave to amend in any event. If you cannot get leave to bring a fresh action, why should you get leave to amend?

MR WALKER: Your Honour is now talking about discretions which would be exercised by a hypothetical future trial judge.

McHUGH J: Yes.

MR WALKER: That would be exercised only after questions of discovery and other case management had been attended to.

McHUGH J: I do not know whether there is any specific statute dealing with the situation in the Northern Territory, but the general common law rule is that you cannot amend a statement of claim to bring a cause of action that was statute-barred, unless there is some specific - - -

MR WALKER: Most of the courts have statutes and rules which are to the contrary of that now, your Honour.

McHUGH J: Yes.

MR WALKER: The discretion will be, of course, the more favourably viewed if the reason why material which would have given rise, in a very routine fashion – amendment after discovery, on the pre-existing issues, is a routine matter and one of the things which, as a matter of utility, is looked for from discovery. To refine or narrow the issues by reason of discovery is a good, not a bad, thing.

May I move, however, to a second and independent important reason why special leave to appeal should be granted, and that is that the decision by the majority on the question of the statutory limits on the powers of the Court of Appeal of Northern Territory to permit consideration of the Quade’s Case matter is one which will apply, because of statutes being in pari materia, in New South Wales, Victoria, Queensland, South Australia, unless there were to be an extraordinary departure from the rules of stare decisis and persuasive authority around this country.

In our submission, there is a considerable similarity between the statute section 55 in the Northern Territory and the statutory provisions dating from Judicature Act times in England and Wales, which were construed by the English Court of Appeal in Taylor v Lawrence [2002] UKPC 30; [2003] QB 528. Sitting a Bench of five, that court reached a diametrically opposite conclusion on grounds which, in particular, are completely overlooked by the way in which the authority was treated in the majority reasons. Could I take your Honours very briefly to page - - -

KIRBY J: Do they make any observation on that passage of Lord Chief Justice Woolf?

MR WALKER: That is the one. At page 47 of the blue book, Mr Justice Gallop refers to - - -

KIRBY J: We have read that. Now, what does the later - - -

MR WALKER: That was only the very beginning of Lord Woolf’s discussion of the matter. That is to be found at paragraph 9 of his Lordship’s reasons. That did not conclude the matter. His Lordship reached an opposite conclusion from what one could gather from that paragraph. First, paragraph 14, the argument was then looked at by the court as to whether there were any circumstances. There was close consideration as to whether fraud was the only exception, and in paragraphs 25 and 26 – and I am only picking out particular ones – it was made crystal clear that there were broader reasons than simply the nature of fraud.

KIRBY J: Well, I am not surprised that that is so, knowing Lord Woolf, but there are two problems, are there not? One, it looks to me as though it would fall on barren ground. Water has not fallen on this ground in Australia for a long time.

MR WALKER: Your Honour, Quade’s Case, with respect, is on all fours with the approach to doing justice shown in Taylor – on all fours.

KIRBY J: Yes, but there has been a lot of water under the bridge since then, including DJL. In any case, you have to go back to what Justice McHugh has been raising with you. You have to, as it were, show that if you could get the evidence in, that it has this force, and if we do not think that is so, then this is not a good case in which to see if there is a little bit of water in the ground.

MR WALKER: The 1984 statement by Dr Calley alone is appropriately treated in the same way as the later ministerial statement was treated by Mr Justice Angel, the only judge who has finally determined anything in relation to the Quade’s Case realistic possibility of a difference. The other judges did not look at that at all. In our submission, if one puts that together with the observations that one might observe in the argument on the last occasion in this Court, there is, if I may put it this way, a realistic possibility of the realistic possibility being found.

KIRBY J: Well, if I thought that – I am the most sympathetic to having a reserve power to do justice. I have said that in the Court of Appeal, I have said it here and I still believe it. But the fact of the matter is, it is not the general view. It is not the general view in this country, and why would I support having that issue tested in a case where you do not have, as it were, a very strong factual case? This is a very weak factual case.

MR WALKER: Quade’s Case is the general view. Quade’s Case does not suggest that - - -

KIRBY J: You should reread DJL. I sat through DJL.

MR WALKER: - - - the defendant who fails to discover, but the delinquency is found out before judgment, will have the judgment set aside, but the defendant who fails to discover and the delinquency is not found until after judgment, notwithstanding good, diligent and persistent attempts to do so, is rewarded by a doctrine which is said to be in the interests of justice. In our submission, there is nothing in Mickelberg or Eastman that embraces any such anomalous result, and the English Court of Appeal - - -

KIRBY J: Yes, but the facts that you are trying to get in would have to be, if not compelling, at least likely to lead to a different result, and when I look at the document, the key passage you say is your strong point, it is just not very strong. Forensically, it is not very strong.

MR WALKER: Tab A in that smaller affidavit shows a “Revised Regional Strategy” relevant to my client, talking about:

[the] campaign extension and property management advice should be most active –

As your Honours have seen from the affidavit, that sits most oddly - - -

McHUGH J: Yes, but that does not make them an adviser. Of course governments are going to give advice in a scheme like this.

MR WALKER: I am not saying that makes them advisers.

McHUGH J: You were setting them up as a fiduciary, claiming that there was a duty.

KIRBY J: It is Justice Finn’s view. He thinks that governments - - -

MR WALKER: I have not mentioned the word “fiduciary”. Your Honour is right to point out that issues and contentions that were raised – I focused on a misrepresentation case in relation to that. That threshold dismissal, ground of dismissal of that was no element of advice, one - - -

McHUGH J: I mean, even the way the misrepresentation case was framed in the Court of Appeal seems to be rather different from the way it was framed at the trial.

MR WALKER: Your Honour, that does not alter - - -

McHUGH J: I know it does not, but there has been a lot of movement of ground on your side, Mr Walker.

MR WALKER: There has been, your Honour, but that does not, in our submission, reflect necessarily badly on our position, bearing in mind the delinquency, the very considerable delinquency, on the other side. Now, the only other matter – your Honours have seen it in writing – it is simply - - -

KIRBY J: You are moving away from the microphone.

MR WALKER: Yes, I am sorry. The red light deters me. I really should sit down.

McHUGH J: Yes. You got big extensions of time on the last occasion and you are getting them again.

MR WALKER: I am sorry, I do not wish to presume that at all. I would simply respectfully draw to your Honours’ attention that there is, in a similar fashion to how the English Court of Appeal had this issue raised in Taylor, a matter which is appropriately raised for this Court concerning new material – the section 35AA point, query section 73 analogy point – in relation to the very close involvement, now known, not disclosed because of recall, by Justice Bailey – the very close involvement. Your Honours have seen the written material. Your Honours have seen the affidavit on the matter.

It is clear that the situation was a world away from what was disclosed in court, namely, that Justice Bailey, having professed incomplete recollection, which is, of course, usual and appropriate, did not think he had even heard of the scheme until quite recently, whereas the documents that have now come to light, only after very persistent pressing, show that that is just the opposite of the case. Those, in my submission, raise acutely the question for this Court as to whether there truly is a preclusion in this Court, as the ultimate court of appeal, of entertaining material which shows that the court below was constituted in a way which goes to the very root of the integrity of the administration of justice.

McHUGH J: Even if there was substance in this view, it would not help you on the first appeal, would it?

MR WALKER: No, that is why I tread to it separately. He was a member of both courts, of course.

McHUGH J: Yes, he was, but it would not help you on the first because there was a joint judgment.

MR WALKER: It would only lead to setting aside the appellate judgment; it would not necessarily lead to the Quade’s Case result of setting aside the trial judgment. However, in our submission, it is an appropriate step. It is obviously important to us. The Court of Appeal judgments stand in the way of success, and it is, in our submission, an ideal vehicle to test what cannot be the absolute preclusion of knowing about what happened, in light of the real facts, in order for this Court to be the one and only supervising place for an intermediate Court of Appeal. May it please your Honours.

McHUGH J: Thank you. Yes, the Court need not hear you, Mr Southwood.

In this matter, there are two applications for special leave to appeal against separate decisions of the Court of Appeal of the Northern Territory. There are also motions before the Court seeking to set aside both decisions on the ground of apprehended bias of one of the judges who sat on the appeals, and to admit further evidence in the appeal in respect of the first matter before this Court.

The first application arises from an action for damages against the Northern Territory. The action was based on allegations of misrepresentation, estoppel, breaches of contract and breaches of fiduciary duty. Insofar as the claims of misrepresentation depended upon the evidence of the principal witnesses for the applicant, the trial judge found their evidence to be unreliable.

Substantially for the same reasons concerning credibility, the claims of breach of contract, estoppel and breach of fiduciary duty failed insofar as they relied on oral evidence. However, two claims for breach of contract depended upon the construction of documents. The trial judge rejected the constructions upon which the applicants relied. The Court of Appeal, in its first decision, upheld the trial judge’s findings on all the relevant issues.

In our view, the first application gives rise to no question that would warrant the grant of special leave to appeal. In addition, we are of the opinion that the construction the trial judge placed on the contract was correct.

The second application concerns the jurisdiction of the Court of Appeal of the Northern Territory to set aside a perfected judgment in circumstances where, after the judgment was perfected, documents were discovered by the Northern Territory which had not been discovered during the trial proceedings. The majority of the Court of Appeal held that that court had no power to set aside a perfected judgment. In our view, upon this Court’s present authority, the majority of the Court of Appeal was correct in so deciding.

If this Court is to consider the relevance of the reasoning of the Court of Appeal of England and Wales in Taylor v Lawrence [2002] UKPC 30; [2003] QB 528, which was much relied on by Mr Walker this morning, it would be preferable to do so in a case with a stronger factual substratum than is present in this case.

One of the motions seeks to set aside both judgments of the Court of Appeal on the ground that there was a reasonable apprehension of bias that one of the judges who decided the appeal could not bring an impartial mind to the appeal. This claim is based on the fact that at the time of the occurrence of the principal events in the case, the judge was a legal officer of the respondent and that he, or officers under his supervision, had given legal and constitutional advice concerning the compensation plan which was at the heart of the applicant’s claim for damages.

Having examined the documents, we are of the view that they do not give rise to any reasonable apprehension of bias. It is therefore unnecessary to determine whether this Court could receive the evidence on appeal if special leave were granted. It goes without saying that unless the evidence could be received on appeal, a grant of special leave on this point would be futile.

The applicant also seeks to use evidence concerning the belated discovery of documents as evidence that this Court could consider in an appeal against the first decision. We are not convinced that even if the documents could be received by this Court in support of the appeal – a matter there is no need to decide – it would found an order that the Court of Appeal of the Northern Territory rehear the matter with the additional evidence. The documents, in our view, simply do not fall within that class.

Accordingly, special leave is refused with costs in both applications. The motions are also dismissed with costs.

AT 9.58 AM THE MATTERS WERE CONCLUDED