SST Consulting Services Pty Ltd v Rieson & Anor [2005] HCATrans 672 (2 September 2005)

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SST Consulting Services Pty Ltd v Rieson & Anor [2005] HCATrans 672 (2 September 2005)

Last Updated: 16 September 2005

[2005] HCATrans 672

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Sydney No S93 of 2005

B e t w e e n -

SST CONSULTING SERVICES PTY LIMITED

Applicant

and

STEPHEN CHARLES RIESON

First Respondent

SCOTT MURRAY BELL

Second Respondent

Application for special leave to appeal

GUMMOW J
CALLINAN J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 2 SEPTEMBER 2005, AT 11.39 AM

Copyright in the High Court of Australia

MR C.J. BIRCH, SC: May it please the Court, I appear with my learned friend, MR R.M. STEELE, for the applicant. (instructed by Maurice Blackburn Cashman)

MR R.I.M. LILLEY: May it please the Court, I appear for the respondent. (instructed by Synkronos Legal)

GUMMOW J: We would be assisted by hearing from you first, Mr Lilley.

MR LILLEY: Thank you, your Honour. Your Honours, might I inquire whether the point in severance or the point in section 4L construction - - -

GUMMOW J: Section 4L.

MR LILLEY: Your Honours, can I ask you to go to page 30 of the application book at about line 40 or paragraph 12. The Court of Appeal there sets out really what the conflict is, in my submission, between what his Honour the trial judge said about section 4L - - -

GUMMOW J: Yes, but to get to the point, Mr Lilley, section 4L is a very important provision. It has never been construed by this Court. There is division of opinion as to what it means and how it operates. Why then is there not a special leave question?

MR LILLEY: With respect, your Honour, I would submit that the court below was correct - - -

GUMMOW J: Yes, but they reversed the primary judge.

MR LILLEY: With respect, the primary judge did not consider all of the material which the court below - - -

GUMMOW J: No. There is a difference between them as to the construction of 4L.

MR LILLEY: There was an initial view, in my submission, your Honour. The trial judge expressed a view without looking at all of the material. There was already the Full Court’s decision as to the construction of section 4L which he regarded himself bound by. The second Full Court, which is the court below, then looked at the question and, in my submission, they were correct.

Your Honour, one thing that I would say about section 4L is that it talks in the language of severance. If the construction for which the applicants - - -

GUMMOW J: There is a threshold question in all of this, and it may or may not be foreclosed by Castlemaine Tooheys [1986] HCA 38; 161 CLR 543 at 544 to 555, which is that contravention of Part IV is visited not only by the remedies in the Trade Practices Act but also insofar as contract law is involved is visited with illegality in the common law in accordance with the principles we considered in Fitzgerald v Leonhardt [1997] HCA 17; 189 CLR 215. So there is that first assumption. On that assumption, one then gets into questions of just what section 4L is doing and how the principles of severance work.

MR LILLEY: Yes, your Honour, I understand that. My submission is, your Honour, if this Court were to look simply at the question of section 4L, the point is that in the language of severance, if the construction for which my learned friend contends was correct, then there would be never any requirement to look at the question of severance, unless you are actually looking at the actual enforceability of the illegal provision and nothing else, because the agreement would be enforceable whether or not it had the illegal provision in it, and yet they have used the language of severance in section 4L.

GUMMOW J: That in a way throws light back into Castlemaine Tooheys.

MR LILLEY: It does, your Honour, but the Castlemaine Tooheys question is not one upon which special leave has been sought, the question whether - - -

GUMMOW J: Conceptually, it has to be engaged in order to construe the section.

MR LILLEY: To date all parties have proceeded on the basis that the Castlemaine Tooheys decision governs the field.

GUMMOW J: The question is: what is the field?

MR LILLEY: The field is illegality at common law.

GUMMOW J: You will not use the phrase “properly understood”.

MR LILLEY: I certainly will not, but, your Honour, the field is governed by Castlemaine Tooheys that presently common law concepts of illegality govern contraventions of Part IV of the Trade Practices Act.

GUMMOW J: Where there is a contract involved?

MR LILLEY: Yes, your Honour.

GUMMOW J: There may be an arrangement or understanding which is no contract.

MR LILLEY: Yes, your Honour, but certainly in relation to contract - - -

GUMMOW J: To that Castlemaine Tooheys does not speak. Now, how do you engage questions of severance with an arrangement or understanding?

MR LILLEY: To that the facts of this case do not speak either and in that regard this case would not be an appropriate vehicle to look at those matters.

CALLINAN J: You have a contract here?

MR LILLEY: We have a contract. It is not an arrangement or understanding.

GUMMOW J: Yes, I realise that, but in construing the section you have to consider the scope of the part.

MR LILLEY: Yes, your Honour, I understand that. Did your Honour wish me to address the severance issue at all?

GUMMOW J: You can say whatever you wish.

MR LILLEY: Your Honour, perhaps if I make my own submissions about section 4L first. Section 4L was, in my submission, live before this Court in the Carlton and United Breweries decision. At page 547 of the report that I have provided it reveals that one of the submissions made was to the effect that:

The amendments made in 1977 did not, and were not intended to, alter the consequences of a contravention of Pt IV.

Specific mention was made in that submission to the Swanson Committee Report and to the effect on section 4L. Then at pages 554 to 555 this Court then expressed the view, as your Honour has - - -

GUMMOW J: This is at a time when the State courts did not have any Part IV jurisdiction, is it not?

MR LILLEY: The question decided there - - -

GUMMOW J: Well, that is not accurate. It did not have jurisdiction to administer any remedies under the Trade Practices Act.

MR LILLEY: Yes, your Honour. The question there was could the State courts look at Part VI considerations other than - - -

GUMMOW J: In the course of a contract dispute?

MR LILLEY: Yes, your Honour.

GUMMOW J: That is right.

MR LILLEY: In that case Mr Merkel made the submission that it was a code.

GUMMOW J: I remember counsel for the respondents - - -

MR LILLEY: In responding to that submission this Court made the comment about the ordinary consequences which the common law attaches to - - -

GUMMOW J: Mr Gleeson, QC referred to Yango Pastoral. Do you see that at page 547?

MR LILLEY: Yes, your Honour, but also in that reference is where he refers to the Swanson Committee Report.

GUMMOW J: Yes, that is right.

MR LILLEY: Your Honours, the next point is that again with respect to the construction there is ample authority in this Court to the approach taken by the Full Court and I make my submission that the Full Court was correct below. It is the approach taken by Justice McHugh of the Court of Appeal in New South Wales as he was in Isherwood – and I have given your Honours that report – at pages 387 and 388. That was approved by this Court in the CIC decision which is referred to in the Full Court’s judgment and approved. It is the approach in the recent case of Network Ten, also referred to by the court below, and it is the approach that Justice Dawson took in a dissenting judgment in Mills v Meeking at page 225 of the report I have given your Honours.

GUMMOW J: Yes, which particular passage in Justice Dawson in Mills?

MR LILLEY: At page 235 of Mills v Meeking. It is the first full paragraph on the page:

However, the literal rule of construction, whatever the qualifications with which it is expressed –

et cetera, down to - - -

GUMMOW J: Yes, but that is not addressed to 4L.

MR LILLEY: No, that is addressed to the approach of the Full Court to the construction of section 4L.

GUMMOW J: Yes.

MR LILLEY: Your Honours, with respect to the question of severance, the test in Humphries is the test for illegal provisions in contract where there can be no apportionment. Their Honours Justice Brennan, as he was, and Justice Toohey pointed out the difference in relation to that and a provision which is void. There are essentially current findings of fact in the courts below as to the application of that test and they are to be found, in the Court of Appeal, at the application book page 47, line 1, page 53, line 1 and page 57, line 46; and the trial judge’s findings, which are similar, are at the application book page 11, line 10, page 16, line 43 and page 17, line 29. Those findings all go to what I will refer to as the tying provision. It was put in the negative way, not an insignificant provision and not an unimportant provision, and it seems as though all four judges found these provisions to be fairly central to the contract and important.

To the extent that one applies the test in McFarlane v Daniell the principal difference in the approaches below is that the Full Court had regard to whether severance would change the nature of the parties contract – and that appears at the application book page 48, line 12 and page 58, line 30 – whereas his Honour the trial judge considered whether the severance would change the character or nature of the arrangements in relation to the advances, which is quite a different matter.

My submission is that the former is the correct approach and, in my submission, the applicant’s special leave point on severance at page 66 of the application book, where it refers to the clause being “for the exclusive benefit”, the findings of both courts below do not support that aspect of the test.

GUMMOW J: What was the relevant provision of Part IV that was contravened here?

MR LILLEY: Section 47(1) in terms of 47(6).

GUMMOW J: Do you have the text of 47(6)?

MR LILLEY: It was conceded, your Honour, that there was a contravention. My learned friend has indicated page 29 of the book, your Honours.

GUMMOW J: Yes, “engages in the practice of exclusive dealing” by supplying, et cetera.

CALLINAN J: The service was unpacking and distributing - unpacking, was it not?

MR LILLEY: Yes, your Honour. One service that was offered was the loan and it was offered conditional upon the borrower obtaining - - -

GUMMOW J: What I wanted to ask you was, there is nothing in 47(6) that stipulates that the supplier offers to supply be in any way contractual, is there?

MR LILLEY: I do not believe so, your Honour. I have not turned my mind to that.

GUMMOW J: Whereas there is, for example, in section 45 and 45A.

MR LILLEY: Except to this extent, your Honour, that 47(6) is “on the condition that the person to whom” - - -

GUMMOW J: Yes, the condition may be a large man standing with a crowbar.

MR LILLEY: It may be, yes, your Honour, but in any event, for the purposes of this proceeding, a contravention of 47(1) was conceded in terms of 47(6). I cannot take the matter any further, your Honour.

GUMMOW J: Where is your notice of appeal, Mr Birch?

MR BIRCH: The draft notice of appeal commences at page 63 of the application book, your Honour.

GUMMOW J: Yes, thank you. Is that in its final form as you wish it to be?

MR BIRCH: Your Honour, we might actually wish to refine it, particularly in light of some comments that fell from the Bench this morning.

GUMMOW J: I do not know about that. Do you need a notice of contention?

CALLINAN J: Relying principally, Mr Lilley, on the point that contractually it is bad anyway independently of the operation of the Trade Practices Act.

MR LILLEY: I am sorry, your Honour, I did not understand that?

CALLINAN J: That is bad contractually anyway. It is a question of illegality under the ordinary law of contract. I am suggesting that you may need a notice of contention to that effect, that regardless of the application of the Act it is an illegal contract from which the repayment provisions cannot be severed. In other words, no matter what view you take of the Act, you might still be able to win. I am not saying that is right but - - -

MR LILLEY: Yes, your Honour.

GUMMOW J: Has that been urged before?

MR LILLEY: That it is illegal otherwise, no, your Honour.

CALLINAN J: It is a pure point of law, is it not? There is no factual - - -

MR LILLEY: No, there is no - - -

CALLINAN J: We can see your opponent is nodding.

MR BIRCH: I agree, your Honour - - -

CALLINAN J: He does not contend there were any facts - - -

MR LILLEY: The whole matter almost been a pure point of law from the beginning really - - -

CALLINAN J: We are giving you a further opportunity really, Mr Lilley.

MR LILLEY: Yes, I understand that, your Honour. A notice of contention may be necessary.

GUMMOW J: Yes. It may be necessary for you to receive a revised notice of appeal too.

There will be a grant of special leave in this matter. There is leave to revise the draft notice of appeal and to put on any notice of contention that is necessary. If there is any difficulty that arises between you as to the content of the notice of appeal or the notice of contention, the matter can be re-listed before me for further debate. This would be a one-day case, I would think. We will adjourn to reconstitute.

AT 11.58 AM THE MATTER WAS CONCLUDED