Autodesk Inc v Dyason

[1995] FCA 696

Federal Court of Australia|1995-08-30|Before: Black CJ, Whitlam JJ, Beaumont J, Davies J, Whitlam J, Like Davies J, Mason ACJ, Brennan JJ

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At a glance

Source facts

Court

Federal Court of Australia

Decision date

1995-08-30

Before

Black CJ, Whitlam JJ, Beaumont J, Davies J, Whitlam J

Source

Original judgment source is linked above.

Judgment (24 paragraphs)

[1]

CATCHWORDS PROCEDURE - Application to reopen orders of a Full Court and order at first instance - new evidence relied upon - fraud not alleged - whether jurisdiction to reopen - whether exceptional circumstances - whether all parties given a fair opportunity to adduce evidence at the trial Federal Court Rules 0.35 r.7 Autodesk Inc v Dyason [No 2] (1993) 176 CLR 300 Charles Bright & Co Ltd v Sellar [1904] 1 KB 6 Chamberlain v Commissioner of Taxation (1991) 28 FCR 21 Flower v Lloyd [1877] 6 Ch D 296 Haig v Minister Administering the National Parks and Wildlife Act 1974 (1994) 85 LGERA 143 Monroe Schneider v Raberem [No 2] (1992) 32 FCR 234 Owens Bank Ltd v Bracco [1992] AC 443 Ex parte Tewkesbury (1898) 19 NSWR 440 Wentworth v Rogers (No 9) (1987) 8 NSWLR 393 COLIN JOHN DONKIN and HEATHER KAY DONKIN v AGC (ADVANCES) LTD No. QG 107 of 1989 Black CJ, Davies and Whitlam JJ 30 August 1995 Melbourne (Heard in Brisbane)

[2]

IN THE FEDERAL COURT OF AUSTRALIA ) ) QUEENSLAND DISTRICT REGISTRY ) No. QG 107 of 1989 ) GENERAL DIVISION ) BETWEEN: COLIN JOHN DONKIN and HEATHER KAY DONKIN Applicants AND: AGC (ADVANCES) LTD Respondent CORAM: Black CJ, Davies and Whitlam JJ. DATE: 30 August 1995 PLACE: Melbourne (Heard in Brisbane) MINUTES OF ORDER THE COURT ORDERS THAT:

The applications be dismissed.
The first-named applicant pay the respondent's costs. NOTE:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

[4]

The history of this litigation and the circumstances under which Mr Donkin's applications come before the Court are discussed in the reasons for judgment of Davies J and of Whitlam J and it is unnecessary for me to repeat them. Like Davies J, I am prepared to assume that this Court does have jurisdiction, not confined to cases of fraud, to allow a case to be reopened even after an appeal has been heard and determined and even where a related or consequential first instance order has been entered: see Haig v Minister administering the National Parks and Wildlife Act 1974 (1994) 85 LGERA 143. It is clear, however, that any such jurisdiction is to be exercised with great caution, having regard to the importance of the public interest in the finality of litigation. In Wentworth v Woollahra Municipal Council (1982) 149 CLR 672 at 684, Mason ACJ, Wilson and Brennan JJ said: "[A]s, we had occasion to point out recently in State Rail Authority NSW v Codelfa Construction Pty Ltd (1982) 150 CLR 28, the circumstances in which this Court will reopen a judgment which it has pronounced are extremely rare. The public interest in maintaining the finality of litigation necessarily means that the power to reopen to enable a rehearing must be exercised with great caution. Generally speaking, it will not be exercised unless the applicant can show that by accident without fault on his part he has not been heard." See also Autodesk Inc v Dyason [No.2] (1993) 176 CLR 300 at 302, 308, 317, 321 and 322. As I have noted, the applicant seeks an extension of time within which to appeal against the order made by Beaumont J in 1991. This application is inappropriate to raise the questions the applicant wants to raise because there has already been an appeal and it has been dismissed. It may also be doubted whether the application for special leave to bring an application to set aside the judgment of Beaumont J "on the grounds of the discovery of new evidence" is appropriate: see Monroe Schneider Associates (Inc) v No 1 Raberem Pty Ltd (No ) (1992) 37 FCR 234 at 239-240 and Re Barrell Enterprises [1973] 1 WLR 19 at 24-27. I understood counsel for the applicant to submit, however, that if the Court did not consider it appropriate to grant leave to bring an application to set aside the judgment the Court should, in its appellate jurisdiction, reopen the earlier appeal, thus providing an opportunity for the exercise of its discretion under s.27 of the Federal Court of Australia, 1976 to receive further evidence.

[5]

In my view, this is not a case in which the Court should exercise such jurisdiction as it may have to reopen the appeal that was heard and determined in December 1991. Essentially, what Mr Donkin complains about are matters that emerged directly from the evidence of his expert witness at the trial, Mr I G Butler from observations made by his own counsel that if a stop-loss mechanism had been in place it would have had the effect, in July 1986, of bringing the loan on-shore, and other aspects of the way in which his own case was presented at the trial In this connection, on of the exhibits in the case, an accountant's report, assumes particular significance. The report, by a partner in KPMG Peat Marwick, was tendered by counsel for AGC without objection by counsel for Mr and Mrs Donkin. The report was prepared on the expressed assumptions that a stop-loss order was in place such as to provide for the bringing of the off-shore currency loan on-shore "at the time unfavourable foreign currency movements reached 10% compared to the original foreign currency rate at the time of entering into the borrowing" and that this situation occurred at 1 July 1986. The accountant's conclusion was that the applicants would have had a net gain of AUD367,000 through the off-shore currency loan compared to the situation where a stop-loss order was in place. The calculations upon which that conclusion rested were attached to the report. The trial judge asked counsel for the applicants whether he had anything to say about the assumptions in the report and received the reply that he did not. Counsel was given the opportunity to consider the report overnight. He did not seek to cross-examine the author. The assumptions stated in the report being accepted, at least tacitly, by counsel for the applicants, and there being no issue about the calculations, the conclusion that the applicants had failed to show that they had suffered any actual loss by reason of the negligence of AGC was one to be expected. On that basis, the order dismissing the application was also to be expected. In such circumstances, the principle that a party is bound by the conduct of his case provides a powerful reason why the Court should refuse to take the exceptional step of allowing a long-completed appeal to be reopened.

[6]

Other considerations also weigh heavily against the exercise of any jurisdiction to reopen the appeal. When the appeal was heard in December 1991 Mr Donkin clearly understood the matters upon which he now relies in support of his application that the case be reopened. They were raised on the hearing of the appeal. That was the appropriate time at which to make an application for the Full Court to receive further evidence, but no such application was made. Another difficulty faces Mr Donkin in persuading the Court to reopen the case on the ground that new evidence, that is likely to have led to an opposite result, is now available. The difficulty is that the evidence is not fresh evidence. The evidence that Mr Donkin wishes to rely upon if the case were reopened is evidence about the actual operation of stop-loss mechanisms in foreign currency transactions in Australia in and about 1986. Mr Donkin's wish to rely upon further evidence, underlines, in another respect, the undersirability of allowing the case to be reopened. What is sought to be done here is not the reopening of an appeal to hear further argument on facts already found. Rather, what is sought to be done is to reopen the fact-finding processes and to do so after an appeal has been dismissed following a full hearing, after an application to the High Court for special leave to appeal has been dismissed, and after the passing of well over three years since the trial. In such a case the public interest in maintaining the finality of litigation points very strongly indeed against the reopening of the case. Finally, as Davies J has pointed out, the trial before Beaumont J was patently a fair trial, and the parties were given a fair opportunity to put anything they wished to put on the question of Mr and Mrs Donkin's loss. Accordingly, assuming there is jurisdiction to reopen a case in circumstances such as the present, there are strong reasons why the case should not be reopened. I would dismiss the applications, with costs.

[10]

MR SHEAHAN: Mr Butler, you know that in this case the Donkins had a Swiss franc line that they drew down in about June of 1986?---Yes. Almost immediately, the Australian dollar dropped against the Swiss franc, and quite substantially. That's right, isn't it?---Yes. In that event, if they had adopted a stop loss type strategy, they would almost immediately have been brought back on shore?---Yes. And they would have been brought back on shore having suffered an immediate capital loss of say, 10 per cent or 15 per cent, wherever the stop loss was placed?---Yes." The case put to Beaumont J by counsel for Mr and Mrs Donkin, Mr Harrison, accorded with this evidence. Beaumont J obtained the agreement of both counsel to the fact that the 10% fluctuation would have occurred by 1 July 1986. His Honour asked Mr Harrison "So that has the effect of bringing the loan on shore?" Mr Harrison replied "Immediately, yes, your Honour." Professor Valentine was not questioned in detail about this matter and it seems probable that, if questioned, he may have given a less simplistic response than that given by Mr Butler. Nevertheless, it should be noted that Professor Valentine did give evidence that, on the happening of the triggering event, there was a decision to be made and that decision should be taken by the client not the financier. Beaumont J, relying upon the evidence of Mr Butler and the concession of Mr Harrison, held that, on the occurrence of the percentage devaluation, the loan would have come on-shore if a stop-loss mechanism had been in place. The finding was detrimental to the Donkins' case as evidence was called on behalf of AGC that, had the loan come on-shore by 1 July 1986, by which time the 10% fluctuation had occurred, the Donkins would have been financially worse off than in fact they were. Therefore, his Honour found that the Donkins had not suffered any loss by reason of AGC's failure to advise the Donkins of the possibility of incorporating a stop-loss mechanism in the arrangement. Shortly before the first appeal, which he conducted himself, Mr Donkin obtained advice that, on the triggering of a stop-loss mechanism, a loan would not ordinarily have been brought on-shore. Mr Donkin put this explanation to the first Full Court. There was no additional supporting evidence put forward in support of the submission and it was rejected. Morling, Gummow and Heerey JJ said:- "In our opinion the reasons given by his Honour are sound. An important part of Mr Donkin's argument was that his Honour was in error in thinking that the triggering of a stop-loss order was effectively to bring an off-shore loan on-shore. We do not agree. Indeed, Mr Butler, who was called in the appellants' case at the trial, said in his evidence in chief that the effect of a stop-loss order was to `effectively bring the loan on-shore.' Mr Jones, the respondent's expert, gave evidence to the same effect. As we understood Mr Donkin's argument, it was to the effect that evidence could have been, but was not, called at the trial to demonstrate that the triggering of a stop-loss order does not have the effect of bringing an off-shore loan on-shore. He therefore sought an order that there be a new trial to allow such evidence to be given. We do not think any case was made out on the hearing of the appeal for a new trial. Mr Donkin was quite unable to persuade us that his case was not properly presented at the trial or that the type of evidence which he says could have been called is, in fact, available. The evidence would be inconsistent with the evidence called at the trial from the appellants' own expert." Mr Donkin has now applied to this present Full Court for leave to appeal out of time from the judgment of Beaumont J or, alternatively, for leave to institute proceedings to set aside the judgment of Beaumont J and the judgment of the first Full Court. The application to set aside the judgments has been referred by the Chief Justice for hearing by a Full Court.

[11]

The Court has received affidavits by Professor G. Carmichael, Mr M. Bennett and Mr A.C. Johnson as to the normal operation of a stop-loss mechanism. Associate Professor B.F. Hunt had also provided the Donkins with an opinion. If this evidence were accepted, it would suggest that the fact found by his Honour may have been wrong. Counsel for Mr Donkin contended to the Court that the evidence given by the expert, Mr Butler, to which I have referred and which was relied upon by counsel for Mr and Mrs Donkin at the trial, was incorrect and that it was not until some time after the trial that Mr Donkin had become aware of the true position. Counsel for Mr Donkin referred to Ex parte Tewkesbury (1898) 19 NSWR 440, Monroe Schneider and Associates v Raberem Pty Ltd [No 2] (1992) 37 FCR 234, Charles Bright & Co Ltd v Sellar [1904] 1 KB 6 and Flower v Lloyd [1877] 6 Ch D 296 to support the contention that a judgment of a court may be set aside if it proceeded upon a basic misconception of fact. Counsel relied, inter alia, upon the words of Cozens-Hardy LJ in Bright v Sellar in which his Lordship said at p.12:- "Doubtless there is ample jurisdiction now to deal by fresh action with some matters which were formerly the subject of a bill of review, or of a supplemental bill in the nature of a bill of review. For instance where a judgment has been obtained by fraud, Birch v Birch [1902] P.130, or where fresh material evidence has been obtained since the judgment which could not have been previously procured, Boswell v Coaks 6 R.167." Counsel was, however, unable to point to any case since the introduction of the Judicature Act 1873 of the United Kingdom in which a judgment duly entered had been set aside on the ground which counsel propounded. In Autodesk Inc v Dyason [No 2] (1993) 176 CLR 300, the High Court of Australia considered the circumstances in which an order of the Court may be reviewed. In that case, the order of the Court had not been perfected by entry. However, observations of members of the Court were not necessarily limited to that circumstance. Mason CJ, dissenting, said at 301-302:- "The exercise of the jurisdiction to reopen a judgment and to grant a rehearing is not confined to circumstances in which the applicant can show that, by accident and without default on the applicant's part, he or she has not been heard. It is true that the jurisdiction is to be exercised with great caution (Wentworth v. Woollahra Municipal Council (1982), 149 C.L.R. 672, at p.684; State Railway Authority of N.S.W. v. Codelfa Construction Pty. Ltd. (1982), 150 C.L.R. 29, at p.38, having regard to the importance of the public interest in the finality of litigation. It is equally true, as this Court said in Wentworth v. Woollahra Municipal Council (supra at p.684), that [g]enerally speaking, it will not be exercised unless the applicant can show that by accident without fault on his part he has not been heard.' But these statements do not exclude the exercise of jurisdiction to reopen a judgment which has apparently miscarried for other reasons, at least when the orders pronounced have not been perfected by the taking out of formal orders. So much was acknowledged by Brennan, Dawson, Toohey and Gaudron JJ. in Smith v. N.S.W. Bar Association (1992) 176 C.L.R. 256, at pp.264-266 when their Honours said: if reasons for judgment have been given, the power is only exercised if there is some matter calling for review.'" The Chief Justice then referred to several circumstances in which decisions had been reopened and went on to say at 302-303:- "These examples indicate that the public interest in the finality of litigation will not preclude the exceptional step of reviewing or rehearing an issue when a court has good reason to consider that, in its earlier judgment, it has proceeded on a misapprehension as to the facts or the law. ... However, it must be emphasized that the jurisdiction is not to be exercised for the purpose of re-agitating arguments already considered by the Court; nor is it to be exercised simply because the party seeking a rehearing has failed to present the argument in all its aspects or as well as it might have been put. What must emerge, in order to enliven the exercise of the jurisdiction, is that the Court has apparently proceeded according to some misapprehension of the facts or the relevant law and that this misapprehension cannot be attributed solely to the neglect or default of the party seeking the rehearing. The purpose of the jurisdiction is not to provide a backdoor method by which unsuccessful litigants can seek to reargue their cases." Deane J dealt with the matter on the footing that the applicants had not been given an adequate opportunity to present submissions in relation to the disputed fact. Brennan J said at 309:-

[12]

"It is one thing to reopen an appeal after judgment if the Court has reached a conclusion by adopting a proposition of fact or law which the unsuccessful party has not had an opportunity to argue. In that event, natural justice is denied and it can be said that the Court's jurisdiction to hear and determine the matter is not exhausted. But that is not the present case. Here the ground on which the appeal was determined had been argued in the courts below and had been the subject of submissions in this Court. The appeal was determined after it was fully heard. That being so, I find no jurisdiction to set aside the judgment already pronounced merely because it is submitted by the unsuccessful party that, on further argument, the Court would be satisfied that it had reached the wrong conclusion in law." Dawson J said at 317:- "Whilst the Court has jurisdiction to entertain an application to vacate orders which it has made, at all events before those orders have been perfected by the entry of judgment (cf. University of Wollongong v. Metwally [No. 2] (1985), 59 A.L.J.R. 481, at p.482; 60 A.L.R. 68, at p.70), (that not having occurred in this case), it is a jurisdiction to be exercised cautiously, bearing in mind the public interest in the finality of litigation (See State Rail Authority of N.S.W. v. Codelfa Construction Pty. Ltd. (1982), 150 C.L.R.. 29, at pp.38, 45-46). In Wentworth v Woollahra Municipal Council (1982) 149 CLR 672 at p.684, the Court said: `[T]he circumstances in which this Court will reopen a judgment which it has pronounced are extremely rare. The public interest in maintaining the finality of litigation necessarily means that the power to reopen to enable a rehearing must be exercised with great caution. Generally speaking, it will not be exercised unless the applicant can show that by accident without fault on his part he has not been heard.'" Gaudron J said at 328:- "[Q]uite apart from the question whether the respondents were given an opportunity to be heard on the issues in the [previous judgment], they are entitled to have the judgment vacated if the interests of justice so require. Having regard to the significance [of the subject matter of the case and] this Court's status as Australia's final court of appeal, it seems to me that the interests of justice would require that course if it were fairly arguable that the judgment involved a misunderstanding of the facts or misapplication of the law in relation to one or more of the issues on which the respondents now wish to put further argument." I take her Honour's remarks and Dawson J's remarks to relate to the circumstance that the order of the Court had not been perfected.

[13]

In Wentworth v Rogers (No 9) (1987) 8 NSWLR 393 Kirby P, delivering the judgment of the Court, Kirby P, Hope and Samuels JJA, accepted that there may be unusual circumstances, apart from fraud, where a court would set aside or vary a perfected order. At 394-5, his Honour said:- "It is not necessary in this case to explore the precise extent of and limits upon the power of the Court to vary or supplement orders made by it: cf Bailey v Marinoff (1971) 125 CLR 529 and Southern Cross Exploration NL v Fire and All Risks Insurance Co Ltd (1986) 7 NSWLR 319. Clearly, to the extent that such a power exists, it would only be used in the most exceptional of cases. It would certainly not be used in the present case upon the ground advanced by the appellant. Accordingly, it is neither necessary nor useful to charter, in this case, the boundaries of the Court's residual discretion to correct or supplement orders made by it." His Honour repeated this view in Haig v Minister Administering the National Parks & Wildlife Act 1974 (1994) 85 LGERA 143 and, at 153, said of the jurisdiction, "It is truly exceptional." In this Court, the circumstances in which an order may be varied or set aside have been set out in O.35 r.7 of the Federal Court Rules, which reads:- "7.(1) The Court may vary or set aside a judgment or order before it has been entered. (2) The Court, where it is not exercising its appellate or related jurisdiction under Division 2 of Part III of the Act, may if it thinks fit vary or set aside a judgment or order after the order has been entered where - (a) the order has been made in the absence of a party, whether or not the absent party is in default of appearance or otherwise in default and whether or not the absent party had notice of the motion for the order; (b) the order was obtained by fraud; (c) the order is interlocutory; (d) the order is an injunction or for the appointment of a receiver; (e) the order does not reflect the intention of the Court; or (f) the party in whose favour the order was made consents. (3) A clerical mistake in a judgment or order, or an error arising in a judgment or order from an accidental slip or omission, may at any time be corrected by the Court. (4) Sub-rule (2) shall not affect the power of the Court to vary or terminate the operation of an order by a supplementary order."

[14]

Notwithstanding this rule, I assume that the Court may reopen a case if there were a truly exceptional circumstance apart from fraud which required a matter to be reopened in the interests of justice. The circumstances in which a court will review the facts in circumstances of fraud have been clearly enunciated. Spender, Gummow and Lee JJ examined that matter recently in Monroe Schneider v Raberem. Their Honours followed the principles enunciated by Lord Bridge in Owens Bank Ltd v Bracco [1992] AC 443 at p.483 and adopted the summary made by D.M Gordon QC in his article "Fraud or New Evidence as Grounds for Actions to Set Aside Judgments" (1961) 77 LQR 358 (Pt.1), 533 (Pt. 2). The jurisdiction may be exercised in the following circumstances:- "(a) evidence newly discovered since the trial; (b) evidence that could not have been found by the time of the trial by exercise of reasonable diligence; (c) evidence so material that its production at the trial would probably have affected the outcome; and when the fraud charged consists of perjury, then: (d) the evidence must be so strong that it would reasonably be expected to be decisive at a rehearing, and if unanswered must have that result." In the present case, any possible defect with the trial was entirely a matter for which the Donkins, their legal representatives and their witness were responsible. Mr Butler gave evidence as to the operation of a stop-loss mechanism and Beaumont J accepted his evidence on this point. Perhaps there was a misunderstanding of Mr Butler's evidence. Perhaps Mr Butler used a loose expression. But if there was such an error, it was promoted by counsel for Mr and Mrs Donkin. Counsel for the Donkins submitted to Beaumont J that he should accept the evidence of Mr Butler on this point. This approach may have been taken because it was a part of the Donkins' case that, if they had been advised about the possibility of adopting a stop-loss mechanism to minimise the risks, they would not have taken the loan in Swiss francs. It was consistent with that point to put the case that, when a stop-loss mechanism operated, the loan came back on-shore. If the present deponents' evidence as to the normal operation of a stop-loss mechanism in 1986 is correct, necessarily, such evidence would have been available at the trial, for the evidence deals with normal practice in foreign currency transactions. Moreover, the evidence would not be likely to be decisive at a rehearing. If further experts were called, the whole trial including the issue of negligence would be reopened. It could not be predicted what the result of that would be. The trial before Beaumont J was patently a fair trial. Evidence was called on behalf of both parties. His Honour adopted a staged process of decision-making so that the parties were aware at all times of the significance of each issue to be resolved. All parties were given a fair opportunity to put anything that they wished to put in relation to the issue. This is not a case when "the applicant can show that by accident without fault on his part he has not been heard." Wentworth v Woollahra Municipal Council at 684. The present complaint appears to come down in its essence to the fact that Mr and Mrs Donkin called as a witness a person who was an expert in the field and the trial Judge relied upon certain of the evidence which he gave. Subsequently, Mr Donkin has come to the view that his expert's evidence did not correctly state the facts. However, as was said by Mason CJ in Autodesk Inc v Dyason [No 2] at 303, the purpose of the jurisdiction to reopen a matter, "is not to provide a backdoor method by which unsuccessful litigants can seek to reargue their cases." In these circumstances, whatever may be the jurisdiction of the Court to reopen a case so that new evidence may be heard - a jurisdiction which the judgments in Auto Desk have left open - the facts of the present case do not disclose those elements which would be essential to doing so, indeed they weigh heavily against a reopening of the case. It is therefore unnecessary to consider whether, as Mr Donkin raised substantially the same issues before the first Full Court, he is now estopped from raising them again. Cf. Chamberlain v Commissioner of Taxation (1991) 28 FCR 21. For these reasons, I would refuse the applications and would order that the applicant pay the respondent's costs thereof. I certify that this and the 10 preceding pages are a true copy of the reasons for judgment herein of the Honourable Justice Davies. Associate: Date: 30 August 1995

[17]

In the judgment, which is referred to in the orders sought, Beaumont J held that the applicants had not suffered damage as a result of a breach of duty by the respondent. Accordingly, they could not succeed in their claim in negligence. On the same day, 9 August 1991, Beaumont J made an order dismissing their application. The applicants did, in fact, appeal from that judgment. The appeal was heard and determined by a Full Court (Morling, Gummow and Heerey JJ). The judgment of the Full Court sets out the essential background to the appeal (at pp 1-3): "The appellants instituted proceedings against the respondent claiming damages and other relief by reason of their entry into a foreign currency borrowing transaction in 1986. They relied upon several causes of action. They asserted that the respondent had engaged in conduct which was misleading or deceptive and that they entered into the borrowing transaction in consequence of fraudulent misrepresentations made to them by the respondent. Claims in negligence were also made. After a lengthy hearing Beaumont J held that all but one of the appellants' claims had not been made out. But he found that the respondent was in breach of a duty of care it owed the appellants to advise them on the steps which were available to minimise the risks associated with the foreign currency transaction into which they entered. Nevertheless, he was of the opinion that the appellants had failed to show that they suffered any actual loss by reason of the respondent's negligence. Accordingly, he dismissed the proceedings. The appellants, who were represented by counsel at the trial but who conducted their appeal without the benefit of legal representation, claim that his Honour was in error in finding that they did not suffer any damage as a result of the respondent's negligence. In their notice of appeal they also claim that his Honour erred in dismissing the other causes of action upon which they relied at the trial. However, upon the hearing of the appeal no real argument was presented that the appellants' other claims were wrongly dismissed. As the respondent does not challenge his Honour's finding on negligence, the only issue which falls to be determined on the hearing of the appeal is whether his Honour's finding that the appellants failed to prove they had suffered damage by reason of the respondent's negligence was correct. Beaumont J found that the respondent owed a duty to the appellants to disclose and explain the risks of loss by entering into a foreign currency loan and a further duty to advise them of the steps available to minimise those risks. It was the second of those duties that his Honour found to have been breached by the respondent. He held that it should have, but did not, inform the appellants that it was possible for them to hedge "selectively" or to use a stop-loss mechanism so as to minimise the risks associated with borrowing in a foreign currency. However, his Honour found that the respondent did not have any obligation to manage the loan which the appellants obtained, or to monitor it during its currency. His Honour rejected an argument [by the appellants] that, if properly advised by the respondent of the possibility of hedging selectively or using a stop-loss mechanism, the appellants would have abandoned entirely the idea of borrowing off-shore. ... He found that it was more likely that the appellants would have put in place a stop-loss arrangement operation at a level of about 10%, i.e. when an unfavourable foreign currency movement of about 10% occurred."

[18]

The trial before Beaumont J was conducted in phases. His findings referred to by the Full Court were made sequentially in a series of separate reasons for judgment. The finding that the applicants would probably have borrowed offshore with the benefit of a stop-loss arrangement operating at approximately 10% was made in a judgment published on the afternoon of 8 March 1991. After a short adjournment his Honour then dealt with the question of the applicants' damage. Counsel for the respondent tendered without objection a report prepared that same day by Mr R.S. Jones, a chartered accountant. The report purported to calculate what the applicants would have owed at 5 June 1990 (being the date when the foreign currency loan was actually converted into Australian dollars), if a stop-loss order had been in place when that loan was made on 2 June 1986. The explicit assumption was made in the report that a stop-loss order "would provide for the bringing of the OCL [offshore currency loan] onshore at the time unfavourable foreign currency movements reached 10% compared to the original foreign currency rate at the time of entering into the borrowing". Mr Jones's calculations then showed that as at 5 June 1990 the applicants were better off by an amount of $367,000 than they would have been, had a stop-loss order been in place. Senior counsel for the applicants expressly accepted the assumptions made in that report. He also acknowledged that such a stop-loss order would have been triggered on 1 July 1986 with the effect of bringing the loan onshore immediately. Beaumont J gave the applicants an opportunity overnight to check Mr Jones's calculations. The next morning counsel for the applicants stated that they had nothing further to say on the report, having indicated the previous day that the trial judge could proceed on the basis that the report was correct. Accordingly, as I have already mentioned, Beaumont J held that the applicants had suffered no damage. This conclusion relied on Mr Jones's report. It is this judgment which was the subject of attack before the Full Court. As noted in the above excerpt from the Full Court's judgment, the applicants appeared in person on the appeal and challenged the finding that they had suffered no damage. At the hearing of the appeal the applicants handed up a summary of five pages of argument on this point. The firstnamed applicant developed this argument in oral submissions. The applicants conceded that at trial their counsel had accepted the assumptions in Mr Jones's report. However, they submitted that there had been "no evidence that the stop-loss mechanism, if triggered, would have the consequence of bringing the loan back on shore". They relied upon the evidence of an expert on foreign exchange Professor Tom Valentine, who was called at the trial by the respondent, in order to explain the true operation of a stop-loss mechanism. Professor Valentine had described the use of forward foreign exchange contracts to reduce risks involved in offshore loans. He had said that such contracts may be used in the passive management of a loan by a stop-loss mechanism which involves covering the loan when a loss of a certain percentage is suffered. Professor Valentine also had deposed that: "The usual procedure is to cover the loan until the next rollover when it can be converted into a AUD loan. It is not usual for a loan to be converted into AUD ("brought onshore") during a rollover period."

[20]

In cross-examination Mr Butler initially agreed with the proposition that a stop-loss regime "basically involves a borrower making a decision for practical purposes, once and for all, that they have had enough of the foreign exchange exposure and would like to get out". However, he later made it clear that the stop-loss level would have been pre-determined and that the forward contract could be taken out with a bank other than the lender. He agreed that hedging defined the borrower's foreign exchange exposure at the settlement date of the forward contract, at which point the borrower has to make "a fresh decision" whether to remain offshore or to come onshore. Finally, Mr Butler acceded to the suggestion that in the present case "if [the applicants] had adopted a stop-loss strategy, they would almost immediately have been brought back onshore". (Emphasis supplied.) As the above chronicle should reveal, it must be taken to have been common ground before the Full Court that, had the stop-loss mechanism been triggered, the loan could still not be brought back onshore until the first rollover. The applicants contended that they would have decided to leave the loan offshore at that date and at the subsequent six-monthly rollovers prior to 5 June 1990. They relied upon the evidence that the loan did, in fact, remain offshore during the whole of that period and the history of what were said to be favourable movements in the exchange rate. On the other hand, counsel for the respondent submitted that the applicants would have brought the loan onshore at the first opportunity (that is, on 2 December 1986). They pointed out that, whilst the applicants did not give any evidence as to what they would have done had they been advised in the way that the trial judge found they should have been, the applicants' case had always been that, properly advised, they would never have borrowed offshore at all. Further, it was said that this was a big loan for persons in the financial position of the applicants and that in those circumstances they would not have waited for the Australian dollar to "bounce back" at future rollovers. In the event the Full Court disposed of the appeal without making any finding on the hypothesis that a "fresh decision" had to be made by the applicants on the first rollover. After describing as "sound" the trial judge's reasons for finding that the applicants did not demonstrate any loss, their Honours said: "An important part of Mr Donkin's argument was that his Honour was in error in thinking that the triggering of a stop-loss order was effectively to bring an off-shore loan on-shore. We do not agree. Indeed, Mr Butler, who was called in the appellants' case at the trial, said in his evidence in chief that the effect of a stop-loss order was to "effectively bring the loan on-shore". Mr Jones, the respondent's expert, gave evidence to the same effect. As we understood Mr Donkin's argument, it was to the effect that evidence could have been, but was not, called at the trial to demonstrate that the triggering of a stop-loss order does not have the effect of bringing an off-shore loan on-shore. He therefore sought an order that there be a new trial to allow such evidence to be given. We do not think any case was made out on the hearing of the appeal for a new trial. Mr Donkin was quite unable to persuade us that his case was not properly presented at the trial or that the type of evidence which he says could have been called is, in fact available. The evidence would be inconsistent with the evidence called at the trial from the appellants' own expert."

[22]

Subsequently the applicants informed the Registrar of the High Court that they did not intend to proceed with their application. They did not appear on the hearing on 10 April 1992, when the High Court (Deane, Dawson and McHugh JJ) ordered that the application be dismissed. Meanwhile, an order had been made in respect of the respondent's cross-claim against the applicants. On 24 December 1991 Spender J ordered that the applicants pay $3,008,640.84 to the respondent. That order was entered the same day. A bankruptcy notice in respect of this order was served on the firstnamed applicant on 20 May 1994. By notice of motion filed on 29 June 1994 he then applied to set aside not the order of Spender J, but the order of Beaumont J made on 9 August 1991. He invoked the power of the Court under O 35 r 7(2)(e) of the Federal Court Rules to set aside an order that does not reflect the intention of the Court. Affidavits filed in support of the motion were made by two experts: Jeffrey Carmichael, a professor of finance at Bond University, and Mike Bennett, a principal in a treasury consulting firm called GBP Treasury Services. Professor Carmichael described in detail the operation of stop-loss orders, amplifying and to some extent clarifying the evidence given at trial by Professor Valentine. Mr Bennett made calculations of the effect upon the applicants' borrowings of a stop-loss order being re-set at each rollover at a level of 10% against the currency of the loan. The motion was heard by Kiefel J on 9 December 1994. During the hearing senior counsel for the applicants submitted that, even if the order of Beaumont J could not be set aside under par (e) of r 7(2), it could be set aside under par (b) of r 7(2) on the basis that it was obtained by fraud. Accordingly, he requested that the motion be adjourned. Kiefel J made an order that, unless affidavits in support of this allegation were filed and served by 13 January 1995 together with a solicitors' letter in certain terms, the motion stand dismissed. No such affidavits were filed. On 31 January 1995 the firstnamed applicant filed his present "application" for an extension of time within which to institute an appeal. In his affidavit in support he said that the "question involved [was] the true meaning and effect of a stop loss mechanism as stated by Professor Valentine in his evidence [before Beaumont J]". He relied upon the same affidavits as were apparently read before Kiefel J. The draft notice stated the grounds of the proposed appeal this way: "3. That having regard to evidence subsequent to the application for special leave to appeal to the High Court brought by the appellant: a) the learned trial judge erred in giving judgement in favour of the respondent; b) the learned trial judge erred in finding that the appellant had failed to show that he suffered any actual loss by reason of the negligence of the respondent; c) the learned trial judge erred in finding that the affect [sic] of a stop loss mechanism was to bring an off shore loan on shore; d) the learned trial judge should have ordered that the property taken by the respondent be returned to the appellant and an account be taken of the then debt to the respondent regarding [sic] having been had to the profits earned from the property of the appellant during the respondent's period of possession."

[23]

In view of the fact that a Full Court has already dismissed an appeal from the order in question, it is obviously nonsense to speak of instituting an appeal. Counsel for the applicants submit, however, that the Court should rescind its earlier order (presumably that made by the earlier Full Court on 5 December 1991) and consider "within its appellate jurisdiction" whether to allow the appeal "on the grounds of new evidence". Such an application should have been made to the same Full Court, but that Court cannot now be reconstituted since two of its Judges have since resigned. In any event, the parties have made no objection to the present constitution of the Court, which can perhaps be justified by the doctrine of necessity, notwithstanding the provisions of s 14(3) of the Act. The order of the earlier Full Court has not been entered. Order 35 rule 7(1) of the Federal Court Rules recognizes that the Court may set aside any order that has not been entered. This power extends to the orders made in the exercise of appellate jurisdiction. Speaking of such a power to correct unperfected orders in Haig v Minister Administering the National Parks and Wildlife Act (1994) 85 LGERA 143, Kirby P said (at 153): "... special circumstances must be shown before the discretion to set aside or alter orders which have been announced is enlivened. The purpose of the jurisdiction is "not to provide a backdoor method by which unsuccessful litigants can seek to reargue their cases" or "simply for the purpose of giving a party the opportunity to present a case to better advantage": see Autodesk Inc v Dyason [No 2] (1993) 176 CLR 300 at 301, 312, 328; State Rail Authority of New South Wales v Codelfa Construction Pty Ltd (1982) 150 CLR 29 at 38, 45f; Wentworth v Woollahra Municipal Council (1982) 149 CLR 672 at 683; 51 LGRA 212 at 220; Permanent Trustee Co (Canberra) Ltd v Stocks & Holdings (Canberra) Pty Ltd (1976) 28 FLR 195 at 201. Special or "very special" circumstances must be shown, amounting to a serious oversight or departure from due process or mistake. Otherwise, the orders pronounced must stand. In Australian courts other than the High Court of Australia, they must then be corrected, if at all, by appeal or by judicial review where available."

[24]

I respectfully agree with this statement of the special circumstances required to set aside orders that have not been entered. In the present case the application to re-open reveals no special circumstances why the appeal should be re-opened. The applicants may have obtained new proofs of evidence since the High Court refused special leave, but the evidence is not new. Evidence was, of course, available at the time of the trial and of the appeal about the operation of stop-loss orders. Indeed, writing extra-judicially in May 1990, a prominent commercial judge referred to expert evidence given in several cases about stop-loss orders and like measures: Rogers CJCommDiv, "Developments in Foreign Currency Loan Litigation", (1990) 1 JBFLP 201. Such evidence would certainly contradict the assumption in Mr Jones's report. Evidence could have been adduced to explain that, when a stop-loss order was triggered, the loan still remained offshore with interest due at rollover, but that interest rate differentials between the Australian dollar and the foreign currency obtaining when the forward contract was taken out were reflected in the forward margin (or premium) payable for the foreign exchange to be delivered at rollover. By the time of the appeal the applicants clearly understood the operation of stop-loss orders, yet they made no application that the Full Court exercise its discretion under s 27 of the Act to receive further evidence. I do not say that the earlier Full Court was bound to accede to such an application. There was certainly nothing unfair about the trial of the damage issue before Beaumont J, where the applicants' counsel accepted the factual basis for Mr Jones's assumption. However, such evidence would have demonstrated the error in the assumptions upon which the trial judge relied as to how a stop-loss order operated. This would, in turn, have highlighted the need to consider the hypothesis that the applicants would not have brought the loan back onshore. Cf Commonwealth Bank of Australia v Mehta (1991) 23 NSWLR 84 at 108. The amended application presently before the Court is misconceived insofar as it seeks "special leave" to commence a proceeding to set aside the judgment of Beaumont J. In Monroe Schneider Associates (Inc) v No 1 Raberem Pty Ltd (No 2) (1992) 37 FCR 234 a Full Court of this Court considered whether an action lies to set aside a judgment on the ground of fresh evidence alone. Their Honours explained (at 239) that prior to the introduction of the Judicature system in England the procedure in Chancery had been that, where it was sought to present a bill of review for a rehearing to set aside a decree based on the discovery of new evidence, a preliminary petition for leave was necessary. Perhaps this explanation is the source of the procedural confusion exhibited by the firstnamed applicant here. In Monroe Schneider Associates (Inc) v No 1 Raberem Pty Ltd (No 2) the Full Court took the view that it was unnecessary to express a concluded view on the availability of a jurisdiction to set aside judgments by reason of new material evidence where fraud was not alleged. However, for reasons given by their Honours (at 239-240) any such jurisdiction had, in my opinion, long ceased to exist when this Court was created by the Parliament. If I am wrong and such an action does lie, then no leave or special leave is required to commence the relevant proceeding. However, an action based on the evidence used in the present application would be futile and bound to fail. The respondent would be entitled to have such a proceeding summarily dismissed. The evidence would, in my opinion, undermine a critical finding of the trial judge and may have produced an opposite verdict on the question of damage. But the evidence is not fresh. It was available at the time of trial. Indeed, it appears quite clearly from correspondence annexed to the affidavits in support of the present application that such evidence could have been adduced from Professor Valentine or Mr Butler. The applications should be refused with costs. I certify that this and the preceding thirteen pages are a true copy of the reasons for judgment herein of the Hon. Justice A.P. Whitlam Associate: Date: 30 August 1995 Counsel for the firstnamed applicant: A. Vasta QC R.A. Lo Monaco Solicitors for the firstnamed applicant: Barker & Associates Counsel for the respondent: P.A. Keane QC M.E. Eliadis Solicitors for the respondent: Feez Ruthning Date of hearing: 27 April 1995 Date of judgment: 30 August 1995