BETWEEN : BHP STEEL (RP) PTY LTD t/as BHP REINFORCING PRODUCTS

Appeal and new trial - Notice of appeal - Application to strike out notice and grounds - Grounds based on misconception of law struck out

Practice and procedure - No case application - Function of judge sitting without jury - Defendant required to elect whether to call evidence - Discretion

Application for leave to amend grounds of appeal allowed in part

1 KENNEDY J: In 1996, BHP Direct Reduced Iron Pty Ltd ("DRI") was constructing a hot briquetted iron plant at Port Hedland. The respondent was a contractor to DRI for part of the material handling facility at the plant. During June and July 1996, Monaveen Pty Ltd ("Monaveen"), which is (or was) a civil engineering contractor, was negotiating a subcontract agreement with the respondent for the supply of civil engineering works for the project. The works covered by the subcontract included steel reinforced concrete foundations to carry conveyor belts. The appellant, which constituted a division of the BHP Corporation, was supplying Monaveen with steel on credit for use in the works. The appellant extended credit to Monaveen, but Monaveen has not paid the appellant the full amount which is owing by it. The appellant asserts that the respondent agreed to, or alternatively represented that it would, ensure that the appellant received payment of the moneys due to it. The appellant instituted proceedings against the respondent, seeking to recover from it the amount which remained outstanding, together with damages or compensation under a number of heads, namely, contract, representations made by the respondent, a claim under the Trade Practices Act 1974 and estoppel.

2 At the close of the appellant's case, counsel for the respondent foreshadowed the possibility that he would be making a no-case submission. On the following day, he indicated that he would make the application, and the learned trial Judge asked counsel why he should not be called upon to elect not to call evidence. Counsel so elected. During the course of the appellant's case, he had, in fact, put into evidence a number of exhibits. The application was eventually successful, judgment being delivered on 20 March 2001.

3 The respondent filed a notice of appeal on 9 April 2001. On 15 June 2001, it filed an application for leave to amend its notice of appeal, together with the proposed amended notice of appeal, just three days prior to the date of hearing of this appeal. In the meantime, on 24 May 2001, the respondent had filed a notice of motion seeking to strike out the appellant's notice of motion and grounds of appeal.

4 When the matters came on for hearing, counsel for the respondent expressed his willingness to deal with the proposed amended grounds of appeal which, he submitted, were objectionable for reasons which were similar to those put forward by the respondent in relation to the initial notice of appeal.

5 The proposed amended grounds of appeal were as follows:

"That the learned Judge erred in law, alternatively in fact, alternatively in law and fact in that:

(a) (i) A no case submission was made by the respondent (defendant). The respondent (defendant) elected not to call evidence.

(ii) His Honour fell into error in failing to rule on the respondent's (defendant's) no-case submission.

(aa)(A) The evidence or the weight of the evidence disclosed that the plaintiff had made out a prima facie case in that:

(i) The appellant (plaintiff) was not paid in full for the supplies made to Monaveen Pty Ltd;

(ii) The respondent (defendant) failed to call evidence in support of the plea that it had reasonable grounds for making such representation;

(iii) His Honour found that the appellant (plaintiff) relied on the said correspondence and discussions in continuing and increasing steel supplies to Monaveen Pty Ltd;

(iv) The appellant (plaintiff) was not paid for all supplies to Monaveen Pty Ltd by reason that there were not sufficient funds payable to Monaveen Pty Ltd to ensure that the appellant (plaintiff) was paid.

(B) His Honour fell into error in failing to find that the plaintiff (appellant) had made out a prima facie case.

(aaa) By finding that the plaintiff (appellant) had failed to make out an actionable representation, his Honour fell into error in that:

(i) The plaintiff (appellant) made out a prima facie case;

(ii) His Honour accepted the evidence of the plaintiff's (appellant's) witnesses in its material aspects;

(iii) There was no evidence led by the defendant aside from certain documents tendered in cross-examination;

(iv) There was no basis on the evidence for finding against the plaintiff (appellant) in final argument.

(b) His Honour found that the respondent (defendant) by way of the letters of 23 August and 13 September 1996 and the discussions between mid-August and mid-September 1996 informed the appellant (plaintiff) that if it were to continue and increase supplies of steel reinforcing to Monaveen there were or would be sufficient funds available to or under the control of the defendant for the plaintiff to be paid for such supplies. Given this finding the evidence or the weight of the evidence supports the finding that there was an actionable representation as pleaded in paragraphs 14(a), 14(b) or 14(c) of the statement of claim made by the respondent (defendant) in that:

(i) The appellant (plaintiff) was not paid in full for the supplies made to Monaveen Pty Ltd;

(ii) The respondent (defendant) failed to call evidence in support of the plea that it had reasonable grounds for making such representations;

(iii) His Honour found that the appellant (plaintiff) relied on the said correspondence and discussions in continuing and increasing steel supplies to Monaveen Pty Ltd;

(iv) The appellant (plaintiff) was not paid for all supplies to Monaveen Pty Ltd by reason that there were not sufficient funds payable to Monaveen Pty Ltd to ensure that the appellant (plaintiff) was paid.

(c) His Honour found that the representation as to there being little or no risk to the appellant (plaintiff) in so continuing and increasing supplies of steel was not made out in that Frew was aware of the normal contractual risks as to the Monaveen contract being performed in the future. This finding was against the evidence or the weight of the evidence in that:

(i) His Honour's dictum that as the respondent (defendant) had not led evidence it was unlikely that reasonable grounds or any representation as to future matters would have been established;

(ii) Frew relied on the information given to him in the said correspondence and discussions;

(iii) Such reliance was as to there being little or no risk that the appellant (plaintiff) would not be paid for such supplies in that his Honour found that it was just such risk which had prevented Frew so committing the appellant (plaintiff) earlier."

6 The argument for the appellant in relation to grounds (a), (aa) and (aaa) was based upon the no-case submission being a two stage process, the first stage being to ascertain whether the appellant had made out a prima facie case, and the second stage being to make a "final ruling" on the respondent's no-case submission. This argument is based upon a misconception. Whilst it might be said that there is a two stage process when the trial is by a Judge and jury, for the reason that the trial Judge may not intrude upon the jury, this is not the case where the trial is by Judge alone.

7 The general practice in civil cases tried by a Judge without a jury in Western Australia is for the Judge to require a defendant who wishes to make a submission of no case to elect whether to call evidence, and to decline to rule on the submission until that election is made. The primary reason for this practice is to avoid a new trial if an appeal against a decision of no case to answer is successful. The trial Judge does, however, have a discretion and he or she may, in special circumstances, decide not to require the defendant to make an election - see Ralph M Lee (WA) Pty Ltd v Fort (1991) 4 WAR 176 at 180. This practice accords with that in the United Kingdom, as to which see Alexander v Rayson [1936] 1 KB 169 at 178 and Young v Rank [1950] 2 KB 510 at 511 - 515.

8 The practice was considered by the Full Court in Victoria in Protean (Holdings) Ltd v American Home Assurance Co [1985] VicRp 18; [1985] VR 187. At 214, Young CJ rejected a submission similar to that which is now put forward on behalf of the appellant. He said:

"In my opinion, there is no substance in the contention of the appellant that the learned Judge erred in ruling upon the submission that Protean had no case to answer in respect of the particular defences by finally deciding the issues. The appellant carried the burden of proving those defences and ex hypothesi all the evidence that the appellant could adduce had been given."

"When a trial judge has to consider an application to be allowed to submit that there is no case to answer, whether by a defendant or by a plaintiff, he must first decide whether he will allow such a submission to be made without requiring the party wishing to make the submission to elect to call no evidence. It will not often be right for a judge to allow that course to be followed except perhaps where the answer depends principally on a question of law. The weight of authority indicates that the practice is the same whether the trial be with or without a jury: see Union Bank of Australia Ltd v Puddy [1949] VicLawRp 46; [1949] VLR 242, at 245. But at any rate where there is no jury it is a matter of discretion: Puddy's Case.

Where a trial judge entertains a submission that there is no case to answer without requiring an election, any one of three results may ensue. The judge may conclude that the evidence could sustain a finding against the party making the submission, in which case he would overrule the submission and allow the case to proceed. The second possible result is that the case is so finely balanced that the judge is not satisfied that even if the evidence could sustain a finding against the party making the submission he would be prepared to make the necessary finding himself. Where the case is being tried without a jury, a trial judge in such a position would no doubt allow the case to proceed ...

The third possible result of a submission that there is no case to answer is that the judge is persuaded by it and decides to uphold it. In reaching such a conclusion a trial judge is entitled to draw all proper inferences from the evidence, but he cannot draw inferences against the party making the submission based upon the absence of evidence from that party. Theoretically he then concludes that the evidence could not sustain a finding against the party making the submission. In such a case he upholds the submission. The consequence must then be that judgment must be entered for the party making the submission. His opponent has simply not discharged the burden which rested on him of establishing his case. Where this result ensues there is no room for a distinction between whether the evidence could sustain a finding against the party making the submission and whether the judge would make such a finding. Such a case is covered by the second possible result referred to above. This third possibility is where the proposition 'no case to answer' means 'would you, the Judge, on the evidence given, decide for the party against whom the submission is made'." cf Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298, at 330 - 1.

10 Tadgell J, at 237, summarised the position as follows:

"When, in the course of a trial by a judge sitting alone, a party indicates that he desires to submit that he has no case to answer upon a contested issue, he is really inviting the Judge to rule that he should not have to adduce evidence, or further evidence, on that issue in order to have it finally decided in his favour. Usually, but not inevitably, the invitation will be issued at the end of the evidence called against the party desiring to make the submission (whom I shall call "the moving party") and before that party calls any evidence on the relevant issue in answer to that of the other party (whom I shall call "the respondent party"). It might be issued after the moving party has called some but not all of his evidence. The judge is entitled, for reasons that seem appropriate to him, to decline out and out to entertain such a submission at the stage at which he is asked to do so. Normally, however, the Judge would not feel justified in refusing outright to hear a submission of no case if to hear it would carry the prospect of justly facilitating the disposition of the litigation. Usually there would be three courses open to him, short of refusing altogether to entertain the submission, namely -

(1) He might decline to entertain the submission at that stage unless the moving party were to elect before making it not to call any evidence, either generally or on the issue on which the ruling was sought; or

(2) He might allow the submission to be made without putting the moving party to any election at that stage but leaving, until he had heard it, the question whether or not he would rule on it without requiring an election to be made; and having heard the submission, and any answer to it by the respondent party, he could either rule on it or not, perhaps requiring an election to be made as a prerequisite to his doing so; or

(3) He might indicate that he would both entertain the submission and rule on it without requiring an election to be made by the moving party."

See also Rasomen Pty Ltd (t/as Shell Fairview Park) v Shell Company of Australia Ltd (1997) 144 ALR 497.

11 In Naxakis v Western General Hospital [1999] HCA 22; (1999) 197 CLR 269, which was concerned with a civil trial by jury, the High Court disapproved of the following passage in the judgment of Tadgell J in Protean (Holdings) Ltd v American Home Assurance Co, insofar as it related to a Judge sitting with a jury. His Honour said, at 240:

"[T]he question of the sufficiency of evidence upon a no case submission is whether there is any evidence that ought reasonably to satisfy the tribunal of fact that the facts sought to be proved are established."

At 271, Gleeson CJ indicated that the principles to be applied in determining whether the trial Judge should direct the jury to return a verdict for the defendant in a civil trial by jury were stated by Jordan CJ in De Gioia v Darling Island Stevedoring & Lighterage Co Ltd (1941) 42 SR (NSW) 1 (at 4 - 5). See also Gaudron J at 274 - 275, McHugh J at 281 - 285, Kirby J at 286 - 294 and Callinan J at 309 - 311.

12 Counsel for the appellant, in the course of his submissions, raised a question as to the order of addresses at the trial. In this case, counsel for the respondent, as I have indicated, tendered a number of documents in the course of cross-examining the appellant's witnesses. On this basis, strictly speaking, the appellant had forfeited its right to the last word - see Weller v O'Brien [1962] 1 WLR 885 at 886, and O 34 r 5(3). However, the trial Judge, in inviting counsel for the respondent to address first, indicated that he would be given a right of reply, which he later exercised without any objection from counsel for the appellant. In the course of his submissions to this Court, counsel for the appellant rightly accepted that the order of addresses was "not particularly significant or relevant to the point that the appellant seeks to make". It certainly could not have affected the outcome of the trial.

13 In my opinion, there is no substance in grounds (a), (aa) and (aaa).

14 Ground (b) of the proposed amended grounds of appeal relating to the representations in par 14 of the statement of claim, in my opinion, does now sufficiently state the grounds relied upon in support of the appeal and sufficiently specifies the particulars relied on to demonstrate that his Honour's findings were against the evidence and the weight of evidence - see O 63 r 2(2). It is not appropriate to comment on the weight of the grounds.

15 I would, however, strike out ground (b)(ii), which contends that the respondent failed to call evidence in support of the plea that it had reasonable grounds for making the representations. In the judgment of Young CJ in Protean (Holdings) Ltd v American Home Assurance Co at 215, quoted above, he indicated that, in reaching a conclusion to uphold a submission that there is no case to answer, the trial Judge is entitled to draw all proper inferences from the evidence, but that he cannot draw inferences against the party making the submission based upon the absence of evidence from that party. Adopting that statement, as I do, I would strike out ground (b)(ii).

16 Ground (c)(i) raises a different issue from ground (b)(ii) and refers to what was merely a passing observation by the trial Judge. It is quite apparent that his Honour, in his judgment at 23, was not relying upon the absence of evidence from the respondent to strengthen the appellant's case. The remark was made in the course of what his Honour acknowledged were short, gratuitous comments about the defence. In this case, the onus was on the respondent to establish that it had reasonable grounds on which to make any representations which might ultimately be found. Clearly, it was most unlikely to be able to achieve its objective without itself calling evidence. However, the appellant's claim was found by the learned trial Judge to have failed at an earlier stage. I would strike out this ground.

17 As to grounds (c)(ii) and (iii), in my opinion they sufficiently specify the particulars relied upon by the appellant in seeking to demonstrate that the finding that the representation as to there being little or no risk to the appellant in continuing and increasing supplies of steel was not made out, was against the evidence or the weight of evidence.

18 In the circumstances, I would allow the respondent's application for leave to amend the notice of appeal in terms of the proposed amended notice of motion filed on 15 June 2001, subject to the omission of grounds (a), (aa) and (aaa) and the striking out of grounds (b)(ii) and (c)(i) of the grounds of appeal.

19 WALLWORK J: I agree with the reasons for judgment of Kennedy J and with the orders proposed by his Honour. There is nothing I wish to add.

20 PIDGEON AUJ: I agree with the reasons of Kennedy J.