Inghams Enterprises Pty Ltd v Timania Pty Ltd

REASONS FOR JUDGMENT THE COURT: 1 This is an appeal against orders made by a Judge of this Court at first instance holding each of the appellants in contempt of court and consequential orders. The contempt charges arose out of litigation between the appellants, Inghams Enterprises Pty Ltd ("Inghams") and Christopher Turner, and the respondents, Timania Pty Ltd ("Timania") and Wayne Toner, in this Court in connection with commercial dealings between them. The substantive litigation has now been resolved, and so the respondents have no interest in resisting the appeal. However, the Court has an interest in upholding its own orders. The grounds of appeal included allegations that there had been a failure to provide procedural fairness. Having regard to the fact that the appeal raised important issues in relation to a contempt of court, we therefore sought and obtained the assistance of Mr M J Collins of Counsel as amicus curiae. We are grateful to Mr Collins for his detailed and cogent submissions. 2 The relevant circumstances of the case can be briefly stated. At all material times, Mr Toner carried on a trucking business through the company, Timania. Since 1985, Timania has provided carrying services to Inghams. On 31 March 2004, Mr Toner and Timania commenced proceedings in this Court against Inghams, claiming damages and other relief, such claims arising out of previous business dealings between them. Mr Turner is employed by Inghams as its southern regional manager. 3 Prior to January 2004, Timania had regularly carted chickens from Inghams' depot at Somerville to its depot in Thomastown and from Thomastown to a storage facility in Doveton. In January 2004, Mr Toner was informed that the Thomastown facility was to be closed and that Inghams would need additional transport services to carry loads to Doveton. Mr Toner inquired of Inghams whether or not, if he acquired an additional truck, he would receive the additional work. He was told that he would, provided that he could match the prices charged by another contractor. As a result, in April 2004, Mr Toner acquired a truck, allegedly in reliance upon the representation made by Inghams that he would get this extra work. After acquisition of the additional truck, Mr Toner was given his roster for the following week and commenced to perform his usual work, as well as carting the additional loads. Subsequent events appear sufficiently from the following paragraphs of the reasons given by the primary Judge in the contempt proceedings: '6. Unbeknown to Mr Toner, events were unfolding which would result in the termination (or more likely the repudiation) of Timania's contract to carry the additional loads. These events had their genesis with Inghams' weekly management meeting which was held on Thursday, 22 April 2004. Among the ten senior Inghams employees present were Mr Turner (the most senior person at the meeting) and Mr Lawrence, the Plant Manager at Thomastown. During the meeting Mr Turner mentioned that Mr Toner (he may have also mentioned Timania) had commenced an action against Inghams. Mr Turner knew very little about the action; he had not seen a copy of the statement of claim, Inghams' solicitors had not discussed the claim with him and he described his own involvement with the case as "little to none". The details of the claim were not discussed. Mr Turner mentioned the action because Mr Toner had been invited to Inghams' golf weekend and he voiced the opinion that Mr Toner should not attend whilst the proceedings were on foot. Those present agreed and Mr Toner's invitation was subsequently withdrawn. Mr Lawrence then informed Mr Turner of the new contract with Mr Toner. Mr Turner canvassed whether Inghams should be providing additional work to Mr Toner in light of his action against Inghams. Mr Turner said that "[t]he general view expressed at the meeting [was] that it was not a good idea for … Inghams to allow [Mr Toner] to do delivery services other than his usual runs." 7. Mr Tuner proffered an explanation for this view. He deposed that he was concerned that "if for some reason Toner was successful [in his action against Inghams] then the last few months of his income could be assessed to determine the extent of his claim and this could include income derived from the additional work." He gave the same explanation during cross-examination. I have no hesitation in rejecting his explanation. First Mr Turner did not impress me as a witness. I had the clear impression that Mr Turner, who was well aware of the difficult position he was in, was prepared to say whatever he thought necessary to avoid a finding of contempt. In passing I should mention Mr Turner's conduct in court, conduct which I have tried to put out of my mind (but perhaps not with complete success) while assessing his credibility as a witness. During the cross-examination of another Inghams' employee, I observed Mr Turner making signals to the witness indicating how he should answer questions. The signals included nodding and shaking his head, which I took to be an indication that the witness should answer yes or no (as the case may be), as well as mouthing words. I also saw the witness hesitate before answering questions, I suspect to allow the witness to take instruction as to the appropriate answer. What extraordinary conduct, especially for a person who is being tried for contempt. When I pointed out what was happening, his lawyer asked Mr Turner to leave the courtroom until the conclusion of the evidence. [We have highlighted the latter part of this paragraph as it is relevant to a major ground of appeal.] 8. The second reason for rejecting Mr Turner's explanation is that if he wanted to protect Inghams from additional damages, I believe that he would have said so at the meeting. I am satisfied that this did not happen. First Mr Turner did not say that he mentioned this concern at the meeting. The only other attendee to give evidence was Mr Lawrence. Mr Lawrence's affidavit made no reference to Mr Turner making any statement with respect to mitigating Ingham's [sic] loss. During cross-examination Mr Lawrence made what I regard as a feeble attempt at supporting Mr Turner. He said: "We discussed [Mr Toner] at the meeting, whether Wayne could go on the golf trip, given the legal writ, and he said: 'What do you think we should do? Should we just keep to the current agreements? Should we be' - or words to this effect - 'giving him more income or extra business,' and we sort of didn't make a concrete decision, just thought we shouldn't be adding to his business - or his, you know, extra deliveries." In my view Mr Lawrence gave this evidence for the sole purpose of backing up Mr Turner, without regard to its truthfulness. 9. The third reason for rejecting Mr Turner's explanation is that if he made any comment about protecting Inghams at the meting, other attendees would have been called to verify that evidence due to its importance. The other attendees were not called and no explanation was given for their absence. I assume, as I am entitled to do, that they were not called because their evidence would not have supported Mr Turner. 10. The final reason arises from correspondence that passed between Middletons, who act for the applicants, and Freehills, the solicitors for the respondents. I will deal with that correspondence, as well as the inferences to be drawn from it, later in these reasons.' 4 His Honour then referred to certain other aspects of the evidence and concluded: '15. In these circumstances I reject Mr Turner's and Mr Lawrence's assertion that no final decision had ever been taken to cancel Timania's contract. It is clear that the decision was taken either at the management meeting or shortly thereafter, and certainly no later than early Friday morning. 16. I find the facts to be as follows. Mr Turner decided that Timania should not be allowed to carry any extra loads. Two reasons informed his decision: one was to punish the applicants for bringing the Federal Court action and the other, which follows from the first, was to put financial pressure on the applicants to withdraw the action. Mr Lawrence was instructed (probably by Mr Turner) to implement the decision. Mr Lawrence subsequently informed Messrs Willox and Lawler that Mr Toner would no longer be given extra work. It was the responsibility of one of these gentlemen to see that the instruction was implemented. 17. This is just what happened. On Tuesday, 27 April 2004 Mr Toner arrived at the Thomastown depot to load his truck for an ordinary delivery to Doveton. Mr Lawler informed him that he would no longer be doing the additional runs. I have both Mr Toner's and Mr Lawler's account of the conversation. There is very little difference between them. The only difference is that Mr Toner recalls being told the reason why he would no longer be given the extra work. Mr Toner attributes to Mr Lawler the statement that he, Mr Lawler, had been told by Mr Turner that there would be "no more extra work for Toner whilst he is suing the company". Mr Lawler does not recall making this comment. I believe that he did: they were his instruction and there was no reason for him not to pass them on.' OBSERVATIONS REGARDING MR TURNER'S BEHAVIOUR 5 Ground 4 of the Notice of Appeal, which arises out of the highlighted part of [7] of his Honour's reasons, is as follows: 'The learned judge erred in that after observing the behaviour of the second appellant ("Mr Turner") in court, and the resulting response of the witness giving evidence, Mr Lawrence, His Honour failed to sufficiently detail those observations or their likely potential significance in the ultimate finding as to the credibility of those witnesses to the appellant's counsel. As a result the appellants were deprived of the opportunity of having Mr Turner give instructions and/or evidence and/or calling evidence from Mr Lawrence in response to his Honour's detailed observations.' 6 Mr Lawrence was another employee of Inghams. His Honour's intervention is recorded in the transcript as follows: 'His Honour: Can I just interrupt for one second. Mr Harrison, it would be very much in your client's interests to make sure that Mr Turner doesn't seek to instruct the witness on what answers he should give. You'd better tell him or get your solicitor to tell him the consequences of doing what he's doing. Mr Harrison: Perhaps I could take a second just to do that. His Honour: Yes. Thank you. Ask a question.' 7 The appellants' complaint is, in effect, that his Honour had not indicated that he might, in deciding the matter, take into account his observations of Mr Turner's conduct. Had he done so, it is said, the appellants would, or may, have sought to lead further evidence either from Mr Turner or from Mr Lawrence concerning the incident and make submissions concerning it. 8 Counsel have helpfully referred us to a number of cases in which similar problems were considered. In Minagall v Ayres [1966] SASR 151 (Minagall), Ayres was charged summarily with having driven a motor vehicle whilst under the influence of liquor. The prosecution led evidence as to his appearance and conduct at the relevant time, which evidence, if accepted, suggested that he was then under the influence of intoxicating liquor. The Magistrate dismissed the charge, observing that Ayres' behaviour in court during the hearing had satisfied him that the witnesses for the prosecution could have been honestly mistaken as to his conduct. On appeal to a Judge of the Supreme Court, Hogarth J held at 154: 'It is, of course, proper and usual for the Court to take note of the demeanour of a witness when in the witness box giving evidence. This is one of the most common and valuable means available to the Court for arriving at the truth of a matter. It is entirely different, however, for a court to take into account the "actions, mannerisms and idiosyncrasies" of a party while he is sitting in the body of the court, that is to say, while he is out of range of vision of both his own and opposing counsel, when the conduct in question may be calculated to lead the court to a decision in his favour. Such conduct is analogous to a statement made by a party in his own favour out of court, evidence of which, in general, would not be admissible. No reference was made during the hearing of the conduct observed by the special magistrate, and of course counsel for the prosecution had no opportunity to investigate its genuineness.' 9 On appeal to the Full Court, Napier CJ and Travis J said at 156, referring to the above passage: 'But, while we agree with Hogarth J, we desire to guard ourselves against being understood as laying down any absolute rule upon the subject. It seems to us that it is a matter of what we should regard as "fair play and common sense". The condition upon which a judge is at liberty to take notice of what he has seen for himself is that the party should know or be informed of what he has noticed, and have an opportunity of answering or dealing with it. …' Justice Chamberlain apparently concurred in this aspect of their Honours' reasons. 10 In Jobst v Inglis (1986) 41 SASR 399, a trial Judge concluded that the plaintiff in a personal injuries action had exaggerated her injuries, basing that conclusion upon 'the totality of the evidence', including a film, observations of the plaintiff in the witness box and 'her contrasting demeanour and behaviour in the body of the court'. After referring to the decision in Minagall, and in particular to the "fair play and commonsense" observation, Jacobs J (who dissented in the result) said at 402: 'The trial judge, on his own initiative, obeyed that precept. He brought his observations to the attention of counsel for the plaintiff, expressly acknowledging the risk of drawing an unfair conclusion, and invited comment or explanation, an invitation which was accepted by counsel; and after discussion counsel said "it is perfectly true (sic) for your Honour to take all those things into account". Having regard to the explanation offered by counsel it is in my opinion quite unrealistic to suggest that the plaintiff should have been recalled to explain her conduct. A Judge cannot be required or expected to interrupt a trial every time a party gestures or grimaces from the body of the Court, which happens not infrequently; no doubt if the conduct is persisted in, it may be prudent to draw it to the attention of the counsel, or even "warn" the party concerned; but what is "fair play and common sense" in dealing with such a situation will vary from case to case. As I have already said, I can see no judicial impropriety in the present case.' 11 At 408, Matheson J said: 'It is true that the trial Judge drew the attention of counsel to what he had observed, but at that time, notwithstanding that the appellant had been in and out of the witness box, his Honour, curiously, only contrasted what he had observed of the appellant in the body of the courtroom with how she had appeared on the film, making no mention of his observations of her in the witness box. Secondly, it seems extraordinary that if she was really "playing a part" in the body of the court, when she must have known that she was under his Honour's observation, that she did not play the same part in the witness box. Thirdly, his Honour's statement that the forlorn expression which he noticed whilst she sat in the body of the court (appeared) to be consistent with her presentation to the majority of her medical examiners, was not really in accord with the evidence, as counsel demonstrated. Finally, the exchange with counsel took place, not merely after all the defence evidence had been given, but defence counsel had finished his final address and counsel for the appellant was half-way through his address. He was clearly in a most invidious position. His Honour ultimately told counsel his observations, but, in my opinion, current concepts of natural justice required that he should have been told earlier, and at a time when he could have sought instructions, possibly over an adjournment, and possibly applied to recall the appellant.' 12 At 417, Johnston J said: 'In my view it is inevitable that the judge will make observations of a party he observes in the court when that party is not actually giving evidence. Generally speaking such observations will be of no real moment, often perhaps confirming impressions already formed from seeing the person give evidence, perhaps adding slightly to the overall impression. I do not think that a judge is called upon to draw to the attention of counsel every single observation that he makes. I respectfully agree with what was said by Napier CJ and Travers J in Minagall v Ayres, that it is a matter of fair play and common sense, that if any real significance is to be attached to what is observed, the party should be informed of what has been noticed. Here his Honour used his observations in respect of what he plainly regards as a very important finding, namely that the plaintiff had exaggerated her symptoms. I think if he was going to use his observations for this purpose, he was bound to draw the attention of counsel to his observations at a time when it was open to the party to bring forward such evidence as might be desired in explanation of it. I think that his indication to counsel was too late. (In this case it might well be that various of the doctors would have views about the observed behaviour of the plaintiff.' 13 We consider, with respect, that the majority view may be a counsel of perfection. Perhaps we are now a little more flexible in allowing the re-opening of a case, even at a very late stage in the trial. The general principle advanced in all three judgments is, in our view, correct. 14 In Angaston and District Hospital v Thamm (1987) 47 SASR 177 (Angaston), the Full Court was concerned with a workers' compensation claim in which the trial Judge found that the claimant's incapacity was partial and not total. In reaching this decision, the trial Judge took into account observations of the claimant's actions and demeanour in the body of the court and out of sight of counsel, but he had not brought these observations to the attention of counsel. After referring to the decision in Minagall, King CJ continued at 178-9: 'The rule, as appears from the passage cited, is not to be regarded as absolute in the sense that it must be applied rigidly to every observation which a judge might make of a party during the course of a trial outside the witness-box. Something will depend, no doubt, on the circumstances of the particular case and upon the significance of the particular observations. It is clear, however, that where the judge makes observations of the actions or demeanour of a party, which actions and demeanour are not observable by counsel, and makes use of those observations in a way which has a significant influence upon his decision of the case, he is required in justice, before making such use of those observations, to make those observations and the possibility of his using them in the course of his judgment known to counsel at a stage of the hearing at which counsel still has an opportunity of dealing with them in a proper and effective way.' 15 In GIO of New South Wales v Bailey (1992) 27 NSWLR 304, Minagall and Angaston were quoted as authority for a general rule which was said to be 'based upon considerations of fairness and justice'. The same line of decisions was cited by the Court of Appeal of New South Wales with apparent approval in Kappos v State Transit Authority (unreported, NSW Court of Appeal, Clarke, Meagher and Sheller JJA, 25 May 1995) and again in Kassem v Crossley (2000) 32 MVR 179. 16 If, in deciding the present case, the primary Judge proposed to rely upon his observations of Mr Turner, he was obliged to draw them to the attention of counsel. His Honour certainly communicated his view that Mr Turner had been seeking to instruct the witness as to answers. He did not precisely describe the conduct which he had observed but rather the inference which he had drawn from it. Nonetheless, had counsel been in any doubt as to the incident, they could have asked for further details. However, if his Honour proposed to take the incident into account in deciding the case, then he was also obliged to afford counsel an opportunity to lead evidence concerning it and to make submissions. Counsel could only have known that they should seek to do so if they were aware of his Honour's intention. We are not satisfied that his Honour made it clear to counsel that he proposed so to consider the incident. It is true that he referred to "the consequences" but that expression did not necessarily mean that the incident would be relied upon in deciding the case. If anything, the contrary was indicated. The tenor of the remark was that Mr Turner should cease whatever he was doing. It was a reasonable inference that if he did so, there would be no further "consequences". Such "consequences" may well have been that his Honour would deal with Mr Turner for contempt in the face of the Court. We consider that the primary Judge ought to have stated clearly his intention to take the incident into account in deciding the case so that counsel could determine whether or not to lead evidence or make submissions concerning it. 17 In Stead v State Government Insurance Office (1986) 161 CLR 141, the High Court considered a case in which the trial Judge had invited counsel for one party to make submissions upon a basis which differed from that upon which the case was eventually decided. After observing that general principles require that a person's case be tested at a fair trial, the Court (Mason, Wilson, Brennan, Deane and Dawson JJ) observed at 145-6: 'That general principle is, however, subject to an important qualification which Bollen J. plainly had in mind in identifying the practical question as being: Would further information possibly have made any difference? That qualification is that an appellate court will not order a new trial if it would inevitably result in the making of the same order as that made by the primary judge at the first trial. An order for a new trial in such a case would be a futility. For this reason not every departure from the rules of natural justice at a trial will entitle the aggrieved party to a new trial. By way of illustration, if all that happened at a trial was that a party was denied the opportunity of making submissions on a question of law, when, in the opinion of the appellate court, the question of law must clearly be answered unfavourably to the aggrieved party, it would be futile to order a new trial. Where, however, the denial of natural justice affects the entitlement of a party to make submissions on an issue of fact, especially when the issue is whether the evidence of a particular witness should be accepted, it is more difficult for a court of appeal to conclude that compliance with the requirements of natural justice could have made no difference. True it is that an appeal to the Full Court from a judgment or order of a judge is by way of rehearing and that on hearing such an appeal the Full Court has all the powers and duties of the primary judge, including the power to draw inferences of fact … . However, when the Full Court is invited by a respondent to exercise these powers in order to arrive at a conclusion that a new trial, sought to remedy a denial of natural justice relevant to a finding of fact, could make no difference to the result already reached, it should proceed with caution. It is no easy task for a court of appeal to satisfy itself that what appears on its face to have been a denial of natural justice could have had no bearing on the outcome of the trial of an issue of fact. And this difficulty is magnified when the issue concerns the acceptance or rejection of the testimony of a witness at the trial.' 18 At [7] of the reasons for judgment in the present matter, immediately prior to the impugned observations, his Honour was dealing with Mr Turner's credit. His Honour rejected a significant aspect of his evidence, observing that 'First, Mr Turner did not impress me as a witness. I had the clear impression that Mr Turner, who was well aware of the difficult position he was in, was prepared to say whatever he thought necessary to avoid a finding of contempt.' 19 His Honour then commented "in passing" upon the incident with which we are presently concerned, observing that he may not have been able to put it out of his mind. This inevitably suggests that his Honour was frankly conceding that he may have been influenced by it. That would not have mattered had he offered counsel the opportunities to which we have referred. In the circumstances, we cannot be satisfied that the outcome of these proceedings could not have been affected had Mr Turner been given an opportunity to explain the incident and/or had counsel made appropriate submissions. The rejection of Mr Turner's evidence was a significant step in reaching the ultimate decision in this case. Accordingly, there has been a failure to afford procedural fairness. For that reason, the appeal ought to be allowed and the orders below set aside. 20 We turn now to a further ground of appeal.