the Official Trustee in Bankruptcy: Mr. B.J. Skinner

Solicitors for the First Respondent, Lobban McNally and Harney

Counsel for the Second Respondent, Mr. D.B. McGovern

Solicitors for the Second Respondent, C.E. Cranney and Co.

1. The orders made by Sweeney J on 11 February 1993 be varied

by substituting for Order 6 an order in the following

terms:-

"Subject to the right of the Trustee to be indemnified for

its costs out of the assets of the bankrupt estates, the

costs of Welona Pty. Limited and the Official Trustee in

Bankruptcy be paid by Mr. Wilson and Ms. Williams personally

provided that the costs to be recovered by the Trustee be

limited to the costs to which the Trustee would have been

entitled as a submitting respondent."

2. Subject to paragraph 1 of these orders, the appeal be

dismissed.

3. The appellants' notices of motion filed on 30 September 1993

and 8 February 1994 be dismissed.

4. Subject to the right of the Trustee to be indemnified for

its costs out of the assets of the bankrupt estates, the

costs of the appeal and of the two notices of motion of

Welona Pty. Limited and the Official Trustee in Bankruptcy

be paid by Mr. Wilson and Ms. Williams personally provided

that the costs to be recovered by the Trustee be limited to

the costs to which the Trustee would have been entitled as a

submitting respondent.

Note: Settlement and entry of orders are dealt with in Order 36 of the Federal Court Rules.

SHEPPARD, FRENCH and EINFELD JJ This is an appeal from a judgment of a judge of this Court (Sweeney J) against orders made by his Honour on an appeal from the Official Trustee's decision not to uphold the appellants' objections to a proof of debt lodged by the second respondent. The proof was lodged against the bankrupt estates of the appellants (hereafter collectively referred to as "the Wilsons").

2. The facts of the matter, partly taken from his Honour's judgment, are not complicated. On 7 March 1975 R. Bowen (Properties) Pty. Limited leased the Gardiner's Inn Hotel at Blackheath to one Donald Wiggins. The lease was for a term of five years commencing on 29 January 1975. It contained the usual covenants including a covenant to repair, clause 2(e), which required the lessee to repair, maintain and keep the premises in good and substantial repair. Clause 15 of the lease entitled the lessee, at his option, to renew the lease for a further period of five years from the date of its expiry. The clause contained the usual provision making it conditional on the lessee not being in default under the lease both at the time of the giving of the notice of the exercise of the option and the date of the expiration of the lease.

3. On 6 April 1979, before the lease expired, Mr. Wiggins entered into an agreement to sell the hotel to the Wilsons. Clause 7 of the agreement provided that Mr. Wiggins would apply for the consent of "the Bowens" to the transfer of the lease. The lessor is controlled by Mr. and Mrs. Bowen ("the Bowens"). Initially they agreed to the transfer but later had second thoughts about the matter and refused to give the lessor's consent. This led to proceedings in the Supreme Court of New South Wales instituted by the Wilsons to compel the Bowens to consent to the lease. These proceedings remained on foot for a time but were eventually discontinued when the Bowens, apparently acting on advice, changed their minds and agreed to grant the new lease. The Bowens' company (by that time named Welona Pty Limited) then leased the hotel to the Wilsons by a lease dated 17 July 1980. The lease was for a term of five years commencing on 29 January 1980 and terminating on 29 January 1985. Again the lease contained the usual covenants including a covenant to keep the premises in repair the terms of which were as follows:-

"AND the lessee DOTH HEREBY COVENANT that the lessor

AND ALSO will during the said term well and sufficiently

repair maintain pave empty cleanse amend and keep the said

premises with the appurtenances both inside and outside in good

and substantial repair together with all chimney pieces windows

door fastenings water closets cisterns partitions fixed presses

shelves pipes pumps pales rails locks and keys and all other

fixtures and things which at any time during the said term shall

be erected and made when where and so often as need shall be

damage by fire only excepted."

4. The Wilsons had entered into possession of the hotel prior to the execution of the lease. For a substantial period they left it in the control of a Mr. Massman who managed it for them. This occurred between 1981 and 1983. For reasons which need not be gone into, the Wilsons vacated the premises prior to the expiry of the lease.

5. The heart of the dispute between the Wilsons and the Bowens concerns the state of repair of the premises and the question of who was obliged to repair them. The Bowens' case is that the premises were in reasonable repair at the time that the lease with the Wilsons was entered into and fell into a state of serious disrepair thereafter. The Widsons' case is that the premises were in a very bad state of repair when they went into occupation and that there was either a collateral agreement or a collateral term of the lease which obliged the Bowens to put them in repair. They were not repaired. Eventually the Bowens, really Welona Pty Limited ("Welona"), carried out substantial repairs to the property. Their proof of debt was for the cost of these repairs. Their proof was upheld by the trustee although some items in it were disallowed or reduced.

6. The appeal came on for hearing on 30 September 1993. The Court reserved its decision. Before its judgment could be delivered, it was notified by the Wilsons' solicitors of an application they wished to make for leave to lead fresh evidence. It was said that the evidence was not available to them at the trial. To this end they took out a notice of motion dated 8 February 1994 that the appellants be granted leave to lead further evidence and that, pending the hearing of the motion, the decision on the appeal be "stayed." Notice of the application had been received in December 1993 but the parties were informed that the Court as constituted could not make a hearing day available until 14 February 1990. That accounts for the apparent delay in the filing of the notice of motion.

7. The evidence which the Wilsons say was not available to them consisted of a number of photographs allegedly taken in 1980. These, so it was said, showed the rundown condition of the hotel at the time of the commencement of the lease. It was claimed that, if they had been available at the hearing before Sweeney J, they would have corroborated the Wilsons' evidence. It was claimed that the photographs were not available because they had been mislaid by the trustee.

8. The notice of motion was supported by a number of affidavits. The principal affidavit was that of the appellant, Mr. Wilson, sworn 10 December 1993. He said that on 29 September 1993, i.e. the day before the appeal was first heard, he attended the Federal Court Registry in Sydney with his solicitor, Mr. Whitfield, and obtained access to a box of the exhibits in the proceedings before Sweeney J. Mr. Whitfield removed exhibits 6, 7 and 8 and examined them. Exhibit 6 consisted of a number of photographs and exhibit 7 a different series of photographs. Mr. Wilson said that exhibit 8 consisted of 26 unmarked photographs which he was able to identify as photographs taken by him in 1980. He said that these were photographs which had once been in his possession and which he had given to Mr. Garrett of the trustee's office but had been told had subsequently gone missing. Additionally, he said that one photograph from the bundle comprising exhibit 6 and one photograph in the bundle comprising exhibit 7 were included amongst those which Mr. Garrett had told him were missing. Mr. Wilson said that, after the photographs were examined, they were placed back in the exhibits box and returned to the exhibits clerk.

9. There was a further examination of the photographs on 14 October 1993, i.e. after the appeal was first heard. Mr. Garrett was present during the examination. According to Mr. Wilson, Mr. Garrett was able to identify some of the photographs as those given to him by Mr. Wilson.

10. The photographs said to have been missing were, according to Mr. Wilson's affidavit, referred to by him in para.9 of an affidavit sworn on 22 April 1991 which was used in the proceedings before Sweeney J. In that paragraph, Mr. Wilson said that there were exhibited to him at the time of swearing the affidavit and marked "EAW1" 41 colour photographs that he caused to be taken "in about April 1983". He said that the photographs depicted many of the structural defects which were present at the time the applicants, i.e. the Wilsons, entered into the lease and of the consequential damage caused by the defective condition of the premises. He said that the nature and extent of these defects were communicated by him to Mr. Bowen on a number of occasions from the time of taking possession of the premises until about September 1984. As mentioned, the evidence discloses that the Wilsons took possession in 1979.

11. In his affidavit of 10 December 1993, Mr. Wilson said that the date in para.9 of his earlier affidavit was a typographical error. He said that in fact he took the photographs in April 1980 at the hotel. He did so because he was concerned that Mr. Bowen "was giving me indications that he would not honour his promise to carry out structural repairs to bring the hotel up to a good standard."

12. In the more recent affidavit Mr. Wilson also said that, after he became bankrupt, he was required by the trustee to supply financial and other records to him. Included in the records were the 41 photographs taken by Mr. Wilson in 1980. He delivered them to Mr. Garrett. He saw Mr. Garrett place all his records in an oblong box. He was not given a receipt.

13. He said that on different occasions he visited the trustee and on those occasions the box of photographs was with his records. He also said that early in 1991 he attended the office of the trustee with his then solicitor, Mr. Jenkins, and inspected his records so that he "could swear the affidavit of 22 April 1991." The photographs were with the records and he recalled that they were counted so that they could be accurately referred to in the affidavit.

14. Mr. Wilson said that, prior to the hearing before Sweeney J, he telephoned Mr. Garrett on a number of occasions and had conversations with him about the photographs. On each occasion, so Mr. Wilson said, Mr. Garrett said, "They are missing and cannot be found." Mr. Wilson stressed the importance of the photographs for his case.

15. It is to be noted at this point that, although para.9 of the affidavit of 22 April 1991 said that the photographs were exhibited to the affidavit, that was not the case. Despite the form of para.9 of the affidavit, no exhibit marked "EAW1" became part of it. In the course of his oral evidence before us, Mr. Wilson explained how this came about. I shall refer to this evidence a little later.

16. In addition to relying on Mr. Wilson's affidavit, the Wilsons relied on a number of affidavits sworn by Mr. Whitfield. These affidavits do not bear directly on the matters to be decided. It is unnecessary to refer to the detail of them.

17. Mr. Garrett swore an affidavit on 16 February 1994. He is a senior Assistant Official Receiver and is entrusted with the care and management of the Wilsons' bankrupt estates. He said that, to the best of his knowledge and belief, in the latter part of 1989 or early 1990, he received from Mr. Wilson and Welona, photographs of areas of the hotel. He did not recall the number of photographs he received. He said that he had had several telephone conversations with Mr. Wilson in connection with the photographs he had given him. During one of the conversations Mr. Wilson asked for the return of the photographs. Mr. Garrett said that he searched all his current files and a box containing books of account and financial records but was unable to locate the photographs. He asked the trustee's solicitor, Mr. McNally, whether he knew where they were. Mr. McNally said that the only photographs he had were those provided by Mr. Bowen. Mr. Garrett told Mr. Wilson that he could not find the photographs and would continue searching for them. He could not find them and "became convinced I had lost or misplaced them." Mr. Garrett did not say when he realised that the photographs were lost.

18. He said that on 29 September 1993, i.e. the day before the first hearing of this appeal, Mr. Wilson attended his office. Mr. Wilson again raised the question of the photographs. Amongst other things, Mr. Wilson told him that "we have a surprise to be revealed at the hearing tomorrow."

19. Mr. Garrett referred to an affidavit sworn by him on 2 July 1991 which was used in the hearing before Sweeney J. He said that at the time of swearing that affidavit he had in his possession the various bundles of documents which were referred to in it. He said that he did not realise that some of the photographs may have been the photographs given him by Mr. Wilson. Finally, Mr. Garrett identified two bundles of photographs most of which he said were given to him by Mr. Bowen. He said that there were three in respect of which he was uncertain whether they had been provided by Mr. Bowen or Mr. Wilson. There were a further 27 photographs. Of these, Mr. Garrett said that he believed 26 were those given him by Mr. Wilson. The remaining photograph in this bundle showed a newspaper. He did not believe it was given him by Mr. Wilson.

20. As earlier said, the gravamen of the Wilsons' complaint is that the 26 photographs referred to by Mr. Garrett were not available for use by the Wilsons in the presentation of their case to Sweeney J. The importance of the photographs was that they showed the condition of the hotel in early 1980 and thus demonstrated that the hotel was in a run down condition at or about the time of the lease to them by Welona. Their case is that, if the photographs had been available at the trial, it is likely that the outcome of the case would have been different.

21. As mentioned, exhibit 6 comprised a bundle of photographs which the Bowens contended showed the condition of the premises much later than 1983. Mr. Wilson does not dispute this except that he says that one of the photographs in exhibit 6 was amongst those handed by him to Mr. Garrett and which Mr. Garrett believes he must have mislaid. That photograph was marked exhibit "W1" in the proceedings before us and was separated from exhibit 6.

22. The photographs comprising exhibit 7 were also said by the Bowens to indicate the condition of the premises at or about the time of the termination of the lease. Again Mr. Wilson does not dispute this but says that one of the photographs from exhibit 7 was another photograph taken by him in 1980 and given by him to Mr. Garrett. That photograph has been marked exhibit "X1".

23. Exhibit 8 before Sweeney J in fact consisted not of 27 photographs but of a single photograph showing the newspaper referred to by Mr. Garrett. However, when the papers were returned to the Registry after the hearing before Sweeney J, the bundle of 26 photographs, which may be some of the missing photographs, was placed in an envelope along with exhibit 8. The envelope itself was marked exhibit 8 and the 27 photographs in it were, until this hearing, assumed to be exhibit 8. That was not an assumption made by Sweeney J, but it probably accounts for the inability of Mr. Garrett and others to find the photographs between the date of Sweeney J's judgment and the hearing before us on 30 September 1993. It may be observed that the 26 photographs, which were marked exhibit Y in these proceedings, and the exhibits marked "W1" and "X1" are all the same size. Their appearance is consistent with their having been taken by the one camera. Exhibit 8 before Sweeney J is of a similar size and the same conclusion may be drawn in respect of it. On the other hand, the remaining photographs in exhibits 6 and 7 are of a larger size. There is no issue about their origin. They came from the Bowens.

24. During the hearing of the motion before us, Mr. Wilson was cross-examined. Before his cross-examination began, he gave some additional evidence in chief in which he identified the various photographs to which reference has been made. We allowed this course because none of the photographs was in his possession at the time his affidavit of 10 December 1993 was sworn.

25. Before referring to the detail of Mr. Wilson's oral evidence, we should mention that during the hearing on 30 September 1993, the photographs were examined by members of the Court. The photographs in the envelope marked exhibit 8 were handed to counsel including counsel for the Wilsons. Counsel was asked whether they were, or whether some of them were, the missing photographs but the answer made by counsel was inconclusive. He has explained why this was so in the course of his submissions on the motion.

26. In his oral evidence, Mr. Wilson gave some detailed evidence of the circumstances in which the photographs, now exhibit Y and possibly also exhibit W1 and exhibit X1, came to be taken. He identified the various photographs. It is unnecessary to refer to the detail of this evidence. He repeated the substance of his affidavit evidence that the photographs depicted the condition of the hotel in 1980. He said he took the photographs because of problems he thought he had with the Bowens. He said that the photographs in exhibit Y were not shown to him during the proceedings before Sweeney J and that the last time he had seen them was in 1991 in Mr Garrett's office.

27. In the course of his cross-examination, Mr. Wilson was referred to para.9 of his affidavit of 22 April 1991 read in the proceedings before Sweeney J. He was asked how it came about that the affidavit could have been sworn without the 41 photographs referred to in para.9 being marked as an exhibit to the affidavit. He said that he had come to Sydney. A draft of the affidavit was prepared. In the course of its preparation, the photographs were inspected and counted. He said the affidavit was not completed during the time he was in Sydney and was sent to a Grafton solicitor before whom it was sworn. It is not apparent to us that the solicitor read the affidavit. That may account for the fact that he raised no problem concerning the absent exhibit.

28. Mr. Wilson was also referred to the fact that in the proceedings before Sweeney J, he had been questioned about his statement that the photographs had been taken in 1983. He said that he told the cross- examiner that this was a mistake and that he had taken the photographs in 1980. It was suggested to him that he had earlier said that the photographs had been taken in 1979. His evidence continued:-

"Well, 79 or 80, I took them when I was in the hotel but I

wasn't in the hotel in 1983 in April.

Do you agree with me that before Sweeney J on 7 October 1991

you told Mr. McGovern that you took the photographs not in

1983 but in September 1979."

There was an objection and the evidence given before Sweeney J was read. In that evidence Mr. Wilson said:-

"I think I may have taken the photographs when Mr Barnes

stopped doing the repairs, that's what made me take them. I

think it might have been back in 1979."

29. We should interrupt this account of Mr. Wilson's evidence before us in order to refer to further evidence he gave before Sweeney J about the date when the photographs were taken. Counsel for Welona conducted his cross-examination, as might have been expected on the assumption that the photographs were taken in April 1983. The suggestion made in the cross-examination was that the photographs were taken because of a builder's report about the condition of the premises in 1983. The particular evidence to which reference is made is as follows:-

"And did you take the photographs of the premises after the

15 May (1983) having received Mr Benson's report? ---I think

- I'm not sure, but I think I took the photographs in

September 79.

In September 1979? ---Yes, after I did the painting. I

think so, I'm not sure. If I'd seen the photos - I'm not

too sure, because it's so long ago and I haven't had the

photos for a long while, they've been a long while with the

receiver. I handed them in and that was back in - I think I

may have taken the photos when Mr Bowen stopped doing the

repairs, that's what made me take them and I think it might

have been back in 1979.

Well, that is your best present recollection, is it? --Well,

it's a long while ago.

Yes. I appreciate that. In your affidavit sworn on the 22

April 1991, you tell us that the - in paragraph 9 you say, I

- the colour photographs are caused to be taken in about

April 1983, that is what you have said in your affidavit.

Just accept that for the time being. Could it be that you

took the photographs after you came back to the hotel and

after you had received Mr. Benson's report? ---No.

Well, you were not back at the hotel in April 1983, were

you? ---I came back from time to time, I did, I was there

the week before and I was there a fortnight before that -

no, I told Mr. Massman I was coming back in because he run

the hotel down."

30. Eventually Mr. Wilson's evidence before us proceeded as follows:-

"You see, the day before the appeal in this court you went

to the registry and inspected all of the photographs, is not

that correct? ---Yes.

SHEPPARD J: I am sorry, can I just find out: did you

inspect the ones that are now exhibit Y, that is to say the

photographs that were loose, that you said were taken in

1980? ---Yes.

You saw those then? ---At the - the exhibits clerk.

The day before the appeal was heard? ---Yes, we went up and

got them.

But did you recognise them as the missing photographs? ---

Yes.

Well, I do not think we were told that. I speak subject to

correction and I would have to look at the transcript."

31. Counsel for the Wilsons said that he was not totally aware "of the impact" of what was being said by the Court on that occasion. He added that he thought, at that stage, he was confused between "the Benson photographs" i.e. the photographs in exhibits 6 and 7, and the other photographs "and in the whole course of things. Your Honour will recall I was on my feet for most of the day and it is only the impact of it that struck me later."

"In other words, Mr. Wilson, every photograph which you have

identified today was identified by you in the registry of

this court the day before the appeal of this matter

commenced, is that correct? ---That's right.

Indeed you went back to Mr. Garrett's office on the day

before the appeal, is that correct? ---Went back to Mr.

Garrett's office on the - I'll just - I just, yes, yes, the

day before the appeal, yes.

And I suggest to you that on the day before the appeal after

you had been to the registry and inspected the photographs,

you said to Mr. Garrett words to the effect, we have got a

surprise to be revealed at the hearing tomorrow, to which

Mr. Garrett said, what would that be, to which you said, I

can't tell you, you will find out tomorrow? ---No, that's ---

Do you recall that conversation? ---No, that's untrue.

You deny what Mr. Garrett has said? ---Yes.

You see, I suggest to you that what Mr. Garrett says is

correct and that at that time you knew what you had found in

the registry about photographs and deliberately concealed

that fact from Mr. Garrett, what do you say to that? ---No,

no, that's wrong.

Well, then, I suggest to you that at no time on the day

before the appeal did you say anything to Mr. Garrett about

the photographs, do you agree with that? ---No. Yes, I

didn't say anything to him. I was told not to say anything

to him - to say nothing to nobody.

You see, the point is, Mr. Wilson, that you had been to the

registry; the photographs which you have been shown today

you saw on the day before the appeal and you were told by

someone to say nothing about it, is that correct? ---That's

correct."

33. The cross-examination established that the error which Mr. Wilson says that there is in para.9 of his affidavit of 22 April 1991 was not picked up by him when he swore his affidavit, was not picked up at the time his case came on for hearing on an earlier occasion before Hill J and was not picked up during the hearing before Sweeney J at least until the cross-examination earlier set out. Furthermore, Mr. Wilson said he did not realise the mistake until he saw the affidavit in the appeal book. Mr. Wilson agreed that there was no further inspection of the photographs after the affidavit was prepared and sworn until after the hearing before Sweeney J. All that would suggest that at no time during the trial did the photographs, absent though they may have been, have any significance in the minds of either Mr. Wilson or his counsel.

34. We have now referred to the essential matters in the evidence which was before us. It is to be noted, as mentioned, that Mr. Garrett was not cross-examined despite Mr. Wilson's denials. It seems to us, as counsel for Welona submitted, that we must accept Mr. Garrett's account of the conversation, he not having been challenged about it in cross-examination. Little, however, turns on that matter.

35. It is appropriate now to refer to the principles which guide the Court in determining whether fresh evidence should be permitted to be relied upon. The principal authorities are Orr v Holmes [1948] HCA 16; (1948) 76 CLR 632, Greater Wollongong City Council v Cowan [1955] HCA 16; (1955) 93 CLR 435 and Commonwealth Bank of Australia v Quade (1991) 65 ALJR 674. Quade was an unusual case. The fresh evidence relied upon in that case consisted of documents produced on discovery by the appellant bank after the trial had been completed. The bank was the defendant in the action brought by the respondent. It was guilty of a form of misconduct in that it had not complied with the obligation it had to make proper discovery of documents.

36. It was submitted by counsel for the Wilsons that this case was a case like Quade. But, in our opinion, it is not. The real parties in this case are the Wilsons and Welona. They are the parties who will gain or lose as a consequence of the outcome of the proceedings. If there were fault on the part of anyone in this case, it is on the part of the trustee because one of his officers mislaid documents which may have supported the Wilsons' case. Upon this hypothesis, Welona is not at fault any more than the Wilsons. The case is therefore more appropriately governed by the principles propounded in the Orr and Wollongong Council cases. Nothing in the judgment of the High Court in Quade suggests that these principles do not apply in ordinary cases.

37. In the Wollongong Council case, Dixon CJ said (at 444):-

"If cases are put aside where a trial has miscarried through

misdirection, misreception of evidence, wrongful rejection

of evidence or other error and if cases of surprise,

malpractice or fraud are put on one side, it is essential to

give effect to the rule that the verdict, regularly

obtained, must not be disturbed without some insistent

demand of justice. The discovery of fresh evidence in such

circumstances could rarely, if ever, be a ground for a new

trial unless certain well-known conditions are fulfilled.

It must be reasonably clear that if the evidence had been

available at the first trial and had been adduced, an

opposite result would have been produced, or, if it is not

reasonably clear that it would have been produced, it must

have been so highly likely as to make it unreasonable to

suppose the contrary. Again, reasonable diligence must have

been exercised to procure the evidence which the defeated

party failed to adduce at the first trial."

38. After quoting that passage, the Court in Quade said (at 675):-

"The words 'rarely, if ever' in the above passage leave open

the possibility of exceptional circumstances justifying a

departure from the general rule even in the class of case to

which the general rule is directed. It is not, however,

necessary to pursue that aspect of the matter for the

purposes of the present case. Nor is it necessary to

consider whether the somewhat obscure qualification

expressed by Dixon CJ in the words 'or, if it is not

reasonably clear that it would have been produced, it must

have been so highly likely as to make it unreasonable to

suppose the contrary' represents other than an illusory

relaxation of the primary test (ie 'reasonably clear that

... an opposite result would have been produced')."

"In cases where all that is involved is the discovery by the

unsuccessful party of fresh evidence, Orr v Holmes and

Greater Wollongong City Council v Cowan establish that the

reconciliation of 'the demands of justice' and the 'policy'

that there be an end to litigation at least prima facie (or

'generally': see McDonald v Mcdonald [1965] HCA 45; (1965) 113 CLR 529 at

532-533) dictate that the successful party should be

deprived of the verdict in his favour only if the

unsuccessful party persuades the appellate court that there

was no lack of reasonable diligence on his part and that it

is reasonably clear that the fresh evidence would have

produced an opposite verdict. Such a stringent rule in that

ordinary class of case is supported by considerations of

both justice and public interest. Considerations of justice

support it in that it would be unfair to the successful

party if he were to be deprived of a verdict obtained after

a trial on the merits and be subjected to the expense,

inconvenience and uncertainty of a further trial merely

because some relevant evidence had, without fault on his

part, been unavailable to the unsuccessful party at the time

of the trial. Considerations of public interest support it

in that it is desirable in the public interest that there be

finality in litigation in other than the truly exceptional

case. If all that was necessary to procure the setting

aside of a regularly obtained verdict was that the

unsuccessful party show that fresh evidence which might have

affected the outcome of the trial has become available after

the trial, the verdicts of the courts would be of a

provisional character only, being subject to the discovery

of further relevant evidence."

40. The account of the matter given by Mr. Wilson both in his evidence before the primary Judge and before us discloses some problems. Some of these - the list is not exhaustive - are as follows:-

(a) There is firstly the way in which the affidavit sworn by Mr.

Wilson on 22 April 1991 is constructed. Some parts of the

affidavit were not read, but it is not necessary to

distinguish between those parts which were read and those

which were not. That is because we are concerned with the

context in which para.9 of the affidavit, in which reference

to the photographs is made, appears. Paragraph 1 of the

affidavit is formal. Paragraph 2 refers to Welona's proof

of debt and para.3 to a notice of rejection of proof of debt

issued by the trustee. Paragraph 4 refers to the lease.

Paragraph 5 says that negotiations concerning the hotel were

carried out by Mr. Bowen on behalf of Welona. Paragraph 6

refers to a meeting between Mr. Wilson and Mr. Bowen in July

1979. It was at that meeting that Mr. Wilson sought consent

to an assignment of the lease. It was in that conversation

also that Mr. Bowen was alleged to have promised to do up

the hotel. He was alleged to have said that he knew it was

in bad repair. In para. 7 Mr. Wilson said that his

liability to repair the premises under the lease was limited

to keeping the premises and leaving them in such condition,

having regard to their age and condition, "at a standard

corresponding to that existing at the date I entered into

possession." He said that this was with the exception "of

structural repairs" and further that many of the items

claimed by Welona were due to problems caused by Welona's

failure to rectify structural defects. In para.8 of the

affidavit, Mr. Wilson referred in detail to the proof of

debt especially to those matters admitted by the trustee.

The paragraph contained detailed comments on a number of

matters. One of these was the guttering. It was said by

Mr. Wilson that this was an item of a structural nature

which was Welona's responsibility. Elsewhere it was said

that, when the premises were vacated by the Wilsons,

substantial work of a structural nature needed to be carried

out before the hotel could be brought up to standard to

satisfy the requirements of the relevant authorities.

Certain plumbing work was said to be in a similar category.

It was also said that proper painting could not be carried

out until structural repairs had been effected to prevent

water penetration. The paragraph also dealt with a number

of items, not structural in character, but which were said

not to be matters about which Welona could justifiably

complain. There then followed para.9 which included the

statement concerning the exhibiting of 41 colour photographs

that were said to have been taken about April 1983. The

paragraph, part of which we have earlier quoted, continued:-

"These photographs depict many of the structural defects

which were present at the time the applicants entered into

the lease and of the consequential damage caused by the

defective condition of the premises. The nature and extent

of these defects were communicated to Bowen by me orally on

a number of occasions from the time of taking possession of

the premises until about September 1984."

It was said that the defects shown in the photographs

included a large number of matters which were then

specified. Amongst other things it was said that the roof

guttering and down piping were rusted and holed in certain

places as were sewer vent pipes. Reference was made to a

leaking water pipe attached to the eastern external wall.

It was also said that the galvanised iron roof on the

southern section of the building was loose permitting entry

of stormwater to the roof area. There was more to the same

effect much to do with the drainage and sewerage systems.

Bearing in mind the Wilsons' claim that they were not liable

for structural defects, there is no reason why photographs

taken in 1983 would not show structural defects as

graphically as photographs taken in 1980. It may be that

there would have been further deterioration in the period of

three years between the entry into the lease and the taking

of photographs in 1983. But there is no reason to think

that photographs taken in 1983 would not assist in

determining whether there were structural defects in 1980.

Of course, one cannot be dogmatic about this. It is enough

to say, however, that there is nothing which emerges from a

reading of the affidavit itself which makes it intrinsically

improbable that the date of the photographs was 1983.

(b) Then there is the undoubted fact that the affidavit of 22

April 1991 was wrong if Mr. Wilson's evidence is now to be

accepted. The affidavit has the hallmarks of one which has

been carefully prepared by the Wilsons' solicitor. It was

read by Mr. Wilson before he swore it. The statements in it

were considered statements; it is not as if they were made

in the run of his oral evidence.

(c) Before Sweeney J the applicant said in his cross-examination

that the photographs were taken in September 1979; before

us he said they were taken in April 1980, not April 1983.

If the statement in para.9 of the affidavit that the

photographs were taken in April 1983 were wrong because they

were taken in 1980, it must follow that two errors were

contained in para.9. The month as well as the year must be

incorrect. Mr. Wilson's evidence before Sweeney J put the

date as September 1979 not April 1979. Thus the error was

not a typographical one. The position is not so difficult

for the Wilsons if the correct date is said to be April 1980

rather than April 1983. By that time they were in the

process of acquiring the lease. Normally, after the lapse

of so much time, one might not be concerned whether the year

was 1979 or 1980. But in the particular circumstances of

this case the inconsistency between the Wilsons' evidence to

Sweeney J, his evidence in the affidavit and his evidence to

us is to be regarded as significant.

(d) Counsel for Welona has pointed out in his written

submissions that there was a reason why para.9 of the

affidavit of 22 April 1991 may have been deliberately

prepared so as to refer to the photographs having been taken

in 1983. Evidence at the trial showed that the Wilsons had

left the hotel in 1981. They left it in the control of Mr.

Massman whom they employed to manage it. Mr. Wilson said he

returned from time to time to inspect the hotel. His Honour

did not say whether or not he accepted this evidence. But

we must not overlook his overall view of Mr. Wilson's

reliability as a witness. What is important is that Mr.

Wilson said before Sweeney J that Mr. Massman had "run the

hotel down." In counsel's submission that provided a reason

why Mr. Wilson might have taken the photographs in April

1983, as para.9 of his affidavit of 22 April 1991 said he

did, in order to establish the condition of the premises in

the event of there arising some dispute between himself and

Mr. Massman.

(e) In the course of his cross-examination about this matter

before Sweeney J, Mr. Wilson said that he had visited the

hotel "on a few occasions" in 1982. He also visited it

again in 1983. He did not remember the occasions

"specifically". He said that he returned to the hotel on 15

May 1983 and began to manage it again. His evidence

proceeded as follows:-

"And was it after that that you took the photographs that

you told us about in your affidavit? ---I am not too sure, I

would have to have a look at the photographs, I think the

date is on them, I am not quite sure.

Well you do not have any independent recollection of when

you took those photographs? ---Well I think the date is on

the photographs and that will tell you.

You received a report from a man called Benson, Mr. Ron

Benson, did not you? ---Yes.

And you received that report from Mr. Benson after you came

back to the hotel in May 1983? ---That's right.

And not only did you receive a report from Mr. Benson but

you also received a solicitor's letter which related to that

report, correct? -----I can't recall.

You didn't take any photographs until after you received Mr.

Benson's report, did you? ---As I said, I can't recall. If

you give me the photos the date is on the photos."

The very vagueness of that evidence suggests that it would

be quite unsafe now to accept at its face value Mr. Wilson's

evidence that the photographs were taken in April 1980.

(f) There is a question whether the photographs which comprise

exhibit Y, i.e. the missing photographs, were the

photographs to which Mr. Wilson was referring in his

evidence before Sweeney J. There is firstly a problem

because there is in fact no date on the photographs as he

thought there was. Furthermore, his affidavit of 22 April

1991 refers to 41 photographs, not 26 or 28. Yet Mr. Wilson

made it clear that, in the course of the preparation of the

affidavit, steps were taken to count the photographs

carefully.

(g) As counsel for Welona has submitted, it would have been open

to Mr. Wilson, if he had wished to rely on photographs taken

in 1979 or 1980 which had been lost or mislaid, to lead

secondary evidence of what they depicted. But that was not

done. No attempt was made to make a case based on lost

photographs which, if available, would have corroborated the

Wilsons' evidence that the premises were in a run down

condition at the time their lease commenced in 1980. It is

true that in his cross-examination before Sweeney J Mr.

Wilson said that the photographs were taken in September

1979. But nothing appears to have been made of this. There

was no formal correction of para.9 of the affidavit of 22

April 1991. More importantly, as the evidence earlier

quoted shows, Mr. Wilson was quite uncertain when the

photographs were taken.

41. There are a number of other matters mentioned in the written submissions prepared by counsel for Welona which have been taken into account along with the matters to which we have made reference. Many of these submissions raise matters which suggest that Mr. Wilson's evidence that the photographs were taken in 1979 or 1980 must be incorrect. It is unnecessary to embark upon a closer analysis of the matter because the matters which are mentioned in paras.(a) to (g) are themselves sufficient to show that there is a real question about the reliability of the evidence given by Mr. Wilson to us. Of course, we are not in a position to reach a concluded view on the matter. That could only be done if we thought that the matter was an appropriate one for a new trial and the matter were tried afresh. That is the question we have to consider.

42. The first of the passages cited from the judgment of the High Court in Quade shows that the jurisdiction we are exercising is a discretionary one. The possibility of exceptional circumstances justifying a departure from the general rule even in the class of case to which the general rule is directed is referred to. But, in the absence of misconduct by one of the parties, it will be the general rule formulated in Orr v Holmes and the Wollongong Council case which will guide the Court in the exercise of the discretion which it has.

43. This is not a case where there was misconduct on the part of Welona. Nor was it a case where there was misconduct on the part of the Wilsons. Misconduct may be too strong a word to use in relation to the mislaying of the photographs in the trustee's office, but if there is fault in the matter, that is where the fault lies. The real parties to the litigation are blameless. The guidelines are thus those to be found in Orr v Holmes and Wollongong City Council. It is to the passage from the judgment of Dixon CJ in the latter case that regard must be paid. There the former Chief Justice said that fresh evidence, in the sense of evidence not available at the trial, could rarely, if ever, be a ground for a new trial unless it were reasonably clear that, if the evidence had been available at the first trial and had been adduced, an opposite result would have been produced or, if it is not reasonably clear that it would have been produced, it must have been so highly likely as to make it unreasonable to suppose the contrary.

44. There may be cases which will from time to time provide appellate courts with difficulty because it will not be easy to determine the significance that particular evidence which has subsequently come to light may have had for the outcome of the trial. There may be cases in which it may be difficult to make a satisfactory judgment about the matter. This is not such a case. We do not have a sufficient degree of confidence in Mr. Wilson's evidence to say that it is at all likely that there would have been a different outcome if the photographs in question had been produced at the trial. Mr. Wilson's evidence is quite unsatisfactory. There is no consistency in the evidence looked at as a whole. There are inconsistencies in the evidence led before Sweeney J and further inconsistencies when the evidence before us is taken into account. The lettered paragraphs (a) to (g) must be looked at cumulatively. The accumulation of them demonstrates, in our opinion, that the availability of the photographs at the trial would have been quite unlikely to have made any difference to its outcome.

45. Accordingly, we would not be disposed to order a new trial based on the fresh evidence referred to in the notice of motion under consideration. The motion must be dismissed.

46. That means that the appeal must be resolved upon the basis of the matters which were argued on 30 September last when the matter was first in the list.

47. In summary the submissions made on behalf of the Wilsons were:-

1. The trial had miscarried because his Honour, in determining

whether he should accept the evidence of Mr. Wilson or Mr.

Bowen, said:-

"My opinion of the credibility of the witnesses and the

course of the litigation in the Supreme Court satisfied me

Mr. Bowen was quite reluctant to lease the hotel to Mr.

Wilson and that the lease was not the subject of any

collateral agreement."

2. The conduct of the trial, not by the primary Judge, but by

counsel and solicitor who then represented the Wilsons, was

such that the Wilsons had been denied "their right" to a

fair trial of the proceedings. Two matters were relied

upon, one a particular one and the other a more general one.

The first was the failure of counsel for the Wilsons to

object to a report prepared by Mr. Benson about the

condition of the hotel at the time the lease came to an end

and to object to a Mr. Bell giving evidence about matters of

which, so it was said, he had no direct experience - really,

as we understand it, no direct knowledge. Mr. Benson was

not called as a witness. It emerged that he had died before

the trial took place. Mr. Bell dealt with matters in Mr.

Benson's report which was tendered. Counsel did not object

either to the tender or to Mr. Bell's evidence. The

submission was more generally based upon an alleged failure

of the Wilsons' counsel and solicitor to provide them with

effective legal representation. This matter was developed

in an affidavit sought to be read in support of an earlier

motion for leave to lead fresh evidence in which Mr. Wilson

gave a number of instances, in addition to the matters

concerning Mr. Benson and Mr. Bell which, so he said,

illustrated that the representation which the appellants had

was so ineffective as to be no representation at all. At

the heart of this submission was the complaint made by

counsel for the appellants that they had been denied "their

constitutional guarantee of effective representation."

Reference was made to the decision of the High Court in

Dietrich v The Queen [1992] HCA 57; (1992) 177 CLR 292 and to the decisions

of the Supreme Court of the United States in Strickland v

Washington [1984] USSC 146; 466 US 668 (1984) and Penson v Ohio [1988] USSC 182; 488 US 75

(1988).

3. The primary Judge erred in allowing Welona to recover a sum

of $7,700 for wages claimed to have been earnt by the Bowens

in respect of certain work which they allegedly did relevant

to the repair of the hotel. It was said that there was no

evidence of a contract between Welona and the Bowens

pursuant to which there was a legal liability of Welona to

pay them for any work which they did.

4. The order for costs made in favour of the trustee in

bankruptcy against the Wilsons should be set aside because

it was not shown that there was any necessity for the

trustee to retain solicitors and counsel independently of

those instructed by Welona.

1. In our opinion, the first submission should be rejected.

What his Honour said was that, upon the overall

probabilities of the matter, it was unlikely that the Bowens

would have been prepared to enter into the collateral

agreement upon which the Wilsons relied. They were an

unwilling party to the lease granted to the Wilsons in 1980.

The proceedings instituted by the Wilsons in the Supreme

Court in effect forced them to execute the lease. His

Honour thought it unlikely that in those circumstances the

Bowens would have been prepared to undertake obligations

additional to those imposed by the lease or to accept the

modification or qualification of the rights which the lease

conferred on them.

His Honour quite obviously preferred the evidence of Mr.

Bowen to that of Mr. Wilson. His reference to the Supreme

Court proceedings was not intended by him to indicate his

primary reason, let alone his only reason, for his

conclusion. Subject to one matter that needs to be

considered, we see nothing inappropriate about his Honour's

use of the Supreme Court proceedings and their consequences

as matters which reinforced him in his conclusion that the

evidence of Mr. Bowen was to be preferred. A reservation we

have about this, however, arises from the fact that the

collateral promise upon which the Wilsons relied was said to

have been made by Mr. Bowen about July 1979. If that had

been the case, the comment made by his Honour would lack

force because it may be that the Bowens' unwillingness to

enter into the lease arose after the alleged promise had

been made. All this, of course, is on the hypothesis that

there was a promise of the kind alleged by the Wilsons. His

Honour found there was not. His principal reason for this

conclusion was his view of the two principal witnesses'

reliability determined upon his perception of them in the

witness box. It follows that, although his Honour's

reliance upon the Supreme Court proceedings may have some

problems about it, the conclusion that he reached ought not

be disturbed because of his overall view of Mr. Wilson as an

unreliable witness; cf Abalos v Australian Postal Commission

[1990] HCA 47; (1990) 171 CLR 167.

2. We would also reject the second submission. It is not

appropriate for us to consider the affidavit which has been

proffered to us otherwise than for the purpose of

understanding the general nature of the allegations which it

contains. If we were to take a different view, the matter

could not be disposed of until there had been a hearing in

which Mr. Wilson was cross-examined about the various

matters to which his affidavit refers and each party had had

an opportunity of calling other evidence relevant to the

question at issue.

In our opinion, the reliance by counsel for the appellants

on the decision of the High Court in Dietrich and the two

United States authorities is misplaced. Dietrich was a

criminal case involving the prosecution of an unrepresented

indigenous person. In the way the matter proceeded, the

accused was not represented at all. The judges of the Court

make it quite clear that they are dealing with the criminal

justice system, not with the civil justice system. Thus

Mason CJ and McHugh J commence their discussion of the right

of an accused to a fair trial by saying (at 299) that the

right of an accused to receive a fair trial acording to law

is a fundamental element of "our criminal justice system."

Reference may also be made to the judgment of Deane J,

especially at 335, where he says that an accused is brought

involuntarily to the field in which he is required to answer

a charge of serious crime. See also Toohey J at 357 and

Gaudron J at 372-3.

There are a number of authorities dealing with the

requirement that trials be conducted fairly. In relation to

all trials, whether civil or criminal, there is invariably

taken into account the part played by a party's legal

representatives if the party is legally represented. The

sort of considerations which are present to the minds of

courts asked to order new trials, not only of civil cases

but also of criminal ones, are referred to in the judgments

of the High Court in Giannarelli v Wraith (1988) 165 CLR

543. In that case the High Court divided on the question

whether a barrister could be sued by his client for

negligence in the conduct of a case in Court or in work out

of Court which leads to a decision affecting the conduct of

a case in Court. Reference may be made to the judgment of

Mason CJ (at 556) where his Honour said that the performance

by counsel of his paramount duty to the Court will require

him to act in a variety of ways to the possible disadvantage

of his client. Moreover he said (at 558) that a second

aspect of public policy was the impact on the administration

of justice of allowing court decisions to become the subject

of collateral attack by means of actions against counsel for

"in-court negligence". See also the judgment of Wilson J at

574-577.

The matter was the subject of consideration by the New South

Wales Court of Appeal in Burchett v Kane (20 May 1976) noted

in (1980) 2 NSWLR 266. I refer particulary to the judgment

of Moffitt P at 269 and 270. At the latter page Moffit P

said:-

"With respect I find it somewhat difficult to divorce the

question of whether there is a miscarriage of justice, even

in the sense of a trial not in accordance with the law, from

the circumstance that a civil trial is conducted under the

adversary system. Parties are allowed to define the issues

between them in various ways, such as by pleadings, by

admissions made formally or informally as by acceding to the

conduct of the trial in a particular way. Where is the line

to be drawn? If counsel wrongly concedes a point of law in

the course of a trial, does the verdict which depended upon

it, and was ultimately given against his client, involve a

miscarriage of justice? If it does, will that answer be

different according to whether the concession was due to a

tactical decision by a skilled advocate; or was due to the

ignorance of unskilled counsel, or was due to some

undisclosed reason."

We refer also to the judgment of Mahoney JA where his Honour

said (at 276):-

"However, it is not in every case of miscarriage that a new

trial will be granted. The Court's jurisdiction to order a

new trial depends, ultimately, upon the demands of justice,

and the Court has a discretion whether a new trial will be

ordered. That discretion is not unfettered. It is, in this

State, limited by the requirement that there should be a

'substantial wrong or miscarriage' in cases falling within

Pt 51, r 16 of the Supreme Court Rules. Under the general

law, 'The grounds upon which the court proceeds in granting

the remedy have been settled by practice but they have never

become completely stereotyped; they have always possessed

some flexibility and have been governed by the overriding

purpose of reconciling the demands of justice with the

policy in the public interest in bringing suits to a final

end': McCann v Parsons [1954] HCA 70; (1954) 93 CLR 418 at 430, 431.

The course which a trial has taken has long been held to be

a ground for refusing a new trial to a party who otherwise

would have been entitled to it: Macdougall v Knight (1889)

14 App Cas 194; Seaton v Burnard (1900) AC 135 at 143, 145;

Banbury v Bank of Montreal (1918) AC 626 at 674 et seq. If,

having regard to what occurred at the trial, it would be

unfair to grant a new trial, or otherwise it would be

contrary to the interests of justice to do so, the new trial

may be refused: Orr v Holmes [1948] HCA 16; (1948) 76 CLR 632 at 640;

Burston v Melbourne and Metropolitan Tramways Board (1948)

[1948] HCA 36; 78 CLR 143 at 167; Vlahsos v Easyware (Aust) Pty Ltd. (1974)

VR 155 at 158."

These authorities emphasise that there is a public interest

in litigation being concluded. That public interest has,

on occasions, to be weighed in relation to another, namely,

the public interest in the due administration of justice.

The case at first instance was conducted, so far as can be

judged from the transcript which is before us, in a

straightforward and fair manner. There is no suggestion

that, at least outwardly, that was not so. The Wilsons were

represented by counsel and solicitor. Obviously there will

be different approaches by different legal representatives

to the conduct of a particular case. Individual counsel

will select the issues upon which the case is to be fought

and the way in which evidence is to be presented and

cross-examinations conducted. There is a substantial danger in

the suggestion implicit in the submissions of counsel for

the Wilsons that they are entitled to have a new trial

because of criticisms they have of the way the trial was

conducted. If courts are to entertain applications of this

kind, their work will be endless. Litigation will never

finish. Assume we were to accede to the application now

made and Welona or the Bowens were dissatisfied with the way

in which their case was conducted before us or at the second

trial which, on this hypothesis, would take place. Is there

to be a further application to a differently constituted

Full Court and the possibility of a resultant third trial

because of a perception that in some way, not due to any

error of the trial judge, the proceedings so miscarried as

to deny one of the parties a fair trial? How is the

question whether the trial was or was not properly conducted

to be resolved? No court could engage in that exercise

without a close examination of the process of the trial in

question. It would need to know why counsel conducted a

case in the way he did. It might need to endeavour to do so

without the benefit of all relevant evidence. The system we

have is adversarial, not inquisitorial. The Court cannot

itself call witnesses.

All these considerations lead us to conclude quite firmly

that this case is one which should be governed by the public

interest in litigation terminating and not any other

consideration. Any other view would, in our opinion, tend

to foster a process which could lead to the breakdown of the

existing system.

3. His Honour referred to the item which is the subject of the

third submission by including it in a schedule showing the

detail of Welona's claim. The item (item 11 in the

schedule) referred to "wages - R and J Bowen $7,700."

Particulars of the item stated that the work involved

arrangement and supervision of tradesmen, arrangement of

building materials and liaison with council and licensing

authorities. It was also said that Mr. Bowen attended to

many of the minor repair jobs and a reference was made to

Mr. Benson's report. His Honour dealt with the various

claims in the schedule globally. Save in respect of one

item, which is not relevant, he said that he was satisfied

that the various payments were made for work done and

materials supplied. Amongst other things, he also said that

he accepted Mrs. Bowen's evidence that she paid wages to

cleaners and labourers personally, that in some cases the

Bowens bought their own materials and paid for them, and

that they did not employ a contract builder but undertook

supervisory and administrative work as a cost cutting

measure. Accordingly, they were entitled to the wages which

were paid to them by Welona.

In the course of his written submissions, counsel for Welona

has referred to the detail of the evidence in relation to

item 11. We do not find it necessary to refer to that

detail. It amply supports his Honour's conclusion that the

Bowens did the work which they claimed they had done. The

question is whether there ought to be inferred an obligation

on the part of Welona to pay them for their work. Obviously

there is no express agreement about the matter. The

question is whether what they did was done under such

circumstances that an obligation on the part of Welona to

pay for the work should be implied or inferred. Despite

their connection with the company, we are satisfied that

such an obligation should be implied. They were in a

commercial relationship with the company which they owned.

The work was being done, not in respect of a private

dwelling but in respect of a commercial building which

comprised one of their investments. If they had been the

owners of the property themselves, there could not have been

any question of their own entitlement to claim payment for

the work which they personally did. The presence of the

company should not make any difference to the position which

would then have prevailed.

We would reject the third submission.

4. The final submission concerns the question of the costs of

the trial and also of the appeal. Throughout the trial and

appeal both Welona and the trustee in bankruptcy were

represented by counsel. His Honour ordered the Wilsons to

pay the costs of both the trustee and Welona. They are thus

liable for a double set of costs, each of the respondents to

the application being separately represented. We can

understand the concern of the trustee about a matter in

which a proof of debt disallowed by him is in question. On

the other hand, this is a case where it must have been

apparent at all material times that there was to be a

contradictor other than the trustee which would take an

active part in the proceedings. The opposition to the

Wilsons' case by Welona ensured that the dispute, which

concerned Welona rather than the trustee, was fully

ventilated. In those circumstances, we do not think it was

correct for there to be two sets of costs awarded against

the Wilsons. It was a case in which the trustee should have

entered a submitting appearance. In our opinion, his costs

at first instance should have been limited to the costs

which would have been payable to a party who has submitted

to such order as the Court thinks fit to make. Similarly

the trustee should have his costs of the appeal on the basis

of the costs payable to a submitting respondent.

49. In the result we dismiss the appeal and the two notices of motion. We order, however, that there be substituted for the order for costs made by his Honour an order that the Wilsons pay to Welona its costs of the proceedings at first instance and that they pay to the trustee his costs of those proceedings but limited to the costs which would be recoverable by a submitting respondent. There will be a similar order be made in relation to the costs of the appeal.