Plaintiff v Defendants

2 The test for special leave to appeal under Rule 77.06(7)(b) has been considered in a number of cases. In Brownport Management Ltd v Aqua-Tech 21 Pty Ltd[1] Hansen J said:

It is important to bear in mind the reason why the requirement of special leave was introduced. It was introduced to stop the mischief of a party using the hearing before the Master as a dry run and, depending on the result, appealing and, on the appeal, filing additional affidavits to bolster its case in light of the arguments presented to the Master and the Master's reasons for decision. This became all too common an occurrence. It could cause vexation to another party in terms of time and costs, and it could take up an unreasonable amount of a Judge's time when there might not have been an appeal if the case had been properly presented to the Master. In short, in many cases it constituted an unreasonable taking advantage of the fact that under Rule 77.05(7) an appeal is by re-hearing de novo.[2]

In that case his Honour refused to give special leave saying:

In my view special leave should be refused. There are several reasons for this conclusion.

First, the present proceeding is the very sort of case for which the requirement of special leave was introduced. It is a case in which the applicant for relief, represented by solicitors and experienced counsel, elected to press on before the Senior Master, deliberately refusing the opportunity to adjourn the proceeding to consider whether it ought to file further affidavits to establish a genuine dispute and an offsetting claim.

Secondly, that election was made in the context, clearly exposed by the proposed further affidavits, but obvious enough from Pullar's affidavits filed before the Senior Master, of an awareness of defects in the irrigation system, and with knowledge that advice on quantum was required.

Thirdly, the subject matter of the further affidavits in respect of which special leave is now sought, in particular that with which Love and Jones are concerned, is the very matter which Pullar and Brownport's legal advisers had in mind from at least the time of preparation of the County Court Writ which was filed in April 2002. The subject-matter is not something new, or of a kind that was not or could not have been in contemplation when the case was before the Senior Master.

Fourthly, Brownport provided no evidence to explain why it had elected to proceed before the Senior Master rather than adjourn to obtain the additional affidavit evidence to establish a genuine dispute or an offsetting claim, and on which further affidavits it now seeks to rely to establish those very matters. Merely making the application for special leave does not constitute evidence, let alone an explanation. The further affidavits do not explain the course adopted or why special leave should now be granted. Brownport's position was put in sharp perspective by its counsel when he said, at the end of his submissions, that:

"... [A]lthough these reports were not put in before the Master and perhaps ought to have been, nevertheless as a matter of justice with fairness, they ought to be admitted."

Later, in reply, Brownport's counsel said that:

"The material is compelling and ought to be admitted on that basis alone."

Yet these statements do not explain (and are not evidence of) why Brownport pressed its application before the Senior Master. The course adopted by Brownport is to eschew providing any explanation to the Court and to hope that the Court, whether or not affected by reading the further affidavits, will grant special leave as an act of mercy or because it is supposed that a court is required to afford a party an opportunity to say whatever the party wants to say at whatever time it wants to say it regardless of its prior opportunity to do so in accordance with the procedures of the Court and its deliberate conduct in that regard. Doubtless, each case must be considered in light of its own facts, and a conclusion reached as to the exercise of the discretion which is appropriate in all the circumstances, including the evidence proposed to be relied on.[3]

In Black Creek Deer Farm Pty Ltd v Australia and New Zealand Banking Group Ltd[4] Beach J gave special leave to a plaintiff to rely upon an affidavit where the application for summary judgment had failed "because of an irregularity in the plaintiff's material filed in support of the application".[5] In National Australia Bank Ltd v Macrae[6] Batt J granted special leave to the plaintiff to rely upon an affidavit sworn after the hearing before a Master because the additional affidavit addressed an objection which his Honour described as "a highly technical one which was first raised only after [a luncheon] adjournment".[7] In Murphy v Doherty[8] Tadgell J gave leave in circumstances where a party's practitioner had erred in advising a client, adding that the "court does not like to see parties to litigation penalized because of default, through incompetence or negligence, or for any other reason, of their legal advisers".[9]

3 Special leave should not be given lightly.[10] The observations by Lord Bridge in Langdale v Danby,[11] in a different but analogous context, provide useful guidance in the context of Rule 77.06(7)(b). In that case his Lordship said:

The classic statement of what amounts to "special grounds" within the meaning of Ord. 59, r. 10 (2), comes from the judgment of Denning L.J. (as he then was) in Ladd v Marshall [1954] EWCA Civ 1; [1954] 1 W.L.R. 1489, and was expressly approved by your Lordships' House in Skone v Skone [1971] 1 W.L.R. 812 in the speech of Lord Hodson, at p. 815. with which all the other members of the Appellate Committee agreed. The statement reads, at p. 1491:

"To justify the reception of fresh evidence or a new trial, three conditions must be fulfilled: first, it must be shown that the evidence could not have been obtained with reasonable diligence for use at the trial; secondly, the evidence must be such that, if given, it would probably have an important influence on the result of the case, though it need not be decisive; thirdly, the evidence must be such as is presumably to be believed, or in other words, it must be apparently credible, though it need not be incontrovertible."

In the situation arising on an appeal to the Court of Appeal from a summary judgment, the application of these conditions and perhaps the conditions themselves will require some modification. It may well be that the standard of diligence required of a defendant preparing his case in opposition to a summons for summary judgment, especially if under pressure of time, will not be so high as that required in preparing for trial. The second and third conditions will no doubt be satisfied if the further evidence tendered is sufficient, according to the ordinary principles applied on applications for summary judgment, to raise a triable issue.

But I can see no injustice at all in requiring a defendant to use such diligence as is reasonable in the circumstances to put before the judge on the hearing of the summons, albeit in summary form, all the evidence he relies on in defence, whereas it would be a great injustice to the plaintiff to allow the defendant to introduce for the first time on appeal evidence which was readily available at the hearing of the summons but was not produced.[12]

To grant special leave too freely will "undermine the importance of proceedings before" Associate Judges and "encourage an abuse" of the Court's processes.[13] The policy against permitting a party to rely upon material not previously before the Associate Judge in an appeal from an Associate Judge can be seen by the requirement that the leave to be obtained be "special leave". The concern expressed in the decided cases to prevent misuse of the Court's processes is reinforced by the provisions of the Civil Procedure Act 2010 (Vic).[14]

4 An important question in determining whether to grant leave will be why the material sought to be relied upon was not adduced before the Associate Judge.[15] It will also be necessary to enquire into the nature of the case, the context in which any election was made, the knowledge of the parties, the subject matter of any further affidavits, and any explanation given for any failure to rely upon evidence before the Associate Judge.

5 The additional material now sought to be relied upon in this proceeding is directed to what was described as a need to correct the means by which certain matters pleaded in the defendants' Defence and Counterclaim had to be verified in an application for summary judgment under s 63 of the Civil Procedure Act 2010 (Vic) and Rule 22.02 of the Supreme Court (General Civil Procedure) Rules 2005 (Vic). The application for summary judgment under those provisions was heard by Gardiner AsJ on 14 December 2011. The plaintiff had filed two affidavits sworn 27 October 2011 in support of its application and the defendant had filed two affidavits sworn by its solicitor, Mr Warren, on 9 December 2011 and 13 December 2011. The view had been taken by the defendants' legal advisors that it was sufficient to verify matters for the purposes of the proceeding before Gardiner AsJ by relying upon affidavits by a solicitor containing statements based upon information and belief. In the proceeding before me Mr Warren swore a further affidavit explaining that he believed at the time that the defendants were entitled to show cause against the plaintiff's application for judgment pursuant to those provisions by affidavit containing statements based on information and belief. Mr Warren went on to add that this belief had been confirmed by Junior Counsel. His Honour's decision to grant summary judgment upon the plaintiff's application was based in part upon the conclusion that the material relied upon by the defendants was not sufficient evidence to persuade him against ordering summary judgment. The plaintiff had been critical of the defendants' approach to the evidence tendered in answer to its application and had submitted to that effect, at some length, in the proceeding before his Honour. No application was made before his Honour to correct or to add to the material which the defendants relied upon in that proceeding. The hearing was conducted before his Honour upon the basis that put in issue the state of the material upon which the defendants sought to rely. Senior Counsel for the defendants submitted that in the application for special leave I should assume that Gardiner AsJ was correct to have regarded the proofs tendered through Mr Warren as insufficient to meet the application for summary judgment.

6 The proceeding was commenced after an earlier proceeding[16] in which Portbury Development Co (the plaintiff in this proceeding, and the defendant in the earlier proceeding), had successfully obtained summary judgment from Dixon J on 27 May 2011. Both proceedings arose from a contract for the purchase of property in December 2008 which was not completed. In the earlier proceeding the present defendant, Ottedin Investments Pty Ltd, had sought a declaration for the repayment of a deposit in respect of the sale of land. In this proceeding the present plaintiff, Portbury Development Co, seeks to recover the shortfall from the subsequent re-sale of the property. Summary judgment in the earlier proceeding for the present plaintiff, Portbury Development Co, was given on 27 May 2011 from a hearing on 13 May 2011. The present proceeding was commenced in July 2011. The plaintiff's application for summary judgment was first foreshadowed on 20 October 2011 and initially given a special fixture on 24 November 2011. On 27 October 2011 the defendants gave the plaintiff a proposed Amended Defence and Counterclaim signed by Senior and Junior Counsel containing paragraphs and particulars challenging the plaintiff's process in the re-sale of the property, upon which its damages claim was based. On 10 November 2011 the plaintiff issued its application for summary judgment which was made returnable on 14 December 2011 as a special fixture for one day. The plaintiff served upon the defendants the two affidavits of Francis Lynch and Susan Kelly, each sworn 27 October 2011, upon which it relied in that application. The affidavits of Mr Warren were not filed on behalf of the defendants until 9 December 2011 and 13 December 2011 and contained the entirety of the evidence upon which the defendants sought to rely for the allegations in para 44 of the Amended Defence and Counterclaim filed 27 October 2011 impugning the process in the re-sale of the property. The decision of Gardiner AsJ was delivered on 21 June 2012 and on that occasion Junior Counsel for the defendant announced that the defendant would appeal the decision. A Notice of Appeal was filed on 28 June 2012.

7 This is not a case where a party seeking summary judgment had failed because of what may fairly be described as an irregularity[17] in the applicant's material or would fail because of an absence of material in response to a highly technical issue raised in the course of the hearing.[18] It is, rather, a case of a party to a commercial dispute, in which there had been pre-existing litigation and judgment, having decided to meet an application for summary judgment, and then to maintain its case against summary judgment at the hearing, upon the material as filed. The proceeding was commenced in July 2011 and an application for summary judgment was foreshadowed in court before Mukhtar AsJ on 20 October 2011. A special fixture on 24 November 2011 was first given on 20 October 2011 for the hearing of the application and the special fixture was subsequently changed to 14 December 2011, before Gardiner AsJ, to accommodate the defendants' legal representatives. The plaintiff filed evidence on the application by affidavits sworn by persons able to give direct evidence, and both before and during the hearing by Gardiner AsJ the plaintiff's counsel submitted that the defendants' evidence was insufficient to resist summary judgment. The facts are that a conscious decision had been made on behalf of the defendants to respond to the application for summary judgment on the basis only of the affidavits of Mr Warren. It had been his view that affidavits by him would be sufficient for meeting the application for summary judgment. That view was apparently confirmed to him by Junior Counsel appearing in that, and in this, proceeding. The decision to proceed on that basis was not inadvertent. The defendants, and its legal advisors, knew that the plaintiff would contend, and did contend, that the material was insufficient to resist the application for summary judgment. The proceeding nonetheless continued for the defendants upon that basis. Most of the evidence now sought to be tendered was always within the power of the defendants to have relied upon at the hearing and the defendants should not now be permitted to rely upon additional evidence as if the proceeding before the Associate Judge was no more than a trial run.[19]

8 Furthermore, the defendants could have been in no doubt after the hearing before Gardiner AsJ that the plaintiff's submissions had challenged the sufficiency of the affidavit material which had been filed in support of the allegations and particulars in para 44 of the defendants' Amended Defence and Counterclaim. The plaintiff had filed supplementary written submissions the day prior to the commencement of the hearing before Gardiner AsJ which included the statement:

Finally, it is not appropriate that this type of affidavit in response to a summary judgment application has been sworn by the solicitor and none of the clients have gone on oath, particularly given that this solicitor was not the solicitor at the relevant time.

The point was taken up again by Senior Counsel for the plaintiff during the course of the hearing before Gardiner AsJ on 14 December 2011. The point was raised with Senior Counsel for the defendants by Gardiner AsJ when remarking that no direct evidence had been led and no affidavits had been filed in contradiction to the affidavits which had been relied upon by the plaintiff. It was also clear from observations by Gardiner AsJ during the hearing that a decision was unlikely before the following February. The plaintiff had been granted leave to provide further written submissions which were subsequently filed in January 2012. Gardiner AsJ gave judgment on 21 June 2012 and at no stage between the hearing in December 2011 and the judgment in June 2012 did the defendants take any step to meet the challenge to the sufficiency of the evidence other than to maintain the position that it had filed sufficient affidavit material to meet the application for summary judgment.

9 In the proceeding before me it was contended as a separate ground of appeal that Gardiner AsJ had denied the defendants procedural fairness on the basis that there was some obligation upon the Associate Judge to have identified during the hearing that he might decide the case on what was described as a technical defect in the evidence. The submission, dated 6 August 2012, on this point appeared under the heading "Failure to accord a fair hearing" and said:

Gardiner, AsJ did not, so far as the authors of these submissions are aware, identify the technical defect in the evidence during the hearing. Had he indicated he was concerned that the facts asserted in the particulars given under paragraph 44 of the Amended Defence and Counterclaim had not been proved by evidence, submissions could have been made to him that this approach was erroneous, and, if he was not persuaded an adjournment could be sought to put on the additional evidence.

This submission, in my view, is untenable given the way in which the proceeding was conducted before his Honour. It was not a matter of his Honour deciding the proceeding upon a basis that had not been raised by the parties, but, rather, of his Honour accepting a point which had been fully and forcefully argued against the defendants by the plaintiff before and during the hearing. In Smits v Roach[20] it was said:

The adversarial system of litigation operates upon the basis that a party is generally bound by the conduct of counsel, and that counsel has a wide discretion as to the manner in which proceedings are conducted. The width of that discretion is reinforced by the role of the barrister as an officer of the court, by the barrister's paramount duty to the court, and by the public interest in the efficiency and finality of the judicial processes. This was civil litigation. If Mr Lindsay had failed to object to inadmissible evidence in the course of the trial, the appellants would have been bound by the consequences, and there would have been no inquiry by an appellate court as to whether that had occurred for a good reason, or with the approval of the clients. Indeed, such an inquiry would normally be impossible. Similarly, if Mr Lindsay had decided not to pursue a certain line of argument, or press a possible point of law, the appellants could not have complained to an appellate court that he had failed to consult them about the matter. The respondents were not at risk of having a favourable decision set aside on the ground that, in some aspect (perhaps some very important aspect) of the conduct of the case, Mr Lindsay was acting without express instructions from his clients. That was because, in conducting the case on behalf of his clients, Mr Lindsay was exercising wide and independent discretion. If it were otherwise, any judgment in a civil case would be at risk of being set aside on the ground that counsel had acted in excess of authority, and the appellate process would be one of endless re-litigation of contested issues.[21]

The point which found favour with his Honour was the point which was contended against the defendants by the plaintiff in adversarial proceedings. It was for the defendants to meet the point and the defendants could have done so in the proceeding before his Honour. The legal advisors for the defendants, rightly or wrongly, elected to meet the plaintiff's case as they did and no fault can be attributed to the Associate Judge of a failure to have accorded a fair hearing to the defendants.

10 The defendants' summons for special leave dated 27 July 2012 list five additional affidavits upon which they sought to rely. A further four were filed 8 August 2012, the day before the commencement of the application for special leave. Amongst them is an affidavit from an expert, Mr Brown, whose affidavit is sought to be relied upon to establish the value of the property at the date of sale. It was not until 23 July 2012 that Mr Warren sought an expert report. Initially the expert report had been sought from a Mr Christopher Rann, however three days later, on 26 July 2012 Mr Rann informed Mr Warren that he had insufficient time to prepare an expert report. It was not until 3 August 2012 that Mr Warren then engaged Messrs Brown and Castran to prepare an expert report. On 6 August 2012 the defendants' written submissions were served upon the plaintiff with no mention of any further affidavit that might subsequently be relied upon. Two days later, however, on 8 August 2012, further affidavits, including the expert evidence from Mr Brown was served upon the plaintiff. The defendants' Notice of Appeal was filed on 28 June 2012 and on 17 July 2012 Daly AsJ set down the matter for hearing on 9 August 2012 with directions concerning any affidavit sought to be relied upon as fresh evidence to be filed by 27 July 2012. There was no suggestion of any expert evidence being filed and no discussion of a timetable for the filing of expert evidence. The submissions were due on 6 August 2012. There has been no adequate explanation given for the lateness of these affidavits and on that basis I would also not give special leave for the defendant to rely upon them.

11 Accordingly, I do not grant special leave to the defendant to rely upon any of the affidavits which were not before Gardiner AsJ.

[1] [2002] VSC 396.

[4] (Unreported, Supreme Court of Victoria, Beach J, 31 July 1995).

[6] (Unreported, Supreme Court of Victoria, Batt J, 14 June 1994).

[8] (Unreported, Supreme Court of Victoria Appeal Division, Tadgell and Cummins JJ, 4 February 1994).

[10] Todaytech Distribution Pty Ltd v Quin Xiong (Kenny) Yu [2004] VSC 246 [9] (Redlich J).

[11] [1982] 3 All ER 129 (Lord Diplock, Lord Fraser of Tullybelton, Lord Roskill, Lord Bridge of Harwich and Lord Brightman).

[13] Todaytech Distribution Pty Ltd v Quin Xiong (Kenny) Yu [2004] VSC 246 [9] (Redlich J).

[14] Octagon Inc v Lleyton Glynn Hewitt & Another No. 2 [2011] VSC 373 [18] (Dixon J).

[15] Farrow Mortgage Services Pty Ltd v Moguls Investments Pty Ltd (Unreported, Supreme Court of Victoria, Vincent J, 22 October 1992).

[16] Ottedin Investments Pty Ltd v Portbury Developments Co Pty Ltd and Nodco Pty Ltd [2011] VSC 222.

[17] Black Creek Deer Farm Pty Ltd v Australia and New Zealand Banking Group Ltd (Unreported, Supreme Court of Victoria, Beach J, 31 July 1995).

[18] National Australia Bank Ltd v Macrae (Unreported, Supreme Court of Victoria, Batt J, 14 June 1994).

[19] Clodumar v Nauru Lands Committee [2012] HCA 22; (2012) 288 ALR 208, 226 [72] (Heydon J); Shedden v Patrick and the Attorney General (1869) LR 1 HL Sc 470, 545 (Lord Chelmsford); Nash v Rochford Rural Council [1917] 1 KB 384, 393 (Scrutton LJ).

[20] (2006) 227 CLR 423.

[21] Ibid 441 [46] (Gleeson CJ, Heydon and Crennan JJ).