How the Type of Decision Appealed Against Affects Establishing Error
74 The "error" that the appeal court must find need not be of a single type - without trying to be exhaustive, it might be that the court below has made an order or a material finding that the appeal court is satisfied is wrong, or it might be that a process has been followed in either the trial itself or in the pre-trial preparation or in the judge's reasoning that the law does not permit. Inevitably, it is the appellate court's own consideration of the evidence and the reasoning in the court below that will be the basis on which it concludes that there is an error in the court below. But a real problem for appellate courts is: "how can I be confident that there is error in the court below?" Appeal court judges need to approach the task of appellate review bearing in mind the inevitable incompleteness of the reasons of the judge below in conveying all the impressions that the evidence and argument have made on the trial judge: Biogen Inc v Medeva plc [1997] RPC 1 at 45; (1996) 36 IPR 438 at 452. Appeal court judges need to approach the decision of the court below with a lively consciousness of their own fallibility and of the limitations under which they carry out their task of review (which are more extensive than concerning factual decisions influenced by demeanour: Fox v Percy at 126 [23] (quoted at para [86] below); Seiwa Australia Pty Ltd v Beard at [150]-[151]). It should also be said that for appellate judges to recognise their limitations is not inconsistent with recognising that there can also be some respects in which an appeal court has an advantage over a trial judge: Yarrabee Coal Co Pty Ltd v Lujans [2009] NSWCA 85; (2009) 53 MVR 187; [2009] Aust Torts Reports ¶82-024 (63,400) at [3]; Seiwa Australia Pty Ltd v Beard at [2].
75 Characteristics of the particular decision that is being appealed against affect whether an appeal court judge can be satisfied that the decision appealed from was in error. One relevant characteristic of the decision is whether it involves deciding a question concerning which the law recognises that there is no single correct answer or whether it involves deciding a question that can only be answered with a "yes" or a "no". It is not relevant, for this purpose, that the decision is one concerning which one can say that competent lawyers could come to different conclusions. That can be said of many legal matters, including pure question of law. But questions of law, and some questions of mixed fact and law are ones that can be answered only with a "yes" or a "no", and if the appellate court comes to be satisfied that the answer to such a question is different to that which the court below has arrived at, the appellate court must substitute the answer at which it has arrived. Another relevant characteristic concerns the type of evidentiary basis the court below was required to consider in making the decision. Another relevant characteristic concerns the process of reasoning that the court adopted in reaching its decision. See generally Costa v Public Trustee of NSW [2008] NSWCA 223; (2008) 1 ASTLR 56 at [15]-[19] per Hodgson JA, [32]-[51] per Ipp JA, cf [71]-[105] per Basten JA.
76 It has frequently been stated that a discretionary decision by a judge can be altered on appeal only within the principles stated in House v The King (1936) 55 CLR 499 at 505. Those principles have been summarised by Heydon JA (Sheller JA and Studdert AJA agreeing) in Micallef v ICI Australia Operations Pty Ltd [2001] NSWCA 274. His Honour said, at [45], that a challenge to a primary judge's discretionary decision can succeed only if the judge:
"(a) made an error of legal principle,
(b) made a material error of fact,
(c) took into account some irrelevant matter,
(d) failed to take into account, or gave insufficient weight to, some relevant matter, or
(e) arrived at a result so unreasonable or unjust as to suggest that one of the foregoing categories of error had occurred, even though the error in question did not explicitly appear on the face of the reasoning."
77 In accordance with those principles, it is not enough to justify judicial intervention that the judges of the appeal court would have exercised the discretion in a different way had they been exercising the discretion at first instance: Mace v Murray (1955) 92 CLR 370 at 378.
78 However, the High Court has decisively rejected any suggestion that, if a decision being appealed from can be described as a discretionary decision, it follows that the appeal can be allowed only if the criteria identified in House v The King are met. In Dwyer v Calco Timbers Pty Ltd at 138-9 [37]-[40], Gleeson CJ, Gummow, Kirby, Hayne and Heydon JJ said:
"The varied use of the term 'discretion' is apt to create a legal category of indeterminate reference. This is because the term is used in the description or characterisation of many acts or omissions in the law. It is, as Dyson LJ recently put it ( Carty v Croydon London Borough Council [2005] 1 WLR 2312 at 2319; [2005] 2 All ER 517 at 524. See also the observations of Gleeson CJ, Gaudron and Hayne JJ in Coal & Allied Operations Pty Ltd v Australian Industrial Relations Commission (2000) 203 CLR 194 at 204-205 [19]), 'a somewhat protean word' which 'connotes the exercise of judgment in making choices', and, in a sense, 'most decisions involve the exercise of discretion'.
The term 'discretion' is sometimes used to describe the scope for selective choice in judicial determination of facts disputed on the evidence, particularly on the oral evidence. Thus in Kades v Kades (1961) 35 ALJR 251 at 253-254; 108 CLR 664 (note) Dixon CJ, McTiernan, Kitto, Taylor and Windeyer JJ, in the course of upholding the setting aside by the New South Wales Full Court of the decision of the primary judge in a custody dispute, said:
'[The primary judge] saw and heard the parties as witnesses and he might thereby gauge the personality of each of them. His exercise of his discretion, moreover, should not be set aside except on firm grounds. Yet in this case the learned judge does seem to have mistaken the effect of what Mrs Kades was endeavouring to convey.'
In other settings, 'discretion' is used quite differently. Thus, the degree to which a court of equity will interfere in the administration of trusts has been held to reflect the width of discretionary powers which have been conferred on the trustees: Hartigan Nominees Pty Ltd v Rydge (1992) 29 NSWLR 405 at 417, 436, 441-442. The judicial review of administrative decisions made in the exercise of a statutory power or 'discretion' attracts a body of principles which in this Court may conveniently be traced back to what was said by Latham CJ in Shrimpton v The Commonwealth (1945) 69 CLR 613 at 620. The exercise of what was called in House v The King (1936) 55 CLR 499 at 504 'a judicial discretion' to impose a particular sentence or to make a particular order under a power conferred by family provision legislation (see Vigolo v Bostin (2005) 221 CLR 191 at 218-219 [74]-[75]), attracts, upon subsequent exercise of a 'general appellate power' ((1936) 55 CLR 499 at 505), principles somewhat akin to those developed in public law. The well-known passage in House v The King illustrates this.
Rather different is the situation where statute creates a legal norm, in this litigation that of a 'serious injury', and does so in terms which require for their operation in a given dispute the identification and evaluation of facts and assigns that fact-finding in the first instance to a judge sitting alone. The occasion for appropriate appellate intervention will depend upon the nature and scope of the particular statutory appeal for which the legislature provides. That inquiry is not advanced by describing the overall decision-making process of the primary judge as 'discretionary'."
79 The "nature and scope of the particular statutory appeal" were of particular importance in Dwyer v Calco Timbers because the statute creating the appeal that was there in question required the Court of Appeal to "decide for itself whether the injury is a serious injury on the evidence and other material before the judge who heard the application and on any other evidence which the Court of Appeal may receive …" (at 134 [27]). That provision required the appeal to be approached more in the manner of an appeal de novo. There is no analogous provision in section 5F.
80 Conversely, there are some decisions that are not discretionary, but that nonetheless are reviewed in accordance with House v The King criteria: Singer v Berghouse (1994) 181 CLR 201 at 210-12.
81 In seeking to understand the way an appellate court hearing an appeal by way of rehearing approaches a decision that involves the application by a primary judge of an evaluative standard to a set of facts, it is instructive to consider the detail of the reasoning of the High Court in Warren v Coombes (1979) 142 CLR 531. The reasoning in question is that which the court employed in arriving at its conclusion about the circumstances in which an appeal court exercising an appeal by way of rehearing should overturn a trial judge's finding concerning whether there had been a breach of duty of care. In Warren v Coombes, there was no issue about the existence of a duty of care (it will be recalled that the case involved a collision between a boy on a bicycle and a motorist), and, as the majority judgment of Gibbs ACJ, Jacobs and Murphy JJ said, at 536: "The question for decision … is whether the learned trial judge was correct in finding that the respondent was not negligent." It was in relation to whether the trial judge was wrong in deciding there had been no breach of duty of care that their Honours said, at 551:
"… in general an appellate court is in as good a position as the trial judge to decide on the proper inference to be drawn from facts which are undisputed or which, having been disputed, are established by the findings of the trial judge. In deciding what is the proper inference to be drawn, the appellate court will give respect and weight to the conclusion of the trial judge, but, once having reached its own conclusion, will not shrink from giving effect to it."
82 It was also in relation to the question of whether the trial judge was wrong in deciding that there had been no breach of duty of care that their Honours said, at 552-3:
"… we can see no justification for holding that an appellate court, which, after having carefully considered the judgment of the trial judge, has decided that he was wrong in drawing inferences from established facts, should nevertheless uphold his erroneous decision. To perpetuate error which has been demonstrated would seem to us a complete denial of the purpose of the appellate process. The duty of the appellate court is to decide the case - the facts as well as the law - for itself. In so doing it must recognize the advantages enjoyed by the judge who conducted the trial. But if the judges of appeal consider that in the circumstances the trial judge was in no better position to decide the particular question than they are themselves, or if, after giving full weight to his decision, they consider that it was wrong, they must discharge their duty and give effect to their own judgment. Further there is, in our opinion, no reason in logic or policy to regard the question whether the facts found do or do not give rise to the inference that a party was negligent as one which should be treated as peculiarly within the province of the trial judge. On the contrary we should have thought that the trial judge can enjoy no significant advantage in deciding such a question. The only arguments that can be advanced in favour of the view that an appellate court should defer to the decision of the trial judge on such a question are that opinions on these matters very frequently differ, and that it is in the public interest that there should be finality in litigation. The fact that judges differ often and markedly as to what would in particular circumstances be expected of a reasonable man seems to us in itself to be a reason why no narrow view should be taken of the appellate function. The resolution of these questions by courts of appeal should lead ultimately not to uncertainty but to consistency and predictability, besides being more likely to result in the attainment of justice in individual cases. The interest of the community in the speedy termination of litigation might, no doubt, be an argument in favour of the complete abolition of appeals, although that would be far too high a price to pay merely for finality. However, if the law confers a right of appeal, the appeal should be a reality, not an illusion; if the judges of an appellate court hold the decision of the trial judge to be wrong, they should correct it.
83 The way their Honours there proceeded was by considering whether, given the particular type of decision the judge below had made, the appellate court was in as good a position as the trial judge to decide that particular question for themselves. If, taking account of any advantages that the trial judge has, the appeal court is still able to reach the conclusion that the decision of the trial judge was wrong, the appeal court should overturn it.
84 The fact that the decision of a trial judge involves weighing and balancing various factors does not of itself mean that the appeal court is not in as good a position as the trial judge to make that particular decision, and thus to conclude that the trial judge was in error. As I pointed out in Certain Lloyds Underwriters v Giannopoulos [2009] NSWCA 56 at [105] a decision by an appellate court about whether a defendant in a negligence action has failed to act with reasonable care involves taking into account such matters as:
"… what choices for action were open to the defendant, was the availability of those choices for action something that the defendant knew or ought to have known, were any of those alternative methods of proceeding ones that the defendant was required by legislation to follow, what type and seriousness of injury is predictable might happen if one of those alternative courses of action is not followed, what is the extent of the risk that injury will result if one of those alternative courses of action is not followed, what disadvantages to other people might arise from the various alternative ways of proceeding, how serious are those disadvantages and what is the risk of them arising, and what were the respective costs (to the defendant and anyone else) of following those various alternative methods of proceeding."
85 Notwithstanding that being the nature of the task, in Warren v Coombes the court held that, at least in circumstances where the facts are undisputed or have been established, an appellate court is in as good a position as the trial judge to carry out that balancing function.
86 One way in which characteristics of the decision appealed against affect whether an appeal court can be satisfied a trial judge's decision was made in error is stated in Fox v Percy. Gleeson CJ, Gummow and Kirby JJ made clear that the obligation of an appellate court conducting an appeal by way of rehearing was to "conduct a real review of the trial and, in cases where the trial was conducted before a judge sitting alone, of that judge's reasons" (at 126-7 [25]), and "give the judgment which in its opinion ought to have been given in the first instance" (at 125 [23]). However there are "natural limitations" on an appellate court that proceeds wholly or substantially on the record (125 [23]), and the appellate court's obligation to review can only be carried out within those natural limitations (126-7 [25]). At 126 [23] of Fox v Percy, their Honours made clear that the advantage of a trial judge is by no means confined to the making of factual findings that are affected by demeanour. Deliberately not being exhaustive, their Honours said that the limitations on an appellate court:
"… include the disadvantage that the appellate court has when compared with the trial judge in respect of the evaluation of witnesses' credibility and of the 'feeling' of a case which an appellate court, reading the transcript, cannot always fully share. Furthermore, the appellate court does not typically get taken to, or read, all of the evidence taken at the trial. Commonly, the trial judge therefore has advantages that derive from the obligation at trial to receive and consider the entirety of the evidence and the opportunity, normally over a longer interval, to reflect upon that evidence and to draw conclusions from it, viewed as a whole." (citations omitted)
87 The majority in Fox v Percy at 128 [28] stated that in some cases "incontrovertible facts or uncontested testimony will demonstrate that the trial judge's conclusions are erroneous, even when they appear to be, or are stated to be, based on credibility findings". Their Honours also acknowledged, at 128 [29], that "In some, quite rare, cases, although the facts fall short of being 'incontrovertible', an appellate conclusion may be reached that the decision at trial is 'glaringly improbable' or 'contrary to compelling inferences' in the case", and be justified by those matters in reversing a trial judge's conclusion on a matter of fact.
88 The inevitable advantage of a trial judge over an appellate court is one of the "natural limitations" on the ability of an appeal court to be satisfied that the trial judge has erred. In the sort of situations identified by their Honours in 128 [28] and [29], an appellate court can be satisfied that the trial judge has erred in making a factual finding that was affected by demeanour.
89 In Seiwa Australia Pty Ltd v Beard at [154], after reviewing this case law, I concluded, with the agreement of Allsop P and Macfarlan JA:
"More generally, concerning any factual finding of a trial judge that is affected by any of the different ways in which the trial judge has an advantage over the appellate court, there needs to be a reason, such as those identified in 128 [28] and [29] of Fox v Percy , that explains why it is that an appellate judge is satisfied, notwithstanding the circumstance that would usually give the trial judge an advantage, that there is error in the finding. But once an appellate judge is satisfied that there is such a reason, the obligation of the appellate judge is to correct the error."
90 In the summary of House v The King given in Micallef, (at para [76] above) paras (a)-(d) identify circumstances in which an appellate court is able to be confident that the decision below is in error, notwithstanding that it is a decision on a topic concerning which it is clearly established that a House v The King standard of appellate evaluation is called for. An appellate court is under no disadvantage in identifying an error of legal principle, referred to in para (a). As remarked earlier, it is one of the types of decision concerning which there can be only one correct answer. The types of errors referred to in paras (b)-(d) are errors of the decision-making process, that an appellate court is not restricted in identifying. A decision reached through an error of process of these types is inevitably legally flawed. Para (e) recognises that there are some questions, concerning which a trial judge had a range of choice, in the sense that the law does not proceed on the basis that there can be only one right answer, and where no specific error can be identified, but where nonetheless the appellate court is satisfied, from the unreasonableness or injustice of the result arrived at, that the trial judge must have made an error.
91 The passage in House v The King at 504-5 that sets out what is often referred to as the House v The King "test" for appellate intervention is:
"… the judgment complained of, namely, sentence to a term of imprisonment, depends upon the exercise of a judicial discretion by the court imposing it. The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable , the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred." (emphasis added)
92 The words that I have emphasised, that bookend the words that are often quoted by themselves as being the test, make clear that what their Honours were here doing was seeking to identify the circumstances in which, concerning the particular type of decision below with which they were concerned, they could be satisfied that the decision was in error. House v The King provides just one example of the way in which an appeal court must take into account characteristics of the decision being appealed against before the appeal court can be satisfied that the decision was made in error, bearing in mind the advantages that a trial judge sometimes has over an appellate court. It states a standard that is particularly applicable concerning questions to which the law recognises that there is no single right answer. A significant part of the reluctance of appellate courts to overrule a judge's interlocutory decision on a matter of practice and procedure arises from the difficulty of the appellate court coming to know the nuances of the case as it has unfolded, and from such questions frequently being ones to which there is no single right answer.