Searle v Commonwealth of Australia

Supreme Court of NSW|2021-12-15|Before: Garling J, Fagan J, Bathurst CJ, Bell P, Basten JA

Judgment

In 2016, the plaintiff, Clayton Searle, commenced proceedings against the defendant, the Commonwealth of Australia ("the Commonwealth"), pursuant to Pt 10 of the Civil Procedure Act 2005 (NSW).
He claimed damages for himself and on behalf of the members of an identified group ("the Group Members") for breach of contract with respect to the provision of training as a part of their enlistment with the Royal Australian Navy.
On 3 July 2018, for the reasons which he then delivered, Fagan J dismissed the plaintiff's claim: see Searle v Commonwealth of Australia [2018] NSWSC 1017.
The plaintiff appealed to the Court of Appeal.
On 31 May 2019, the Court of Appeal (Bathurst CJ, Bell P and Basten JA) upheld the plaintiff's appeal and set aside the orders of Fagan J dismissing the plaintiff's claim.
The Court of Appeal ordered that judgment for the plaintiff be entered in the sum of $60,000 together with interest and costs. The Court of Appeal remitted the matter to the Common Law Division for the determination of the claims of other Group Members and the resolution of common questions between claims of all Group Members. The reasons for this decision are to be found at Searle v Commonwealth of Australia [2019] NSWCA 127.

The Court of Appeal Decision

Common Questions

Prior to the appeal to the Court of Appeal, Fagan J answered some common questions. He gave reasons for his decision in Searle v Commonwealth of Australia (No 2) [2019] NSWSC 14. The answers were not overturned by the Court of Appeal. Relevantly, the common questions and answers are as follows: "7. Did the defendant fail to provide to the plaintiff and to the Group Members a Training Plan as referred to in the [Training Contracts]? A. Yes. 18. Did the defendant arrange for a Training Plan as referred to in the Training Contract and the Group Member contracts to be signed by the defendant and each of the plaintiff and Group Members? A. No. 8. Did the defendant fail to take steps to provide the training that would be required to enable the plaintiff and Group Members to obtain the Certificate IV in Engineering … ? A. Yes. 20. Did the defendant evince an intention in June 2014 not to be bound by the Training Contract or Group Member contracts by announcing that the plaintiff and the Group Members would not be, and could not be, obtaining the Certificate IV in Engineering … at the end of the contract? A. Yes."

Current Issues

The Court has fixed for hearing commencing on 28 February 2022, with an estimate of four weeks, the assessment of damages of the claims made by nine individual Group Members.
On 12 November 2021, the plaintiffs filed a Notice of Motion seeking the following orders: "1 Pursuant to section 192A of the Evidence Act 1995 (NSW), the Court rules that the following evidence proposed to be adduced by the Defendant in the hearing of the claims of the Sample Group Members is not admissible: a. Paragraphs [11]-[27] and [33]-[34] of the affidavit of Justine Windsor sworn 25 September 2017; and b. paragraphs [30]-[31], [36]-[41], [45]-[46] of the affidavit of Tyrone Palmer sworn in February 2018. 2 The Defendant pay the Plaintiff's and Sample Group Members' costs of, and incidental to, this motion. 3 Such further or other orders as the Court may deem fit."
The Notice of Motion nominated the nine sample Group Members by name.

The Disputed Evidence

Ms Justine Lee Windsor and Mr Tyrone Edward Palmer swore affidavits dated 25 September 2017 and February 2018, respectively. The affidavits were served in advance of the proceedings first being heard before Fagan J, but were not read during the course of those proceedings.
In paragraphs 11 to 27 inclusive of her affidavit, Ms Windsor describes the occurrence of various presentations being made to members of the Navy about the Training Contracts, the subject of these proceedings. Ms Windsor deposes that her presentations to recruits at the Recruit School at HMAS Cerberus were substantially similar and were oral. Those presentations generally took place in late 2010. Further presentations took place in 2011 and were made to individuals during their first week of initial technical training.
Ms Windsor gives evidence of her best recollection of what it was that she said on those occasions.
As well, Ms Windsor gives evidence about the way in which the Training Contracts were prepared, including what material was to be inserted into them. She describes the existence of a difference of viewpoint between two of her superiors about the length of time it would take for the Training Contracts to be concluded.
Further, in paragraphs 21 to 27 inclusive, Ms Windsor describes a particular presentation which occurred on 20 June 2011, when a large number of sailors were present.
That particular presentation took place before many of the sailors had signed their Training Contract. The particular significance of this evidence is that Ms Windsor recalls that she told all those present that although the contract had a nominal period of 48 months to obtain the Certificate IV in Engineering, the training would take five years to complete and that the Training Contracts would need to be extended, as well might the period of enlistment.
Ms Windsor's evidence is that she continued through to 2012 to make similar presentations.
The evidence of Mr Palmer, to which objection is also taken, relates to his knowledge of the circumstances, facts and matters relating to the length of time that would be necessary to conclude a Certificate IV in Engineering.
He proceeds to describe his recollection of what was said at the presentation of 20 June 2011, to which Ms Windsor refers, as described at [21] to [22] above. He corroborates her statement as to what was said about the likely training period. He also says that he made similar statements to those made by Ms Windsor about the length of time that it was likely to take the sailors to obtain the qualifications referred to in the contract.
His evidence also extended to what was said at other presentations held on a monthly basis.
In substance, the evidence is of statements made to individuals before they signed their Training Contract, and which were at odds with the Training Contract terms.
It is to be noted that in each case, the Training Contracts contained a "Nominal Term" of four years for the length of contract, by which time the Certificate IV in Engineering was to be obtained.
The oral statements relied upon all suggested in one form or another that the qualification would not be obtained in four years, but rather it would take a longer period of five, or perhaps six, years or so.

Parties' Submissions

The plaintiff submits that this disputed evidence would be in contest if it were admissible and would necessitate the calling of a significant number of witnesses to refute it. The plaintiff submits that the disputed evidence ought be the subject of an advance ruling pursuant to s 192A of the Evidence Act 1995 (NSW) because, first, the evidence is clearly inadmissible and, secondly, the ruling sought would, if made, result in substantial time and cost savings for the parties and the Court.
The Commonwealth submits that it is not appropriate for the Court to give such an advance ruling because the particular circumstances are not such as to enable any good reason to be identified to justify such a ruling.
As well, the Commonwealth submits that the evidence is relevant or, at least arguably so, sufficient to defer to the final hearing of the matter any final ruling on its admissibility.

Advance Ruling

Section 192A is in the following form: "Where a question arises in any proceedings, being a question about - (a) the admissibility or use of evidence proposed to be adduced, or (b) the operation of a provision of this Act or another law in relation to evidence proposed to be adduced, or (c) the giving of leave, permission or direction under s 192, the court may if it considers it appropriate to do so, give a ruling or make a finding in relation to the question before the evidence is adduced in the proceedings."
It is to be observed that relevantly here there is a jurisdictional threshold which must be found to exist before a court can exercise its powers under s 192A, i.e., either subs (a) or subs (b) has to be satisfied.
In this case, I am satisfied that there is a question about the admissibility of evidence which the Commonwealth proposes to adduce, namely, whether it is relevant or not.
The question of relevance is, in accordance with s 56 of the Evidence Act, a matter which determines admissibility of the evidence in the proceedings. Section 56(1) provides that evidence that is relevant in a proceeding is admissible; s 56(2) provides that evidence that is not relevant is not admissible. The extent of relevance is determined in accordance with the formula set out in s 55 i.e., "evidence that is relevant in a proceeding is evidence that, if it were accepted, could rationally affect (directly or indirectly) the assessment of the probability of the existence of a fact in issue in the proceedings".
I am satisfied that that threshold condition exists because the admissibility on the question of, at least, relevance, is raised in respect of the disputed evidence.
The issue is then how the Court should determine whether or not to exercise the discretion which it has in accordance with s 192A.
In Australian Securities and Investments Commission, in the matter of Whitebox Trading Pty Ltd v Whitebox Trading Pty Ltd [2017] FCA 324, Gleeson J said at [21] ff: "21. Section 192A permits but, does not compel, advance rulings to be given on the admissibility of evidence: Bailey v Director-General, Department of Natural Resources [2013] NSWSC 515 at [55]. Whether the Court should make an advance ruling is a 'discretionary case management decision': NA & J Investments Pty Ltd v Minister Administering Water Management Act 2000 (No 4) [2012] NSWLEC 120 AT [40]; Beslic v MLC Ltd [2015] NSWSC 908 at [33]. … 22. The authorities indicate that 'some good reason should be advanced in order that the court exercise jurisdiction under s 192A': … It may, for example, be appropriate to give an advance ruling 'if all matters relevant to the issue have been or can then be ascertained and if it is clear that a ruling will inevitably be required': TKWJ v The Queen [2002] HCA 46; (2002) 212 CLR 124 at [42] (Gaudron J). Further, the giving of a ruling, or the making of a finding, under s 192A may be appropriate where 'a considerable amount of time, effort and money might be saved if the documents were ruled to be admissible now': …" … 24. A sound reason to refuse to give a ruling under s 192A may exist where the proceeding is in its infancy, the issues have not yet been joined because the pleadings have not closed and it is uncertain whether the evidence sought to be the subject of the advance ruling will be relied upon at final hearing … "
As Middleton J said in Davaria Pty Limited v 7-Eleven Stores Pty Ltd (No 9) [2021] FCA 473, at [9]: "… However, there is no specific test to apply in order for the Court to make an advance ruling under s 192A of the Act. It will be a matter of discretion, having regard to the circumstances before the Court and implementing the purpose of s 192A, having regard to good case management principles."
In this Court, s 56 of the Civil Procedure Act provides that the overriding purpose of the Act and the rules of Court in civil proceedings is "to facilitate the just, quick and cheap resolution of the real issues in the proceedings". Section 57 draws specific attention to one of the objects of case management, being the timely disposal of proceedings "… at a cost affordable by the respective parties".
In my view, given the circumstances of this matter, it is appropriate for the Court to give an advance ruling on the admissibility of the disputed evidence. I have come to this conclusion by reference the following matters.
The evidence which the Commonwealth proposes to adduce is disputed. The evidence would be given by two witnesses on behalf of the Commonwealth and would be contested by evidence to be called by the plaintiff from an additional 12 witnesses, six of whom reside in States other than NSW, and three of whom reside in NSW but outside the Greater Sydney area. The evidence of those 12 individuals was filed at an earlier point in the proceedings.
The solicitor for the plaintiff, Mr Imlay, gave evidence, which was not subject to cross-examination or dispute, that his calculation was that if the evidence is admitted, the hearing would be extended by between three and four days having regard to the number of witnesses to be called, the extent of cross-examination and the extent of admissions to be made. In addition, Mr Imlay pointed to the fact that the calling of the 12 additional witnesses would incur considerable expense including subpoena, filing and service fees and relevant travel and accommodation expenses.
As well as these 12 additional witnesses, six of the sample Group Members have filed evidence in reply challenging the accuracy of the disputed evidence. Mr Imlay suggests that the evidence to be adduced from these six witnesses would add between one and two days to the length of the hearing.
It goes without saying that the existence and extent of the dispute over this evidence would lead to considerable additional legal expense by way of preparation of the witnesses for the hearing and the preparation of cross‑examination by both sides to deal with this issue.
This is a matter in which the issues are clear. The Court is being asked to assess damages for each of the sample Group Members arising out of their entry into the Training Contract and the breach by the Commonwealth of that Training Contract. The proceedings are not at an early stage. The issue of liability has been determined. What remains is the assessment of the damages which each Group Member now seeks to prove.
The course proposed by the plaintiff of an advance ruling has significant cost and efficiency benefits. It will be cheaper, it will save a significant number of witnesses from having to give evidence and, importantly, it will save a considerable number of days of hearing.
In those circumstances, particularly having regard to the objects of case management, I have concluded that this is an appropriate matter for an advance ruling to be given in accordance with the provisions of s 192A.

Admissibility of Disputed Evidence

The Commonwealth submits that the evidence is relevant for the purposes of the upcoming damages hearing because it could rationally affect the assessment of the probability of the existence of a fact in issue in the proceedings.
The Commonwealth submits that the evidence is relevant to the proper construction of the terms of each of the Training Contracts entered into by the Group Members.
It is important to note that the claim brought by the plaintiff on behalf of himself and the Group Members for breach of contract was on the basis that the Training Contracts were wholly in writing. They were in a standard form which accorded with the relevant legislation. The terms of the contracts pleaded in the Second Further Amended Statement of Claim were particularised as wholly being in writing and contained in the signed contracts.
In its Defence, the Commonwealth put in issue whether or not the document described as a "Training Contract" created a valid contract between the plaintiff and the Commonwealth. The Commonwealth pleaded that the Training Contract was a nullity or invalid or otherwise enforceable and was not supported by consideration.
In answer to the pleading of the terms of the contract articulated by the plaintiff as being wholly in writing, the Commonwealth maintained its denial of the validity of the contracts and did not admit the terms pleaded, but said that it would: "… rely upon the terms of the 'alleged Training Contract and the Group Member Contracts in their entirety as to the interpretation of such terms'."
The Commonwealth did not plead that there was any other term of the contract - whether express or implied. It did not plead that there was any collateral or other agreement which affected the terms of the contract. Nor did it plead that the terms of the Training Contract, if valid and enforceable, were ambiguous or vague or not capable of being accorded a meaning. The Commonwealth did not plead by reference to any extrinsic circumstances that any of the terms of the Training Contract had a particular meaning. Rather, the Commonwealth pleaded that it relied for the proper interpretation on the Training Contract as a whole.
At the trial before Fagan J, senior counsel for the Commonwealth, when dealing with the Training Contract, made these remarks: "That is all relevant to, it's not a [parol] case, the contract is the contract to the extent your Honour finds it was a valid instrument. … We haven't raised - we haven't said a word in our pleading about [the contract] being partly oral, partly written, we haven't said anything about that and it's not our case."
The evidence which is the subject of this Motion was not read by senior counsel for the Commonwealth at the first hearing.
In oral submissions at the hearing of this Motion, senior counsel for the Commonwealth (who did not appear at the hearing before Fagan J) submitted that the disputed evidence went to, or was relevant to, two issues, namely: 1. the question of the proper construction of the contract, in particular what the phrase "Nominal Term" meant; and 2. the question of whether or not a contemplated extension within the terms of the contract "was given any content". The Commonwealth contended that "that could only have been done orally at or prior to the commencement of the contract and that's what this evidence goes to".
Senior counsel made it plain that the Commonwealth did not contend that the disputed evidence amounted to an oral term of the contract but constituted a background fact relevant to an understanding of what the word "nominal" must mean, thereby going in aid of construction.
In dealing with the ambiguity issue of the phrase "Nominal Term", senior counsel submitted this: "And the evidence which we seek to adduce does two things. Firstly, it shows internally - and it's not just the representation made to the seamen at the various presentations - internally, there was an understanding on our part that four years was not realistic and was not achievable. So that's part of the matrix of facts, the evidence of what we knew. The other part is the evidence of what the other parties to the contract, the seamen, knew. And that is where the presentations come in. Now we say that that is not a pre-contractual representation in the sense of a negotiation. What that is is disclosing to the other side problems which we have identified, which were aware of and which meant two things, both relevant to the exercise of rights under clause (g)."
He then added: "[T]he question is what was the quality of the breach and what was the extent of the breach. And our position is that the combination of [N]ominal [T]erm, plus the operation of [clause] (g), means the time at which the breach crystallises and loss is suffered is not necessarily going to be 48 months."
Senior counsel accepted that the common questions noted that a breach of the contracts occurred in 2014 (see [13] above), which was before the expiry of the Nominal Term as the contracts were entered into prior to October 2012, and further, that none of the contracts had by that time been extended in accordance with the legislative provisions or the terms of the contract.
Senior counsel submitted that as the disputed evidence did not constitute any part of pre-contractual negotiations, it was not precluded from being admissible by the relevant authority.
It is relevant to note three terms of the Training Contract. They are as follows: "We agree that: … (b) the Contract can only be changed by our agreement and according to State/Territory legislation and the State/Territory Training Authority must be informed of the proposed change/s. In some States/Territories approval for the change/s must be sought. … (f) the Contract is successfully completed when there is agreement from the employer, Registered Training Organisation and apprentice/trainee, and/or an acknowledgement by the State/Territory Training Authority, that the apprentice/trainee has attained all the required competencies; (g) this Contract expires if it reaches the term of the contract referred to in question 4 without the apprentice/trainee having attained all the required competencies or a request for an extension of the contract having been endorsed by a State/Territory Training Authority. …"
Question 4 of the contract referred to in the clause extracted above was the Nominal Term of 48 months.
As is apparent, the Training Contract nominates the term of 48 months and notes that there is an agreement between the parties that it can be extended. But, in addition, the contract can only be changed by agreement if that such change accords with the relevant legislation and, as necessary, is approved by the relevant State/Territory Training Authority.
This gives rise in my view to no ambiguity whatsoever. The 48-month period is the term nominated by the parties to the contract, which was approved by the relevant Training Authority. The fact that the contract may, at some time in the future, by agreement between the parties, be extended and that extension approved, whether in accordance with cl (b) or cl (g), would depend on future facts. In this case, it was not contended that those future facts arose. On the contrary, the finding of breach suggests that the breach occurred well before the Nominal Term had been reached and, as senior counsel accepts, without any request for an extension of the term of the contract being made.
The issues which fall for determination at the upcoming hearing relate to the damages suffered by each of the sample members as a consequence of the breach of the contract which has been found.
In my view, statements made prior to the contract being entered into are not admissible. First, there is no ambiguity in the terms of the contract to which those statements may go in terms of interpretation or construction of the contract. Secondly, it is not said on the part of the Commonwealth that the statements constituted a term of the contract or else a mutual understanding of particular facts which formed part of the contract, or else, if they did not form part of the contract, were causative of the Commonwealth entering into the contract and from which the sample Group Members ought not be permitted to depart (i.e., some form of estoppel). Thirdly, the Commonwealth pleads that the proper interpretation of the Training Contract is to be derived from the Training Contract itself. Fourthly, the understanding of the Commonwealth of, or its belief with respect to, the provision of training at a time prior to entering into a binding contract is not of any relevance in determining damages. The fact is that the contract was found to have been entered into and was breached. An argument that says that the Commonwealth was, in effect, never going to be able to comply with the contract simply is irrelevant to any issue of damages caused by the breach of the contract which it subsequently entered.
The position may be different if it were alleged that in some way the statements and the consequent conduct constituted an oral variation of the written terms of the contract. No such allegation is made.
In those circumstances, I am satisfied that the evidence is irrelevant and inadmissible.
Accordingly, pursuant to s 192A of the Evidence Act, I give an advance ruling, namely, that the evidence contained in paragraphs 11-27 and 33-34 of the affidavit of Ms Justine Lee Windsor sworn 25 September 2017 is inadmissible; and further that the evidence contained in paragraphs 30-31, 36-41 and 45-46 of the affidavit of Mr Tyrone Edward Palmer dated February 2018 is inadmissible.
It is appropriate that the Commonwealth pay the plaintiff's costs of and incidental to this Motion.
There will be orders made accordingly.

Amendments 15 June 2023 - Sequential numbering on coversheet. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 15 June 2023

At a glance

Court

Decision date

Before

Source

Judgment (9 paragraphs)

Parties

Legislation Cited (2)

Cases Cited (10)

Cited By (2)