VCP Investments Pty Ltd & Ors v J McCubbin & Sons Pty Ltd & Ors [2006] VSCA 50

"9. How that came about was at first blush not easy for me to discern. What I am talking about is the payment of wages. How that came about was not easy for me to discern at first. But when reviewing all of the evidence and all of the matters which were going on at that time, it seemed to me to be reasonably clear that there was an error which induced the payment of those wages for that period of time.

10. The error came about because at the time that all of this was going on, Mr McCubbin, who was the principal actor on behalf of the McCubbin group of companies, was not well and was away from the place of business for a period of time being hospitalised and was apparently quite gravely ill. The general arrangement is the one concerning the $30,000 which were retained in order to tide Mr Pike over for the first couple of weeks until the first payments were made from Uncle Ben's. That money was refunded but in addition to that, there was this issue of paying the wages for those two weeks, which comes to some $46,000 in round figures."

His Honour then made adverse observations concerning Mr Kenneth Pike's credit and demeanour in the witness box.

4 It should be said at once that this was not an easy trial, having regard to the pleadings and the course of the evidence. It is a matter for congratulation that so many of the issues have been resolved to the satisfaction of the parties, at least to the extent that his Honour's decision on those issues has been accepted and there is no appeal in relation to them. The difficulty is that the reasons given in relation to the only live issue on the appeal are insufficient to enable this Court to discharge its appellate function as described by the High Court in Fox v. Percy[1]. The Court must have such assistance if it is to perform its function. Without it, we cannot be confident of doing justice between the parties.

5 The incidental matter to which I referred earlier arises from the fact that his Honour ordered the Pykes to pay the McCubbins on an indemnity basis. That order is no longer challenged as such but, if the appeal had been allowed on the merits, the Pykes would have asked that the costs order be varied to require them to pay only two-thirds of the McCubbins' costs of the proceeding, to be taxed on an indemnity basis. That concession should be reflected in the orders that the Court makes today.

6 I propose orders in accordance with the following minutes:

1. The appeal is allowed.

2. So much of paragraph 1 of the order made by the County Court on 2nd March 2004 as relates to "$46,790.73 together with interest to the date of judgment herein in the sum of $10,125" is set aside.

3. The proceeding is remitted to the County Court for re-hearing, limited to the respondents' claim for the said sum of $46,790.73 together with interest.

4. Paragraph 2 of the order made by the County Court on 2nd March 2004 is also set aside. In lieu thereof, it is ordered that the defendants pay two-thirds of the plaintiffs' costs of the proceeding down to and including 2nd March 2004, to be taxed on an indemnity basis, and that the balance of the plaintiffs' costs of the proceeding down to and including that date be in the discretion of the judge presiding at the second trial.

7 We should hear counsel on the question of the costs of the appeal and s.74(4) of the County Court Act 1958. I would grant the respondents an indemnity certificate pursuant to s.4 of the Appeal Costs Act 1998. I do not consider that Pickford v. Incorporated Nominal Defendant[2] stands in the way of that conclusion.

8 I agree with the orders which his Honour proposes and with his reasons for doing so. I add the following remarks for myself.

9 This is, in my opinion, a truly lamentable state of affairs. The parties conducted the proceeding in the County Court over three days, doubtless at considerable expense to themselves and doubtless having had to commit considerable amounts of time to the preparation of their respective cases with their legal advisers, and to being at court for the case. That all having taken place, the reasons for judgment are so manifestly inadequate that we are unable now to afford the parties the opportunity which our system of justice would ordinarily give them, to argue on appeal the correctness of the findings of the trial Judge.

10 It is remarkable that, in the reasons given by the Judge, a number of paragraphs are devoted to dealing with a claim made in the defence and counterclaim which, as his Honour points out, had been abandoned by defence counsel in final address. That was the claim of "silent misrepresentation", as his Honour termed it. It is also remarkable that his Honour, in dealing with the question of the payment of wages, decided an issue, namely mistake, which he was not asked to decide. Before the case concluded, the plaintiffs had abandoned any claim that the payments were made under a mistake. And it is beyond comprehension, in my opinion, that his Honour could have failed to decide the one issue which did have to be decided with respect to the wages payments, namely whether (as the appellants put it in paragraph 8 of their appeal outline) the wages payments were or were not made pursuant to an oral collateral agreement, as the plaintiffs had alleged in their pleading.

11 The judgment makes no mention of the plaintiffs' reliance on such a contract. As a result, the appellants in their outline were constrained to contend that the finding which his Honour made about mistake - that being an issue he did not need to decide - carried with it "the necessary implication that he was satisfied that the wages payments were not made pursuant to the oral collateral agreement pleaded by the respondents/plaintiffs". It is a sorry state of affairs when an appellant is forced to base its appeal submissions on an inference as to what the Judge decided on the critical issue, there being no indication in the judgment as to what was actually decided on that issue.

12 As Callaway, J.A. has said, it is impossible for this Court to know what his Honour decided on the issue, less still why he did so, and it is, accordingly, impossible for us to embark on the task of doing justice between the parties to the appeal. Our colleague in the New South Wales Court of Appeal, McColl, J.A., said recently in Ainger v. Coffs Harbour City Council[3]:

"Adequacy of reasons lies at the heart of the judicial process. Failure to provide sufficient reasons promotes 'a sense of grievance' and denies 'both the fact and the appearance of justice having been done', thus working a miscarriage of justice."[4]

There has been a serious miscarriage of justice in this case. The failure to provide any reasons which state, or explain, the conclusion arrived at on the contract issue, as contested by the parties, denies both the fact and the appearance of justice having been done in this case.

13 It is of concern to me as President of this Court that the parties have not had an opportunity to address this threshold problem until now, some two years after the notice of appeal was filed. That is a matter for this Court. Naturally, the parties will be dismayed to find that, having waited so long for their appeal, it cannot now be heard. It is important that the parties be aware that this Court is cognisant of the time it has taken for the appeal to come on, and of the dismay they would naturally feel, given the conclusion to which Callaway, J.A. and I have felt constrained to come.

14 For these reasons in addition to those given by Callaway, J.A., I would make the orders which his Honour proposes.

15 For the reasons given by the President and Callaway, J.A., I also agree with the orders proposed.

2. So much of paragraph 1 of the order made by the County Court on 2 March 2004 as relates to "$46,790.73 together with interest to the date of judgment herein in the sum of $10,125" is set aside.

3. The proceeding is remitted to the County Court for re-hearing, limited to the respondents' claim for the said sum of $46,790.73 together with interest.

4. Paragraph 2 of the order made by the County Court on 2 March 2004 is also set aside. In lieu thereof it is ordered that the defendants pay two-thirds of the plaintiffs' costs of the proceeding down to and including 2 March 2004, to be taxed on an indemnity basis, and that the balance of the plaintiffs' costs of the proceeding down to and including that date be in the discretion of the judge presiding at the second trial.

5. Direct that the sum of $56,915.73 deposited by the defendants/ appellants with the County Court pursuant to s.74(4) of the County Court Act 1958 be paid out to the defendants/appellants.

6. The appellants pay the costs of the respondents reserved by this Court on 24 June 2005 and 12 August 2005 respectively, and otherwise each party bear its own costs of the appeal.

7. The respondents have a certificate under s.4 of the Appeal Costs Act.

[1] [2003] HCA 22; (2003) 214 C.L.R. 118, especially in the judgment of Gleeson, C.J., Gummow and Kirby, JJ. at 124 [20]-[31]. See also Sun Alliance Insurance Ltd. v. Massoud [1989] VicRp 2; [1989] V.R. 8 at 18.

[2] [1981] VicRp 58; [1981] V.R. 583.

[3] [2005] NSWCA 424 at [47].

[4] Her Honour here cited Mifsud v Campbell (1991) 21 NSWLR 725 at 728; Beale v Government Insurance Office of New South Wales (1997) 48 NSWLR 430 at 442 per Meagher, J.A.