20 At the hearing before Kavanagh J, the respondents relied on the Amended Reply and a bundle of financial documents from the records of the fourth respondent, KSPC Pty Ltd trading as Westpath Services. No affidavit evidence was read on behalf of the respondents to the application. The parties also tendered a list of matters that were agreed, including the following matters:
· the Court had jurisdiction to grant the relief sought in relation to the first contract;
· Mr Joseph paid $41,000 for his share in Westpath and Mr Khaliq paid $50,000 for his share;
· Mr Joseph started work on setting up Westpath in April 1998;
· Westpath started to process specimens for pathological analysis in about October 1998;
· Mr Joseph had been provided with a company motor vehicle and was largely responsible for recruiting work for Westpath from various medical practitioners;
· Westpath's business developed slowly but steadily from about October 1998 until May-June 1999;
· Mr Joseph deposited a cheque from Ultrasound services made out to cash in his own account;
· Mr Joseph received an agenda letter from Westpath dated 15 February 2000 notifying him of a meeting on 11 March 2000 and the agenda included the removal of Mr Joseph as director of Westpath;
· On 8 March 2000, Mr Joseph's then solicitor wrote to Westpath's solicitor in relation to Westpath's allegation that Mr Joseph had abandoned his employment;
· The issue of Mr Joseph's employment status was the subject of correspondence between solicitors representing Mr Joseph and those representing Westpath and ultimately in correspondence dated 5 April 2000 from Westpath's solicitors, Westpath advised that it had determined that Mr Joseph had abandoned his employment;
· Westpath made no calculation or payment for any accumulated leave entitlements owed to Mr Joseph either then or subsequently;
· The respondents never refunded the applicant's investment of $41,000;
· In October 2002, Westpath sought to introduce a share buy back scheme without informing Mr Joseph;
· Mr Zhang borrowed $25,000 from Westpath;
· Mr Khaliq borrowed $25,000 from Westpath;
· In November 2002, Westpath agreed to a proposal from Mr Joseph to have an independent valuation of its business;
· In November 2002, Mr Zhang and Mr Khaliq registered KSPC Pty Ltd;
· In December 2002, Mr Joseph's solicitor and the respondents' solicitor discussed the issue of appointment of an independent valuer;
· The respondents' solicitor advised Mr Joseph's solicitor to go ahead with the job of finding an independent valuer. The respondents' solicitor also advised that the respondents would not object to the selection of the independent valuer;
· On 12 March 2003, Mr Joseph's solicitor wrote to the respondents' solicitor providing him the name of the proposed independent valuer;
· On 24 March 2003, the respondents' solicitor informed Mr Joseph's solicitor as follows:
I have had a conference with my clients who have informed me that the business had not traded since 5 January 2003. I am informed that the final accounts are currently being prepared by the accountant, and I will ensure that you are provided with a copy of those accounts as it come to hand.
· On 13 May 2003, the respondents advised that Westpath had ceased trading and a new company had been formed in the name of Westpath Pty Ltd;
· On 5 August 2003, the respondents' solicitor advised that the name of the new company was KSPC Pty Ltd and not Westpath Pty Ltd.
· KSPC Pty Ltd trades as "Westpath Services" and operates out of the premises formerly occupied by Westpath.
21 In her judgment, Kavanagh J noted that Mr Joseph had started full-time work in April 1998 in establishing the pathology business and that his first day of employment with the company Westpath was 3 August 1998. Her Honour immediately drew attention to the difference between the proceedings under s 84 and s 106 of the Act. The s 84 proceedings provided a statutory remedy in respect of a claim brought by Mr Joseph for his unfair dismissal, whereas the Court's jurisdiction under s 106 of the Act required Mr Joseph to establish unfairness in the terms and/or conduct of the employment contract, possibly requiring the Court to have regard not merely to the terms of the contract or arrangement but to the manner in which the contract or arrangement was conducted between the parties, citing as authorities: Port Macquarie Golf Club v Stead (1996) 64 IR 53, Oraka Pty Ltd v Wendy's Supa Sundaes, Pilgrim and ors [2004] NSWIRComm 39, Davies v General Transport Development Pty Ltd (1967) AR NSW 37 and A & M Thompson Pty Ltd v Total Australia Ltd (1980) 2 NSWLR 1. The application brought under s 106 pleaded unfairness against Westpath, Mr Zhang and Mr Khaliq asserting that the contract and the associated arrangements were unfair because of the way the contract was conducted during the time of the employment relationship; the termination of the employment relationship; the unfair distribution of monies to other employees through Westpath which had been established to conduct the business; and in the transfer of and the continued use of Mr Joseph's monies in the formation of a new company operating the same business or a similar business, being KSPC Pty Ltd.
22 Although the appellants acknowledged the findings of the Commissioner and accepted his findings as to the credit of Mr Zhang and Mr Khaliq, they challenged a number of facts asserted by Mr Joseph: her Honour acknowledged the necessity of establishing the facts in the s 106 proceedings. Her Honour also noted that the facts asserted by Mr Joseph were neither raised nor argued before the Commissioner and were identified as: the shareholding held by Mr Joseph in Westpath; Mr Joseph's salary/remuneration package as agreed during the employment relationship; the full financial dealings of Westpath: and the shareholding in Westpath. The appellants conceded that Mr Joseph was a founding director of Westpath but challenged his assertion that he was a shareholder in the company, although they, somewhat curiously, argued in the alternative that Mr Joseph had failed to meet a call for the unpaid portion of the shares and had therefore forfeited them. The failure to pay $9,000 owed on the shares was said to entitle the appellants to remove Mr Joseph from the company register.
23 Her Honour rejected the proposition that there had been a proper call for the payment of $9,000 and rejected the assertion that Mr Joseph had used his position of advantage and trust as a director and company secretary to issue himself with the share certificate. Her Honour looked at the records of the company and concluded that Mr Joseph had contributed $41,000 of $50,000 for 50,000 $1 shares in Westpath, while Mr Zhang did not appear to have paid anything for his shares although he was recognised as the holder another 50,000 shares. The evidence was silent as to other shareholders but the company records were "of concern". Importantly, her Honour noted that a certificate specifying shares held by a member was prima facie evidence of the title held by the member in those shares, citing s 1087 of the Corporations Law. Also of significance was the fact that Mr Joseph was formally removed as a director of the first respondent on 11 March 2000 with the Minutes of Westpath not only recording his removal as a director and company secretary but also acknowledging him as being the former holder of 50,000 ordinary shares. The company records showed that Mr Joseph ceased being a shareholder on 30 January 2001. Her Honour expressed the view that, between 1998 and November 1999, Mr Joseph, Mr Zhang and Mr Khaliq "seemed to have conducted themselves as though they were equal shareholders".
24 Having regard to that material, her Honour accepted that Mr Joseph held an interest in Westpath as a result of his financial contribution and held an allocation of 50,000 shares in the first respondent. Her Honour was satisfied that this was an associated arrangement to the employment contract, with Westpath receiving the monies as an establishment contribution. While the respondents challenged Mr Joseph's assertion that his contribution gave him a quarter share in the business of Westpath, the respondents accepted that, if he was found to be a shareholder, then he held a quarter share in the business at the time of the formation of Westpath.
25 Her Honour also noted other changes in relation to the operation and shareholding in Westpath. It was agreed between the parties that, in October 2002, Westpath sought to introduce a share buy-back scheme without informing the applicant. Both Mr Zhang and Mr Khaliq borrowed $25,000 from Westpath and, in November 2002, Westpath agreed to Mr Joseph's proposal to have an independent valuation of the business. Also in November 2002, Mr Zhang and Mr Khaliq registered KSPC Pty Ltd. In December 2002, solicitors for the parties discussed the appointment of an independent valuer. On 13 May 2003, the respondents advised that Westpath had ceased trading and that a new company had been formed in the name of Westpath Pty Ltd. On 5 August 2003, the respondents' solicitors advised that the name of the new company was KSPC Pty Ltd not Westpath Pty Ltd, although it traded as "Westpath Services" and operated out of the premises formerly occupied by Westpath.
26 In relation to salary, Mr Joseph stated that Mr Zhang and Mr Khaliq on behalf of Westpath agreed to pay him $700 per week, while the maximum he was actually paid during his employment was $460 per week. Mr Joseph said that he agreed to receive $460 per week until Westpath reached a profit, and then his salary would be $700 per week plus a car and a mobile telephone. Mr Joseph relied on the fact that there was no other evidence before the Court in relation to salary but her Honour expressed concern, in view of Cambridge C's findings as to credit, about acting on evidence of the parties alone and so sought other sources including bank records to determine the issues in contest.
27 The duties of Mr Joseph were then considered and an assessment made by her Honour that the value of those duties would be fairly covered by a payment of $600 per week. Her Honour took into account Cambridge C's order that appeared to proceed on the basis of pre-termination remuneration of $600 per week, although the Commissioner's intention to limit the compensation was unclear as to whether it was a reference to the period over which the payments should be made or as to the rate at which it was to be made. Her Honour rejected $460 per week as constituting a fair payment for Mr Joseph's labour.
28 The financial records of Westpath were then examined by her Honour. They revealed that the directors of Westpath, including Mr Zhang and Mr Khaliq, received other payments in addition to their salary from the Westpath account each financial year until Westpath ceased trading on 5 May 2003. No such payments were made to Mr Joseph after he was terminated: in the first year of the operation of Westpath 1989/1999, there was only a distribution to Dr Singh of $1,216 and $110,000 to Mr Zhang. In the financial year 1999/2000 (when Mr Joseph was dismissed), monies were paid to each director or to a company in which each director declared an interest as follows: $28,865 to Mr Singh; $29,480 to Mr Prasad; $41,206 to Mr Zhang and $46,610 to Mr Khaliq. Her Honour concluded that there was a distribution of monies accumulated by Westpath "be it a profit distribution or bonus payment", yet Mr Joseph worked for Westpath for six months of the financial year 1999/2000, was a shareholder and received no distribution of monies. The evidence further revealed that each of the four directors took out of the account of Westpath after salary on average in the stated financial years the following: in 2000/2001, $68,477; in 2001/1002, $88,291; in 2002/2003 (for the nine months until it ceased trading in March 2003) $19,908.
29 The financial records revealed that, on 2 June 2005, in two separate movements of money, a total of $175,588 was transferred from Westpath to the account of KSPC Pty Ltd. KSPC Pty Ltd in the financial year ending 30 June 2006 had an income in excess of $4.5 million. KSPC Pty Ltd was a company established by Mr Zhang and Mr Khaliq and conducted a similar business to that of Westpath. KSPC Pty Ltd employed Mr Zhang and Mr Khaliq to provide the same service they had provided to Westpath. KSPC Pty Ltd originally traded under the name of Westpath Services and operated out of the same building. While this business was now conducted through KSPC Pty Ltd, its trading name was still Westpath Services.
30 Although Mr Joseph alleged a contract initially with Mr Zhang and Mr Khaliq, then a subsequent contract of employment with Westpath when it was registered, her Honour found that there was an employment contract with Westpath and that Mr Zhang and Mr Khaliq had a direct connection with the making and avoidance of that contract: on the evidence, they were the controlling minds of Westpath. Her Honour then made the following findings: the applicant held a financial interest in Westpath; he held the position of marketing director/scientific officer; the Minutes of the Westpath directors' meeting of 28 November 1999 did not reveal that there was agreement that Mr Joseph be dismissed and that much of the meeting was concerned with the kick-back scheme. Her Honour found that, in the financial dealings of Westpath, there was unacceptable corporate behaviour and that Mr Joseph, Mr Zhang and Mr Khaliq were parties to that unacceptable conduct. While the terms of the employment contract were originally fair and the contract was entered into on even terms, by the conduct of Westpath and the conduct of its directors Mr Zhang and Mr Khaliq, the contract in its performance became unfair. The contract was unfair in the way its financial dealings were conducted to the detriment of Mr Joseph's financial interest, both as to distribution of profit/bonus and in the financial dealings within the associated arrangement, and there was unfairness in Mr Joseph's termination and in the operation of Westpath's share register so that he was removed as a shareholder (as part of the unfair employment termination).
31 Having reached these conclusions, her Honour then considered whether the unfairness found should lead to a variation of the contract and the making of compensation orders as sought by Mr Joseph. Her Honour addressed the role of the Court under s 106 in making orders that were "just in the circumstances" of the case; she considered well known authorities such as Baker v National Distribution Services (1993) 50 IR 254 and Westfield Holdings v Adams (2001) 114 IR 241 and the principle that money orders needed to be connected to the variation of the contract and, where appropriate, were to restore a party to the circumstances that existed before the making of the contract. In that context, her Honour then considered the respondents' submission that Mr Joseph did not come to the Court with "clean hands" and should therefore not have the benefit of the Court's discretion and orders by way of compensation.
32 Her Honour described the business dealings of the parties as "unethical" and that Mr Joseph, Mr Zhang and Mr Khaliq had behaved "inappropriately, if not fraudulently" in the conduct of the pathology business and that there was an unacceptable corporate culture and behaviour in the operation of Westpath. It was noted that the respondents said that the applicant was a thief "who was culpable and recalcitrant" and that therefore no order should be made which would "punish" the respondents. The respondents further submitted that Mr Joseph was disentitled to orders because the contract was a bargain entered into on even terms; his employment contract required the parties to engage in criminal conduct or to aid and abet the commission of criminal offences and the Court was being asked to enforce a contract tainted by illegality; and the applicant lacked clean hands because of fraud and that, although he took an oath to tell the truth, he gave false evidence in the proceedings before Cambridge C and because he participated in criminal proceedings. The allegation of theft was, of course, a reference to the fact that Mr Joseph had placed into his own bank account a $300 cheque made out to "cash" which was said to be part of the kick-back system and which prompted the 28 November 1999 meeting. The respondents further argued that it would be contrary to public policy for the Court to order the distribution of the "proceeds of crime".
33 In dealing with the lack of "clean hands" submission, her Honour considered the unethical nature of the business operated by all parties and, in particular, the treatment of Mr Joseph by the respondents in isolating him from the distribution of profit or bonus, removing him from the share register without returning his $41,000 establishment money and ignoring his initial quarter share in the business. In those circumstances, her Honour was persuaded that it was proper, given the unfairness in the conduct of the contract, to vary the contract of employment. Because of the credit issues arising in relation to all the parties, her Honour proposed to make money orders by following the "money trail" in determining what was just in the circumstances of the case.
34 Given Cambridge C's order for the payment of 13 weeks' salary in the s 84 proceedings, her Honour rejected Mr Joseph's claim for an additional period of notice in the s 106 proceedings. Working on the basis that the applicant was entitled to payment of $600 per week but had only been paid at the rate of $460 per week, the agreement was that the higher amount would be paid once the company was in profit. In those circumstances, her Honour determined that Mr Joseph be paid $600 per week from 1 April 1998 until 28 November 1999 with credit to be given for payments already made. Interest was to be paid on that amount in accordance with s 100 of the Civil Procedures Act 2005 from 1 April 1998 to the date of judgment. In view of the respondents' concession that, if Mr Joseph was not fairly terminated for theft, he should receive his accrued benefits, her Honour found that it was just in the circumstances to order that Mr Joseph be paid the benefits of his accrued leave entitlements for the 20 months he worked for Westpath calculated on his base rate of $600 per week. Interest was to be paid on that sum in accordance with the Civil Procedures Act.
35 Mr Joseph contributed $41,000 as establishment money to Westpath and held 50,000 shares in that company representing originally one-quarter of the shareholding. Her Honour found that the respondents had the benefit of Mr Joseph's capital in order to both establish and build the business of Westpath and noted that there was considerable growth in the revenue of Westpath during the period of Mr Joseph's employment. For the financial year ending 30 June 1999, Westpath's revenue was over $367,000; for the financial year ending 30 June 2000 the revenue exceeded $1.72 million; and for the financial year ending 30 June 2001, the revenue exceeded $1.55 million. Her Honour noted that the applicant ceased working on 28 November 1999 and that he had contributed to Westpath up until that period. These facts persuaded her Honour that Mr Joseph had a legitimate claim for a return on his capital investment, being an investment that was an arrangement closely associated with the employment contract. Her Honour dealt with this claim by determining that Mr Joseph should share in the distribution of money, whether described as profit, bonus or overtime payments that were paid to the other respondent directors.
36 During the relevant period, Mr Zhang and Mr Khaliq took approximately $40,000 (a figure rounded down from $47,000) from Westpath in 1999/2000 while holding a similar number of shares in that company. Mr Joseph had been removed unfairly as a shareholder, given his contribution to the company made in support of his employment contract. Having contributed to the success of the company, it was just in the circumstances that Mr Joseph share in a similar way in the payments made to the directors Mr Zhang and Mr Khaliq, although her Honour reduced the relevant sum from $40,000 to $35,000 in recognition of the fact that the applicant worked for only part of the financial year. Interest was to be paid on that amount in accordance with the provisions of s 100 of the Civil Procedures Act from 1 July 2002 until the date of judgment.
37 Mr Joseph made a significant claim for the loss of his business interest arising from the fact that the respondents continued to operate the business without either refunding his shareholding of $41,000 and by not extending to Mr Joseph payments made to the other directors. No recognition had been given to Mr Joseph for his quarter share in the business of Westpath nor was there any recognition of the use of Westpath's resources in establishing KSPC Pty Ltd which had income of over $4 million in 2005. Her Honour found this the most difficult of the claims pursued by Mr Joseph. Account had to be taken of the payment of $35,000 already made as, at least, reflecting part of a return on Mr Joseph's investment of $41,000. In the circumstances, her Honour thought that the appropriate course was to order that Mr Joseph be reimbursed the sum of $41,000 but that there should be compound interest calculated on this sum from 1 July 2000 to the date of judgment. The interest compounded in this way was considered just given the continued use of Mr Joseph's monies in the successful pathology business. Her Honour rejected the other claims that Mr Joseph should receive a payment reflecting the earnings of Westpath after his termination and rejected the other claims grouped under this heading.
38 By reason of both Mr Joseph's conduct and the lack of medical evidence, his claim for the payment of money on account of stress and psychological injuries suffered during his employment was rejected. The conduct of Mr Zhang and Mr Khaliq and the evidence as to the origins of KSPC Pty Ltd led her Honour to form the view that all were involved in a culpable way in the unfairness suffered by Mr Joseph. That unfairness was addressed by the Court's orders and all the respondents should therefore be jointly and severally liable in relation to those orders.
THE APPEAL
39 The Amended Application for Leave to Appeal and Appeal sought to appeal against the following matters:
(a) the order that Mr Joseph be paid $600 per week from 1 April 1998 to 28 November 19998 and that interest be paid on that sum from 1 April 1998;
(b) the order that Mr Joseph be paid $35,000 as a distribution of bonus/profit made by Westpath Services Pty Ltd in the financial year 1999/2000;
(c) the order that Mr Joseph be repaid the sum of $41,000 with compound interest (but as to interest only);
(d) the order that the appellants pay Mr Joseph's costs;
(e) the order requiring Mr Joseph to be paid accrued annual leave entitlements for 20 months at $600 per week.
40 The appellants nominated 19 grounds of appeal. The grounds of appeal may be grouped as follows: firstly, it was not reasonably open on the evidence that there was a profit distribution or bonus payment made to other directors of Westpath and that the finding that such payments were made was based on a misrepresentation of the relevant evidence by Mr Joseph; secondly, in ordering the payment of extra salary to an employee engaged in misconduct directly related to the contract of employment was contrary to principle, Mr Joseph had not come to the Court with "clean hands" and that there was error in finding there was collective misconduct on behalf of the appellants; thirdly, that there were internal inconsistencies in the orders for monetary payments; fourthly, that her Honour had wrongly found there was a transfer of $175,580 from Westpath to KSPC Pty Ltd in 2005; fifthly, that the orders made were not "just in the circumstances of the case" in that there was an error in ordering additional payments for a period during which the contract was fair and entered into on equal terms, there was error in awarding additional payments for a period during which the contract was fair, there was error in ordering extra salary payments and compensation in addition to the return of capital plus compound interest for concurrent periods, there was error in awarding extra salary payments and compensation in addition to the return on capital plus compound interest for concurrent periods where other directors did not receive such payments, there was error in ordering payment of extra salary between October 1998 and November 1999 when other directors did not receive such payments; sixthly, there was error in awarding annual leave entitlements and there was further error in awarding annual leave to a partner; seventhly, there was error in making orders against Westpath in relation to a period when it did not exist; eighthly, there was error in ordering payment of interest on amounts not due and error in ordering interest on sums of money not paid; ninthly, the finding that Mr Joseph was employed full-time by Westpath from April 1998 was not reasonably open on the evidence and the finding that there was an agreement to reimburse Mr Joseph further for his labour was not reasonably open on the evidence; and tenthly, there was error in considering the gross revenue of Westpath only.
41 In relation to leave to appeal, it was stated that there were matters of significant principle raised by the proceedings that ought to be the subject of an authoritative ruling by a Full Bench of the Court. It was submitted that there had been a misrepresentation of the evidence as to the sums paid to other directors that had led Kavanagh J into error by treating what were recorded in Westpath's cheque books as day-to-day outgoings that could not reasonably be held out as a distribution of profits or as bonus or overtime payments made only to the other directors and not to Mr Joseph. The evidence and submissions for Mr Joseph in support of that proposition were made in breach of counsel's duty under the Barristers' Rules requiring counsel to refrain from alleging any matter of fact unless they believed on reasonable grounds that the factual material already available provided a proper basis to do so.
42 In relation to the "clean hands" argument, it was submitted there was little previous guidance as to the application of the maxim in the exercise of the Court's jurisdiction under s 106 and it was appropriate for the Full Court to determine the extent to which the maxim applied in the jurisdiction, the circumstances in which it would apply and to enunciate whether there were exceptions or limitations on the application of the maxim and how the maxim might be applied when all parties to a transaction were alleged to have acted improperly.
43 In relation to her Honour's consideration of what orders were "just in the circumstances of the case", it was appropriate for a Full Bench to lay down principles on the approach to be taken where there was an interplay of considerations to take into account before exercising a discretion to award compensation under s 106(5) of the Act. It was submitted that the approach should constitute the following steps: firstly, the Court would identify the period during which the impugned contract was unfair; secondly, the Court would consider what other periods (if any) were relevant in assessing compensation; thirdly, the Court would consider each of the heads under which compensation might be available and the weight that should be given to each of them; fourthly, the Court would identify any other payments already received by an applicant (eg unfair dismissal payments) and give them appropriate weight; fifthly, a Court would consider whether any compensation payments should be made concurrently; and sixthly, the Court would consider whether any discretionary factors should be taken into account so as to vary the amount of any compensation ordered.
44 It was also submitted by the appellants that, in relation to the orders encompassing payments of annual leave, the liability of Westpath and the timing of interest payments, the Court had exceeded its jurisdiction and it was appropriate that the Full Court should consider whether the decision on these issues was inconsistent with established law and principle and for the Full Court to lay down appropriate principles.
45 In relation to leave to appeal, the appellants accepted that the principles applicable were those laid down in Knowles v Anglican Church Property Trust (No 2) (1999) IR 380 at 381. While it was accepted that leave would not be lightly or automatically granted, the statutory scheme made it clear that the legislature intended to restrict access to appeals to appropriate cases meeting the public interest test stated in s 188(2). Questions of jurisdiction by themselves would not establish a basis for the grant of leave and each case would have to be judged against the statutory criteria. It was also relevant to the grant of leave to consider amongst other factors whether the appellants had brought a substantially different case on the appeal. It would also be necessary to consider whether an appeal raised substantial and important considerations and questions of public interest.
46 At the forefront of Mr Joseph's case on the appeal was the submission that substantially the issues sought to be raised on appeal constituted a different case to the one put before Kavanagh J and ignored clear concessions made in the proceedings at first instance which were relied upon by both Mr Joseph and the Court. In this context, it is to be noted that, in the proceedings before Kavanagh J, the appellants were represented by Mr Levingston, solicitor, but the written submissions in support of the granting of leave to appeal and on the appeal if leave be granted were drawn by Mr A K Singh of counsel who appeared in the Appeal but did not appear in the substantive proceedings before Cambridge C or Kavanagh J.
47 In view of the importance of these contentions as to the nature of the case at first instance and the case sought to be argued on appeal, it is appropriate at this stage to refer to the relevant principles, noting that s 191(1) of the Industrial Relations Act 1996 provides that an appeal to a Full Bench is not by way of a new hearing and is to be determined on the evidence and material adduced in relation to the decision appealed against.
48 In Coulton v Holcombe (1986) 162 CLR 1, the joint judgment (Gibbs CJ, Wilson, Brennan and Dawson JJ) dealt with the nature of an appeal by way of re-hearing and stated at p.7:
To say that an appeal is by way of rehearing does not mean that the issues and the evidence to be considered are at large. It is fundamental to the due administration of justice that the substantial issues between the parties are ordinarily settled at the trial. If it were not so the main arena for the settlement of disputes would move from the court of first instance to the appellate court, tending to reduce the proceedings in the former court to little more than a preliminary skirmish. The powers of an appellate court with respect to amendment are ordinarily to be exercised within the general framework of the issues so determined and not otherwise. In a case where, had the issue been raised in the court below, evidence could have been given which by any possibility could have prevented the point from succeeding, this court has firmly maintained the principle that the point cannot be taken afterwards: see Suttor v Gundowda Pty Ltd (1950) 81 CLR 418 at 438; Bloemen v The Commonwealth (1975) 49 ALJR 219. In O'Brien v Komesaroff (1982) 150 CLR 310 at 319, Mason J in a judgment in which the other members of the court concurred, said:
In some cases when a question of law is raised for the first time in an ultimate court of appeal, as for example, upon the construction of a document, or upon facts either admitted or proved beyond controversy, it is expedient in the interests of justice that the question should be argued and decided (Connecticut Fire Insurance Co v Kavanagh [1892] AC 473 at 480; Suttor v Gundowda Pty Ltd at (1950) 81 CLR 4187 at 438; Green v Sommerville (1979)141 CLR 594 at 607-8. However, this is not such a case. The facts are not admitted nor are they beyond controversy. The consequence is that the appellant's case fails at the threshhold. They cannot argue this point on appeal; it was not pleaded by them nor was it made an issue by the conduct of the parties at the trial.
In our opinion, no distinction is to be drawn in the application of these principles between an intermediate court of appeal and an ultimate court of appeal. Finally, in a recent decision of six justices of this court (Unversity of Wollongong v Metwally [2] (1985) 59 ALJR 481 at 483 the court said:
It is elementary that a party is bound by the conduct of his case. Except in the most exceptional circumstances, it would be contrary to all principle to allow a party, after a case had been decided against him, to raise a new argument which, whether deliberately or by inadvertence, he failed to put during the hearing when he had an opportunity to do so.
The Court of Appeal recognised the great importance, in the public interest, of these principles. Their Honours summarised them in the following terms:
The finality of litigation; the difficultly of inducing an appeal court to consider new facts; the undesirability of encouraging tactical decisions not to present an issue at first instance; keeping it in reserve for appeal; and the need for vigilance to avoid injustice to a party having to meet new facts and new issues of law for the first time at the appeal court.
49 The High Court revisited this area in another context in Banque Commerciale S.A., En Liquidation v Akhil Holdings Ltd (1990) 169 CLR 279. Mason CJ and Gaudron J at 284 looked at the policy behind the rules cited in Coulton v Holcombe and stated:
It is necessary to note the decision of Water Board v Moustakas (1988) 62 ALJR 209. In that case the appellant was precluded from making a case that had not been made at trial, although the elements of that case had been pleaded and particularised. The decision in that case was rested on the rule that, unless all facts have been determined beyond controversy or the question is one of construction or law and it is expedient and in the interests of justice to entertain the point, a party may not take a point for the first time on appeal. See, generally, Suttor v Gundowda Pty Ltd ... , University of Wollongong v Metwally (No 2) ... , Coulton v Holcombe ... , O'Brien v Komesaroff ... . Some aspects of that rule appears to derive from public policy considerations directed to ensuring the finality of litigation. On the other hand, some aspects of the rule may have their genesis in estoppel by election in the conduct of litigation, although, if so, the relevant consideration is not that the other party is put in a worse position but that he or she may have been so placed. See, for example, Moustakas at 212, where the refusal to allow the appellant to raise a new case was rested on 'the possibility that the [other party] may, if it had been raised below, have wished to call evidence in response to it'. So far as the rule may derive from public policy, the relevant consideration is that the case sought to be made on appeal is a new or different case from that which emerged at the trial. See Browne v Dunn (1893) 6R 67 at 75,76, cited with approval in Rowe v Australian United Steam Navigation Co Ltd (1909) 9 CLR 1 at 24,25; Moustakas (1988) 62 ALJR at 210-211.