Yevad Products Pty Ltd v Brookfield

On appeal from a single Judge of the Federal Court of Australia

the court 1 On 31 August 2005 this Court allowed in part an appeal from a judgment of Lander J dated 9 September 2004 and otherwise dismissed the appeal. The appellant ('Yevad') now brings a notice of motion seeking to vary the orders made by this Court on 31 August 2005. The basis on which the motion is sought is that four grounds of appeal relating to costs, supported on the hearing of the appeal, appear to have been overlooked in the reasons for judgment of the Court. The motion therefore seeks to reopen the appeal for the purpose of completing it and varying orders made on the appeal.

history of proceeding 2 It is necessary to briefly recapitulate the history of this proceeding. 3 On 8 February 1996, Branson J made an order dismissing an application by the present respondents ('Brookfield' and 'SPA') contending that pumps supplied by the appellant breached, among other things, implied conditions of merchantability and fitness for purpose: Brookfield v Davey Products Pty Ltd (1996) 14 ACLC 303. Her Honour found Brookfield and SPA had not made known to Yevad the particular purpose for which those pumps were required so that such breach could not be made out. The issue turned upon the modification to what was then described as the Parco Beaver System made by the Brookfield and whether that had been made known to Yevad. 4 The orders made by Branson J on 8 February 1996 were: '1. The application is dismissed. 2. [Brookfield] to pay [Yevad's] costs of the proceedings.' 5 On 19 December 1997 Branson J further ordered: 'The costs order of 8 February 1996 be varied to read: "[Brookfield] pay [Yevad's] costs specified in the sum of $380,493.82".' 6 On 19 May 1998, O'Loughlin J dismissed an application by Brookfield and SPA on a notice of motion that judgment be stayed on the grounds of failure to make proper discovery: Brookfield v Davey Products Pty Ltd (1998) ATPR 41-635. 7 On 9 September 2004, Lander J handed down judgment on two notices of motion filed by Brookfield and SPA seeking to set aside the judgment and orders of Branson J made on 8 February 1996 and 19 December 1997 complaining of failure to make proper discovery: Brookfield v Yevad Products Pty Ltd [2004] FCA 1164. In his reasons his Honour described the causes of action brought by Brookfield and SPA and the resolution of each of the claims by Branson J, which it is not necessary to repeat here. 8 On 23 December 2004, Lander J made orders to give effect to the reasons he had delivered on 9 September 2004. Those orders were as follows: '1. Paragraph 1 of the orders made by Branson J in the within action on 8 February 1996 be set aside. 2. Paragraph 2 of the orders made by Branson J in the within action on 8 February 1996 be set aside. 3. The order made by Branson J on 19 December 1997 be set aside. 4. [Yevad] pay [Brookfield and SPA's] costs thrown away by reason of [Yevad's] failure to make proper and appropriate discovery. 5. There will be no order for costs of the notice of motion. 6. The application to join McPherson's Limited is dismissed. 7. Insofar as any party requires leave to appeal from paragraphs 5 and 6 of these orders, leave is granted. 8. Extend the time for any party to appeal from these orders until 31 January 2005.' 9 On 21 January 2005, Lander J made orders in respect of the costs of three notices of motion filed by Brookfield and SPA. His Honour ordered, firstly, that Brookfield and SPA pay Yevad's costs of and incidental to a notice of motion filed on 14 December 2004 on an indemnity basis. With respect to notices of motion dated 20 October 2004 and 8 December 2004 he ordered there be no order as to costs, those including the hearing on 18 January 2005. 10 Following the hearing of the appeal by this Full Court, the Court ordered on 31 August 2005: '1. The appeal be allowed in part. 2. The order made by Branson J on 8 February 1996, to the extent that it dismissed the claims for breach of contract under s 14 of the Sale of Goods Act 1895 (SA), be set aside. 3. Otherwise, the appeal be dismissed. 4. [Yevad] pay [Brookfield's and SPA's] costs of the appeal.' 11 It is common ground that up to the time of the filing of the present notice of motion on 21 September 2005 the orders of the Court made on 31 August 2005 had not been sealed. However, the orders were subsequently sealed in order that Yevad could qualify for the rules applicable to an application for special leave to appeal to the High Court of Australia. 12 On 28 November 2005 Branson J considered a notice of motion brought by Yevad for a stay of Order 4 made by Lander J on 23 December 2004. Her Honour ordered that the notice of motion be treated as filed in the appeal proceeding with a view to this Court determining the stay application. Included in the motion is an application for an order summarily dismissing Brookfield's notice of motion dated 10 November 2005 and filed on 11 November 2005 and referred by this Court to the trial judge on 16 November 2005 on the hearing of Yevad's notice of motion.

NOTICE OF MOTION 13 The present notice of motion seeks to reopen the appeal for the purpose of inviting the Court to decide grounds 22, 23, 25 and 26 of the notice of appeal. 14 Ground 22 contended that Lander J was in error in ordering, at Order 4, that Yevad pay Brookfield and SPA's costs of the action thrown away by reason of Yevad's failure to make proper and appropriate discovery. It contends that his Honour should have held that as he had made no finding that Yevad's failure to make discovery had deprived Brookfield of further evidence by it which would have led to an opposite judgment, the costs of the trial before Branson J should have been reserved for consideration upon any retrial. 15 Ground 23 set out further respects in which it was said that his Honour's reasons erred: '(cc) In failing to give effect to his findings (Reasons of 23 December 2004 [36]) that Septic Products had accused Yevad of fraud but that it was not guilty of fraud and Septic Products' conduct in the hearing resulted in the hearing taking longer than it should have by: (dd) awarding Yevad the costs of the issues in the set aside applications on which Septic Products failed; (ee) awarding Yevad the costs of the issues on which it succeeded ie the tender of inadmissible evidence by Septic Products; and (ff) awarding Yevad the costs of and incidental to the allegations of fraud made by Septic Products. (gg) In taking into account (Reasons of 23 December 2004 [37]) that Septic Products was unrepresented in the set aside applications and felt "aggrieved" by Yevad's admitted failure to make appropriate Discovery and earnestly believed that the failure meant that Branson J dismissed their claim; (hh) In failing to take into account that His Honour had made no finding that Yevad's failure to make Discovery would have lead to an opposite judgment at trial; (ii) In taking into account (Reasons of 23 December 2004 [39]) that Yevad still has not provided a complete list of documents and in failing to find that Yevad was and is under no obligation to file a further list of documents in these proceedings; and (jj) In failing to take into account the imbalance between the costs incurred by Yevad in respect of the issues on which it succeed on the one hand, and, on the other, the lack of costs incurred by Septic Products, being unrepresented.' 16 Ground 25 and ground 26 maintained that Lander J erred in ordering no order as to the costs of the notices of motion of 20 October 2004 and 8 December 2004 and stated that he ought to have ordered that SPA pay to Yevad on an indemnity basis the costs of and incidental to those notices of motion.

contentions 17 The principal contention of Yevad in support of the present notice of motion is that grounds 22, 23, 25 and 26 and the arguments in support were overlooked by the Court at the time the reasons were delivered and judgment given. 18 In consequence it is contended that Order 4 made by Lander J giving Brookfield costs thrown away was wholly premature. It is submitted that Lander J's reasons indicate his Honour meant at least the costs of the trial, and that this was innapropriate because until the retrial is complete it cannot be said with confidence what costs of the trial have been thrown away. It is submitted that the proper order which should be made is an order in the nature of that made by the High Court in McCann v Parsons (1954) 93 CLR 418 at 431 which was to either reserve the costs to the trial judge or to order that the costs thus far incurred in relation to the action abide the event of a further hearing. 19 In relation to the issues raised by ground 23 it was said that Yevad had submitted to Lander J that, because Brookfield was unrepresented, there was really no point in depriving Yevad of its costs of the application. Additionally, it was submitted that Brookfield had sought to bring before Lander J much evidence which was irrelevant, including evidence which was stale evidence resulting in substantial time and costs wasted. 20 In relation to the issues raised by grounds 25 and 26, it was submitted that the basis for the appeal against the order on those notices of motion lay in the fact that they raised hopeless applications. 21 Brookfield contends that Yevad's notice of motion must be considered in the context that the case had been running for twelve years. As a self-represented litigant, he contends it was the failure of the appellant to discharge the obligations of full and proper discovery in 1994-1995 which had brought this position about. Accordingly, he opposed the granting of the motion.

jurisdiction to reopen orders 22 The present notice of motion raises the issue of the jurisdiction of this Court to reopen an appeal in order to complete the hearing, if that be the case. Yevad contends that there are three bases which support such reopening. 23 The first is in reliance on O 35 r 7(1) of the Federal Court Rules ('FCR') which provides that the Court may vary or set aside a judgment or order 'before it has been entered'. Yevad contends that because the notice of motion was filed before the entry of the orders made on 31 August 2005, the provisions of this rule are satisfied. 24 Secondly, Yevad contends that the Court's intervention is supported also by O 35 r 7(4). That provides that subrule (2) shall not affect the power of the Court to vary or terminate the operation of an order by a supplementary order. Order 35 r 7(2) provides that the Court, where it is not exercising its appellate or related jurisdiction under Div 2 of Pt 3 of the Federal Court of Australia Act 1976 (Cth) ('the Act'), may if it thinks fit vary or set aside a judgment or order after the order has been entered. Yevad submits that O 35 r 7(4) encompasses circumstances such as those presently before the Court. 25 Thirdly, Yevad relies upon what is said to be the implied power which flows from s 23 of the Act. That section provides that the Court has power in relation to matters in which it has jurisdiction to make orders of such kind as the Court thinks appropriate. Yevad says that the High Court has shown that this power is one which can be used to protect the integrity of the Court's processes once set in motion: CSR Ltd v Cigna Insurance Australia Ltd (1997) 189 CLR 345 at 391 per Dawson, Toohey, Gaudron, McHugh, Gummow and Kirby JJ; Cardile v LED Builders Pty Ltd (1999) 198 CLR 380 at 393 per Gaudron, McHugh, Gummow and Callinan JJ. However, the appellant submits that it is sufficient to have regard to the first two of the preceding submissions relying on the express provisions of O 35. 26 In support of these submissions, Yevad refers to two authorities. The first is that of BHP Steel (AIS) Pty Ltd v Construction, Forestry, Mining & Energy Union [2001] FCA 336. There Kiefel J, when making an order declaring a respondent to have been guilty of contempt, also made an order for costs. Her Honour did so without appreciating that the applicant desired to be further heard on the question of any special order for costs. The order which she had made resulted in the applicant recovering its party and party costs only. The order came back before her Honour with an order entered but without the applicants having been so heard. Her Honour said in relation to the power of the Court to rectify that position: 'Order 35 rule 7(2)(f) Federal Court Rules in my view permits the order to be set aside given the consent of both parties. The question of which of them had the benefit of the order does not need determination. Alternatively, it seems to me that the Court has an implied power to correct the misuse of its processes: see s 23 Federal Court of Australia Act 1976 (Cth) and Westsub Discounts Pty Ltd v Idaps Australia Ltd (No 2) (1990) 94 ALR 310. This would extend to unintentional actions having the effect that one party was mistakenly denied a right to put its case. A substantial injustice is involved. The Court's powers should not logically depend only upon the wrongful and intentional conduct of a party producing that result.' 27 The second authority relied on by Yevad is Westsub Discounts Pty Ltd v Idaps Australia Ltd (No 2) (1990) 94 ALR 310. There Woodward J considered the power of the Court to set aside judgment entered. At 317 he stated that however wide or narrow the proper scope of O 35 r 7(4) was, it was wide enough to cover the circumstances of the case before him where he considered the order made must be amended in order that justice could be done. He considered the case not unlike that decided by Fisher J in TJM Products Pty Ltd v A & P Tyres Pty Ltd (1987) 17 FCR 390. In that case a notice of motion to set aside an order for costs had been issued before the other party to the action entered judgment. Fisher J relied on authorities such as Hunter v Chief Constable of West Midlands Police [1982] AC 529 and Castanho v Brown & Root (UK) Ltd [1981] AC 557 where the filing of a notice of discontinuance in order to avoid the possible adverse effects of a summons taken out by the other party, was held by the House of Lords to be an abuse of process. At 398, he said that the court could exercise an express power to vary or set aside a judgment or order conferred by FCR O 35 r 7(1) in circumstances where the judgment or order had not been regularly entered. His preference was to rely upon O 35 r 7(4). 28 Yevad submitted that the position is a fortiori in the present case, namely, that FCR O 35 r 7(4) is sufficient to support the step of reopening the appeal to complete the hearing of the appeal notwithstanding that the order had been sealed for the purpose of protecting the rights of the appellant in its application to the High Court. 29 In the submissions by Yevad, reference was also made to DJL v Central Authority (2000) 201 CLR 226 and to the statement by Kirby J at 266, at [100] that there is authority in this Court and other courts that in wholly exceptional circumstances of the type to which Gibbs J referred in Bailey v Marinoff (1971) 125 CLR 529 and in Gamser v Nominal Defendant (1977) 136 CLR 145 the Court may enjoy the power to correct even a perfected order. Kirby J was in dissent and the majority view was that the Full Court of the Family Court did not have power to reopen final orders after their entry. 30 The decisions of the Full Court of this Court referred to by Kirby J were Donkin v AGC (Advances) Ltd [1995] FCA 695; Wati v Minister for Immigration & Multicultural Affairs (1997) 78 FCR 543 at 551; Fox v Commissioner for Superannuation (No 2) (1999) 88 FCR 416 at 429. Reference was also made to Australian Fisheries Management Authority v PW Adams Pty Ltd (No 2) (1996) 66 FCR 349. 31 In DJL in the reasons of the majority at 247, at [44] stated: 'We would add that the statement in De L v Director-General, NSW Department of Community Services [No 2] [(1997) 190 CLR 207 at 215] that the power of the High Court to re-open its judgments and orders is not in doubt should not be misconstrued. In that case and in all of the authorities respecting orders of this Court which were referred to in that passage, the applications were to re-open final orders and were made before entry of the orders in question. There is, as yet, no decision of this Court which turns upon the position after entry of its final orders.' 32 In our opinion this supports the conclusion Yevad is correct in submitting that it is significant the notice of motion for reopening was filed before the orders of 31 August 2005 were sealed. It is the time of the making of the application to reopen which is determinative in this respect. 33 The consequence is that FCR O 35 r 7(1) has application and provides a source of authority to the Court to vary or set aside the prior orders in question. We do not consider on the authorities canvassed before us that it can be in doubt that this rule is sustained by s 23 of the Act.

NEW trial FOR particular ISSUE 34 There is one preliminary issue on which we think it is necessary to reopen the orders. It is in respect of the issue of the claims for breach of contract under s 14 of the Sale of Goods Act 1895 (SA) ('Sale of Goods Act') alone. Considerable time has now elapsed since the trial judge (Branson J) heard the case. It cannot be assumed that there is a continuing memory by the trial judge of the evidence at trial in the way which would facilitate the weighing of the additional evidence in that context. Additionally her Honour made findings of fact against Brookfield and for that reason it would not appear to be appropriate that she should hear the additional claims. 35 In our opinion there should be a new trial on the single cause of action which Order 2 of 31 August 2005 identified as being open to the Brookfield and SPA. That would give to Brookfield, who has had adverse findings made in respect of him, the opportunity to cross-examine Yevad's principal witness on issues relating to his credit now that the witness's affidavit of documents has been shown to be incorrect. By a 'new trial' we mean a trial limited to the particular issue in respect of which error was found and conducted as a rehearing de novo on that issue: cf Community and Public Sector Union v Telstra Corporation Ltd (No 2) (2001) 112 FCR 324 at 327, at [11]. 36 Given the lapse of time in the order of a decade from the original trial we do not consider that there would be any advantage in the former trial judge conducting the new trial on the single cause of action and, at least from the perspective of Brookfield, there are perceived disadvantages if her Honour were to do so. We would add that in our view, the intention of Lander J's orders of 23 December 2004 was that there be a new trial, not a continuation of the trial before Branson J which was rendered nugatory by the failure of Yevad to give full discovery.

effect on costs order at trial 37 In our opinion Order 4 of Lander J should be stayed pending resolution of the application by Yevad for special leave to appeal to the High Court and, if leave is granted, until determination of the appeal. Additionally, the stay should extend until delivery of judgment and orders in the new trial. At that time there will be enhanced possibility of assessing the quantum of costs thrown away. In effect we would grant the application for stay sought by Yevad in the motion referred to us by Branson J.

application for summary dismissal 38 Given that we have already ordered that the Brookfield's motion be referred to the trial judge, we propose to refer to the trial judge Yevad's application for summary dismissal of that motion.

grounds 25 and 26 39 Grounds 25 and 26 in the notice of appeal concern the issue of costs of the notices of motion filed by Brookfield and SPA on 20 October 2004 and 8 December 2004. Those notices of motion contained proposed orders to give effect to Lander J's reasons of 9 September 2004, and were heard, amongst other notices of motion, on 17 December 2004. His Honour then made orders as to costs on 21 January 2005, referred to above at [9]. 40 Yevad failed before Lander J in its application to vary the order made by Branson J in December 1996. However, Yevad succeeded before us on this issue as a new trial is to be limited to the issue of the claims for breach of contract under s 14 of the Sale of Goods Act. 41 However, his Honour specifically found at [53]-[60] that though it may be accepted that a lot of the matters raised in the motions were futile and bound to fail, those matters 'occupied little time in the various hearings after 9 September 2004' and it was not possible to say that Yevad was entitled to all of the costs since 9 September 2004 or on an indemnity basis. 42 Yevad invites us to make a finding that the motions occupied, directly or indirectly, the whole of the hearings on 1 November 2004, 2 December 2004, and 10 December 2004. We do not see that any basis has been shown to indicate an error in his Honour's finding. Nor do we see any reason to interfere with the exercise of his Honour's discretion on the question of costs. I certify that the preceding forty-two (42) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Nicholson, Finkelstein and Jacobson

Counsel for the Appellant: Mr J Wells QC with Mr SJ White

Solicitors for the Appellant: Thomson Playford

Date of Hearing: 16 November 2005

Date of Judgment: 16 December 2005