a JUDGMENT No. 4049.22...) a LIMITED DISTRIBUTION : ' ' ' i CATCHWORDS "" ' PRACTICE AND PROCEDURE - Application for leave to appeal from to the decision of a single judge refusing to vacate a trial date - principles to be applied - weight to be given to the views of the judge at first instance - application made to enable . simulation of a computer system - importance of simulation in the conduct of the trial - whether simulation within the ordinary rules of practice and procedure adopted by the court. Ahern v. Deputy Commissioner of Taxation (Qid) (1987) 76 A.L.R. 137 + i L Federal Court of Australia Rules - 0.34 t Federal Court of Australia Act - s.25(2) C HONEYWELL HOLDINGS PTY LIMITED v, ASSOCIATED NEWSAGENTS CO-OPERATIVE LIMITED & OTHERS - ' No. Gi056 of 1988 ' Davies, Sheppard and Burchett JJ. 7 8 July 1988 Sydney LIMITED DISTRIBUTION IN THE FEDERAL COURT OF AUSTRALIA ) ) NEW SOUTH WALES DISTRICT REGISTRY ) No. G1056 of 1988 ) ) GENERAL DIVISION BETWEEN: HONEYWELL HOLDINGS PTY LIMITED Appellant AND: ASSOCIATED NEWSAGENTS CO-OPERATIVE LIMITED (RECEIVER AND MANAGER APPOINTED ) First Respondent AND: BERSAND ONLINE SERVICES PTY LIMITED Second Respondent AND: BERNARD J. DAWSON Third Respondent AND: EXATRON PTY LIMITED Fourth Respondent CORAM: Davies, Sheppard and Burchett JJ. DATE: 8 July 1988 PLACE: Sydney REASONS FOR JUDGMENT EX TEMPORE Davies J.: This is an application for leave to appeal from a decision of a single Judge of the Court who refused an application to vacate 1 August 1988 as the date of the trial of proceedings brought by the first respondent ("Ancol"), against ore pow ee wring eee eee eee the applicant ("Honeywell") and the other respondents. The proceedings were brought by Ancol against Honeywell and the three other respondents with respect to the supply to Ancol of a computer based videotex system. The system was intended to be accessible by newsagent members of Ancol for the purpose of keeping their accounts, for ordering supplies and for other purposes. The system was installed about April 1985 and became operational in August 1985. It was abandoned by Associated Newspapers in July 1986, being regarded by Associated Newspapers as irredeemably unsatisfactory. The maximum utilisation of the system was in March 1986 when about 100 members of Ancol were using the system. Honeywell had supplied the hardware and had some role with respect to software, although the other respondents also had responsibilities in that regard. In his reasons for decision, the learned trial judge mentioned that:- "During the period of operation there was a Honeywell officer designated as project manager. He was employed full time for portion of the period. Honeywell also kept a diary of problems notified to the company in relation to the system and in regard to the action taken to meet those problems. This diary has been discovered and apparently sets out numerous items. It also is said, and accepted on behalf of Honeywell, that, during this period, the company flew out experts from France. from time to time to investigate the complaints. In about December 1985 a newstex steering committee was established; the word ''newstex' referring to the code name of the system. This committee consisted of a Honeywell representative, Mr Dawson, who is the third respondent, and a principal of the second respondent and an Ancol representative. This committee met regularly and minutes were kept. Apparently the committee dealt with problems which were being experienced." ee 3. The trial was first fixed for 1 July 1988, but his Honour later postponed that to 1 August 1988 to give Honeywell more time to prepare. On 25 May 1988, counsel for Honeywell informed the trial Judge that Honeywell intended to make application to vacate the hearing date to enable Honeywell to conduct a simulation of the computing system in order to obtain evidence relevant to the case. On 23 June 1988, his Honour refused the motion and it is from that decision that leave to appeal is sought. The principles to be applied by this Court on such an application for leave were stated in Ahern v. Deputy Commissioner of Taxation (Qld), (1987) 76 A.L.R. 137 at pp.146-7, by Davies, Lockhart and Neaves JJ. as follows:- , "The decision whether or not to adjourn the hearing of the petition was within the discretion of the primary judge. It is well established that an appellate court will rarely interfere with a trial judge's exercise of discretion upon an application for adjournment. However, the refusal to grant an adjournment may in some cases prevent the party seeking it from presenting his case or defence and in some circumstances this may result in injustice of such kind or magnitude as to warrant interference on appeal. In Maxwell v. Keun [1928] 1 K.B. 645 Aitkin L.J. said (at 653): "I quite agree the Court of Appeal ought to be very slow indeed to interfere with the discretion of the. learned judge on such a question as an adjournment of a trial, and it very seldom does do so; but, on the other hand, if it appears that the result of the order made below is to defeat the rights of the parties altogether, and to do that which the Court of Appeal is satisfied would be an injustice to one or other of the parties, then the Court has power to review such an order, and it is, to my mind, its duty to do so." In Bloch v. Bloch (1981) 55 A.L.J.R. 701 Wilson J. at 703, with whose judgment Gibbs C.d., Murphy and Aickin JJ. agreed, described this passage from the judgment of Aitkin L.J. as stating 'the rule in terms which have won wer eee te is er ae ia oon mene wer ee 4g general acceptance.' Similarly, in Walker v. Walker [1967] 1 W.L.R. 327 Sir ———— Jocelyn Simon P. said at 330: 'Pirst where the refusal of an adjournment would result in a serious injustice to the party requesting the adjournment, the adjournment should only be refused if that is the only way that justice can be done to the other party; and, secondly, that although the granting or refusal of an adjournment is a matter of discretion, if an appellate court is satisfied that the discretion has been exercised in such a way as would result in an injustice to one of the parties, such appellate court has both the power and the duty to review the exercise of the discretion.' A related principle, though derived from a different stream of authority, was expressed in Cameron v. Cole (1944) 68 C.L.R. 571 by Rich J. (at 589) in these terms: 'It is a fundamental principle of natural justice, applicable to all courts whether superior or inferior, that a person against whom a claim or charge is made must be given a reasonable opportunity of appearing and presenting his case.' To similar effect, Dixon C.J. and Webb J. said in Commissioner of Police v. Tanos (1958) 98 C.L.R. 383 at 395: ',.. it is a deep-rooted principle of the law that before anyone can be punished or prejudiced in his person or property by any judicial or quasi-judicial proceeding he must be afforded an adequate opportunity of being heard.' See also Taylor v. Taylor (1979) 143 C.L.R. 1 per Gibbs J. at 4. The principles that guide a court when sitting on an appeal from a discretionary order or judgment have been referred to many times. The principles are summarised by Kitto J. in Australian Coal and Shale Employees' Federation v. Commonwealth (1953) 94 C.L.R. gat at 627: 'I shall not repeat the references I made in Lovell v. Lovell (1950) 81 C.L.R. 513, at pp.532-4 to cases of the highest authority which appear to me to establish that the true principle limiting the manner in wich appellate jurisdiciton is exercised in respect of decisions involving discretionary judgment is that there is a strong presumption in favour of the correctness of the decison appealed v from, and that that decision should therefore be affirmed unless the court of appeal is satisfied that it is clearly wrong. A degree of satisfaction sufficient to overcome the strength of the presumption may exist where there has been an error which consists in acting upon a wrong principle, or giving weight to extraneous or irrelevant matters, or failing to give weight or sufficient weight to relevant considerations, or making a mistake as to the facts. Again, the nature of the error may not be discoverable, but even so it is sufficient that the result is so unreasonable or plainly unjust that the appellate court may infer that there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. House v. The King (1936) 55 C.L.R. 499 at pp.504-5.' This passage was cited with approval in the joint judgment of the Full Court of the High Court in Rodgers v. Rodgers (1964) 114 C.L.R. 608 at 619-20. See also Niemann v. Electronic Industries Ltd [1978] Vv.R. 431, especially per Murphy J. at 435-6." See also Adam P. Brown Male Fashions Pty Ltd ve Philip Morris Inc & Anor (1981) 148 C.L.R. 170 at pp.176-7 and Squire v. Rogers (1979) 39 F.L.R. 106 at pp.103-4. The weight which is given, in respect of the questions arising under an application for an adjournment, to the views of the judge at first instance was emphasized by the Full Court in Mudginberri Station Pty Ltd v. Australasian Meat Industry Employees' Union (1986) 12 F.C.R. 10 at pp.12-13. At p.13, the joint judgment of the Court states:- "Where there is no question of absence of jurisdiction, breach of the rules of natural justice, or other positive error, a mere refusal of an adjournment can very rarely, we think, be a fit subject for a grant of leave to appeal." The case put to his Honour for the adjournment was that a major issue at the trial would be whether defects in the computing system arose from the equipment which Honeywell had supplied or, on the other hand, from the software designed by the third respondent, Mr B.J. Dawson, and supplied by the second respondent, Bersand Online Services Pty Limited. The case was put that, as the hardware and software were available in substantially, though not entirely, the form in which they had been supplied, it would be possible to prepare and institute a programme which would simulate the operating conditions encountered when the computing system was used by Ancol. It was said that if the simulation were properly structured and appropriate tests were devised, it should be possible to ascertain where the faults in the system lay. Provided that an effective and useful simulation could be achieved, it no doubt would not matter that there would not be complete identity between the test equipment and that actually used by Ancol. However, the evidence before the trial Judge left much in doubt. The programme for the simulation had not been worked out. The assumptions to be made had not been agreed. The objectives and specific goals of the simulation had not been finally identified or settled. The evidence was that from May to 12 August 1988, time would be spent identifying more precisely what the model had to simulate and what components the model must have in it in order to provide an effective simulation. Then, from 12 August to 24 December 1988, time would be spent writing programmes and running the initial trials. It would then be necessary for the programmes to be audited to ensure that each programme properly recreated the environment it was intended to simulate. Mr P.K. MacGregor, the expert witness called in this 7. application on behalf of Honeywell, was unable to say when any decision would be taken as to whether the simulation would be used by Honeywell for the purpose of seeking to determine whether the operating computer system was running correctly. As to the use of the simulation, Mr MacGregor gave this evidence:- "And do you have a view as to whether the simulation will have any - will give you any assistance in forming a view as to the capacity of the system?---Yes it would. Why would it do that?---It would allow us to measure the capacity of the system over a range of rates of submission of transactions and over a range of different transaction types. And why is that a significant matter in the context of the complaints that Ancol makes?---As I understand it, one of the complaints which Ancol makes is that the system had insufficient capacity to handle more than, I believe, 50 users, under certain conditions which are specified in the complaint and the simulation would allow us to test that claim." The trial judge came to the view that, if the simulation were allowed, it would be as likely to interfere with the fair trial of the proceedings as to assist it. His Honour said:- "It is clear to me that the development and operation of a network load simulator would be of assistance in answering some of the questions which arise in the proceeding. But it is equally clear -- and indeed conceded by Mr MacGregor, who has given evidence on behalf of Honeywell -- that the utility of the simulator will depend upon it being either conceded or found that the specification and the program used in developing the simulator do fairly reflect the system which was installed in 1985. As to that matter, one can only say that it ought to be possible for the specification, and subseqgently the program, to be submitted for examination by one or more experts retained by Ancol. But, in respect of at least some items, Mr MacGregor has conceded that competent people might differ as to the appropriateness of what is proposed. I can-only say that the evidence does not satisfy me that it would be possible to avoid the undesirable situation at a trial of having a separate question arise as to whether the | ty eR me 8. simulation is in fact a fair representation of the original system. Were such an issue to arise, it could have the effect of distracting attention from the principal question -- the adequacy of the original system to comply with the requirements accepted on behalf of the respondents -- and, of course, this diversion could considerably extend the length of the trial and its cost. If I were of the view that a simulation could be undertaken which would very likely answer all the problems of the trial, there would be considerable temptation in postponing the trial for sufficient time to allow the simulation to occur. However, it 1s clear that this is not so. I think that it may turn out that the simulation provides little ultimate assistance; and even perhaps a disadvantage in the ultimate resolution of the issues between the parties." I agree with the view taken by his Honour. The simulation would, if anything, tend to distract attention from what was said and done and known at the time of the transactions which are the subject of the proceedings. The proceedings are based principally upon representations made by or on behalf of Honeywell. At the trial, it will be necessary for the trial Judge to determine what representations were made by or on behalf of Honeywell and what equipment, hardware or software was supplied by or on behalf of Honeywell or by others within the ambit of the Honeywell representations. And it will then be necessary to ascertain whether the representations were false, misleading or deceptive or likely to mislead or deceive. By directing attention of the experts away from the facts as they occurred and the knowledge as it stood at the time to the assumptions in the programmes of and the other technicalities of the simulation, the simulation would be likely to detract from a proper trial of the proceedings. ate omy 9. The proposal for the simulation was outside the ordinary rules of practice and procedure adopted by courts. The simulation was not intended as part of the discovery and inspection of equipment held by an opposite party. Discovery of equipment held by others, including software, was available. The application for the adjournment was not sought to ascertain what had occurred in the past but to permit further investigation to determine what were the causes of the failures which had occurred. If any such simulation were to take place, it could appropriately take place pursuant to an order under Order 34 of the Federal Court Rules, that is to say, by an expert appointed by the Court. That is because, if the Court thought it proper that an issue of fact in the case should be resolved by the making of further tests, it would be appropriate for the Court to appoint an independent expert who would develop the assumptions, programmes and procedures for the carrying out of the necessary tests. In that way, the making of the tests would form a part of the decision-making process and the problems which the trial Judge foresaw under the present proposal would be avoided. The motion put on behalf of Honeywell was not a motion for the appointment of a Court expert under 0.34. If in the course of the proceedings it becomes appropriate to have an issue of fact determined by an expert in some manner, as by carrying out a simulation, that course is one which 1s still open and any party may apply to the trial Judge under 0.34. However, the trial Judge would not make an order appointing a court expert unless he was satisfied that in all the circumstances of the case it was wom, Sor ch ete ee 10. appropriate to do so. There may well be other means, whether by order of the Court or by agreement of the parties, whereby the simulation could take place if the trial Judge thought it appropriate that it should do so. However, his Honour was of the view, at the time of the applacation before him, that the carrying out of the simulation was not appropriate. That view was open to his Honour on the material before him and, with respect, it was correct. His Honour also rejected the adjournment on the basis of delay. His Honour said:- "Notwithstanding my comment on 9 March, it was not until early May that a decision was made by Honeywell to seek a further adjournment of the trial and, if that application was successful, to embark upon the simulation. No program for the simulation was available until the end of May; the feasibility study prepared by the Preston Group Pty Limited being dated 30 May 1988. That document sets out a timetable. The timetable shows the final step -- namely the confirmation of system performance under critical load conditions -- as being targeted for 28 November 1988. However, Mr MacGregor has indicated, in the course of his evidence, that this target date is unrealistic. He has said that it will take at least until the end of January 1989 to reach this stage and that that date will slip further if there is any delay in commencement of the work; as indeed there already has been. Mr MacGregor said that it could be April 1989 before a report was available. Assuming that this hope was met, it would still be necessary for affidavits to be filed, so as to make the report available to the Court and the other parties, and there would have to be an opportunity for the other parties to meet this new evidence. Even 1f all went as well as could be hoped, it seems to me obvious that a trial could not start before the beginning of August 1989. In other words, there would have been a full year's delay. But even this may be a fairly optimistic view of the position. The fact is that, in a period of only a few weeks, the likely report date has already slipped back about four months. Bearing in mind the number of matters which Mr MacGregor has indicated have yet to be resolved and one's everyday experience that estimates of completion dates -- whether in relation to the hearing of cases in courts, the construction of buildings, or anything else -- generally prove over-optimistic, I have ii. no real confidence that, if the simulation went ahead, it would be possible to start a trial even by August 1989. What I do know is that the consequence of an adjournment of the trial is to add over a million dollars to the applicant's claim, without there being any information before the Court as to whether any or all of the respondents would have the ability to pay that extra amount." Again, with respect, his Honour's conclusions were correct. For these reasons I am satisfied that his Honour approached the issue on a correct basis and in a manner calculated to do justice between the parties by ensuring that there would be as early a hearing of the proceedings as was practicable taking into account all such steps as reasonably ought to be taken prior to trial. No error of principle or of fact has been established. The application for leave to appeal should therefore be dismissed. I should not let the occasion pass, however, without emphasising that the Court is loath to interfere with interlocutory orders of this nature. It is for a trial judge to ensure the fair trial of the proceedings before him. This may require the making of many orders of an interlocutory nature. [It is inappropriate that the Full Court should interfere in such matters and s.25(2) was inserted into the Federal Court of Australia Act 1976 by Act No. 72 of 1984 to make it clear that appeals may be brought with respect to such matters only when the decision under appeal raises a significant point of principle or is calculated to defeat the rights of the parties or of one of - =4 12. them altogether or to seriously diminish then. In the present case, not only has it not been shown that there is any serious injustice to Honeywell by his Honour's decision, but I am satisfied that his Honour's decision was the just and appropriate decision in the circumstances. In my opinion, the application for leave to appeal should be dismissed with costs. Sheppard J.: I agree with the reasons which have been given by Davies J. and I have nothing to add. Burchett J.: I also agree and I also have nothing to add. I certify that this and the i1 preceding pages are a true copy of the Reasons for Judgment herein of Davies, Sheppard and Burchett JJ.. —_ Associate: et CaM Date: ly 2988 Counsel for the appellant: Mr A.R. Emmett Q.C. with Miss H. Coonan Solicitors for the appellant: Allen Allen & Hemsley Counsel for the ist respondent: Mr D.E. Grieve Q.C. with Mr P.M. Wood Solicitors for the ist respondent: J.C. Behm & Associates Date of hearing: 8 July 1988