Newington v Beneficial Finance Corp Ltd [2000] FCA 338

FEDERAL COURT OF AUSTRALIA

Newington v Beneficial Finance Corp Ltd [2000] FCA 338

APPEAL ) PRACTICE AND PROCEDURE ) – leave to appeal out of time – fresh evidence – principles – appeal long out of time – leave refused. Federal Court Rules Order 52 r 15(2) Jess v Scott (1986) 12 FCR 187 followed CDJ v VAJ (1998) 72 ALJR 1548 applied Commonwealth Bank of Australia v Quade (1991) 178 CLR 134 applied JEAN EDELWEISS ALAINE NEWINGTON & ORS v BENEFICIAL FINANCE CORPORATION LIMITED NG 213 of 1990 NG 234 of 1993 BURCHETT, DRUMMOND AND WHITLAM JJ 24 MARCH 2000 SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NG 213 of 1990

NG 234 of 1993

BETWEEN: JEAN EDELWEISS ALAINE NEWINGTON, GENMAN PTY LIMITED and JACQUES BONNET

Applicants

AND: BENEFICIAL FINANCE CORPORATION LIMITED

Respondent

JUDGES: BURCHETT, DRUMMOND AND WHITLAM JJ

DATE OF ORDER: 24 MARCH 2000

WHERE MADE: SYDNEY

THE COURT ORDERS THAT: The application for leave to appeal be dismissed. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NG 213 of 1990

NG 234 of 1993

BETWEEN: JEAN EDELWEISS ALAINE NEWINGTON, GENMAN PTY LIMITED and JACQUES BONNET

Applicants

AND: BENEFICIAL FINANCE CORPORATION LIMITED

Respondent

JUDGES: BURCHETT, DRUMMOND AND WHITLAM JJ

DATE: 24 MARCH 2000

PLACE: SYDNEY

REASONS FOR JUDGMENT

THE COURT 1 This is an application for leave to appeal out of time in one matter, and for leave to appeal in respect of interlocutory orders in a second matter, the interlocutory orders being partly referable to pleading points (which, in themselves, would not attract leave) and largely consequential on the final decision sought to be appealed against out of time. Ms Newington argued the application on her own behalf and (by leave) on behalf of the other applicants. 2 It should be said at the outset that Ms Newington faced a very high hurdle, for the application for leave to appeal was not filed until just over two and a half years after the making of final orders by Lehane J on 22 April 1997. In Jess v Scott (1986) 12 FCR 187 at 195, the joint judgment of the Court (Lockhart, Sheppard and Burchett JJ), after referring to the requirement of "special reasons", set by Order 52 rule 15(2) for a grant of leave to appeal out of time, as "an elastic test, suitable for application across a range of situations, from an oversight of a day to a neglect persisted in during a prolonged period", added: "It would require something very persuasive indeed to justify a grant of leave after, for example, a year … ." The hurdle for Ms Newington is even higher than this dictum suggests, for the applicants did initially appeal, and then formally abandoned that appeal on the day it was to be heard, having failed to secure an adjournment. That was as long ago as 5 March 1998. 3 The ground relied on to justify a grant of leave is the discovery of fresh evidence, especially that of one Wayne Maurice Dunne. What Mr Dunne says, while it also reflects on his own credibility, involves extremely serious allegations against senior employees of the respondent, and Ms Newington's desire to ventilate these allegations is wholly understandable. But the core of Mr Dunne's evidence was available to the applicants from 5 November 1997, in an affidavit sworn by him on that day. 4 Before attempting any further analysis of the position, we should explain the nature of the judgment the applicants seek to challenge. It is a very long judgment, following a hearing that had taken more than three weeks, and we shall not take up space expounding it in detail. What it concerned was the applicants' claim to have set aside, on the ground of the respondent's unconscionable conduct, two consent judgments in favour of the respondent, one in this Court and the other in the Supreme Court of New South Wales. Additionally, the applicants sought to have set aside a "deed" (as it was called, though it was not executed as a deed by all parties to it) dated 6 February 1983. The litigation had its origin in property development activities in which the applicants were engaged, in the eastern suburbs of Sydney, in the early 1980s. Beneficial, as we shall call the respondent, agreed to provide finance for these ventures, and was a secured creditor. The "deed" was entered into on the basis that the applicants were in default, and it gave Beneficial power to take control of the building work involved in the development activities. The litigation in which the consent orders were made involved allegations by the applicants of breaches by Beneficial of the contractual arrangements in respect of finance. The consent orders secured the dismissal of those claims. 5 The judgment of the trial judge, Lehane J, records that, although the pleadings alleged the "deed" and consent orders were obtained as a result of misrepresentations and duress or improper pressure, the case ultimately propounded by senior counsel for the applicants was "based entirely on unconscionable conduct of the kind identified in Commercial Bank of Australia Limited v Amadio (1983) 151 CLR 447." The other matters previously raised were explicitly abandoned. 6 Lehane J expressly held that the applicants were in default at the time the "deed" was entered into. He found "convincing" the evidence called by Beneficial that "in the latter part of 1982, and into 1983 and 1984, there was a serious slump in the market", which had previously been "buoyant". His Honour held that the applicants were "in a very serious situation in January and February 1983; they had been in default to [two other mortgagees] for some months and each of those mortgagees had resorted to threats of vigorous action against them. Their building work was delayed … and it was becoming apparent that the estimated building cost would be exceeded. They had no source of income from which they could make good the deficiencies in interest payments … ." In that situation, the "deed" was signed after legal advice, and his Honour rejected the allegation that its execution was obtained by unconscionable conduct. Likewise, he rejected the similar claims made with respect to the consent orders, which were entered in December 1983 and April 1984. At those times, the applicants, he said, "had advice and assistance from experienced counsel and solicitors" and they "were seriously in default", with "no serious prospect of retrieving the situation". In the circumstances, the procuring of their consent to the orders was not unconscionable. 7 Lehane J pointed out that, had he taken a different view, a submission, made on behalf of Beneficial, that the applicants' case was barred by laches or delay would "obviously have considerable force". 8 It is in the light of these matters that we are bound to consider the application for leave to appeal so long out of time. The principles that would govern an appeal on the ground of fresh evidence, if leave were granted, would be those stated in CDJ v VAJ (1998) 72 ALJR 1548, with the special qualification, so far as the fresh evidence might be regarded as withheld from the applicants by the respondent's default in discovery, stated in Commonwealth Bank of Australia v Quade (1991) 178 CLR 134. Although, in CDJ v VAJ, a more flexible test was adopted by the majority (McHugh, Gummow and Callinan JJ) than had been stated in previous decisions, the remarks of their Honours at 1575 make it clear that, in a case such as the present, a new trial on the ground of fresh evidence would require a conclusion that "the further evidence if tendered before [the trial judge] was likely to have produced a different result." As their Honours said (at 1566): "Ordinarily, where it is alleged that the admission of new evidence requires a new trial, justice will not be served unless the Full Court is satisfied that the further evidence would have produced a different result if it had been available at the trial. Without that condition being satisfied, it could seldom, if ever, be in the interests of justice to deprive the respondent of the benefit of the orders made by the trial judge and put that person to the expense, inconvenience and worry of a new trial." 9 An exceptional rule applies "where the unavailability of the evidence at the trial resulted from a significant failure by the successful party to comply with an order for the discovery of relevant documents in his possession or under his control": Commonwealth Bank of Australia v Quade at 142. In such a case, as the joint judgment of the High Court went on to state (at 142-143): "[I]t will be necessary for the appellate court to take account of a variety of possibly competing factors, including, in addition to general considerations relating to the administration of justice, the degree of culpability of the successful party, any lack of diligence on the part of the unsuccessful party and the extent of any likelihood that the result would have been different if the order had been complied with and the non-disclosed material had been made available. While it is not necessary that the appellate court be persuaded in such a case that it is 'almost certain' or 'reasonably clear' that an opposite result would have been produced, the question whether the verdict should be set aside will almost inevitably be answered in the negative if it does not appear that there is at least a real possibility that that would have been so." 10 In the present case, the fresh evidence includes material from an audit report which should have been, but was not, discovered by Beneficial. However, its strong tendency is to criticize senior employees of Beneficial, not for misrepresenting anything to the applicants or behaving unconscionably towards them, but rather for failing to control the company's lending and administer its activities with appropriate stringency. We cannot be satisfied there is any real possibility that a different result would have ensued had the report been discovered. 11 So far as concerns the bulk of the further evidence, there is one issue which demands careful consideration. That is the evidence of Mr Dunne, to which reference has already been made. Mr Dunne was not available at the trial. Beneficial put him in charge of the building operations, for some five months, after it had taken them over in 1983 pursuant to the "deed". He is now said to be willing, subject, it seems, to the grant of a certificate under s 128 of the Evidence Act 1995, to give evidence of his own involvement in the systematic falsification of wages records and records of materials purchased in respect of the work done on the applicants' developments. According to that evidence, he was acting by arrangement with a senior employee or employees of Beneficial, and for their mutual benefit. But, as we have indicated, the substance of this evidence was available to the applicants at the time they chose to discontinue their appeal on 5 March 1998. Nothing has been put before us which could justify us in granting leave to allow a matter deliberately abandoned then to be raised now to the obvious prejudice of the respondent. 12 Furthermore, we are not satisfied that a different result would have been obtained, had this evidence been available at the hearing. If Mr Dunne had given evidence, he might have been believed, despite the problem of his credibility, and at least one senior employee of Beneficial might have been held guilty of serious fraud. But that would not have impeached the previously executed "deed", nor would it have shown unconscionability in relation to the consent orders. That particular employees were fraudulent in their own interests would not have demonstrated fraud against Beneficial. On the contrary, according to Mr Dunne's evidence, it also was a victim of the fraud. The wages paid, as a result of falsified wages sheets, to "ghost" employees came out of Beneficial's funds, though charged to the applicants, and were of course, in the result, and predictably, irrecoverable. That they swelled the debt claimed by Beneficial from the applicants did not make its conduct unconscionable, unless it was aware of the fraud, which the fresh evidence does not show. Nor, and this is important, has it been shown that the amount, though possibly exceeding $100,000, could have made any difference to the inevitability of Beneficial's realisation of its securities, having regard to the severity of the applicants' difficulties and the vast extent of their indebtedness. 13 In all the circumstances, while we sympathize with the applicants' frustration that the evidence did not become available until after the hearing, we do not think it would justify us in granting leave to appeal now, so that a new trial might be sought. The application for leave to appeal must be dismissed. 14 However, the respondent's failure to comply properly with its obligations in respect of discovery was a significant issue in the argument, which may be taken to have contributed to the applicants' pursuit of the application. The authorities have repeatedly emphasized that the Court has, under s 43 of the Federal Court of Australia Act 1976, an unfettered discretion as to costs, and a successful party's contribution, by his own conduct, to the pursuit of a proceeding has been regarded as a factor that may be reflected in the Court's order. In all the circumstances, we make no order as to costs. I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Court.