DWYER v COMMONWEALTH BANK OF AUSTRALIA [No 2] SUPREME COURT OF NEW SOUTH WALES — COURT OF APPEAL CLARKE, HANDLEY and SHELLER JJA 16, 29 August 1995 [1995] NSWCA 137 On an appeal from the decision of Staff AJ of 18 October 1991, the Court as presently constituted on 30 June 1995 ordered that the matter be remitted to the Commercial Division for determination of a number of issues and that the appellants, Mr and Mrs Dwyer, pay one half of CBA's (the respondent's) costs of the appeal. By notice of motion CBA applies to set aside the orders of the Court and substitute orders that the appeal be dismissed and the appellants pay CBA's costs of the appeal. Alternatively CBA applies to set aside order 2(iv) that the matter be remitted to the Commercial Division for determination of how the costs of the proceedings before Staff AJ and the further hearing in the Commercial Division should be borne and substitute the order of Staff AJ made on 18 October 1991 that the appellants pay the costs of the proceedings before him. CBA attacked the proposition that in reliance upon the inference the Federal Court was prepared to draw in David Securities Pty Limited v The Commonwealth Bank of Australia (1990) 23 FCR 1 (since overruled by the High Court (1992) 175 CLR 353), the appellants did not lead evidence that they had paid the amounts on account of withholding tax under a mistake of fact. CBA submitted that as this proposition was not advanced to the Court and CBA had no opportunity to respond to it, it was patently wrong as a basis for a new trial; Pt 51 r 16 Supreme Court Rules referred to. CBA asked the Court to draw the inference that the appellants had decided to take their chances with the evidence and were not saying they wished to wait and see what the High Court had to say. Held: (1) It would be unfair to the appellants to deny them an opportunity, in light of the decision of the High Court to apply to lead further evidence on the matter. To that end, as this Court cannot decide the matter, the matter should be remitted to the Commercial Division which will need to be persuaded by the appellants that in all the circumstances they should be allowed to lead further evidence on this question. (2) The submission that order 2 (iv) be set aside on the basis that it "took away the respondent's costs of the trial" was rejected. If the appellants succeed on their claim to recover withholding tax, it is preferable that the judge hearing the matter deal with the costs of the first hearing and the further hearing afresh. (3) The submission that order 4 that the appellants pay one half of CBA's costs of the appeal should be set aside on the basis that it was too generous was rejected. No argument was put on the hearing of the appeal about costs and nothing suggests that the Court's discretion miscarried. Clarke JA, Handley JA and Sheller JA. On 30 June 1995 the Court as presently constituted gave judgment in this appeal from a decision of Staff AJ of 18 October 1991. The appellants were Mr and Mrs Dwyer, the respondent the Commonwealth Bank of Australia (CBA). Sheller JA gave the principal judgment with which the other members of the Court agreed. Order 2 remitted the matter to the Commercial Division for determination, in accordance with the judgment of the Court, of the following issues: (i) whether the appellants should be permitted to call evidence on the issue of mistake; 2 UNREPORTED JUDGMENTS (ii) whether the appellants paid the additional amounts on account of withholding tax because of their mistaken belief that their contractual arrangements with CBA required the payments;(iii) whether CBA changed its position on the faith of receipt of the payments by the appellants; (iv) how the costs of the proceedings before Staff AJ and of the further hearing in the Commercial Division should be borne. Order 4 was that the appellants pay one-half of CBA's costs of the appeal. By notice of motion CBA applies to set aside the orders of the Court and substitute orders that the appeal be dismissed and the appellants pay CBA's costs of the appeal. Alternatively CBA applies to set aside order 2 (iv) and substitute the order of Staff AJ made on 18 October 1991 that Mr and Mrs Dwyer pay CBA's costs of the proceedings before him. The application was supported by an affidavit of Robert Lloyd Jones of 3 August 1995. Staff AJ heard the proceedings on various dates between May and September 1991 and decided them on 18 October 1991. David Securities Pty Limited v The Commonwealth Bank of Australia (1990) 23 FCR | had already been decided in the Full Federal Court. That case stood for the following propositions: 1. Money paid under a mistake as to law or as to law mixed with fact was not recoverable; 2. In the circumstances of that case, despite the absence of direct evidence, there was sufficient evidence from which it could be inferred that the appellants would have made no payment but that which they regarded themselves as legally obliged to make pursuant to their contractual and security arrangements with the Bank. The High Court appeal was heard on 2 and 3 October 1991. By a judgment handed down on 7 October 1992 the Court (David Securities Pty Limited vCommonwealth Bank of Australia (1992) 175 CLR 353) overruled the Federal Court on the first matter. As to the second, because neither the primary judge nor the Full Federal Court had identified the evidence which sustained the finding or gave rise to the inference, in the circumstances, their Honours were not satisfied the evidence warranted the drawing of such an inference; 368. At the trial before Staff AJ the parties were alive to the Federal Court decision and the fact that it was under appeal to the High Court. The parties reserved their right to appeal when the High Court's decision was known. CBA first attacked the following statement in the principal judgment: Probably, in reliance upon the inference the Federal Court was prepared to draw in David Securities (23 FCR at 33), the appellants did not lead evidence that they had paid the amounts on account of withholding tax under a mistake. CBA submitted that that proposition was not advanced to the Court and was not something to which CBA, therefore, had an opportunity to respond. CBA submitted that it was patently wrong as a basis for a new trial. If the submission were to be made it should have been supported by evidence and was something which CBA would have been entitled to contest by way of leading evidence along the lines of that contained in the supporting affidavit of Mr Jones. CBA said that the order remitting the matter to the Commercial Division could not stand and should be set aside. CBA drew our attention to Pt 51 r 16 of the Supreme Court Rules that the Court of Appeal should not order a new trial on any ground unless it appeared to the Court that some wrong or miscarriage had been thereby occasioned. UWRVYER v COMMONWEALTH BANK OF AUSTRALIA [No 2] (Clarke JA, Handley JA an@ Sheller JA) The further evidence upon which CBA now relies is that as at 27 August 1991 Mr and Mrs Dwyer had not finally indicated whether or not they intended to call further evidence on the withholding tax issue and that when they applied toreopen their case to call further evidence it was evidence from a Mr Nobbs and a Mr Munro but not evidence from Mr Dwyer or Mr Baird, his solicitor, as to their mistake. We were asked to draw the inference that Mr and Mrs Dwyer had decided to take their chances with the evidence and were not saying that they wished to wait and see what the High Court had to say. At one stage Mr Emmett QC, who appeared for CBA, advanced a collateral argument that his Honour had found that Mr and Mrs Dwyer had not paid the withholding tax under a mistake of law. The passage in his Honour's judgment is set out at 18 on the principal judgment in the appeal. We did not treat this as a finding of fact nor as a matter of language should it have been so treated. Staff AJ said: The trial proceeded in the contemplation by the parties of the reference of the withholding tax issue to a referee under Part 32 of the Rules for determination. For that reason no doubt, Mr Dwyer gave no evidence in relation to that issue and was not cross examined in respect of it. When the parties ask(ed) that rather than have a reference, I determine the question, (each reserving his right to pursue an appeal following knowledge of the reasons given by the High Court of Australia for its decision in David Securities Limited v Commonwealth Bank of Australia 23 FCR 1, which are expected to be published later this year) they were given the opportunity to produce further evidence and to cross examine further, but each declined that opportunity. This explains the later passage which introduced the part of his Honour's judgment we quoted and which CBA suggested was a finding of fact. That introduction was as follows: 'I will add that although for the reasons I have expressed, Mr Dwyer gave no evidence of mistake ....'. His Honour was there alluding to the withholding tax issue being sent out to a referee and the reservation by the parties of the right to pursue an appeal following knowledge of the reasons given by the High Court of Australia. With the benefit of theinference drawn in the Full Federal Court, which on its face seemed to be the natural one, Mr and Mrs Dwyer, advised by competent legal representatives, would have been justified in proceeding on the basis that they could rely upon an inference to the same effect being drawn by Staff AJ. However that may be the reasons why Mr Dwyer gave no evidence of mistake are stated in Staff AJ's judgment. Mr and Mrs Dwyer asked this Court to remit the matter to the Commercial Division and the question whether this should be done was fully argued before us. We see no basis upon which CBA should now be entitled to lead evidence to refute what Staff AJ said. What Staff AJ said was summarised in Sheller JA's judgment in the sentence before that now complained of. 'Later they asked Staff AJ to determine the question reserving the right to pursue an appeal once the High Court's decision was known.' Staff AJ's error in holding as a matter of law that the withholding tax was not recoverable would result in a substantial wrong or miscarriage to Mr and Mrs Dwyer if, now the High Court has decided that in David's case direct evidence may be required to show that a payment was made under a mistake of law, the Dwyers were not given the opportunity to apply to lead such evidence. Had his Honour decided the point of law favourably to the Dwyers, the Full Federal Court decision would have supported an argument that it was open to infer, despite the absence of direct evidence, that the appellants would have made no payment but that which they regarded themselves as legally obliged to make pursuant to their 4 UNREPORTED JUDGMENTS contractual arrangements with CBA. It was open to this Court to infer, without finally deciding the matter, that for this reason the appellants did not lead direct evidence on this. Accordingly it would be unjust and unfair to Mr and Mrs Dwyer not to give them an opportunity, in light of the decision of the High Court, to apply to lead further evidence on the matter. This is not a matter which this Court can conveniently decide. To that end we made order 2. Mr and Mrs Dwyer will have to persuade the Commercial Division that in allthe circumstances they should be allowed to lead further evidence on this question. The parties are not restricted as to the evidence they call or the arguments they put for or against the granting of that permission. We reject CBA's submissions on this point. CBA also sought individually to challenge order 2 (iv) on the basis that it 'took away the respondent's costs of the trial.' If the Dwyers succeed on their claim to recover withholding tax it is far preferable that the judge then hearing the matter deal with the costs of the first hearing and the further hearing afresh. Nothing we have said in any way inhibits the judge's discretion. The judge may reinstate the order made by Staff AJ or vary it in such way as in the circumstances is appropriate in the exercise of the judicial discretion. We reject CBA's submissions on this aspect of the matter. Finally CBA argued that order 4 should be set aside as being too generous to Mr and Mrs Dwyer. No argument was put on the hearing of the appeal about costs. The parties were content to leave that to the Court depending upon the outcome of the appeal. Nothing CBA has put suggests to us that our discretion miscarried. This submission is also rejected. The application is dismissed with costs. Application dismissed with costs. Counsel for the appellant: AR Emmett QC/JE Marshall Solicitors for the appellant: LE Taylor: Solicitor: Commonwealth Bank Counsel for the respondent: GR Dwyer (in person) Solicitors for the respondent: Hegarty and Elmgreen