SAVAGE v LUNN SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL HANDLEY and SHELLER JJA and SHEPPARD AJA 15 October 1998, 10 November 1998 [1998] NSWCA 204 PRACTICE — Court of Appeal — rehearing — issues not addressed in earlier judgment APPEAL — bias of trial Judge EQUITY — defences — laches — knowledge of facts The claimants (appellants on appeal and defendants at trial) sought a rehearing of issues which they claimed were not dealt with, sufficiently or at all, in the Court's reserved judgment delivered on 9 March 1998. The issues were the alleged ostensible bias (including pre-judgment) of the trial Judge and laches. HELD - dismissing the motion: (1) The claimants' submissions relating to ostensible bias of the trial Judge should be rejected. Neither the Judge's reasons of 14 October 1994, nor his Honour's conduct thereafter, provided any basis for a finding of ostensible bias or pre-judgment prior to 14 October 1994. Vakauta v Kelly (1989) 167 CLR 568 considered. (2) The principle stated in this Court's original judgment that proof of laches "ordinarily" requires proof by the defendant that the plaintiff remained inactive after acquiring "sufficient knowledge of the facts" was correct, and not controverted by the authorities cited by the claimants. (3) This Court's earlier reasons were sufficient in respect of both issues. Handley, Sheller JJA and Sheppard AJA This appeal was heard by the Court as presently constituted over nine days in September 1997, and our reserved judgment was delivered on 9 March 1998. By notice of motion dated 20 May, the appellants sought a rehearing of issues which they submit were not dealt with, sufficiently or at all, in the Court's reserved judgment. The issues in question were the alleged ostensible bias (including pre-judgment) of the trial Judge and laches. The Judge delivered his first reserved judgment on 14 October 1994 in which he made findings of fact covering most of the issues in dispute, made additional tentative findings, and stood the case over to enable the parties to consider his reasons. Thereafter the history of the case evidenced, as we indicated in our judgment, a number of significant irregularities, a possible denial of procedural fairness and possible ostensible bias. We concluded that the Judge appeared to be labouring under misapprehensions as to the legal principles applicable to a claim that a transfer of shares had been forged, and the defence of laches in such a case (judgment p58-p59, p61). We also held that the plaintiffs were entitled to succeed on the findings of fact, other than those described as tentative, in the Judge's 1994 reasons (judgment p62). There was no need for the Court to deal finally with the submissions based on the irregularities and the alleged ostensible bias of the Judge after the delivery of his 1994 reasons. These matters, in our view, became irrelevant because they did 2 UNREPORTED JUDGMENTS not affect his 1994 reasons, or the judgment to which the plaintiffs were entitled, as a matter of law, based on those reasons (judgment p26-p27, p61-p62). Mr Reynolds for the claimants submitted that rulings by the Judge, which pre-dated delivery of his 1994 reasons, also evidenced ostensible bias, and that the available inference to this effect was strengthened by the events which post-dated delivery of those reasons. He also submitted that the later events, on their own, established ostensible bias during the earlier stages of the proceedings prior to delivery of the 1994 reasons. He relied on the Judge's rulings on interrogatories, but we rejected the appellants' submissions on those rulings as being without substance. He also complained of the Judge's decision to reject the affidavit of Mr Robert Savage, in the light of some of his rulings favourable to the plaintiffs. However we upheld this decision (p22-p26), as being within the Judge's discretion. Moreover our reasons (p25) show that we considered that this decision was correct. In our view it does not evidence ostensible bias. It was also suggested that the numerical balance of the Judge's rulings in the first part of the trial favoured the plaintiffs, but no attempt was made during either hearing to demonstrate that any other ruling evidenced ostensible bias. On its own the numerical balance of the rulings establishes nothing for this purpose. In our judgment the Judge's interlocutory rulings prior to delivery of his 1994 reasons provide, on their own, no basis for a submission of ostensible bias. We would add, although this is strictly unnecessary, that no application was made to the Judge to disqualify himself prior to delivery of the 1994 reasons, and senior counsel then appearing for the claimants moved for dismissal of the proceedings based on those reasons. Mr Reynolds relied upon Vakauta v Kelly (1989) 167 CLR 568 for the proposition that statements in a judgment, or in the later stages of proceedings, may establish, or help to establish, ostensible bias earlier in the proceedings. As a general proposition this is undoubtedly correct, as Vakauta v Kelly demonstrates. In our judgment however there is no basis in this case for any retrospective inference, based on later events, that ostensible bias existed before delivery of the Judge's 1994 reasons. In Vakauta v Kelly the Judge's remarks during the trial, and later in his reserved judgment, evidenced in terms his pre-judgment of the reliability and credibility of expert medical witnesses retained by the Government Insurance Office based on his experience in earlier cases. Such pre-judgment necessarily pre-dated the commencement of the trial and demonstrated that his Honour was disqualified from sitting. The events post-dating delivery of the 1994 reasons relied upon by the claimants are incapable of establishing ostensible bias or pre-judgment at the commencement of this trial. His actual judgment on the issues, decided in his 1994 reasons, including the credit of Mr Savage Snr, arguably disqualified him from deciding further issues involving questions of credit (compare Australian National Industries Ltd v Spedley Securities Ltd (1992) 26 NSWLR 411), but could not retrospectively disqualify him from hearing the first stage of the proceedings and delivering his 1994 reasons. In our opinion the claimants' submissions that the Judge's 1994 reasons were vitiated by ostensible bias, and that they are entitled to a new trial, should again be rejected. The other matter relied upon by the claimants was our failure to deal adequately with the defence of laches. We held in our judgment, and this was not challenged, that the claimants had failed to prove that the administrator, or his URJ SAVAGE v LUNN (Handley, Sheller JJA and Sheppard AJA) 3 predecessors, or any of the other plaintiffs, knew or suspected the existence of the forgeries for any appreciable time prior to the lodgment of their caveats on 18 January 1989 (p58). We also held, and this was not challenged either, that the defendants had the onus of proving the facts to establish this defence. Mr Reynolds submitted that the Court failed to deal with the defence of laches based on inordinate delay, and he relied on the acts or omissions of the plaintiffs, or their predecessors, dating back to 1913 or 1916, including the failure of the executrix to become registered as the holder of the shares. He particularly relied on the following statement in Meagher, Gummow and Lehane, 3rd Ed, 1992, para3617: "\.. in the kind of laches which consists of a plaintiff's long delay leading to the defendant (or some third person) reasonably altering his position to his detriment in reliance thereon, there seems to be no reason why the fact that the plaintiff is ignorant of his rights should bar a defence of laches". The claimants' difficulties, however, arise from lack of evidence that the plaintiffs or their predecessors knew that a forgery had occurred. In the passage referred to the authors deal with a case where the plaintiff was unaware of his "rights", which is not the issue in this case. Earlier in the same paragraph the authors state: "In order to have one's claim barred by laches, to what extent is it necessary to know what one's rights are? The answer is that, in the kind of laches which really consists of waiver implied by conduct, the party against whom the defence is urged must know both the facts on which his rights depend and also what his rights are... But it would appear that knowledge of the relevant facts gives rise to a presumption of knowledge of one's rights... and the availability of the means of knowledge is as good as knowledge". In our judgment we referred to statements by Lord Selborne, Lord Blackburn and Sir William Deane which establish that proof of laches "ordinarily" requires proof that the plaintiffs remained inactive after acquiring "sufficient knowledge of the facts". Nothing in Meagher, Gummow and Lehane controverts, or could controvert, this principle. When we reserved our decision on this application, we gave Mr Reynolds leave to submit a list of any authorities which established that this defence could succeed without actual or inferred proof of such knowledge. The Court was later supplied with the following list of authorities: Baburin v Baburin (No 2) [1991] 2 Qd R 240 at 257.3-258; Hourigan v Trustees Executors and Agency Co Ltd (1934) 51 CLR 619 at 630, 651; Lamshed v Lamshed (1963) 109 CLR 440 at 453 and 455; Websdale v S & JD Investments Pty Ltd (1991) 24 NSWLR 573 at 582-583; Ashburner, "Principles of Equity", (2nd Edition) at p515-p516; "Halsbury's Laws of England", (4th Edition), Volume 16, paral476 ff; Spry, "Equitable Remedies", (4th Edition) p227-p228, p232-p233; Erlanger v New Sombrero Phosphate Co Ltd (1878) 3 App Cas 1218 at 1279; Lindsay Petroleum Co v Hurd (1874) LR 5 PC 221 at 239-240, 241; Stafford v Stafford (1857) 1 De G & J 193 at 202, 44 ER 697 at 701; Holder v Holder [1968] Ch 353 at 394; Allcard v Skinner (1887) 36 Ch D 145 at 186; Pickering v Lord Stamford (1795) 2 Ves 581; 30 ER 878; Life Assn of Scotland v Siddal (1861) 3 De GF & J 58; 45 ER 800; Browne v McClintock (1873) LR 6 HL 456 at 471.5; Marquis of Clanricarde v Henning (1861) Beav 175, 54 ER 855 at 857.9. The passages cited have all been read, but, individually and collectively, they do not furnish any support for the proposition that actual or inferred knowledge of the facts is not a necessary requirement of this defence. In any event the 4 UNREPORTED JUDGMENTS decisions listed either predate Lindsay Petroleum Co v Hurd and Erlanger v The New Sombrero Phosphate Co or contain nothing contrary to the relevant statements of Lord Selborne and Lord Blackburn. The Court asked Mr Reynolds when time began running in equity in this case and received no direct answer. The claimants did not have to prove the date of the forgery in order to establish laches, but they did have to prove when it was that the plaintiffs or their predecessors knew or suspected that a stranger was claiming to be the owner of the Lunn Estate shares so that time began to run in equity, and there was no evidence of this. Mr Reynolds relied on the failure of the plaintiffs to give evidence, and this would be important if there was an available inference of knowledge for any appreciable time prior to the lodgment of the caveats on 18 January 1989, but no such inference was available. The apparent revival of Cardiff could not, in itself, suggest that a forged transfer of the Lunn Estate shares had been registered as it was consistent with the persons responsible owning or having lawfully acquired other shares which enabled them to obtain control. We have not been persuaded that our earlier reasons were insufficient on this question, or that the claimants are entitled to succeed on it. The motion will therefore be dismissed and the claimants must pay the opponents' costs. (1) Motion dismissed. (2) Claimants to pay opponents' costs. Counsel for the appellants: G O'L Reynolds/A A Henskens Solicitors for the appellants: Baker Love, Newcastle Counsel for the respondents: F S McAlary QC/S White Solicitors for the respondents: The Hafey Law Practice, Cessnock