New South Wales Court of Appeal CITATION: Schenck Australia Pty Limited v Australian Coal Technology Pty Limited [2006] NSWCA 211 This decision has been amended. Please see the end of the judgment for a list of the amendments. HEARING DATE(S): 23 June 2006 JUDGMENT DATE: 23 June 2006 JUDGMENT OF: Beazley JA at 1; Santow JA at 42; Tobias JA at 45 EX TEMPORE JUDGMENT DATE: 06/23/2006 DECISION: Orders: see para 41 CATCHWORDS: PROCEDURE – discovery – claim that discovery is oppressive – trial judge failed to engage in balancing exercise required – failure of trial judge to give a fair hearing and reasonable opportunity to be heard – improper assessment of case during hearing – inadequate hearing due to judicial time pressure – miscarriage of justice - JUDGMENT – extempore judgment – revision of judgment after hearing – reference added to evidence without having had proper regard to that evidence during the hearing – trial judge failed to give proper consideration to issues - PROCEDURE – counsel had not previously taken objection to manner in which case dealt with by trial judge – whether precluded from raising issue on appeal – nothing justifies usurpation of justice in favour of court efficiency and case management Civil Procedure Act 2005 (NSW) ss 56, 57, 58 LEGISLATION CITED: Criminal Appeal Act 1912 (NSW) Supreme Court Rules 1970 (NSW) Uniform Civil Procedure Rules 2005 (NSW) r 21.2 Calin v Greater Union Organisation Pty Limited (1991) 173 CLR 33 Eggins v Brooms Head Bowling and Recreational Club (1986) 5 NSWLR 521 CASES CITED: Morawski v State Rail Authority (1988) 14 NSWLR 374 National Australia Bank Limited v Idoport Pty Limited (2000) NSWCA 8 State of Queensland and Anor v JL Holdings Pty Limited (1996-1997) 189 CLR 146 Todorovic v Moussa (2001) 53 NSWLR 463 PARTIES: Schenck Australia Pty Limited (Appellant) Australian Coal Technology Pty Limited (Respondent) FILE NUMBER(S): CA 40883/05 COUNSEL: A McGrath (Appellant) J K Kirk (Respondent) SOLICITORS: Phillips Fox (Appellant) Middletons (Respondent) LOWER COURT JURISDICTION: Supreme Court - Equity Division LOWER COURT FILE NUMBER(S): SC 50099/04 LOWER COURT JUDICIAL OFFICER: Einstein J LOWER COURT DATE OF DECISION: 7 October 2005 LOWER COURT MEDIUM NEUTRAL CITATION: Australian Coal Technology Pty Limited v Schenck Australia Pty Limited [2005] NSWSC 1023 - 11 - IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40883/05 BEAZLEY JA SANTOW JA TOBIAS JA Ex tempore 23 June 2006 SCHENCK AUSTRALIA PTY LIMITED v AUSTRALIAN COAL TECHNOLOGY PTY LIMITED Judgment 1 BEAZLEY JA: There is before the Court a concurrent hearing of a summons for leave to appeal and, if leave is granted, an appeal from an order made by Justice Einstein on 7 October 2005 on a Notice of Motion filed by the opponent seeking discovery of categories of documents in respect of proceedings in the Commercial List of the Equity Division of the Supreme Court. 2 The dispute is sizable and involves a large claim for damages. Justice Einstein described the dispute as raising wide-ranging questions of fact relating to a joint venture agreement that involved technology to construct coal preparation plants and the grant of an exclusive and non transferable right to market, manufacture and install such plants in China. The essential allegation in the proceedings is that the defendant claimant had breached its contractual obligations under the contract. 3 There was a dispute between the parties in relation to the width of the discovery that was sought and it was that dispute that came before his Honour on 7 October 2005, in his Honour's Motions List. 4 The opponent had filed a lengthy affidavit of Timothy John Webster sworn on 7 September 2005, which included annexures running to 86 pages, in support of its Notice of Motion. 5 According to the affidavit evidence before the Court today, being the affidavit of Florian Samuel Ammer, sworn 14 November 2005, when his Honour came onto the bench on the morning of 7 October 2005, his Honour said "I should indicate that I have approximately four minutes to deal with this matter." His Honour then commenced the hearing of the Notice of Motion. Within a short time, his Honour adjourned the matter to later in the day. 6 His Honour's comment as to the time is not recorded in the transcript of the proceedings of that day. Counsel for the opponent does not concede that that was the length of time that his Honour gave to the matter at that stage. However, the transcript relating to the initial hearing on that day is just over two and a half pages long and Mr Kirk, counsel for the opponents, conceded that it was a short hearing. 7 Prior to the hearing on 7 October 2005 the parties had been engaged in extensive disputation in relation to the discovery extending over almost 20 weeks. By the time that the matter came before his Honour the parties had reached some agreement in relation to discovery and were asking his Honour to deal with seven categories that remained in dispute in respect of which the claimant continued to contend that to require discovery was oppressive. 8 At the commencement of the hearing that morning his Honour commenced by saying: "You can tell me what the problem with these discovery orders are. The suit has a very wide-ranging set of allegations. The type of discovery that is being sought is certainly extensive but having looked through the file, I was unable to see what the problem was." 9 At that point Mr McGrath, counsel for the claimant, sought to hand up the affidavit of Mr Ammer of 4 October 2005. That affidavit, including annexures comprised 37 pages and set out the reasons why the claimant contended that the application for discovery was, in certain respects, oppressive. His Honour granted leave for that affidavit to be filed in court. Mr Kirk drew his Honour's attention to the fact that there was also the affidavit of Mr Webster to be read. 10 Mr Ammer, in his affidavit of 14 November 2005 filed in the proceedings before this Court, gave evidence that he observed his Honour looking at his affidavit of 4 October 2005 for a period of five to ten seconds immediately after the affidavit was handed up to his Honour, and further observed that his Honour did not look at that affidavit again during the rest of the hearing. 11 There were a number of exchanges between both counsel and his Honour in relation to the categories and at about halfway through the hearing his Honour made the comment, "[I]t is a matter of money. I am told it will take two months, and it will cost a lot of money." That comment appears to be responsive to Mr McGrath's submission that there was oppression arising in respect of two of the categories, namely categories 15 and 16. 12 There were approximately half a dozen further exchanges at which point his Honour said "I make an order in terms of paragraph 1 of the notice of motion filed 8 September 2005." 13 Mr McGrath on behalf of the claimant then pointed out to his Honour that that order had been made without knowing which categories remained in dispute between the parties. His Honour thereupon revoked the order and required the parties to bring in short minutes and said that he would make the final orders when those short minutes were brought in. The matter was thus stood down for that to occur and the matter was again listed before his Honour at 2.45pm on the same day. 14 His Honour commenced that part of the hearing with a comment, "[b]ecause there were so many matters this morning, believe it or not, we have to start again and just remind me what we're doing." It is apparent that when Mr McGrath brought the matter to his Honour's attention his Honour recalled the matter, as he said: "[y]es, you were supposed to have agreed on a lot of things and then I decided the issues which were in dispute and you apparently have one or two areas where you have stalled and you need some further determination. Is that right?" 15 Although his Honour appears to have some recall at that point of what the issues were, he did not have any specific recall of what the nature of the application was. This is apparent from Mr McGrath's next comment when he said to his Honour: "No, just to make the position plain. This morning when we came before your Honour there were some seven categories that remained in dispute. Your Honour heard me very briefly in relation to each of those." After a small further exchange his Honour said: "Yes, I remember. I revoked the order and said I said that I hoped that [the parties] could produce now some short minutes of order." 16 The short minutes of order were handed up and Mr McGrath on behalf of the claimant informed his Honour that those orders were not made by consent. He also indicated that he proposed to seek a stay in the event that his Honour made the orders. There is no issue in this case in relation to the stay. 17 His Honour then delivered an extempore judgment of just over six pages in relation to the matter which is the subject of the summons for leave to appeal before us. It is necessary to refer to that judgment in some detail. His Honour said, first, so far as is relevant, at [4], that after relatively brief submissions from the bar table he had made it clear what the Court's decision was. His Honour continued: "I indicated that the suggested oppression by reason of the reach of the discovery claimed could be addressed being essentially a question of costs and time." 18 For myself, I have difficulty in understanding what his Honour was saying in that paragraph. In the first instance it is not apparent that his Honour made any finding as to whether or not the application for discovery of the disputed categories was in fact oppressive. That was a matter that he was required to determine. Secondly whilst his Honour may have indicated that the suggested oppression could be addressed, being essentially a question of costs and time, that's the very issue that his Honour was asked to determine, that is, whether, because of question of costs and time involved in giving the discovery, the discovery was oppressive. 19 Although his Honour's reasoning at that point was somewhat confusing, it can at least be said that he had not made any determination of the issue of oppressiveness. 20 His Honour then set out the nature of the dispute in general terms. He indicated that the opponent's claim was very broad, which he said (at [9]): "seem to me to justify the proper exercise of the court's relevant discretion being … to allow the [opponent's] claimed categories still in dispute." 21 His Honour then made reference to the Uniform Civil Procedure Rules 2005 (NSW) r 21.2, the corresponding provisions of the Supreme Court Rules 1970 (NSW) and the decision of this court in National Australia Bank Limited v Idoport Pty Limited (2000) NSWCA 8. His Honour then set out the matters that he took into account. Those matters were solely confined to the provisions to the Civil Procedure Act 2005 (NSW) and in particular ss 56, 57 and 58 of the Act. 22 Those sections stress the requirement for the court to manage proceedings before it, having regard to the just determination of the proceedings, the efficient disposal of the business of the court, the efficient use of available judicial and administrative resources and the timely disposal of proceedings at a cost affordable by the parties: see s 57(1). 23 His Honour also referred to matters specified in s 58(2) which was relevant in his Honour's consideration of the application before him, included the degree of expedition with which the respective parties had approached the proceedings and the degree of injustice that would be suffered by the respective parties as a consequence of any order or direction. 24 His Honour then said at [11]: "I have taken into account my view that the nature and scope of the issues to be litigated as thrown up by the current pleadings are so wide as to mean that although the defendant may be prejudiced in terms of parameters of costs and time (cf. the affidavit of Mr Ammer of 4 October 2005), the efficient disposal of the business of the Court made it a proper exercise of the Court's discretion to presently avoid a bifurcated or circumscribed form or discovery and to require, as the Court has, a relatively broad approach to that which has to be discovered, the touchstone being the ascertainment of matters in issue." 25 I would make the following comments about that paragraph. First, it is not clear to me that his Honour actually made a finding of oppression in that paragraph. However, assuming his comment that "the defendant may be prejudiced in terms of parameters of costs and of time" amounted to such a finding, his Honour then appeared to engage in a balancing exercise between that prejudice and the need for the court to efficiently dispose of the proceedings. In my opinion that is not the correct balancing exercise that needs to be undertaken in determining whether or not an application for discovery is oppressive. 26 That that was the process his Honour was undertaking is further emphasised by his Honour's comments at [16]: "The very difficulty of the exercise involving the above described international parameter itself speaks to the efficiency of once and for all closing down, as soon as practicable, the interlocutory discovery processes, where as the court file … makes plain, the proceedings commenced over a year ago." 27 There is no other consideration in the course of his judgment given to the question of oppression and whether or not the claimant had established oppression. Nor did his Honour enter upon the balancing exercise that is required to be undertaken in a matter of this sort. The only apparent consideration of a 'balancing exercise' is that to which I have referred above. 28 The claimant's contention is that his Honour in fact failed to give it a fair hearing and a reasonable opportunity to be heard in relation to the opponent's notice of motion as evidenced by the short hearing that was had before him on the morning of 7 October as is revealed in his Honour's reasons. In particular Mr Ammer gave evidence in his affidavit of the 14 November 2005 that when his Honour delivered his extempore reasons he made no reference to Mr Ammer's affidavit of 4 October 2005. By contrast, at [11] in his Honour's revised version of the judgment, there is a reference to that affidavit. 29 There is scope in the revision of an extempore judgment for a judge to include matters to which no specific reference was made during the course of the delivery of the extempore judgment. The extent to which a judge may do so has been discussed in reasons of this Court: see Todorovic v Moussa (2001) 53 NSWLR 463. The concern in this matter however, is that his Honour added the reference, at a later point at time without having had proper regard to that affidavit evidence during the course of the hearing. 30 That argument is resisted by Mr Kirk on behalf of the opponent, making reference to the transcript where his Honour had correctly, on Mr Kirk's submission, summarised the argument of the claimant in relation to oppression by saying that it was a matter of money, he was told it would take two months, and that it will cost a lot of money, being the passage to which I have I referred to earlier in these reasons about at [11]. 31 In my opinion that reference by his Honour in the transcript does not give any indication that his Honour had fully appreciated the extent of the oppression that was claimed. Rather it is indicative of his Honour having had a quick look of the affidavit, having picked up one paragraph where reference was made to oppression in terms of time and money, but without having, in any way, properly assessed the burden on the case that was being advanced by the claimant before his Honour. 32 In my opinion his Honour failed to give proper consideration to the claimant's application that the discovery in the disputed categories was oppressive. It would have been impossible for him to do so in the short period of time in which he dealt with the matter. The affidavit of Mr Ammer of 4 October 2005 could not have been assessed in that period of time. It was clear from the transcript of the hearing before his Honour in the afternoon of 7 October 2005, that he had not had any further regard to that affidavit. 33 The dispute as to discovery is important to both parties and required a detailed consideration by his Honour. The pressure that his Honour apparently felt to determine the matter in the context of a long list had the result that his Honour failed to give the claimant a proper opportunity to have the application heard, considered and determined. 34 The injunction for the Court to give a just, quick and cheap disposition of a matter does not invalidate the requirement that the court give full and proper consideration to the matters that are before it. 35 Counsel for the opponent contended that, even if his Honour did not give adequate consideration to the matter, the claimant is precluded from now making complaint as to the manner in which the matter proceeded before his Honour because of a failure to object to his Honour having only allocated a very short period of time in which to determine the matter. 36 There are occasions where a party is bound by conduct of counsel, and there is considerable authority in various fields where that is the case. Indeed, in the Criminal Appeal Act 1912 (NSW) there is specific provision which relates to the failure of a counsel to take a point at a criminal trial. However, the principle is not confined to criminal trials and the overriding principle is that justice must be given in any particular case. 37 Thus in Calin v Greater Union Organisation Pty Limited (1991) 173 CLR 33, their Honours Mason CJ, Deane, Toohey and McHugh JJ said at 39, in respect of a common law jury trial, that notwithstanding an absence of a request for a redirection in circumstances where there was a clearly wrong direction given by a trial judge, the court could order a new trial if it appeared that some substantial wrong or miscarriage had thereby been occasioned. 38 The matter is discretionary and it is relevant in the exercise of the court's discretion to have regard to what occurred at a trial. Their Honours said in that context that a failure to seek a redirection was a most material matter but was not fatal. 39 There is authority to the same effect in Eggins v Brooms Head Bowling and Recreational Club (1986) 5 NSWLR 521 at 524-5 and in Morawski v State Rail Authority (1988) 14 NSWLR 374 at 381. 40 An analogous principle applies in this case. There is no indication on the transcript that Mr McGrath sought to have his Honour give a more thorough consideration to the matter. Having said that it seems that there was very little opportunity for him to have done so; but even assuming, for the point of the argument, that he ought to have done so, in my opinion there has been a miscarriage of justice in this case. The interests of justice require that the decision of his Honour be set aside. 41 It follows, in my opinion, that the appropriate orders in this case are as follows: 1. Grant leave to appeal; 2. Appeal allowed; 3. Set aside so much of Order 1 contained in the Short Minutes of Order made by Einstein J as relates to categories 6, 15 and 32 in the opponent's request for discovery; 4. Remit the notice of motion seeking discovery to the Commercial List for further determination; 5. Set aside Order 3 in the Short Minutes of Order; 6. Order that each party pay its own costs of the hearing before Einstein J on 7 October 2005; 7. Order the opponent to pay the claimant's cost of the summons of leave to appeal and of the appeal. I direct the claimant to file a notice of appeal. Mr McGrath can I have your solicitor's undertaking that that will be done and the filing fee paid? McGRATH: Yes, your Honours. BEAZLEY JA : That undertaking has been accepted. I order that the opponent have a certificate under the Suitors' Fund Act 1951 (NSW) if so entitled. 42 SANTOW JA: I agree with the reasons comprehensively set out by the presiding judge and with the orders she proposes. I would wish to add only this. It may be accepted that the commercial list is a busy list and no doubt was especially busy on the day in question. However, the High Court has emphasised in State of Queensland and Anor v JL Holdings Pty Limited (1996-1997) 189 CLR 146, particularly in the joint judgment of Dawson, Gaudron and McHugh JJ at 155, that "Case management, involving as it does the efficiency of the procedures of the court, was in this case a relevant consideration. But it should not have been allowed to prevail over the injustice of shutting the applicants out from raising an arguable defence, thus precluding the determination of an issue between the parties. In taking an opposite view, the primary judge was, in our view, in error in the exercise of her discretion." 43 While that was said in relation to extension of time to file a defence, it is no less applicable in the present context. Thus while the primary judge referred to matters of case management and its object as articulated in s57 of the Civil Procedure Act 2005, there is nothing in that provision which justifies placing considerations of case management or court efficiency, important as they are, above the need for justice to the parties. 44 For that reason, in addition to the reasons articulated by the presiding judge I agree with the orders she proposes. 45 TOBIAS JA: I agree with the reasons of the presiding judge and the orders she proposes and with the additional remarks of Santow JA there is nothing further that I could usefully add. 46 BEAZLEY JA: I agree with the further comments of Santow JA. ********** 31/07/2006 - Incorrect file no. - Paragraph(s) Cover sheet 08/08/2006 - Judgment date, typo - Paragraph(s) Cover sheet, para [37] DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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