McCarthy v McIntyre [2000] FCA 409 (24 March 2000)

Last Updated: 11 April 2000

FEDERAL COURT OF AUSTRALIA

McCarthy v McIntyre [2000] FCA 409

PRACTICE & PROCEDURE - claim for misleading conduct - partial remitter by Full Court - no question of principle.

RONALD IAN McCARTHY, MAXWELL McCARTHY AND EDLAN NO. 54 PTY LIMITED V NEVILLE McINTYRE, AURO ROMANO McINTYRE AND NEVITORO INVESTMENTS PTY LIMITED

JUDGE: BEAUMONT J.

DATE: 24 MARCH 2000

PLACE: SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 672 OF 1996

BETWEEN:	RONALD IAN McCARTHY FIRST APPLICANT MAXWELL McCARTHY SECOND APPLICANT EDLAN NO. 54 PTY LIMITED THIRD APPLICANT
AND:	NEVILLE McINTYRE FIRST RESPONDENT AURO ROMANO McINTYRE SECOND RESPONDENT NEVITORO INVESTMENTS PTY LIMITED THIRD RESPONDENT
JUDGE:	BEAUMONT J.
DATE OF ORDER:	24 MARCH 2000
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1. The Notice of Motion 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 672 OF 1996

BETWEEN:	RONALD IAN McCARTHY FIRST APPLICANT MAXWELL McCARTHY SECOND APPLICANT EDLAN NO. 54 PTY LIMITED THIRD APPLICANT
AND:	NEVILLE McINTYRE FIRST RESPONDENT AURO ROMANO McINTYRE SECOND RESPONDENT NEVITORO INVESTMENTS PTY LIMITED THIRD RESPONDENT

JUDGE:	BEAUMONT J.
DATE:	24 MARCH 2000
PLACE:	SYDNEY

REASONS FOR JUDGMENT

(ON MOTION TO RE-OPEN)

BEAUMONT J:

1 Before me is an amended notice of motion dated 24 March 2000 in which the second applicant, Mr Maxwell McCarthy, seeks firstly, leave to re-open his case generally in the proceedings and to lead further evidence; and, secondly (in the alternative) that leave be granted to the second applicant to lead the specific evidence set out in sub paras (i) to (vi) of para 2 of the amended notice of motion.

2 The context in which the motion comes before me is an order made by the Full Court on an appeal from my judgment at first instance in which the appeal by the second applicant was dismissed, but the appeal by the second applicant was allowed in part. The second applicant's application (the second appellant in the appeal) against the first respondent, Mr Neville McIntyre, was remitted by the Full Court for determination by myself as the trial Judge consistently with the Full Court's reasons. The order of the Full Court was made on 11 June 1999.

3 The remitter has been before the Court for directions on several occasions and I have now heard full argument on behalf of the second applicant in support of the amended notice of motion. I have come to the view that I should refuse the motion.

4 In order to understand the issues that arise on the motion, it will first be necessary to refer to the relevant process of reasoning in the Full Court. The Full Court explained the reasons for remittal in para 56 where the Court said:

"However, the appeal should be allowed in part. The application, so far as it concerned Max, should be remitted to the primary judge to make the necessary factual findings to determine whether the case of third party reliance made by him should succeed."

5 Earlier, in its reasons, the Full Court had said (at pars 45 - 46):

"The amendments to the pleading, together with the submissions, make it tolerably clear that the case below for both Jack and Max (but not for Edlan, which, as already noted, was not included in paragraph 12 of the statement of claim) was put on the basis that they had suffered loss as a result of the misleading or deceptive conduct of Neville (and those with accessory liability) in providing false information to their financier, Westpac, thereby inducing Westpac to refinance the Edlan loan to the Commonwealth Bank. It was said that, had the real figures been provided to the accountant and supplied to Westpac in the form of a valuation, Westpac would not have proceeded with the deal. In consequence, neither Jack nor Max would have entered into the various agreements which ultimately caused them to suffer loss.

This aspect of the case was not addressed by the primary judge. For it to succeed, the following findings would need to be made:

1. That had the true figures been revealed, Westpac would not have provided finance.

2. That finance would not have been available from any other source.

3. Related to the first two findings, that in consequence the parties would not have entered into the transactions they did.

4. That Max or Jack or both suffered loss in the result, including within that finding the extent of that loss. (It should here be mentioned that it was conceded by senior counsel for the McCarthys before us that it could not be shown that Jack had suffered any loss, so any such finding would be limited to Max.)"

6 The Full Court had previously considered the background to an adjectival issue that had arisen on the appeal, that is, whether the pleadings (including the statement of facts issues and contentions) and the submissions below, did demonstrate that the McCarthys had indeed advanced the case upon which they then sought to rely. That was a matter of contention in the appeal, as their Honours recognised, and, it appears, a matter of some difficulty from the perspective of the Full Court. As the Full Court pointed out (at para 33) this particular case was put as an alternative argument, but the Full Court went on to note that, for their part, the McIntyres had submitted that - "... the evidence made it clear that a case along the lines now advanced by the McCarthys could not succeed."

7 Significantly, however, the Full Court went on to say:

"It should be observed that there were nine appeal books, including thousands of pages of transcript and exhibits, which would have to be examined before we could reach a view on the factual matters raised by this submission. Moreover, we have not had the advantage of observing the witnesses, in circumstances where the primary judge's reasons for judgment make it clear that there would be real questions of credit to be decided. We therefore reject the invitation that we should make factual findings where no such findings have been made. If the primary submission of the McCarthys succeeds, the matter must be sent back to the learned primary judge for the facts to be found."

8 The Full Court then considered in the abstract, a question of law, that is, whether the provisions of the Trade Practices Act 1974 could apply where the case is one of third party reliance (see para 34 of their reasons).

9 In my opinion, a reading of the reasons of the Full Court as a whole and, in particular, a reading of the parts of the reasoning to which I have referred, indicate that the Full Court had in mind that I would now make factual findings, but only on the evidence adduced at the trial.

10 As the Full Court noted, there were thousands of pages of transcript and documentary material. The appeal by Mr Jack McCarthy had been dismissed. It was at all times, and still is, common ground first, that Mr Jack McCarthy was the moving party in the transaction, and was the person involved in the conduct of all relevant negotiations and, secondly, that Mr Max McCarthy relied on Mr Jack McCarthy in that connection. But if the present motion were to be allowed, it would follow inevitably, in my view, that this lengthy, complex and bitterly contested litigation would be reagitated in most of its dimensions. I do not accept that the Full Court could have intended this. For one thing, to put the parties to the immense expense that would follow from a retrial of substantially all the previous issues is unlikely in the extreme to have been contemplated by the Full Court. Secondly, it is obvious that if there were to be a retrial of most of the issues in litigation, Mr Jack McCarthy would once more be a central witness. Again, I have difficulty accepting that the Full Court contemplated this course.

11 In my view, the Full Court's reasons should be taken as directing me, as the primary Judge, to revisit only the evidence previously given for the purpose of making the necessary factual findings.

12 I would add that, even if the matter had been remitted to me upon the footing that I had an open discretion on the question whether leave should be granted to re-open to the significant extent now sought, I would, in the exercise of my discretion, have refused to do so, for the reasons I have previously given.

13 I therefore dismiss the notice of motion.

I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Beaumont.

Associate:

Dated: 24 March 2000

Solicitor for the Applicant:	Paclaw
Counsel for the Respondent:	Mr Peter Biscoe QC, Mr M J Cohen
Solicitor for the Respondent:	Mr K A Garling
Date of Hearing:	24 March 2000
Date of Judgment:	24 March 2000