Aircair Pty Ltd v Co-ordinated Air Services Pty Ltd [1989] PGLawRp 62; [1988-89] PNGLR 549 (21 December 1989)

Papua New Guinea Law Reports - 1988-89

[1988-89] PNGLR 549 - Aircair Pty Ltd v Co-ordinated Air Services Pty Ltd 

[1988-89] PNGLR 549

SC377

PAPUA NEW GUINEA

[SUPREME COURT OF JUSTICE]

AIRCAIR PTY LTD

V

CO-ORDINATED AIR SERVICES PTY LTD

Waigani

Bredmeyer Amet Hinchliffe JJ

30 June 1989

21 December 1989

JUDGMENTS AND ORDERS - Setting aside for fraud - Relevant principles - Onus of proof - Matters for proof - Where application to call fresh evidence - Allegations of false or mistaken evidence - Application dismissed.

Held

N1>(1)      A party who seeks to establish that a judgment ought to be set aside as being obtained or tainted by fraud must establish that the claim is based on newly discovered facts; that the facts are material and such as to make it reasonably probable that the case will succeed; that they go beyond mere allegations of perjury on the part of the witness at the trial; and that the opposing party who took advantage of the judgment is shown, by admissible evidence, to have been responsible for the fraud in such a way as to render it inequitable that such party should take the benefit of the judgment.

Wentworth v Rogers (No 5) (1986) 6 NSWLR 534 at 538-539, adopted and applied.

Hip Foong Hong v H Neotia & Co [1918] UKPC 65; [1918] AC 888; Robinson v Smith [1915] 1 KB 711; Jonesco v Beard [1930] AC 298 at 300-301; McDonald v McDonald [1965] HCA 45; (1965) 113 CLR 529 at 542, 543; Nicholls v Carpenter [1974] 1 NSWLR 369; Flower v Lloyd (No 2) [1879] UKLawRpCh 7; (1879) 10 Ch D 327 at 333; Baker v Wadsworth (1898) 67 LJQB 301 at 307; and Everett v Ribbands (1946) 175 LT 143, considered.

N1>(2)      Where an appellant sought to call evidence of an agreement before the Supreme Court, which was not in evidence in the National Court, to prove that the judgment of the National Court was tainted by fraud, the agreement had been available for discovery or tender to the court, and if there had been false or mistaken evidence before the National Court in relation to the agreement no evidentiary steps had been taken to counter that evidence, the application should be refused.

Cases Cited

Baker v Wadsworth (1898) 67 LJQB 301.

Everett v Ribbands (1946) 175 LT 143.

Flower v Lloyd (No 2) [1879] UKLawRpCh 7; (1879) 10 Ch D 327.

Government of Papua New Guinea and Davis v Barker [1977] PNGLR 386.

Hip Foong Hong v H Neotia & Co [1918] UKPC 65; [1918] AC 888.

Jonesco v Beard [1930] AC 298.

Ladd v Marshall [1954] EWCA Civ 1; [1954] 3 All ER 745; [1954] 1 WLR 1489.

McDonald v McDonald [1965] HCA 45; (1965) 113 CLR 529; 39 ALJR 179.

Nicholls v Carpenter [1974] 1 NSWLR 369.

Robinson v Smith [1915] 1 KB 711.

Wentworth v Rogers (No 5) (1986) 6 NSWLR 534.

Applications

In an appeal from a decision of Woods J in the National Courts the appellant applied to the Supreme Court for orders under s 6(1)(a) and s 8(1)(b) of the Supreme Court Act</i> (Ch No 37), to compel the appearance of a witness to give evidence not given in the hearing below and to allow fresh evidence on the basis that the decision of Woods J was tainted by fraud.

Counsel

J Bray, for the appellant.

I Molloy, for the respondent.

Cur adv vult

21 December 1989

BREDMEYER J: This is an application by the appellant to produce fresh evidence on the hearing of the appeal on the ground that the judgment below was obtained by fraud or at least was tainted by fraud. In order to understand the application, it is necessary to describe the litigation in the court below.

The plaintiff, Co-ordinated Air Services Pty Ltd (Co-Air), is a company which owns and operates aircraft and the defendant, Aircair Pty Ltd (Aircair), is a company which services aircraft and aircraft engines. I note that the company is spelt Aircair and not Aircare. In about 1986, Co-Air delivered a number of parts to Aircair for repair and overhaul. Later in that year, relationships between the two companies soured and disputes arose over the repairs. Co-Air requested that the parts be returned; Aircair refused and held on to the parts on the basis that they had not been paid for. In a letter dated December 1986, Co-Air demanded the return of all the parts given to Aircair for repairs. In about January 1987, Aircair returned the parts, not to Co-Air but to Talair on the basis that Talair had taken over the Co-Air company or had purchased aircraft and parts belonging to it.

Prior to the trial, the plaintiff amended its statement of claim to plead that the defendant was wrongfully in possession of the goods and had refused to deliver them to the plaintiff. The goods were all listed by description, serial number and value, and they included a VHF radio, a fuel contents gauge, a propellor worth K6,000 and a propellor-governor worth K1,200. At the commencement of the trial, counsel for the plaintiff, Mr Molloy, further amended the statement of claim to allege “further or alternatively on or about January 1987 the defendant unlawfully delivered goods to a third party without the authority of it and thereby converted the same”. That further amendment to the statement of claim put in issue the allegation that the defendant had unlawfully delivered the goods to a third party, that is, delivered the goods to a third party without the plaintiff’s authority. The plaintiff’s case was that it had sent the goods for repair, had paid the bills, and yet had not had the goods returned. Therefore, it was up to the defendant to disprove this alternative allegation by showing that it delivered the goods to Talair with authority to do so.

The trial commenced before Woods J in Lae on 20 July 1988. The plaintiff called one witness and the defence called two witnesses, a Mr Morgan, the manager of Aircair, and a Mr Goodhind, the spare-parts manager of Talair. The defence witnesses said that the goods, after being repaired, had been collected by Talair, which had purchased them from Co-Air. Aircair’s repair bills had been paid. There was no dispute about that.

The defence as pleaded was that the goods had been received for repairs, the defendant’s bills had been paid and that in January 1987 the plaintiff retook possession of the goods. The defence was not amended to plead its case to the plaintiff’s amendment to the statement of claim at the outset of the trial that the goods had been unlawfully delivered by the defendant to a third party. At the outset of the trial, defence counsel no doubt knew from his witnesses’ statements that the goods, after repair, had, in fact, been delivered to a third party, Talair — as the plaintiff asserted — because Talair had purchased them. Defence counsel knew at the outset of the trial that the goods had been delivered by the plaintiff to Aircair for repairs, the repairs had been made, the repair bills paid and the goods handed over to a third party, Talair. All that was not in dispute. The only issue in dispute was whether those goods were handed to Talair with the authority of the plaintiff or not. Defence counsel must have known that the question of authority was the only issue in the case and that he had the onus of proving it. He had the onus of proving it because clearly when A delivers goods to B for repairs, B has the duty of returning the goods to A after the repairs have been made and the bills paid. If B chooses to return those goods to C rather than to A, then B has broken the terms of the bailment unless he can show some authority from A to do so.

To prove the defence case that the goods were handed over to Talair with authority of the plaintiff, defence counsel could have called witnesses which he did, and/or the contract of sale document, which he did not. The defendant, Aircair, called two witnesses at the trial. One was David Morgan, its manager, and the other was Jerry Goodhind, the spare-parts manager for Talair. Morgan said that the goods had been repaired and bills invoiced out to Co-Air. He said they were awaiting payment which came through “in December 1986, just prior to the Talair take-over”. He said Talair sent representatives to collect the goods and they were handed over to Talair in early January 1987. They were handed over to Mr Goodhind of Talair. Mr Goodhind said that Talair purchased aircraft and relevant spare parts from Co-Air and he was told that some of the aircraft spares were being held by Aircair. He thereupon went to Aircair and collected the spare parts. Mr Goodhind knew of the written agreement for the sale of spares. He could not recall the effective date of it and he understood that “copies of the agreement have been provided”. At the trial the plaintiff called only one witness, William Phillip Reeve, who was the manager for Co-Air. He said that Talair purchased some of the assets of Co-Air and that there was a written agreement to that effect dated 1 April 1987. He said that he was involved in the inventory for the sale but that the parts in dispute in this court case were not included in that inventory. The trial judge was thus faced with a conflict of oral evidence. The plaintiff’s witness, its manager, said that the repaired goods were not included in the sale to Talair. The first defence witness, its manager, Mr Morgan, said the goods were handed over to Talair “after the Talair take-over” but clearly his company was not a party to the sale between Co-Air and Talair and he never said he sighted the contract nor any paper work authorising a handover of the goods to Talair, so he gave no real evidence as to whether the goods were lawfully handed over to Talair. Mr Goodhind, Talair’s spare-parts manager, said, in effect, that some of the spares included in the sale were held by Aircair and he went and collected them. The conflict of oral evidence was thus one witness for the defendant saying that the goods collected were goods which had been sold to Talair and one witness for the plaintiff saying they were not. Faced with this conflict of oral evidence, the trial judge found the issue unproved; he found against the defendant and held the defendant liable to pay damages to the plaintiff. The trial judge accepted the evidence that the goods were, in fact, passed over to Talair in January 1987 but he was not satisfied that Aircair had authority to do this. He said:

“Whilst witnesses before me have made reference to some agreement between Co-Air and Talair for the purchase of such equipment such agreement has not been produced... and the defendant in this matter has not relied on this agreement and therefore I must assume that such agreement is not relevant to this case...

...

However, the defendant still refers to some agreement without referring me to the details or terms. The defendant states that by virtue of some agreement or arrangements there was some implied authority for the defendant to deliver the goods the subject of this claim to Talair. However, there is no evidence of any agreement before me concerning these components.

...

There is no evidence of any direction or authority given from the plaintiff to the defendant for the defendant to deliver the goods to any other party. The defendant has produced no direction or authority and has only made reference to some kind of understanding or some agreement, the terms of which are unknown.”

Clearly the defendant’s case failed because, although he led indirect evidence of a sale of these parts by Co-Air to Talair, he failed to prove it; in particular, he failed to produce the contract of sale document and, if necessary, to examine and cross-examine witnesses on it. Defence counsel could have tendered the document through Talair’s employee, Mr Goodhind, or through cross-examination of Co-Air’s manager and witness, Mr Reeve. The contract of sale dated 1 April 1987 had been revealed by the plaintiff in its affidavit of discovery sworn seven months before the trial. Legal professional privilege was claimed for it but clearly that was a false claim. The defendant could have obtained a court order to inspect it. The defence counsel could have called for the production at the trial as the plaintiff’s counsel had it on the Bar Table throughout the trial.

The document has been produced to us. It is dated 1 April 1987 and it is a sale of nine aircraft, spare parts and airport terminal facilities for K495,000. The aircraft sold to Talair are listed in the first schedule by reference to aircraft make, registration number and valuation, for example, Cessna 206, registration number p2-coap2-coa, valuation K11,950. The value of the nine aircraft totals K363,800. The spare parts are not itemised; they are simply listed as “the spare parts held by the vendor for the aircraft” covered by the sale. Although the agreement is dated 1 April 1987, it provides that completion of the contract shall take place on 19 January 1987, and in particular, K100,000 is to be paid on 15 January, K250,000 on 19 January, and K145,000 on 26 January. The contract provides that on the date of completion (that is, 19 January 1987) the vendor shall give, and the purchaser shall take, full and complete delivery or possession of the assets. The contract provided that the purchaser was to conduct a stock-take of the spare parts on the date of completion.

Because the contract of sale does not itemise the spares, it would be necessary for the defendant to call oral evidence in addition to the contract, to show that the spares itemised in the statement of claim related to the aircraft listed in the contract of sale and thus that they passed with the sale. This could have been done by examination of Mr Goodhind or cross-examination of Mr Reeve.

The judgment of Woods J was handed down on 29 July 1988 and Aircair appealed to the Supreme Court within 40 days. Aircair also instituted proceedings against Talair claiming an indemnity for the amount which it was ordered to pay by Woods J. Talair was represented by Mr Bernard Avery of Warner Shand, Lawyers, Lae, and in a letter dated 20 September 1988 he disclaimed any liability on the part of Talair and referred to the contract of 1 April 1987.

He referred to the clause in the contract whereby the spare parts held by the vendor for the aircraft sold were sold to Talair for K77,000 and said that all of the spare parts which were the subject of the action before Woods J were parts belonging to the aircraft sold. Mr Bray seeks an order for us to compel Mr Avery to appear before us as a witness to produce the contract of sale and to give evidence that the spares, the subject of this action, were sold under the contract of sale. The Supreme Court has power under s 8(1)(b) of the Supreme Court Act (Ch No 37) to order a witness to attend and to be examined before it. The Court has power to allow fresh evidence under s 6(1)(a) of the Supreme Court Act. Counsel for the appellant makes the application on the basis that the decision of Woods J was tainted by fraud.

I consider there are two alternative applications here. The first is an application to adduce fresh evidence; the second is an application to set aside the verdict because it was obtained by fraud or tainted by fraud. To deal with the first application, the Supreme Court has power on an appeal to allow fresh evidence to be adduced where it is satisfied that the justice of the case warrants it. Fresh evidence has been defined by Lord Denning in Ladd v Marshall [1954] EWCA Civ 1; [1954] 3 All ER 745 at 748 as follows:

“... in order to justify the reception of new evidence or a new trial, three conditions must be fulfilled: first, it must be shown that the evidence could not have been obtained with reasonable diligence for use at the trial: second, the evidence must be such that, if given, it probably would have an important influence on the result of the case, although it need not be decisive: third, the evidence must be such as is presumably to be believed, or in other words, it must be apparently credible, although it need not be incontrovertible...”

That statement of the law was considered applicable and appropriate to the circumstances of Papua New Guinea by Prentice Dep CJ in Government of Papua New Guinea and Davis v Barker [1977] PNGLR 386 at 393. Applying those words to the facts of this case, I consider the application fails because the evidence sought to have been led could have been obtained, in my view, with reasonable diligence before the trial. As I have said, it could have been obtained from the defendant’s own witness, the spare-parts manager of Talair. As I have also stated above, the contract of sale dated 1 April 1987 was discovered by the plaintiff, legal privilege was wrongly claimed for it, and the defendant could have obtained a copy of it by an interlocutory order prior to trial, or called for its production at the trial. If the defendant had obtained a copy of that document, he could have examined better his own witnesses and cross-examined the plaintiff’s witness to elicit from them that these spares were, indeed, included in the sale to Talair. I consider the application fails.

The main thrust of the appellant’s argument is not a simple application to adduce fresh evidence but rather an application to set aside the verdict as obtained by fraud or at least tainted by fraud. At common law a judgment may be set aside for fraud. I quote from the 1985 Supreme Court Practice(UK) (Vol 1), par 59/11/9:

N2>“3.      Judgment Obtained by Fraud

There is jurisdiction to set aside a judgment for fraud on a motion for a new trial, but as a rule an action must be brought for the purpose, and if for special reasons a motion is permitted, the charge of fraud must be made with the same particularity as in an action and as strictly proved, and the same rules apply as to burden of proof and admissibility of evidence (Hip Foong Hong v H Neotia & Co [1918] UKPC 65; [1918] AC 888 at 893-894, Jonesco v Beard [1930] AC 298 at 300-301, and Stern v Friedman [1953] 2 All ER 565.”

Hip Foong Hong v H Neotia & Co [1918] UKPC 65; [1918] AC 888 was a Privy Council appeal from the Supreme Court of Shanghai. The appellants before the Privy Council lost a case in the Supreme Court. They initially appealed to the Full Court of the Supreme Court but abandoned that appeal in favour of an application to set aside the judgment and obtain a new trial. The application was supported by affidavit evidence that witnesses for the respondent had committed perjury at the trial and that the respondent’s case had been supported by bribery and other fraudulent conduct. At 894, the Privy Council, speaking through Lord Buckmaster, distinguished between an application for a new trial based on fresh evidence and one based on fraud or surprise. I quote:

“In all applications for a new trial the fundamental ground must be that there has been a miscarriage of justice. If no charge of fraud or surprise is brought forward, it is not sufficient to show that there was further evidence that could have been adduced to support the claim of the losing parties; the applicant must go further and show that the evidence was of such a character that it would, so far as can be foreseen, have formed a determining factor in the result. Such considerations do not apply in questions of surprise, and still less to questions of fraud. A judgment that is tainted and affected by fraudulent conduct is tainted throughout, and the whole must fail.”

The applicants in that case failed to show that the case was tainted by fraud and they failed to obtain a new trial. They also failed on appeal to the Privy Council.

Although earlier in time, Robinson v Smith [1915] 1 KB 711, is consistent with Hip Foong Hong’s case and illustrates its principles. In that case the plaintiff had obtained damages for breach of promise to marry. The defendant applied for a new trial on the basis of fraud and led evidence that the plaintiff was a married woman and therefore not capable of marrying or suing for breach of promise. The plaintiff filed an affidavit refuting this evidence, saying she was a single woman. The Court of Appeal ruled that the evidence of fraud was sufficiently strong to justify a retrial. Fraud was not actually proved, but it was a case where, on a retrial, fraud might be proved by fresh evidence.

In Jonesco v Beard [1930] AC 298, the question of setting aside a judgment for fraud came up for consideration by the House of Lords. The leading opinion was given by the same Lord Buckmaster with whom the four Law Lords concurred. At 300-301 he said:

“It has long been the settled practice of the Court that the proper method of impeaching a completed judgment on the ground of fraud is by action in which, as in any other action based on fraud, the particulars of the fraud must be exactly given and the allegation established by the strict proof such a charge requires. In Flower v Lloyd [1877] UKLawRpCh 173; (1877) 6 Ch D 297, 302, the Court of Appeal, consisting of Jessel MR, James and Baggallay LJJ, held there was not jurisdiction in the Court of Appeal to entertain a similar application, with regard to one of their own judgments. James LJ states that ‘you cannot go to your adversary and say, “You obtained the judgment by fraud and I will have a rehearing, of the whole case” until that fraud is established’. Flower v Lloyd (No 2) [1879] UKLawRpCh 7; (1879) 10 Ch D 327, 333, Cole v Langford [1898] UKLawRpKQB 104; [1898] 2 QB 36, and Baker v Wadsworth (1898) 67 LJQB 301, show that the right procedure for that purpose is by action. That, however, there is jurisdiction in special cases to set aside a judgment for fraud on a motion for a new trial may be accepted. Hip Foong Hong v H Neotia & Co [1918] UKPC 65; [1918] AC 888 is such a case; but it should be remembered that this case had come up to the Privy Council on this procedure and the Board would naturally be unwilling to defeat a case at its last stage on such a ground.

If, however, for any special reason departure from the established practice is permitted, the necessity for stating the particulars of the fraud and the burden of proof are no whit abated and all the strict rules of evidence apply. The affidavits used must, therefore, be examined as on final trial; every particle of hearsay evidence and reference to documents, not produced, must be excluded, and it must be kept constantly in mind that the rules which permit, on interlocutory proceedings, hearsay evidence, where the exact source of the information is afforded, have no more application than they would possess were the deponent a witness in the box speaking at the trial.”

Commenting on and approving of Robinson v Smith, Menzies J of the Australian High Court in McDonald v McDonald [1965] HCA 45; (1965) 113 CLR 529 at 542, said:

“This proposition... leaves untouched the rule that, if by any means it be affirmatively proved that the earlier judgment was tainted by fraud, it will, without more, be set aside. Thus, for instance, to prove the bribery of a witness or a juryman at the earlier trial by a party would require a verdict given in his favour to be set aside without speculation upon the result of the bribery.”

The facts of McDonald v McDonald illustrate the application of this principle. The plaintiff sued the defendant for damages for assault and defamation. The assault was said to have taken place at the rear of a shop on a Saturday afternoon at 1 pm. The jury heard witnesses on both sides and found for the defendant. A key witness called by the defendant was a man named Maloney who said that he was there at the time as he was passing that way on his way to bowls. His version favoured the evidence of the defendant that there was no assault. After the verdict was returned, the plaintiff applied for a new trial to the Full Court of the Supreme Court of Queensland on the basis that Maloney’s evidence was fraudulent. The plaintiff obtained a signed statement from a witness, Mrs Platt, that she lived in the same house as Mr Maloney and that, at the relevant time, she noticed his bedroom door was closed. She said that, if he was not occupying the bedroom, the door was normally open and that, being closed, it indicated that he was in his room resting. She swore that she saw him leave the house by the back door at about 3 pm. The High Court applied the law to these facts. The leading judgment is given by Menzies J, who (at 543) said:

“Is there then here a case where the fresh evidence, if believed, would prove fraud and justice would demand a new trial? I think not. Firstly, it would be possible to believe all Mrs Platt’s evidence and nevertheless to accept Maloney’s evidence that he was outside Pay’s shop shortly after 1 pm on 17 November 1962, for Mrs Platt did not say that she saw Maloney until 3 pm. Her evidence that his door was shut at 1 pm does not, of course, require the conclusion that Maloney was within at that time nor is it irreconcilable with his having been in South Street ten minutes or a quarter of an hour later. Of course, there is inconsistency between the evidence Maloney gave and Mrs Platt’s evidence, eg as to where he was at 3 pm, but it could only be in a rare case that a judgment would be set aside because of fresh evidence relating to a collateral matter merely affecting the credibility of a witness...”

The other judges agreed that the fresh evidence was not of such a character as to justify an order for a new trial. Taylor J (at 537) said:

“... it was evidence on the fringe of the case, it was insubstantial and, even if accepted, would not preclude the conclusion that Maloney was present on the occasion in question. In no respect does it measure up to the required standard.”

A new trial was granted on the basis of fraud in Nicholls v Carpenter [1974] 1 NSWLR 369. In that case, C, who was a married man separated from his wife, and L, a single lady, were passengers in a car together with L’s parents. The car ran off the road, L was injured and her father, N, was killed. After the accident, C made out an accident report and forwarded it to the Government Insurance Office as the insurer of the car. In his report, C stated that he was the driver of the car and was solely responsible for the accident and that there were no independent witnesses. A police accident report prepared by Senior Constable S stated that whether L was a passenger or the driver of the car was not known and that there were two witnesses to the accident, brothers AJ and WC Bates. The Government Insurance Office obtained a copy of the constable’s report but did not obtain copies of the statements from the brothers Bates. At the trial for damages, the lawyers for the Government Insurance Office discussed the two reports but did not interview C or Constable S. The lawyers decided to admit liability and the trial proceeded by way of assessment of damages and L was granted a verdict of $26,085.

Shortly after that, the coroner inquiring into the death of N noticed a conflict between the report of C and that of Police Constable S and referred these reports to the Government Insurance Office. The latter then obtained a detailed statement from Police Constable S and statements for the first time from the brothers Bates. S, in his statement, said that he had inspected the damage to the vehicle and from the damage to it, it was clear that the driver of the car would have received injuries to the right side of the body. The plaintiff L had injuries to the right side of her body. WC Bates testified that he was the first person to reach the car and that he pulled the plaintiff L out of the driver’s door. His brother testified that at the same time he pulled the man C from the passenger’s seat. Evidence was also led that L and C were living in a de facto relationship and that a child was born to that union. The New South Wales Court of Appeal held that the defendant was not entitled to a new trial on the discovery of fresh evidence because clearly that evidence could have been discovered with due diligence before the hearing of the action. But the defendant was entitled to a new trial on the basis of fraud as fraud had been affirmatively established. The new evidence clearly suggested that the girl L was the driver and not the passenger as stated in C’s report to the Government Insurance Office. The verdict was set aside and a new trial ordered on all issues.

The cases establish that even proof of perjury by a witness may not be sufficient to set aside a judgment on the ground of fraud. In Flower v Lloyd (No 2) [1879] UKLawRpCh 7; (1879) 10 Ch D 327 at 333, James LJ (with whom Thesiger LJ concurred) said:

“We have thought it right and due to the defendants to go through the allegations made against them; and their counsel, in fact, scarcely asked for any judgment except one based on their acquittal of the fraud charged against them. But we must not forget that there is a very grave general question of far more importance than the question between the parties to these suits. Assuming all the alleged falsehood and fraud to have been substantiated, is such a suit as the present sustainable? The question would require very grave consideration indeed before it is answered in the affirmative. Where is litigation to end if a judgment obtained in an action fought out adversely between two litigants sui juris and at arms length could be set aside by a fresh action on the ground that perjury had been committed in the first action, or that false answers had been given to interrogatories, or a misleading production of documents, or of a machine, or of a process had been given? There are hundreds of actions tried every year in which the evidence is irreconcilably conflicting, and must be on one side or the other wilfully and corruptly perjured. In this case, if the plaintiffs had sustained on this appeal the judgment in their favour, the present defendants, in their turn, might bring a fresh action to set that judgment aside on the ground of perjury of the principal witness and subornation of perjury; and so the parties might go on alternately ad infinitum... Perjuries, falsehoods, frauds, when detected, must be punished and punished severely; but, in their desire to prevent the parties litigant from obtaining any benefit from such foul means, the court must not forget the evils which may arise from opening such new sources of litigation, amongst such evils not the least being that it would be certain to multiply indefinitely the mass of those very perjuries, falsehoods, and frauds.”

That statement was upheld and followed by two judges of the Queen’s Bench division in Baker v Wadsworth (1898) 67 LJQB 301. At 301, Wright J and Darling J said that:

“There is no authority that the mere proof that a verdict and judgment had been obtained by perjury is sufficient to induce the court to set the judgment aside ...”

In Everett v Ribbands (1946) 175 LT 143, the Court of Appeal considered a decision of Lord Goddard CJ who had refused to set aside a civil judgment on the basis that it had been obtained by perjury. The Lord Justices on appeal there affirmed the decision of Lord Goddard and affirmed the decisions of Flower v Lloyd and Baker v Wadsworth already cited. A very good review of these and other English authorities is found in the decision of the Court of Appeal of New South Wales in Wentworth v Rogers (No 5) (1986) 6 NSWLR 534. It is sufficient in this jurisdiction to cite English cases, as at Independence we elected to follow the English common law. However, where, as here, an Australian case provides a useful summary of the English cases, it is worthwhile to cite it. The leading judgment in that case was delivered by the President, Kirby P, with whom Hope JA and Samuels JA concurred. I quote at length from Kirby P, at 538-539:

“First, the essence of the action is fraud. As in all actions based on fraud, particulars of the fraud claimed must be exactly given and the allegations must be established by the strict proof which such a charge requires: Jonesco v Beard [1930] AC 298 at 301; McHarg v Woods Radio Pty Ltd [1948] VicLawRp 38; [1948] VLR 496 at 497.

Secondly, it must be shown, by the party asserting that a judgment was procured by fraud, that there has been a new discovery of something material, in the sense that fresh facts have been found which, by themselves or in combination with previously known facts, would provide a reason for setting aside the judgment: see Lord Selborne LC in Boswell v Coaks (No 2) (1894) 6 R 167 at 170, 174; 86 LT 365 at 366, 368; Cabassi v Vila [1940] HCA 41; (1940) 64 CLR 130 at 147; McDonald v McDonald [1965] HCA 45; (1965) 113 CLR 529 at 533; Everett v Ribbands (1946) 175 LT 143 at 145, 146; Birch v Birch [1902] UKLawRpPro 9; [1902] P 130 at 136, 137-138; Ronald v Harper [1913] VicLawRp 54; [1913] VLR 311 at 318. This rule has an ancient lineage: see, eg, Shedden v Patrick (1854) 1 Macq 535 at 615, 622. Halsbury’s Laws of England, 4th ed, vol 26, par 560 at 285. It is based upon a number of grounds. There is a public interest in finality of litigation. Parties ought not, by proceeding to impugn a judgment, to be permitted to relitigate matters which were the subject of the earlier proceedings which gave rise to the judgment. Especially should they not be so permitted, if they move on nothing more than the evidence upon which they have previously failed. If they have evidence of fraud which may taint a judgment of the courts, they should not collude in such a consequence by refraining from raising their objection at the trial, thereby keeping the complaint in reserve. It is their responsibility to ensure that the taint of fraud is avoided and the integrity of the court’s process preserved.

Thirdly, mere suspicion of fraud, raised by fresh facts later discovered, will not be sufficient to secure relief: Birch v Birch (at 136, 139): McHarg v Woods Radio Pty Ltd (at 498); Ronald v Harper (at 318). The claimant must establish that the new facts are so evidenced and so material that it is reasonably probable that the action will succeed. This rule is founded squarely in the public interest in finality of public litigation and in upholding judgments duly entered at the termination of proceedings in the courts.

Fourthly, although perjury by the successful party or a witness or witnesses may, if later discovered, warrant the setting aside of a judgment on the ground that it was procured by fraud, and although there may be exceptional cases where such proof of perjury could suffice, without more, to warrant relief of this kind, the mere allegation, or even the proof, of perjury will not normally be sufficient to attract such drastic and exceptional relief as the setting aside of a judgment: Cabassi v Vila (at 147, 148); Baker v Wadsworth (1898) 67 LJQB 301; Everett v Ribbands (at 145, 146). The other requirements must be fulfilled. In hard fought litigation, it is not at all uncommon for there to be a conflict of testimony which has to be resolved by a judge or jury. In many cases of contradictory evidence, one party must be mistaken. He or she may even be deceiving the court. The unsuccessful party in the litigation will often consider that failure in the litigation has been procured by false evidence on the part of the opponent and the witness called by the opponent. If every case in which such an opinion was held gave rise to proceedings of this kind, the courts would be even more burdened with the review of first instance decisions than they are. For this reason, and in defence of finality of judgments, a more stringent requirement than alleged perjury alone is required.

Fifthly, it must be shown by admissible evidence that the successful party was responsible for the fraud which taints the judgment under challenge. The evidence in support of the charge ought to be extrinsic: cf Perry v Meddowcroft [1846] EngR 1070; [1846] 10 Beav 122 at 136-139; [1846] EngR 1070; 50 ER 529 at 534, 535. It is not sufficient to show that an agent of the successful party was convicted of giving perjured evidence in the former proceeding, the result of which it is sought to impeach. It must be shown that the agent, in so acting, was in concert with the party who derived the benefit of the judgment: Ronald v Harper (at 318); Shedden v Patrick (at 643).

Sixthly, the burden of establishing the components necessary to warrant the drastic step of setting aside a judgment, allegedly affected by fraud or other relevant taint, lies on the party impugning the judgment. It is for that party to establish the fraud and to do so clearly. In summary, he or she must establish that the case is based on newly discovered facts; that the facts are material and such as to make it reasonably probable that the case will succeed; that they go beyond mere allegations of perjury on the part of witnesses at the trial; and that the opposing party who took advantage of the judgment is shown, by admissible evidence, to have been responsible for the fraud in such a way as to render it inequitable that such party should take the benefit of the judgment.”

Applying these principles to the facts of this case Mr Bray, for the appellant, says that the judgment obtained from Woods J is tainted by fraud and he seeks an order to call evidence to prove that on this appeal. That evidence is two-fold. The first is the agreement for sale of aircraft and spares between Co-Air and Talair dated 1 April 1987. As discussed above, that agreement does sell all the spares relating to nine listed aircraft without itemising the spares. Secondly, Mr Bray would like to call Mr Avery, lawyer for Talair based in Lae, to produce a letter dated 10 September 1988 which Mr Bray has produced to us, or to otherwise give evidence, that the spare parts, the subject of this litigation, were the subject of the sale just mentioned.

The first thing which should be said is that the agreement for sale was not hidden from the court by fraud. As stated above, two of the witnesses gave evidence of it, and it was disclosed by the plaintiff upon discovery. The agreement was clearly relevant to the defendant’s case but it appears that the defendant’s counsel did not appreciate this fact. Perhaps he was misled by the fact that the agreement is dated 1 April 1987 when the spares were handed to Talair in January 1987. Had defence counsel read the agreement, he would have seen that its date of execution is a little misleading because it relates to a sale of spares which took place in January 1987. It is crystal clear to me that this agreement was not hidden from the court by the plaintiff’s fraud. It could have been obtained by an order upon discovery which would have rejected the plaintiff’s false claim for legal professional privilege. Or it could have been tendered through the witness Mr Goodhind, who was an employee of Talair. The second piece of evidence relates to a letter from Mr Avery under Warner Shand’s letterhead pointing out that all of the spares in the dispute had been sold under the agreement to Talair. Mr Avery does not give his source of knowledge and, depending on his source, his evidence on that point may or may not be admissible. Mr Avery could have been called at the trial. Indeed, Mr Goodhind from Talair who was called could have been asked to produce the inventory of spare parts which Talair received from Co-Air. Interrogatories could have been administered, asking Co-Air to list the spares which it sold to Talair. If Mr Avery is simply writing about something told to him by an officer of Talair, then his evidence is hearsay and inadmissible. As the cases show, fraud must be strictly proved. The best witness to say whether these spares passed on the sale would be someone from Co-Air or Talair who prepared the inventory for the sale of the spares and/or who witnessed the handover.

If, however, it could be shown by admissible evidence that the spares, the subject of this action, passed to Talair under the contract of sale, then it would appear that the evidence from Co-Air’s manager, Mr Reeve, was false or mistaken. He said that there was a sale of assets from Co-Air to Talair and that there was a written agreement dated 1 April 1987. He said that “aircraft components” were not part of the sale. He was involved in the inventory for the sale. He was asked, “Were these parts in that inventory?” and he answered, “No”. Assume for the moment that this evidence was deliberately false, that is, perjured, then the appellant in this case is faced with the authorities of Flower v Lloyd, Baker v Wadsworth and Everett v Ribbands, already quoted, which are against him. They say that even if perjury is proved, then, by itself, that is not enough to get a new trial. There is a good reason for that. As the authorities say, in many cases there is a head-on conflict of testimony between a witness for the plaintiff and a witness for the defendant. In such a case, where the truth does not lie in some middle position, one witness must be lying and one witness must be telling the truth. Yet that is not sufficient to get the verdict set aside. As the cases show, there is a public interest in making it difficult to impeach a completed judgment; in asserting the finality of judgments. Moreover, the perjury, which is a species of fraud, must be sheated home to the plaintiff. But in the present case there is no evidence that Mr Reeve, the plaintiff’s manager, was an officer, for example, a director or the secretary, of the plaintiff company.

The more normal way to counter a witness who is telling lies, or for that matter is mistaken, is to call sufficient witnesses on the other side to refute him. In this case, counsel for the defendant failed to do that. Had he obtained a copy of the agreement and a copy of the inventory of spare parts which passed pursuant to the agreement, he could have led evidence of that from his witnesses to counter and overwhelm the evidence of Mr Reeve, and/or he could have cross-examined Mr Reeve on those documents and maybe gained a reversal of his answer, that these parts did not pass on the sale.

I consider that this application fails totally and I would refuse it with costs granted to the respondent.

AMET J: I have read the judgment of Bredmeyer J in draft. I agree with his conclusions and the reasons he gives. I have nothing further to add.

HINCHLIFFE J: I agree with Bredmeyer J and I have nothing further to add.

Applications dismissed

Lawyers for the appellant: Kirkes.

Lawyers for the respondent: Henao Cunningham & Co.