Case: Union Bank of Australia Ltd v Puddy [1949] VLR 242
Outcome: followed
In William H Muller &amp; Co's Algemeene etc v Ebbw Vale Steel, Iron &amp; Coal Co Ltd [1936] 2 All ER 1363 at 1365-1366 Branson J said: "It seems to me that it must be a matter for the judge who is to try the case to decide for himself whether, in the particular case before him, and having regard to all the circumstances of it, it is likely to save the litigants before him expense and time and trouble to deal with the case by way of ruling upon the submission without putting any terms upon counsel upon either side, or whether it is better to say: 'In this case I think it would be desirable that before I rule I should hear the whole of the evidence." This passage has been referred to or quoted with approval in many cases. See, for example, Protean at 238, Rasomen at 504, J-Corp Pty Ltd v Australian Builders Labourers Federated Union of Workers (Western Australian Branch) (No 2) (1992) 38 FCR 458 at 461-462 and Union Bank of Australia Ltd v Puddy [1949] VLR 242. In Puddy at 245-246, after reviewing the earlier decisions on the circumstances in which, in the exercise of the discretion, it is appropriate to depart from the general rule requiring an election, Fullagar J said: "I would add only two observations of my own. In the first place ... something may turn on the nature of the case itself. ... [W]here, as in the case before me, fraud is alleged, it may often be wrong to suggest that a party should submit himself to cross-examination before it is seen that there is really some evidence against him. In the second place, it would seem that the exercise of the discretion must generally involve an estimating of probabilities. If I accede to the application made to me, I may save the parties a great deal of time and expense, or I may cause them much greater expense and delay in the event of a new trial being ordered. In order to assess these probabilities, it seems to me that it must generally be necessary to form some preliminary estimate of the evidence before ruling as to whether the submission is to be entertained without election. In the present case I felt no doubt that I ought to entertain and rule on the submission without requiring the plaintiff to elect to call no evidence. I felt clearly of opinion that the balance of convenience was heavily in favour of this course. The case for the defendant, consisting of the opening and examination in chief, with very little cross-examination, had lasted over three and a half days. Then, coming to determine the application on its merits, I have felt satisfied that there was no case for the plaintiff to answer on defence or counterclaim." Other cases which show that the discretion to depart from the general rule requiring an election is more readily exercised where fraud is alleged are Protean at 215 and 236 and Merry at 7. 22 Sampson and Puddy were referred to with approval by Mason and Jacobs JJ (with whom Barwick CJ agreed) in Stevenson v Barham [1977] HCA 4 ; (1977) 136 CLR 190 at 203. Stephen J dissented in the result, but agreed with what Mason and Jacobs JJ said about election. 32 Contravention of s 588G(3) is an offence, one element of which is that the director's failure to prevent the company incurring the debt was dishonest. I have referred to the cases drawing attention to the position where fraud is alleged. The "gross fraud" referred to by Fullagar J (junior) in Protean was in fact arson it was alleged that the insured had lit or connived at lighting the fire. In my view the words of Fullagar J (senior) in Puddy are apposite here it would be wrong for the defendants to be subjected to cross-examination on the dishonesty component of the offence before it is seen that there is some evidence of the insolvency component. 33 In the present case the plaintiffs' case took two weeks. The parties have thus already been put to great expense, both in terms of time and money. It is clear from what has thus far transpired that the defendants' case would have lasted at least the remaining week allocated to the proceeding. Mr Jenkins' affidavit evidence alone (including exhibits) occupies 982 pages of the Court Book. His evidence touches all aspects of the case: solvency, his awareness of the company's ability to pay its debts, and the quantum of the debts. I would be surprised if he were cross-examined for less than three days. Having regard to the cross-examination of the plaintiffs' experts, I would expect the defendants' expert, Mr Stout, to be cross-examined for at least a day. In those circumstances, as was the case in Sampson and Puddy , there may be a considerable saving in time and expense to the parties if the application is heard.