Case: Protean (Holdings) Ltd (rec and mgr apptd) v American Home Assurance Co [1985] VR 187
Outcome: followed
That O 32 r 4(4) does not operate in the manner suggested by the plaintiffs is supported by what the Full Court said in Rasomen Pty Ltd v Shell Company of Australia Ltd (1997) 144 ALR 497 at 503: "Apart from O 32, r 4(4) of the Federal Court Rules which gives a general discretion to the court to regulate the conduct of the trial, there is no statutory provision or Rule of Court which provides for the procedure to be adopted in the Federal Court in a civil case where a ruling of no case to answer is sought." Further, what is said in Rasomen at 505 cannot stand with what the plaintiffs seek to derive from sub-r (4). Similarly, in a passage concerned solely with no case submissions in this Court, the sixth Australian edition of Cross on Evidence renders (at 297) the presently relevant effect of Rasomen and Protean (Holdings) Ltd (rec and mgr apptd) v American Home Assurance Co [1985] VR 187 at 237 (Full Court), namely that there is no general rule that requires a party making a no case submission to elect to call no further evidence if some evidence has already been led, or if exhibits have been tendered during cross-examination, without any reference to sub-r (4). 17 The defendants' counsel then developed his no case submission, without then being required to elect. The plaintiffs' counsel responded. I then reserved my decision on the no case submission and on whether the defendants should be required to elect not to call further evidence. This course was followed in reliance on Protean at 237-240, Rasomen at 498-499 and Compaq Computer Australia Pty Ltd v Merry (1998) 157 ALR 1 at 6-9. In those cases approval was given to the approach to a no case submission described by Tadgell J in Protean at 237: "[The Judge] might allow the submission to be made without putting the moving party to any election at that stage but leaving, until he had heard it, the question whether or not he would rule on it without requiring an election to be made; and having heard the submission, and any answer to it by the respondent party, he could either rule on it or not, perhaps requiring an election to be made as a prerequisite to his doing so...." (His Honour had earlier indicated that the expression "moving party" meant the defendant making the no case submission and "respondent party" meant the plaintiff responding to the submission.) Young CJ expressed a similar view at 215 and Fullagar J agreed with what Tadgell J had said. 18 In Protean the trial judge had not adopted the course I have described at [17]. Rather he had indicated that he would both entertain the no case submission and rule on it without requiring an election to be made by the moving party. While Tadgell J did not think this an incorrect approach, his Honour clearly considered preferable that described at [17]. At 238-239 he said: "In deciding whether or not the general rule [requiring an election] should be followed the Judge will sometimes be assisted to know the basis on which the moving party seeks to rest his submission of no case. To that end the Judge might find it useful to allow the submission to be made and answered without first requiring an election to be made, before deciding whether he will rule on it, ie to take the second course summarized above .... When that course is followed the Judge will know, before he commits himself to rule, whether the no case submission is (a) that there is no evidence at all in support of the respondent party's case, ie accepting all the evidence at face value, no case has been established in law ..., or (b) that, although there is some evidence in support of the respondent party's case, the Judge should not act on it because, for example, it is so unsatisfactory or inherently unreliable or equivocal that he should find that the burden of proof resting on the respondent party has not been discharged ..., or (c) a combination of (a) and (b)." See also per Young CJ at 215. 19 The general rule is that a decision will not be given on a submission of no case unless the moving party elects to call no evidence. However, the judge has a discretion to depart from the general rule where the particular circumstances require it. It has been said that in deciding which course to follow, the judge will be guided by the nature of the case, the stage it has reached, the particular issues involved and the evidence that has been given. The imposition of the requirement that the moving party make an election before the judge entertains the submission or rules on it will depend on the just and convenient disposition of the litigation. See Protean at 238 and Rasomen at 504. 20 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. 21 In Sampson v Edwards [1949] VLR 6 Lowe J said: "The plaintiffs' case has been closed with the exception of his evidence as to damages which, by consent, is standing over until the issue of liability is determined. ... The substance of the matter argued before me is whether I should allow [counsel] to make that [no case] submission without putting him to his election as to whether he will call evidence or not on the issue of liability. In my opinion, I have a discretion as to whether or not to adopt that course, and I think that two of the factors, at any rate, which should operate with the Court in exercising that discretion are the saving of expense by hearing the application and the saving of time. They may not be, and probably are not, the only considerations, but those are two and I think both are present in this case. This action has now been going for the best part of four days and I have heard the evidence only of the plaintiffs and their witnesses and that only on the issue of liability. The particulars with regard to damages which were given this morning are such as to indicate that the plaintiffs' case before it is concluded will take some further considerable time, and on both those aspects of liability and of damage the defendants would have the opportunity to call evidence, and there has been an indication in cross-examination that if the case goes to its full conclusion evidence will be called by the defendants on both those aspects. Now with those matters in my mind it seems to me that convenience does point to my adopting the course which was adopted in Hannah v Stott [1928] VLR 168, and which I think has been adopted since then in many other cases. Those cases, and this case it is to be noted, are cases in which the Judge is sitting without a jury, and while jury cases stand on a somewhat different footing, even in those cases the Court has recognised ... that where there may be an unnecessary loss of time and money, it may be proper for a Judge to hear, at the close of the plaintiff's case, an application for judgment for the defendant. ... I only propose to add that I think the question of putting a defendant to his election is one which arises for the protection of the Court and is not, I think, a right which is given by law to the opposing party." The propriety of this last observation is confirmed by Protean at 238 where Tadgell J said: "The imposition of such a requirement [ie to elect] is not a right of the respondent party, for the fate of the submission of the moving party, once made, is in no sense dependent on election or no election." See also Rasomen at 505. 23 In exercising his discretion not to require the defendant to elect, the trial judge in Protean at 192-193 relied heavily on the time the case had already lasted, and the time that might be saved by hearing the no case submission. In the Full Court Fullagar J (junior) said at 236 that no criticism could be levelled at the trial judge's exercise of discretion "in the light of the allegations of gross fraud, in the light of the reasons for judgment of Fullagar J [(senior)] in ... Puddy, and in the light of established authorities relating to appeals from the exercise of a discretion". 30 I do not understand the plaintiffs to have submitted that the tendering of exhibits required the defendant to elect not to call further evidence. Rather, the contention was that tendering the exhibits disabled them from making a no case submission. I have dealt with that at [11] to [16]. In any event, had such a submission been made, I would have rejected it. There is no general rule that requires a party making a no case submission to elect to adduce no further evidence if some evidence has already been led, or if exhibits have been tendered during cross-examination. In a particular case, the fact that the party has taken steps of this kind will be one of the circumstances to be taken into account in the exercise of the discretion whether to require an election. See Protean at 237 and Rasomen at 505. 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. 36 In Protean the owner of premises which were damaged by fire sued its insurer for indemnity. The insurer raised defences that the insured had lit or connived at lighting the fire and had falsely represented, and failed to disclose, to the insurer material facts. The trial judge allowed the insured to split its case. The insured adduced evidence on matters on which it had the onus of proof, but elected to call no evidence in relation to the defences until all the evidence for the insurer on the defences had been called. The insurer then went into evidence on its defences. At the close of the insurer's case the judge allowed the insured to submit that it had no case to answer in respect of the defences without being put to its election whether or not to call evidence in relation to the defences. The insured's submission was upheld, and being of opinion that the insured had made out its case for indemnity, the judge entered judgment for it. 37 On appeal it was contended by the appellant that, in deciding the no case submission, the trial judge "embarked upon the wrong exercise". It was said his Honour had proceeded as if his function was to reach a final judgment on the facts, with inferences drawn and applied, as if he were deciding at the end of the whole case. His proper function, it was contended, was to decide whether the evidence before him (treating it in the most favourable way to the defendant) permitted the inferences to be drawn in favour of the affirmative defences, and not to decide whether to draw those inferences. An alternative argument was that the evidence revealed a prima facie case in respect of each of the defences, sufficient to require an answer by the insured. 38 All members of the Full Court rejected those contentions. Tadgell J, with whom Fullagar J agreed, distinguished (at 239) between a case where the no case submission is that there is no evidence at all in support of the respondent party's case and one where it is that, although there is some evidence to support it, the judge should not act on it because, for example, it is so unsatisfactory or inherently unreliable or equivocal that he should find that the burden of proof resting on the respondent party has not been discharged. His Honour went on (at 239): "If a judge sitting alone receives a submission of the second kind and decides to rule on it, whether the moving party is put to or makes his election or not, he must be entitled in doing so to assess the quality of the evidence. Were it otherwise the Judge, being the tribunal of fact, would be placed in an impossible position: he would have to assess the validity of the case for the respondent party without being able to assess the worth or weight of the evidence led in support of it. It has been said that 'when there is no jury, the proposition 'no case to answer' may obviously mean far more than, 'is there evidence on which a jury could find for the plaintiff?' It merely means, would you, the Judge, on the evidence given, find for the plaintiff?'" See also per Young CJ at 215.