Case: Jones v Dunkel [1959] HCA 8 ; (1959) 101 CLR 298
Outcome: cited
Senior counsel for the defendants submitted further that the assertion that Mr Phillpot did not intend that the offer documents sent to Hawthorn Glen convey a parallel offer and that paragraphs 78 and 79 were deliberately misleading was not apparent to the defendants from the pleadings, Hawthorn Glen's opening submissions or otherwise before Hawthorn Glen's closing submissions. Senior counsel argued that it was unfair that Messrs Phillpot and Jasper had been deprived of the opportunity to address these matters in their evidence. He submitted that Mr Phillpot's state of mind when he was drafting the offer documents was not relevant to the objective construction of the offer documents. For the same reason, senior counsel submitted that Mr Spargo was not in a position to give evidence which would assist the Court in the objective construction of the offer documents sent to Hawthorn Glen and that until closing submissions by Hawthorn Glen it was not apparent to the defendants that Hawthorn Glen would ask the Court to draw Jones v Dunkel ((1959) [1959] HCA 8 ; 101 CLR 298) inferences from Aconex's failure to call Mr Spargo. 7 In the course of his final address on 2 November 2007, senior counsel for Hawthorn Glen made the following submissions: (a) Paragraphs 78 and 79 of Mr Phillpot's affidavit avoided disclosure of his intention in inserting references to 30 April 2007 in the offer documents dispatched to Hawthorn Glen and amounted to "very carefully crafted obfuscation"; (b) At the directions hearing on 22 August 2007 senior counsel handed the Court the 14 February 2007 Aconex board paper and asserted that the reference by Mr Phillpot to 44 days in the offer documents was deliberate. (He also made this assertion in his opening address); (c) Mr Phillpot had the opportunity to give further evidence as to the inclusion of the 30 April 2007 date in the offer documents and as to the drafting process and chose not to do so; (d) Aconex chose not to call Mr Stephen Spargo of Allens Arthur Robinson who was in a position to shed light on the drafting of the offer documents and that, in effect, a Jones v Dunkel inference should be drawn from the failure to call Mr Spargo; (e) Paragraphs 78 and 79 of Mr Phillpot's affidavit were deliberately misleading and should not be accepted because he was not intending by the offer documents dispatched to Hawthorn Glen to make a parallel offer under schedule 6 of the facility agreement. When Mr Phillpot prepared the offer documents he intended that Hawthorn Glen as a shareholder have until 30 April 2007 to accept the offer and that Aconex would make a separate sequential offer under schedule 6; (f) Mr Phillpot's true state of mind was reflected in the following contemporaneous documents discovered by Aconex: &#8226; a board paper prepared for the Aconex directors' meeting on 14 February 2007; &#8226; Aconex board minutes of 14 March 2007; &#8226; advice from Neil Young QC to Aconex dated 16 February 2007; &#8226; the information memorandum sent by Aconex to potential new investors; &#8226; emails from Mr Phillpot to Mr Spiro Hrambanis of 17 March 2007, David Murdoch of 19 March 2007 and Bill Phillpot of 19 March 2007; &#8226; emails from Martin Hosking to Su-Ming Wong and Brigitte Smith each dated 21 March 2007; (g) Hawthorn Glen was entitled to accept Mr Phillpot's evidence as it was and was not obliged to challenge paragraphs 78 and 79 in cross-examination or to put to him in cross-examination the contemporaneous documents contended by Hawthorn Glen to be inconsistent with those paragraphs. The rule in Browne v Dunn had no application because Aconex had been put on notice that Hawthorn Glen alleged that the references in the offer documents to the 30 April 2007 were deliberate and was aware that Hawthorn Glen relied on the documents from its opening submission on 9 October 2007 and from the 22 August 2007 hearing. 13 In the case of Mr Phillpot, Mr Meadows said that the submissions not anticipated by the defendants were the following: (a) Paragraphs 78 and 79 of his affidavit sworn on 24 July 2007 did not disclose his intention in inserting references to 30 April 2007 in the Invitation to Participate sent to Hawthorn Glen on 16 March 2007 and in the letter from Aconex to Hawthorn Glen dated 15 March 2007 and sent on 16 March 2007 and amounted to very carefully crafted obfuscation; (b) Certain contemporaneous documents discovered by Aconex showed that Mr Phillpot intended by the offer documents that the closing date for acceptance by Hawthorn Glen as a shareholder be 30 April 2007 contrary to the impression he sought to convey in paragraphs 78 and 79 of his affidavit; (c) Paragraphs 78 and 79 of Mr Phillpot's affidavit were deliberately misleading and should not be accepted; (d) Mr Phillpot chose deliberately to withhold evidence as to his intention in inserting reference to 30 April 2007 in the offer documents and an inference should be drawn under Jones v Dunkel that his evidence as to the drafting of the offer documents and as to their meaning and effect would not assist the defendants and would assist Hawthorn Glen; (e) Mr Phillpot's evidence that he believed that Hawthorn Glen did not have schedule 6 rights after the 23 March 2007 agreement between the defendants and Hawthorn Glen was unreliable; (f) Mr Phillpot's evidence in his second affidavit sworn on 27 September 2007 was virtually identical to the evidence given in Mr Jasper's second affidavit, apparently contended to be relevant to his credit and used to support a submission that he was an unreliable witness. 14 In the case of Mr Jasper, Mr Meadows said that the submissions not anticipated by the defendants were the following: (a) Mr Jasper with Mr Phillpot was responsible for drafting the offer documents, he had given no evidence of his involvement in the drafting process and an inference under Jones v Dunkel should be drawn that his evidence concerning the preparation of the offer documents and as to their meaning and effect would not assist the defendants and would assist Hawthorn Glen; (b) The 14 February 2007 board paper which Mr Jasper prepared evidenced an intention by Aconex that Hawthorn Glen as a shareholder be given by the offer documents an offer open for acceptance until 30 April 2007, contrary to paragraphs 78 and 79 of Mr Phillpot's affidavit; (c) Mr Jasper's evidence in his second affidavit sworn 9 October 2007 was virtually identical to the evidence given in Mr Phillpot's second affidavit, apparently contended to be relevant to his credit and to support a submission that he was an unreliable witness. 15 The closing submissions made by Hawthorn Glen in relation to Mr Spargo which were not anticipated by the defendants, according to Mr Meadows, were that the Court should infer under Jones v Dunkel that Mr Spargo's evidence as to the preparation of the offer documents and the 15 March 2007 letter and as to their meaning and effect, and in relation to an email from Mr Ian Baillieu to Mr Martin Hosking dated 20 April 2007, would not have assisted the defendants and would have assisted Hawthorn Glen. 16 The defendants now submit that it would be unfair and contrary to the interests of justice for them to be exposed to the possibility of the findings relevantly being contended for by Hawthorn Glen in final submissions being made by the Court without being given an opportunity before judgment to adduce evidence to deal with these matters. 17 The defendants submit that if, contrary to their contentions, they were put on notice before final submissions that Hawthorn Glen was challenging paragraphs 78 and 79 of Mr Phillpot's affidavit and would submit Jones v Dunkel inferences should be drawn in relation to Mr Phillpot, Mr Jasper and Mr Spargo, and consequently Hawthorn Glen's case in this regard was fairly put, the defendants' legal advisers did not so understand the position. The defendants then submitted that it would be unfair for them to be precluded from having the opportunity to address evidence in response to the matters raised by Hawthorn Glen in final submissions because of any misunderstanding of Hawthorn Glen's case by their legal advisers. 38 Hawthorn Glen submitted that Mr Phillpot chose deliberately to withhold evidence as to his intention in inserting the reference to 30 April 2007 in the offer documents and an inference should be drawn under Jones v Dunkel that his evidence as to the drafting of the offer documents and as to their meaning and effect would not assist the defendants and would assist Hawthorn Glen. Mr Phillpot was not on notice that Hawthorn Glen would submit that he chose deliberately to withhold this evidence and that such an inference should be drawn. In relation to that submission the rule in Browne v Dunn was not complied with and I propose to disregard that submission and not take it into account. I would add, as I noted earlier, Mr Phillpot's intention in relation to his drafting of the offer documents is not a relevant or admissible matter to take into account in determining the proper construction of the offer documents and is of marginal significance in assessing Mr Phillpot's credit as a witness. 41 I turn to the submissions made by Hawthorn Glen in relation to Mr Jasper which were not anticipated by the defendants. The first submission was that Mr Jasper gave no evidence of his involvement in the process of drafting the offer documents and an inference under Jones v Dunkel should be drawn adverse to the defendants. Mr Jasper was not on notice of this submission and to that extent the rule in Browne v Dunn was not complied with. However, such evidence was not relevant to, or admissible in respect of, the proper construction of the offer documents and was only relevant to the defence of mistake which was abandoned in final submissions. There is no purpose now in Mr Jasper giving such evidence. 44 I turn to the submissions made by Hawthorn Glen in relation to Mr Spargo which were not anticipated by the defendants, namely that the Court should infer, in accordance with Jones v Dunkel , that his evidence as to the preparation of the offer documents and the 15 March 2007 letter, and as to their meaning and effect, and in relation to an email from Mr Ian Baillieu to Mr Hosking dated 20 April 2007, would not have assisted the defendants and would have assisted Hawthorn Glen. Such an inference was open for Hawthorn Glen to submit whilst the defence of mistake was alive but it was not an inference which was relevant to, or admissible in respect of, the proper construction of the offer documents. Further, Mr Spargo's evidence in relation to the email from Mr Ian Baillieu to Mr Hosking on 20 April 2007 is of no relevance or significance in relation to the proper construction of the offer documents or the other causes of action relied upon by Hawthorn Glen. There is no purpose now in Mr Spargo giving such evidence.