Adamson v Ede

Case [2009] NSWCA 379

NEW SOUTH WALES COURT OF APPEAL

CITATION:
Adamson v Ede [2009] NSWCA 379

FILE NUMBER(S):
40052/08; 40053/08

HEARING DATE(S):
11 May 2009

JUDGMENT DATE:
26 November 2009

PARTIES:
Christopher Michael Adamson (Appellant in 40052/08 & Applicant in  40053/08)
ACN 097 590 817 Pty Ltd as Trustee of the ACN Trust (Second Appellant in 40052/08)
Kenneth John Ede (Respondent in 40052/08 & 40053/08)

JUDGMENT OF:
Giles JA Hodgson JA Campbell JA   

LOWER COURT JURISDICTION:
Supreme Court - Equity Division

LOWER COURT FILE NUMBER(S):
6285/03; 3712/06

LOWER COURT JUDICIAL OFFICER:
Windeyer J

LOWER COURT DATE OF DECISION:
14 December 2007

LOWER COURT MEDIUM NEUTRAL CITATION:
ACN 097 590 817 Pty Ltd as Trustee of the ACN Trust v Ede; Adamson v Ede [2007] NSWSC 1384

COUNSEL:
In person (Appellant/Applicant)
J Horowitz, Solicitor (Respondent)

SOLICITORS:
In person (Appellant/Applicant)
Horowitz and Bilinsky (Respondent)

CATCHWORDS:
COURTS AND JUDGES – natural justice – procedural fairness – nature of natural justice in a judicial context – importance of judicial context when determining content of natural justice – nature of an opportunity to respond – whether natural justice requires a judge to warn a witness that adverse credit findings are proposed to be made against them – entitlement of trial judge to make findings about credibility – COURTS AND JUDGES – judicial duty – reasons for judgment – whether a trial judge ought to avoid making findings about credibility if the case can be resolved without making such findings – obligation of the judge to state the real reasons for judgment – EVIDENCE – admissibility and relevancy – decisions as to admissibility – obligation on party tendering evidence to demonstrate admissibility and relevancy – whether evidence which a party failed to demonstrate was admissible or relevant can be adduced on appeal – parties bound on appeal by manner in which the case below was conducted – CONTRACTS – onus of proof – whether plaintiff has the onus of proving the validity of a document sued upon when the validity is disputed by the defendant – COURTS AND JUDGES – judges – bias – apprehended bias – matters giving rise to a reasonable apprehension of bias in a fair-minded lay observer – COSTS – costs of interlocutory applications

LEGISLATION CITED:
Bankruptcy Act 1966 (Cth)
Contracts Review Act 1980
Family Law Act 1975 (Cth)
Real Property Act 1900
Supreme Court Act 1970
Uniform Civil Procedure Rules 2005

CATEGORY:
Principal judgment

CASES CITED:
Abalos v Australian Postal Commission (1990) 171 CLR 167
ACN 097 590 817 Pty Ltd as Trustee of the ACN Trust v Ede [2007] NSWSC 1384
ACN 097 590 817 Pty Ltd v Ede (NSWSC, Windeyer J, 18 October 2007, unreported)
Ali v Nationwide News Pty Ltd [2008] NSWCA 183
Allied Pastoral Holdings Pty Ltd v Commissioner of Taxation [1983] 1 NSWLR 1
Amadio Pty Ltd v Henderson (1998) 81 FCR 149
Angaston and District Hospital v Thamm (1987) 47 SASR 177
Archer v Richard Crookes Constructions Pty Ltd (1997) 15 NSWCCR 297
Banque Commerciale SA, en liquidation…

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Adamson v Ede [2009] NSWCA 379
Case
[2009] NSWCA 379
Decision Date

CaseChat Overview and Summary

The case involved an appeal by Mr Adamson against decisions made by Windeyer J in proceedings concerning a dispute between Mr Adamson and Mr Ede. The core of the dispute revolved around the validity and enforceability of certain documents, including a deed and a transfer of property, which Mr Adamson sought to rely upon. Mr Ede contended that these documents were either not properly executed, lacked consideration, or were misrepresented to him at the time of signing.

The legal issues before the appellate court included whether the trial judge had erred in making adverse findings about Mr Adamson's credibility without first warning him that such findings were contemplated. The court also considered whether the trial judge was obligated to avoid making credibility findings if the case could be resolved on other grounds, and whether the judge had adequately stated the real reasons for judgment. Furthermore, the appeal raised questions about the onus of proof regarding the validity of documents when disputed, and the admissibility of evidence on appeal that was not properly demonstrated as admissible or relevant at trial.

The Court of Appeal dismissed Mr Adamson's contentions. It held that a trial judge is not required to warn a witness, even a self-represented litigant, that adverse credibility findings might be made based on their demeanour or conduct during proceedings. The court found that Mr Adamson, acting as his own solicitor and effectively the alter ego of the trustee, was not denied procedural fairness by the judge's failure to issue such a warning. The court also affirmed that parties are generally bound by the way they conducted their case at trial, and that the trial judge was entitled to make findings of fact and credibility based on the evidence presented and the conduct of the parties. The court found that the trial judge had provided sufficient reasons for his decision, particularly concerning the invalidity of the transfer document.

In proceedings 40052/08, the appeal was dismissed with costs. In proceedings 40053/08, the application for leave to appeal was also dismissed with costs.

Orders

Orders of the court

In proceedings 40052/08 - Appeal dismissed with costs.

In proceedings 40053/08 - Application for leave to appeal dismissed with costs.

Background

Background to the litigation

I have concluded that none of Mr Adamson’s contentions should succeed. Factual Background In 1994, Mr and Mrs Ede had long been separated, but not divorced. Mrs Ede was living in the house on Lot 106. Mr and Mrs Ede were being sued by Esanda for a debt alleged to have arisen from a failed business venture. Mr Adamson came to act for them in that litigation. The litigation was eventually settled on terms requiring money to be paid to Esanda. To raise the money to pay Esanda, Mr and Mrs Ede mortgaged Lot 106 to Searson & Shannon, solicitors. Mr Ede and Mr Adamson executed a document dated 10 May 1995. At the time they were living together in a rented flat. The document included terms whereby Mr Adamson was retained to act as Mr Ede’s solicitor. The terms of the retainer were unusual. Mr Ede agreed to bear all out-of-pocket expenses of Mr Adamson acting on his behalf, including the cost of practicing certificates and library, accommodation, travelling, and office and clerical expenses, and also to pay a retainer of $50 net after tax per week. Mr Adamson was excused from liability of any kind, including for negligence. On 10 September 1995, a further deed was entered between Mr and Mrs Ede and Mr Adamson. The judge said (at [9]) that it:“… looks like an employment contract, but … was probably a retainer agreement under which Adamson was to perform legal work for Mr and Mrs Ede for up to five hours per week for a retainer of $50 net of tax per week and thereafter at $10 per hour after tax for time spent over the five hours. This was the charge which was to apply other than in contentious matters, where the appropriate scale was to be charged instead. The deed included an extraordinary clause excluding any liability in Adamson for any act, omission, wrong advice, recklessness or negligence. There is no application in these proceedings to set it aside. It could, in any event, have been terminated by either side on notice.” Mr Ede and Mr Adamson executed another document dated 4 October 1995. It contained a provision whereby, in return for Mr Adamson continuing to act for Mr Ede as his solicitor and in return for continuing to assist him in his business and financial affairs for the next 12 months, Mr Ede agreed to assign to Mr Adamson half of Mr Ede’s interest in Lot 106. There was a complex definition of what amounted to Mr Ede’s interest in the property, which in broad terms was the proceeds of sale of the property (whether it was sold as a whole or subdivided) minus the total of (a) the costs of sale or subdivision, (b) any mortgage debt, and (c) an amount of “up to the amount of $90,000” that was intended to be paid for the provision of a house for Mrs Ede. In the event that the amount so payable to Mr Adamson did not exceed $10,000, Mr Ede undertook a personal liability to make the amount up to $10,000. The deed provided that Mr Adamson had a caveatable interest in Lot 106. There was also a provision that if any provision of the deed was alleged by Mr Ede, or was held to be, void or unenforceable, Mr Adamson could elect to receive a payment of $100,000 as his fees for acting for Mr Ede. The deed provided for Mr Adamson to have a further caveatable interest in Lot 106, to secure payment of that $100,000. The deed stated that, “Pursuant to s 175 of the Legal Practitioner’s Act NSW [sic]”, the deed, “sets out the amount of costs and the billing arrangements for the legal services to be provided by Christopher Adamson to Kenneth J Ede for the next twelve months”.

Evidence

Evidence Before The Court

Mr Ede’s Second Further Amended Cross-Claim, dated 12 May 2006, set out the basis on which he denied the agreement upon which the Trustee sued. The judge summarised that basis (at [23]) as being:“… that the 2001 documents were represented by Adamson as required for the Family Law proceedings; that the transfer was blank; that all the documents were signed in the presence of Mr Faddoul in his tobacconist shop at Kings Cross and that Adamson was present; that the documents were not required for the stated purposes, or not all of them were; and that the transfer was filled in at a later date and there was no consideration for it …”Affidavit Evidence By an affidavit made on 8 May 2007, Mr Adamson gave his account of the circumstances leading to execution of the transfer:“7.In about July 2001, the defendant said to me: ‘Will you lend me monies on an ongoing basis to assist me in my business and to enable me to do a matrimonial property settlement with my wife.’ I said to the defendant: ‘Alright, I will arrange for my family trust to make loans to you on an ongoing basis pursuant to a deed of loan including up to $80000.00 to enable you to do a settlement with your wife. Such loans to be repayable with interest at 10%p.a. in the next couple of years and to be secured over the Trapyard Road property. Provided further that if and when the land is duly refinanced and registered in your name, my family trust will forgo the benefit of the deed dated 4 October 1995 and forgive the repayment of the $80000.00 loan in return for a 2/3 share of the property prior to subdivision and as sole proprietor of proposed lot 1063 being the proposed lot containing the building and residence and as tenant in common with you in proposed lots 1061 and 1062 in equal shares and I will require you to do all things and to execute all documents to give effect to such agreement including a transfer(s) and consent caveat.’ The defendant replied ‘I agree.’…15.I refer to the terms of the transfer dated 31 July 2001 a copy of which is discovered and will be tendered at the hearing.16.The part of the consideration expressed in the transfer as ‘the deed’ was intended by the parties to express the said oral agreement that part of the consideration would be that the plaintiff would forgo the benefit of the deed dated 4 October 1994.” Mr Ede swore an affidavit on 7 April 2005 that set out his account of his relationship with Mr Adamson. After giving an account of a conversation between Mr Ede and Mr Adamson on 14 July 2001, in which Mr Adamson told Mr Ede that he had arranged a settlement of Mr Ede’s property affairs with Mrs Ede on the basis that she would receive $80,000, the affidavit continued:“29.Adamson produced some documents that he had prepared purporting to effect the Family Court settlement and refinance of the property. I recall signing documents at King’s Cross in the presence of a Justice of the Peace at Kingsway. To the best of my recollection, the documents included a blank transfer, residential tenancy agreement for Parmilla to stay if she wanted to and mortgage to Adamson for $80,000. I did not check the details. I recall these documents were sworn in front of the JP dated 31 July 2001. I recognize the transfer dated 31 July 01 as one of the documents signed that day – Exhibited and marked KE11 is that document.30.On the following day, I went to Forster with Adamson and remained in a park while he spoke to Parmilla’s solicitor Mr Mark Morris. At Adamson’s request I signed further documents[,] they included a Deed of Settlement. … I did not go to court but Adamson and Mark Morris went into court while Parmilla and I remained outside the court. I returned to Sydney with Adamson and thereafter to the Gold Coast.31.At the time I signed the blank transfer KE11 in front of the Justice of the Peace at Kings Cross the document dated 31st July is in my writing. The writing in paragraphs A, C, D and F was Adamson’s signature. The purpose of signing the transfer was to effect the transfer of the land from Parmilla to myself. To the best of my information and belief, the writing that appears in paragraphs A, C and F was added later. As to paragraph A, the lot numbers being the various lots referred to could not have been allocated by mid 2003.”

Decision

Reasons for decision

Mr Adamson made no evidentiary response to these allegations until he swore an affidavit on 27 November 2007. That day was the second day of the hearing before Windeyer J. His evidence in reply on the topic of execution of the documents on 31 July 2001 was in its totality:“25.I deny the defendant[’]s allegations in respect of the execution of any of [sic] documents at issue herein.26.Although I was extremely busy at the time, I can say that I was not present when the defendant executed the documents before the J.P.27.My recollection is that when I executed the documents on or about the date that they bear the documents were completed and I do not recall that there were any blanks in them.”The Judge’s Decision The judge’s reasoning concerning the transfer was:“40… It is right to say that Adamson was not a convincing witness and Ede was not totally convincing either. Adamson’s conduct at the commencement of the trial in endeavouring to say that he had not been served with documents because they did not come from the solicitor on the record was ridiculous and I would think improper. His conduct in lodging a caveat based on a document which gave no interest in land and signing a consent on the authority of a document which did not exist could not, I think, have been in error. His answers as to the state of documents when executed were not direct and I think they were evasive. On the other hand, Ede had given false evidence on oath in other proceedings and his evidence on the state of the documents when he signed them was contradictory, as in cross-examination he said that he saw Adamson’s writing in places on the transfer whereas previously his evidence was that those places were blank. 41On the validity or effectiveness of the transfer Adamson has the onus. Even he says that the transfer is not correct insofar as it expresses consideration. It has all the hallmarks of later addition, even if added before he signed. The fact is that it is expressed to be consideration of forgiveness of a loan of $80,000 made under a document signed on the same day makes the latter document purposeless. I find that the document was not in its present form when it was signed by Ede. In addition I accept the evidence of Ede that he was told the documents were required for the family law settlement and thus he would have expected to sign a transfer from his wife to him of her interest in the property. On balance I find that the description of the transferee was not inserted when the document was signed by Ede. The description of the subsequent lot numbers was not then known. In fact Adamson signed Ede’s signature on the subdivision application, although on one basis he might have had authority to do so. The document is a nullity. I find Adamson knew of this. 42Adamson knew the state of the documents and signature was in issue. He could have called the witness. There was no explanation for not doing so. It is proper to infer the witness’s evidence would not have assisted Adamson. 43The transfer could not be registered even in its present form as now completed. No agreement under the document could be subject to specific performance. That part of the claim should be dismissed. The transfer should remain on the file. 44I have not overlooked the fact that caveat [AA88405A] purports to have the signature of Ede consenting to its lodgement. In his affidavit of 7 April 2005, Ede denied signing it. He was not cross-examined on this and, I accept his evidence. A cursory examination of the signature and initialling would give some reason for doubt as to its veracity.”The Procedural Fairness Challenge

Ratio Decidendi

Legal Principle Established

Specifically, proper conduct of court proceedings does not require a trial judge to put to a witness that the judge might make unfavourable findings on the basis of the witness’ demeanour. As Heerey J said in MZWIQ v Minister for Immigration and Multicultural and Indigenous Affairs [2005] FCA 1636 at [13]:“There is no obligation on a Court or by a Tribunal to make observations in the course of a hearing about possible aspects of demeanour. This would be quite impractical. If, for example, the party disputed that he had manifested the demeanour observed by the Court or Tribunal, would there have to be a trial within a trial to determine whether that demeanour had in fact been displayed?” There are some cases that have recognised that, in a case in which a litigant is represented, natural justice might sometimes (though not invariably) require a judge to bring to the representative’s attention any behaviour of the litigant or a witness that was occurring out of the sight and hearing of the representative but that the judge was contemplating taking into account in a way detrimental to the litigant or witness: Angaston and District Hospital v Thamm (1987) 47 SASR 177 at 178-80 per King CJ; Government Insurance Office of NSW v Bailey (1992) 27 NSWLR 304 at 323-4; R v Martin (No 4) [2000] SASC 436; (2000) 78 SASR 140 at 142–7 [14]-[34], 149-50 [52]-[54]; Kassem v Crossley [2000] NSWCA 276; (2000) 32 MVR 179 at [15]-[17]; Chaina v Alvaro Homes Pty Ltd [2008] NSWCA 353 at [2]-[4], [33]. However, that line of authority has no application in the present case, where Mr Adamson was representing himself and was, for all practical purposes, the alter ego of the Trustee. I do not accept that the judge was under any obligation to warn Mr Adamson that he might make findings detrimental to him on the basis of his perceived evasiveness. Whether Mr Adamson was Served One specific matter that the judge mentioned early in para [40] of his judgment, in a way that was detrimental to Mr Adamson, was “Adamson’s conduct at the commencement of the trial in endeavouring to say that he had not been served with documents because they did not come from the solicitor on the record”. The circumstances leading to that remark require explanation. Before the hearing, Mr Ede changed solicitors, and appointed Mr Bilinsky as his solicitor. Both Mr Adamson and Mr Bilinsky appeared at the hearing of an interlocutory injunction, at which pre-trial directions were also given, on 18 October 2007. One of the directions the judge gave was that any evidence of the defendant not served by 24 October not be read in the proceedings without special order. The first day of the hearing was on 26 November 2007. Early that day, Mr Sirtes applied to amend the defence and to file an affidavit of Mr Ede dated 24 October 2007. Mr Adamson opposed that application. A draft of that defence and a copy of that affidavit had been given to Mr Adamson by someone from Mr Bilinsky’s office, on 25 October 2007. Mr Adamson strenuously submitted to the judge that he had not been served with those documents, because he had not been served with any document saying that Mr Bilinsky had become the solicitor on the record for Mr Ede. Mr Adamson’s contention to the judge was that, when he received those documents on the 25th, he handed them to an assistant, saying: “Hold the document until I receive notice of a change of solicitor”. An affidavit of service from Mr Bilinsky’s assistant was read deposing that on the 25th “I met with Mr Adamson and I gave him the documents”. The following exchange eventuated:“ADAMSON: That is a different matter from me reading the documents. They came to me a day after they were supposed to and from a firm which I didn’t recognise as the solicitor on the record. Why should I have looked at the document until today? I didn’t even know they were the solicitor on the record until today.HIS HONOUR: There is no merit in anything you have said so far. I propose to allow the document to be filed. Firstly, notice of those was given and, on the evidence, served on 25 October, which is more than a month before the hearing commenced.Secondly, the matters alleged are basically legal matters, not factual matters.ADAMSON: I am not admitting service.HIS HONOUR: You don’t have to admit service.”