Casualife Furniture Intenational Ltd v Knopp

[2001] VSC 395

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

No. 4571 of 2001

CASUALIFE FURNITURE INTERNATIONAL LTD	Appellant
v
PAMELA KNOPP	Respondent

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JUDGE:	Balmford J
WHERE HELD:	Melbourne
DATE OF HEARING:	9 October 2001
DATE OF JUDGMENT:	22 October 2001
CASE MAY BE CITED AS:	Casualife v Knopp
MEDIUM NEUTRAL CITATION:	[2001] VSC 395

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Appeal under section 109 of the Magistrates’ Court Act 1989 against an order refusing the appellant’s claim to property which was seized pursuant to a warrant executed to recover an amount owed by a related company to the respondent – consideration of the evidence provided to a previous Court to decide whether the Magistrate was entitled to find that the evidence was inadequate and doubtful.

PROCEDURE - Where a question in the order of a Master discloses no relevant question of law - where a question of fact is dressed up as a question of law.

Magistrates’ Court Act 1989 – section 109

City of Greater Geelong v FR & MJ Herd and Dowling (1997) 20 AATR 293
Jones v Dunkel (1959) 101 CLR 298
R v The District Court; Ex parte White (1966) 116 CLR 644
Rhesa Shipping SA v Edmunds [1985] 1 WLR 948

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APPEARANCES:	Counsel	Solicitors
For the Appellant	Mr CD Johnson	Joseph Guss
For the Respondent	Mr TC De Uray	Glowreys

HER HONOUR:

1. This is an appeal pursuant to section 109 of the Magistrates’ Court Act 1989, which provides that a party to a civil proceeding in the Magistrates’ Court may appeal to this Court, on a question of law, from a final order of the Magistrates’ Court in that proceeding. The final order the subject of the appeal was made on 25 January 2001 by the Magistrates’ Court at Dandenong, sitting at Melbourne, constituted by Mr Coburn, Magistrate. The claim of the appellant to certain industrial presses was refused and it was ordered that the appellant pay the respondent’s costs fixed in the sum of $1,000.

1. On 19 March 2001 a Master of the Court ordered that two questions of law were raised by the appeal, namely:

(a)Having regard to the whole of the evidence could a Magistrate properly instructed have come to the conclusion a charge over the property of Casualife Furniture Pty Ltd in favour of Casualife Furniture International Ltd was not still effective or current?

(b)If the charge was effective in what circumstances (if any) would that inhibit the property the subject of the [charge] being sold pursuant to a warrant of execution.

1. I raised with counsel certain difficulties with the form of the second question and suggested that they consider whether its terms were appropriate.   However, no submissions were made on that issue.

1. The facts appear from the affidavit of Mr Pilkington, counsel for the appellant in the proceeding before the Magistrates’ Court, and the exhibits thereto.   By an order of the Magistrates’ Court at Dandenong on 15 November 1999 (a copy of which was not before the Court) Casualife Furniture Pty Ltd (“the Australian company”) was ordered to pay an amount of $10,632.80 to the respondent.   On 16 December 1999 the solicitors for the respondent requested the issue of a warrant to seize property to recover $19,013.85, the amount then owing on that order, including interest and costs.  Pursuant to that warrant the Sheriff on 4 May 2000 seized two presses (“the goods”) at the premises of the Australian company.

1. On 25 July 2000 Casualife Furniture International Ltd (“the Hong Kong company”) issued an adverse claim for the goods, claiming that the goods were charged in favour of the Hong Kong company under charge number 331284 registered on 21 February 1992 (“the charge”).  The Sheriff issued an interpleader summons on 23 November 2000, which was heard and determined in the Magistrates’ Court on 25 January 2001.

1. Before this Court, as well as the documents already referred to, were a copy of the charge, a draft balance sheet of the Australian company as at 30 June 1999, an extract of the order of the Magistrates’ Court on the interpleader summons, and a copy of the transcript of the hearing on that summons.

1. The decision of the Magistrate reads as follows, with some obvious or agreed corrections to the transcript indicated in square brackets:

On 15 November 1999 the judgment creditor [Miss Knopp] obtained an order against Casualife Furniture Pty Ltd.   In an effort to obtain the fruits of that judgment, Miss Knopp issued a warrant of execution and had it forwarded to the Sheriff.   The Sheriff has executed the warrant and seized property being a John Hyne upright power press and a[n] airless brake press which the Sheriff found in the possession of the judgment debtor.

[The] judgment debtor doesn’t deny that it owns that property.   What [t]he judgment debtor says is that that property is the subject of a charge in favour of a related company, Casualife Furniture International Ltd.   Casualife Furniture Pty Ltd, the judgment debtor, is a company registered here in Victoria and Casualife Furniture International Ltd is the company registered in Hong Kong.

What the claimant, the Hong Kong company says is;  that the goods seized are the subject of a charge in its favour.   It produces a photostat copy of that charge showing [sic] and also produces a certificate of entry of that charge at the Australian Securities Commission [on] 21 February 1992.   It is upon clause 3.2 that the claimant, the Hong Kong company, relies and without reading out that clause what it does is provide for a fixed charge over some assets and a floating charge over others.   The fixed charge is – and includes fixtures, plant and equipment.

The question I have to determine is, is that charge presently current, is it presently effective, is it being relied upon by the claimant at this point in time, and my answer to that is I don’t know.   It’s up to the claimant to demonstrate, on the balance of probabilities, that the charge is current, is effective, and is being relied upon.   That is, that monies [are] presently owed by the Australian company to the [Hong Kong] company.   In support of that I offer the following reasons, not necessarily in order or in order of importance.

I’ve heard nothing from the Hong Kong company, not even one letter, one written document, nothing.   The Hong Kong company may have provided an affidavit, it may have asked for evidence to be taken on commission, it may, as the current fashion is, [have] had a video conference, you do video conferences all over the world in this building.   The Hong Kong company has had the advantage of legal advice right from the time that the claim form, at least from the time the claim form was signed.   It’s had advice that this application is on foot since some time in December.

The only evidence called by the Hong Kong company is given by the accountant to the Australian company.   Mr Varendran says he knows nothing and could know nothing about the circumstances in which the charge came into being because he commenced with the Australian company in May 1995.   He says that he’s prepared a draft balance sheet which shows an indebtedness in 1999 of $469,000 odd.   He makes some estimate that in June 2000 there was about [$500,000] odd owing.   It doesn’t say what the situation was in July 2000 when the claim was lodged.   He concedes that they’re draft documents and subject to – well 1999 the only document existed is a draft document subject to settling by a chartered accountant.

There is the problem [as to the role of Mr Joseph Guss], who in this case is the solicitor for the claimant, the solicitor for the judgment debtor, a director [of] the judgment debtor, the person who signs the claim form on behalf of the claimant and the person who signed the charge on behalf of the judgment debtor.   Mr [Guss] has given evidence in the Magistrates’ Court and [the] Supreme Court on behalf of the judgment debtor and what that ties in with the fact that we’ve heard nothing from Hong Kong.   All we’ve really heard is from the people who are going to get an equal benefit out of this application as the Hong Kong company.   That [is,] if Hong Kong is said to have a charge, then of course the judgment debtor remains in possession of these items and can continue to use them.

Mr Pilkington, as a result of the question I put to him when he [was] making – or an observation I made to him when he was making submissions said that if I were dissatisfied with the state of the evidence, then he would apply for an adjournment in an endeavour to obtain further material.   As Mr [De Uray] points out, Mr Pilkington had closed his case and we will just deal with what Mr [De Uray] said.   He closed his case, that he made his election and I don’t think it is open to parties in cases like this when they see the tide might be turning against them to apply for an adjournment.   Bearing in mind some of the matters that I referred to earlier and one additional matter.

Mr Pilkington, before I raised my concern, had already said that his client had given consideration to bringing somebody from Hong Kong.   He said it was a difficult matter and apparently had made an election not to do that.   The claimants at all times have been legally represented and there are ways of overcoming that difficulty which aren’t all that difficult.   I have no confidence in the evidence before me that on the balance of probabilities the charge is still effective or current.

The application by the claimant is refused.

1. It will be apparent that the Magistrate did not find that the charge “was not still effective or current” in terms of the first question.   What he found was that the Hong Kong company had not discharged the onus which it bore “to demonstrate, on the balance of probabilities, that the charge is current, is effective, and is being relied on”.   The first question thus does not relate to the actual finding of the Magistrate.

1. Further, even if the finding of the Magistrate had been as cited in the first question, that question amounts to no more than an attempt to have a question of fact, to adapt the words of Batt J in City of Greater Geelong v FR & MJ Herd and Dowling (1997) 20 AATR 293 at 317, “dressed up as a question of law”.   As Menzies J said in R v The District Court;  Ex parte White (1966) 116 CLR 644 at 654:

Even if the reasoning whereby the Court reached its conclusion of fact were demonstrably unsound, this would not amount to an error of law on the face of the record.   To establish some faulty (eg illogical) inference of fact would not disclose an error of law.

1. It would thus be appropriate to dismiss this appeal on the grounds that the first question in the order of the Master discloses no relevant question of law, and the second question depends for its validity (if any) on the answer to the first question.   However, as the first question was argued before me, I propose to deal with it.

1. Mr Johnson, for the Hong Kong company, submitted that there was no evidence to contradict the evidence of Mr Varendran, the financial manager of the Australian company, who was the only witness called before the Magistrate.   That evidence demonstrated that the charge was registered, that the draft balance sheet of the Australian company showed a secured loan of $469,767.68 as a non-current liability as at 30 June 1999, that that loan was secured by the charge, that the amount secured was $499,294.31 as at 30 June 2000, and that to the knowledge of Mr Varendran the charge was still in existence.   The charge spoke for itself.

1. Mr Johnson submitted further that no adverse inference should be drawn from the failure to call a witness from the Hong Kong company.   The availability of modern communication systems did not create an onus to provide cumulative evidence.   Nor was there any reason for Mr Guss to explain his role in the litigation.   In any case the finding by the Magistrate that Mr Guss had signed the claim form on behalf of the Hong Kong company was not supported by the evidence of Mr Varendran.

1. As to the latter point, while Mr Varendran did not positively identify the signature on the claim form with the signature on the charge, I note that there is sufficient similarity between the two signatures for it to have been open to the Magistrate to find that they were made by the same person.   However, that is a minor issue.

1. Mr De Uray, for the respondent, relied on the decision of the House of Lords in Rhesa Shipping SA v Edmunds [1985] 1 WLR 948 as authority, if authority were needed, for the proposition that it is always open to a court to conclude at the end of the day that the matter in issue remains in doubt, even on a balance of probabilities, with the consequence that the party bearing the burden of proof has failed to discharge that burden.

1. Mr De Uray then referred to matters additional to those relied upon by the Magistrate which, in his submission, served to justify the conclusion reached by his Worship. 

·At one point the witness said that he was not aware of any financial records evidencing a loan agreement between the Hong Kong company and the Australian company;  at another point he said that he had financial records evidencing advances from the Hong Kong company to the Australian company since 1992 and that “they would be in the office”.   No such records were produced to the Magistrate.   On this point Mr De Uray referred to the case of Jones v Dunkel (1959) 101 CLR 298 and submitted that the inference was available to be drawn that the production of those records would not have assisted the Hong Kong company.

·Without such records, it is difficult to know how the draft balance sheet could have been prepared.

·The witness, without explanation, first said that he had not spoken to Mr Guss that morning, and immediately afterwards said that he had met him that morning “at the office” and “in the city also”.

·Despite his close association with both companies, Mr Guss was not called to give evidence and indeed was not present in the court.

·The witness said that he had not seen any affidavit material from either company and had never spoken with any of the directors of the Hong Kong company.   He had seen no minute of either company relating to the charge.

·The evidence of the witness was inconsistent as to whether Mr Guss was a director of the Australian company.

1. The Magistrate had the advantage of hearing and observing the witness.   He was entitled to find that the evidence was inadequate.   The grounds upon which he relied in reaching his conclusion were open to him, and on those grounds, as well as those put forward by Mr De Uray, it was open to him to find that he had no confidence in the evidence.

1. For the reasons given, the appeal will be dismissed with costs.

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