ECS Services Pty Ltd v DGA Holdings Pty Ltd
[2013] NSWSC 869
•01 July 2013
Supreme Court
New South Wales
Medium Neutral Citation: ECS Services Pty Ltd v DGA Holdings Pty Ltd [2013] NSWSC 869 Hearing dates: 10 April 2013 Decision date: 01 July 2013 Jurisdiction: Common Law Before: Price J Decision: (i) The judgment of Coombs LCM delivered on 29 January 2013 is set aside.
(ii). The matter be remitted to the Chief Magistrate of New South Wales so that he might allocate it to a judicial officer of the Local Court other than Coombs LCM to be heard and determined according to law.
(iii). DGA Holdings Pty Ltd is to pay the costs of ECS Services Pty Ltd of this appeal as agreed or assessed
Catchwords: APPEAL FROM LOCAL COURT-conflicting evidence-second judgment after appeal-whether adequate reasons provided. Legislation Cited: Civil Procedure Act 2005
Local Court Act 2007 s 39, s 40(2)
Suitors Fund Act 1951Cases Cited: Beale v Government Insurance Office of New South Wales (1997) 48 NSWLR 430
Cassegrain v Commonwealth Development Bank of Australia [2003] NSWCA 260
ECS Services Pty Ltd v DGA Holdings Pty Ltd [2012] NSWSC 1058
Northern NSW FM Pty Limited v Australian Broadcasting Tribunal (1990) 26 FCR 39
Wiki v Atlantis Relocations (NSW) Pty Ltd (2004) 60 NSWLR 127; [2004] NSWCA 174:
Young v Cesta-Incani (2007) 49 MVR 31; [2007] NSWCA 229Category: Principal judgment Parties: ECS Services Pty Ltd (Plaintiff)
DGA Holdings Pty Ltd (Defendant)Representation: Counsel:
Mr M Southwick (Plaintiff)
Mr H Woods (Defendant)
Solicitors:
James Legal Pty Ltd (Plaintiff)
Kazi Portolesi Lawyers (Defendant)
File Number(s): 2013/60292 Decision under appeal
- Date of Decision:
- 2013-01-29 00:00:00
- Before:
- Coombs LCM
- File Number(s):
- 2011/149130
Judgment
HIS HONOUR: This is a disappointing case as I have concluded that the magistrate for the second time has failed to comply with his obligation to provide an adequate statement of reasons for his decision to find for DGA Holdings Pty Ltd (DGA) who was the plaintiff in the Local Court. The result is unfortunate as Harrison AsJ in ECS Services Pty Ltd v DGA Holdings Pty Ltd [2012] NSWSC 1058 said at [56]:
"It is my view that the Magistrate failed to give adequate reasons and that this failure amounted to an error of law. In particular there was a failure to consider the oral evidence of the witnesses as to who DGA contracted with. If the Magistrate was unable to reconcile this evidence he should have explained why. His Honour bases his decision upon the exchange of invoices and emails. The two significant invoices are contradictory. The Magistrate did not explain why he came to the conclusion he did in the light of this inconsistent evidence. The result is that the appeal is upheld".
Her Honour was referring to the magistrate's ex tempore judgment of 9 December 2011 which she set aside and remitted to the Local Court at Fairfield to be determined according to law. It is the magistrate's reserved judgment of 29 January 2013 that is the subject of the present appeal by ECS Services Pty Ltd (ECS). ECS was the defendant in the Local Court.
ECS seeks an order that the judgment be set aside. Orders are also sought to set aside the magistrate's interlocutory judgments delivered on 13 November 2012 in ECS's motion for leave to file further evidence and on 29 January 2013 when his Honour refused to disqualify himself for apprehended bias. However, the focal point of the appeal is the adequacy of his Honour's reasons in the reserved judgment of 29 January 2013.
Section 39 of the Local Court Act 2007 provides that a party who is dissatisfied with a judgment or order of the Local Court may appeal to the Supreme Court, but only on a question of law. The onus is on ECS to demonstrate that there is error of law.
Section 40(2) provides that a party to proceedings before the Local Court sitting in its General Division who is dissatisfied with an interlocutory judgment or order of the court may appeal to the Supreme Court, but only by leave. The order made on 13 November 2012 dismissing ECS's motion for further evidence to be filed and his Honour's refusal to disqualify himself are interlocutory in nature and the leave of this court to appeal is required.
The summons identifies seven grounds of appeal that specifically relate to the adequacy of the reasons of the reserved judgment. They are that the magistrate erred in law in failing to:
(i) give proper or adequate reasons for his judgment having regard to the judgment of Harrison AsJ;
(ii) give any reasons for disregarding the evidence of a 14 January 2010 quote issued by DGA to Cornish, the second defendant in the Local Court prior to the commencement of the works;
(iii) give any reasons for disregarding the evidence of the payment of that quote by Cornish to DGA on 15 January 2010;
(iv) give any reasons for apparently relying (it is unstated in his reasons) on invoices issued to ECS after completion of the works as evidence of the alleged contract between ECS and DGA;
(v) give any reasons for disregarding the affidavit of debt sworn by DGA in support of an application for judgment by DGA against Cornish sworn in September 2011;
(vi) give any reasons for disregarding the evidence of inconsistencies in the evidence of DGA as to the alleged issue of the invoice 765 to ECS on 1 June 2010;
(vii) for giving an unjust decision.
The Local Court proceedings
By an amended statement of claim, DGA as the plaintiff claimed against ECS as the first defendant and Cornish Property Services Pty Ltd (Cornish) as the second defendant the sum of $78,649.64 for damages for breach of contract, or alternatively the sum of $78,649.64 on a quantum meruit claim.
The background to the proceedings was that Cornish had contracted with the New South Wales Government to do work which included the refurbishment of toilet blocks at five schools in country New South Wales. Agreed facts in the Local Court proceedings included that Cornish had subcontracted part of the works to ECS, that ECS undertook building works on all five sites from 15 December 2009 until 5 March 2010 and Anthony Luck on behalf of ECS had spoken with George Azzi on behalf of DGA in or about 15 December 2010 concerning the prospect of DGA providing tiling services in relation to various schools. Further agreed facts were that DGA undertook the tiling part of the works at four of the country schools on or after 5 January 2010 to on or about 3 February 2010; that DGA forwarded progress claim reference "Quote 00000769" dated 14 January 2010 to Cornish; and Cornish paid to DGA the progress claim of $6,600 on 15 January 2010.
DGA pleaded that it had entered into an express oral contract with ECS (either on its behalf, or as an agent for Cornish as an undisclosed principal) to provide tiling services at the four schools and that it had not been paid for the work.
In an amended defence, ECS denied that it was indebted to DGA and to the best of its knowledge ECS said that the agreement was entered into between DGA and Cornish for the performance of the tiling work.
The real issue for consideration was whether the contract was between DGA and ECS, or alternatively, whether the contract was between DGA and Cornish: ECS Services Pty Ltd v DGA Holdings Pty Ltd at [20]. Cornish had been placed in liquidation on 26 August 2011.
I do not propose to detail all of the evidence that was before the magistrate during the Local Court hearing that occupied two days in December 2011 and proceeded by way of affidavit and oral evidence. Harrison AsJ reviews the affidavit evidence in ECS Services Pty Ltd v DGA Holdings Pty Ltd at [23]-[54]. The witnesses were Anthony Luck, the project manager for ECS, John Morrison who had been Cornish's General Manager, George Azzi, a director of DGA, and Sung Kim, a tiler.
A matter of difference between Mr Azzi and Mr Morrison was that Mr Morrison deposed that ECS introduced Mr Azzi "as being suitable tilers to undertake the tiling work on the Five Schools": affidavit 8 September 2011 ex A TB 30 p 193 par 8. Another factual difference was that Mr Morrison maintained he had supervised DGA's work until completion. In his oral testimony Mr Azzi said he had never met Mr Morrison and when he visited the work sites there was no-one there, except his tilers: ex A TB 21 p 47 L20-26. He testified that Mr Luck had never provided him with an introduction to Cornish: ex A TB 21 p 70 L19-24. Mr Kim in his oral testimony said that he had never met Mr Morrison and had not seen him at any of the sites when carrying out tiling work: ex A TB 21 p 42 L28-48. In his affidavit, Mr Kim states that he had a conversation in late 2009 with Mr Azzi who said "I've got a big job in Gundagai, Junee, Nangus and Condoblin (sic)": ex A TB 24 p 94 par 7. He had met Mr Azzi about 13 years ago and DGA provided him with about 90 per cent of his work. He said that a man named Steve and Anthony Luck instructed him how they wanted the works to be completed and he only ever conferred with them. He knew that Mr Luck was employed by ECS. He did not know who Cornish was.
In referring to the affidavit evidence of Mr Luck and Mr Azzi, I gratefully adopt Harrison AsJ's summary at [28] - [45]:
Mr Luck's (ECS's) version of events
Anthony Luck is the project manager of ECS. On 29 November 2009, John Morrison of Cornish asked him to inspect the bathrooms at the schools that Cornish had secured the contract to upgrade. On 8 December 2009, Mr Luck visited the sites again to undertake measurements in order to prepare a quote.
Also on about 8 December 2009, Mr Luck says that he had a conversation with Mr Azzi who wanted to know who to charge for the work. Mr Luck informed him that he had not worked out the contract terms with the head contractor Cornish but when they had been agreed he would get back to Mr Azzi.
On 15 December 2009, before Mr Luck had completed the quotes for each school, he had a conversation with Allan Raad from Cornish. Mr Raad asked if they could get the jobs started straight away. Mr Luck agreed to do so. Mr Luck says that no agreement was reached concerning Cornish's payment to DGA.
On 17 December 2009, Mr Luck spoke to Allan Raad in words to the following effect: "... We need you to pay the deposit on the bathroom partitions, as Raj does not agree to funding them with the current debt." Mr Raad said he would speak to Raj.
On 20 December 2009, Mr Raad telephoned Mr Luck and said, "We will pay you $15,000 immediately. Go ahead and order the partitions." Mr Luck ordered the partitions but received no moneys and the manufacturer would not commence the work until a deposit was paid.
On 27 December 2009, they again spoke by telephone. Mr Raad said that they needed to have the tilers onsite over the Christmas/New Year break. Mr Luck told him that the tilers were "ready to go we just need to give them some money." Mr Raad said he would get the money sorted and it was safe.
Mr Luck says that he telephoned George Azzi and said words to the effect:
"Luck: Cornish wants tilers to commence in the first week in the New Year. We still have not sorted the money and it is probably quicker and easier if you deal with Cornish direct.
Cornish will supply the tiles and accommodation has been booked by Cornish at Condobolin and Gundagai. Cornish will take care of all your site induction and OH&S compliance.
George: Okay I will send a team out but they will not start until I get a deposit.
Luck: That is understandable."
On about 4 January 2009, payment still had not been made by Cornish to DGA. Mr Luck understood that Cornish had not paid a deposit to the tilers to commence work but understood that discussions had taken place between Allan Raad and George Azzi concerning payment of the tilers by Cornish as Allan Raad said to him that, "We will pay the tilers and all you need to do is to manage and supply labour."
Mr Luck believes that DGA's first progress claim, described as quote 769 and dated 14 January 2010, was prepared by DGA and addressed to Cornish after Cornish had paid DGA $6,600.
Mr Azzi's (DGA's) version of events
Sometime in December 2009 Mr Luck offered Mr Azzi a job. A few days later Mr Azzi met with Anthony Luck at a factory on Briens Road Westmead. When he arrived at the premises he had a conversation with Anthony Luck in words to the following effect:
"Anthony Luck: The schools are going to be in Gundagai, Junee, Nangus and Condobolin. The job I want you to do is the tiling of the toilet blocks
[Mr Azzi]: How do you want to do this? Should I send the boys and do day charges.
Anthony Luck: Yeh, it has to be by the day. There's loose tiles coming off, so we can't do contract. We have accommodation there that your boys can stay in."
Mr Azzi took this to mean that a lump sum figure would not be paid for the work, but that DGA would be paid on a "do and charge" basis. Mr Azzi said, "Okay, I'll charge our usual rate" to which Mr Luck responded that that was fine. Mr Azzi asked, "When do you want us to start?" to which Mr Luck responded "You can start during the school holidays."
The standard rate charged by DGA at the time was $55 per person per hour plus GST, plus a 15% margin plus materials.
Then Mr Azzi spoke with Sung Sub Kim of Double S Tiling in relation to the job. DGA subcontracted some work to Sung Sub Kim trading as Double S Tiling. He told Sung Sub Kim that Mr Kim would need about five workers plus Mr Kim. On 5 January 2010 Sung Sub Kim and his employees commenced work at Gundagai South Public School.
On or about 6 January 2010 Mr Azzi called Mr Luck on his mobile phone and had a conversation with him in words to the effect of:
"Mr Azzi: Anthony I need to pay my boys, we need payment.
Mr Luck: Send me the invoice"
He then emailed Anthony Luck a tax invoice for $6,600.00.
A short time later he received a telephone call from Mr Luck. He said:
"Can you change the invoice from ECS Services to Cornish Property Services. If you can you won't have to wait, you can get paid straight away."
On about 14 January 2010 Mr Azzi amended the details on the tax invoice, that was stored on his computer, from ECS Services to Cornish Property Services. He sent the amended tax invoice to Anthony Luck at ECS.
On about 14 January 2010 Mr Azzi received a telephone call from Alan Raad of Cornish. Mr Raad said "What are your bank account details so I can transfer you the money?" He informed Alan Raad of his bank account details. This he says is the only conversation he had with Alan Raad during the course of the works being completed. On 15 January 2010 he received $6,600 from Cornish Property via internet transfer into his company bank account.
I would add to her Honour's summary of Mr Luck's affidavit evidence, his statement (at ex A TB 29 p 140 par 23) that "[a]part from those conversations set out above I had no conversations with the plaintiff directors or employees concerning payment of the plaintiffs' services."
During his oral testimony, Mr Azzi said that the first time he heard of the existence of Cornish was "when Anthony called me and said I can't pay you that invoice you have to go through Cornish so you can get paid a bit quicker": ex A TB 21 p 50 L45-46.
Mr Azzi was asked in cross-examination: ex A TB 21 p 69 L20-30:
"Q. Did you ever swear an affidavit that Cornish was indebted to DGA for the amount of these invoices?
A. Sworn against Cornish?
Q. Yes. You've never sworn an affidavit like that?
A. That Cornish owes me money, no.
Q. Cornish owes DGA the money?
A. No."
Mr Azzi was then shown an affidavit that he had sworn in support of a motion to enter a default judgment against Cornish in the amount of $81,450.33. In this affidavit (at ex A TB 27 p 131), Mr Azzi deposed:
"...
2. The source of my knowledge of the matters contained in this affidavit concerning the debt is tax invoice dated 2 April 2010 in the sum of $15,477.00 and tax invoice dated 2 April 2010 in the sum of $63,172.64.
...
4. The amount owing to me at the time of the commencement of the proceedings in respect to the cause of action for which the proceedings were commenced was $78,649.6".
When cross-examined on this affidavit, Mr Azzi gave the following evidence T 21 p 69 L49-50 p 70 L1-13:
"Q. Did you read that affidavit?
A. Yes.
Q. And its in support of a judgment against the second defendant?
A. Against the second defendant?
Q. Yes, against Cornish?
A. Well Cornish they don't owe me any money.
Q. They don't owe you any money?
A. Not Cornish.
Q. So insofar as you've sworn an affidavit that they (sic) you $81,000 that's incorrect, is that what you're saying now?
A. Well yeah Cornish doesn't owe me no money, that's all I know. I know ECS owes me the money."
Mr Azzi was cross-examined on his evidence that "[o]n about 14 January 2010 [he] amended the details on the tax invoice, which was stored on [his] computer, from ECS Services to Cornish Property Services": ex A TB 25 p 100 par 17. There were differences in the invoices that were explored at length in Mr Azzi's cross-examination.
In discussions with counsel, the magistrate referred to the evidence of the affidavit by stating (at ex A TB 21 p 72 L14-17):
"...the situation seems to have been that once Mr Azzi got a lawyer the lawyer could see this alternative line of attack and added in a second defendant is what seems to happen, isn't it."
His Honour seemed to confine the significance of this evidence to "the adoption of the second defendant into his claim": ex A TB 21 p 72 L7-8, but Mr Southwick put to the magistrate that it was on Mr Azzi's instructions that a judgment was obtained and Mr Azzi had denied swearing an affidavit.
There was in evidence a letter dated 15 June 2010 from James Legal Pty Ltd (the solicitors for ECS) to Glass Conveyancing and Legal Services (the solicitors for DGA): ex A TB 28. In short, the contents of the letter included a denial of liability by ECS and the assertion that DGA had contracted with Cornish.
I should mention that there was no evidence that supported the suggestion that the affidavit of debt was sworn by Mr Azzi because his lawyers could see an alternative line of attack. There is nothing in the letter dated 15 June 2010 that supports such an inference being drawn. According to Mr Azzi, the source of his knowledge of the indebtedness of Cornish was the two tax invoices dated 2 April 2010: see [18.2] above. ECS served a notice to produce upon DGA on 30 November 2011 that required production of copies of all invoices issued by DGA to ECS and Cornish in respect of the work. Peter James, the solicitor for ECS, states in his affidavit dated 23 October 2012 that the two invoices were not produced.
Mr Luck agreed in cross-examination that he contacted Mr Azzi in December and was comfortable that Mr Azzi would do a good job for him. He accepted that by 14 January, the tilers arranged by DGA had been on site "from the order of nine days": ex A TB 22 p 80 L1-4. He denied that Mr Azzi spoke to him again throughout January regarding payment, but said that he had spoken to Mr Azzi in relation to Cornish making payments in February. He was cross-examined about paragraph 23 of his affidavit and agreed that he had not referred to the February conversation in the affidavit.
There was further cross-examination about the lack of mention in Mr Luck's affidavit about introducing Mr Azzi to any particular person at Cornish. He responded that he believed it did happen, but agreed it was not in his affidavit. He denied receiving emails in February from Mr Azzi and said that he had not received two invoices from Mr Azzi in May. He denied that he had supervised Mr Kim. Mr Luck said that the deal with Cornish was independent of tiling.
The emails and invoices that were in evidence included the following:
6 January
Bill/Tax Invoice issued by DGA to ECS, and described as for $6600.00. Bill emailed to Anthony Luck at his email.
14 January
Bill/Tax invoice reissued to Cornish Property Services with description "progress Claim for item (Jo 5396, 5397, 5398 and 5399"for $6600.00 and emailed to Mr. Luck.
15 January
DGA receives payment of $6600.
16 February
Email from George Azzi to Anthony Luck with a breakdown of the number of tilers and days worked.
16 February
Email from George Azzi to Anthony Luck with a breakdown of cost of material used and enquiring about travel and away allowance.
2 May
George Azzi attaches invoices 786 for $15477.00 and 785 for $63172.64 to an email to Anthony Luck at 11:48am
2 May
George Azzi attaches invoices 786 and 785 to an email to Anthony Luck at 3:41pm
The first judgment
After counsel had addressed, his Honour delivered the following ex tempore judgment:
"In this matter DGA Holdings, essentially in the form of Mr Azzi, seek a determination that there was a contract between him and ECS Services as opposed to Cornish Properties. Given no formal written document of any contractual significance the course of conduct between the parties ultimately has to be the guide that the court has to follow. It is undoubtedly the case that anything approaching justice in this case has been avoided in this case by the fact that the parties have not compromised.
The court is then left with having to decide who Mr Azzi had a contract with, and the only evidence of that is in the exchange of invoices and emails, however ineffective they may have been for various statutory purposes. Those are the only evidence that the court can consider.
I THEREFORE MUST, AS I SAID BEFORE, WITH SOME MISGIVINGS, FIND FOR THE PLAINTIFF IN RESPECT OF ECS SERVICES. SO THE ORDER WILL BE FOR THE AMOUNT CLAIMED. AGAIN, THE USUAL INTEREST AND TIME WILL APPLY."
As I have recorded at [1] above, Harrison AsJ concluded that the magistrate's reasons were inadequate and amounted to an error of law. The proceedings were returned to the Local Court.
The second judgment
Following the return of the proceedings to the Local Court, a notice of motion was filed by ECS seeking leave to call further evidence and that the matter proceed by way of re-hearing. On 13 November 2012, the magistrate announced that he was against the argument that had been advanced by Mr James on behalf of ECS. His Honour was of the view that Harrison AsJ's judgment "simply" required that further and better reasons should be provided. His Honour adjourned the proceedings to 28 November 2012.
According to the affidavit of John Bui, DGA's solicitor, dated 19 March 2013 (ex 1), the magistrate made orders on 28 November 2012 dismissing ECS's motion. The proceedings were stood over to 6 December 2012 for hearing and determination. On 5 December 2012, Mr Bui was served with a notice of motion by ECS that the magistrate disqualify himself on the ground of an apprehension of bias. The magistrate stood the proceedings over to 29 January 2013.
On 29 January 2013, the magistrate delivered the following judgment:
"As for the substantive matter, I do find for the plaintiff, as I did before. My reasons are as follows. I have before me, not merely the statements of the parties, but there was oral evidence adduced and, as the court above said correctly, the only issue to be determined is whether or not the contract was between the two parties. To reach that conclusion, I needed to examine the evidence of the parties, both oral and written. It is my view on the balance of probabilities, that the evidence of the plaintiff was more convincing. I therefore find that the way in which the contract was established, is as he said, that the contract was between [DGA] and ECS.
The argument adduced by the defence, that because of certain payments, the contract was in fact between [DGA] and Cornish Property Services, is one which I think is adequately explained on the balance of probabilities by the evidence given by [Mr Azzi] in court and in his statements. That is, that the only way in which he became involved with Cornish was at the behest of the defendant as a means of early payment. How that arrangement was made, it was his understanding and the facts seem to suggest that Cornish was merely an agent for payment by the defendant. It is for those reasons that I find that the contract was indeed between [DGA] and ECS.
The only other matter which might be referred to is the legal relationships between ECS and Cornish Property Services but it seems to me that whatever that relationship might have been, it does not affect the finding that I must make on the basis of the evidence that was before me, that I found compelling to the required standards at least. I therefore find for the plaintiff and the judgment will be as before."
The magistrate had commenced his judgment by rejecting the application that he disqualify himself, "principally because of the stage at which the application was made", His Honour said that "[b]ut for the intervention of the Supreme Court, [he] would have been practice (sic) officio and it would be quite improper if such application were made regularly at the time of judgment." Should the transcript be an accurate record of what was said by his Honour, it appears that he meant "functus officio."
The obligation to provide adequate reasons
The relevant principles as to the requirement to provide an adequate statement of reasons are summarised in Wiki v Atlantis Relocations (NSW) Pty Ltd (2004) 60 NSWLR 127 at 135-136; [2004] NSWCA 174:
"A miscarriage of justice can arise where what is and is not disclosed in a judge's reasons is a breach of the principle that justice must not only be done but must be seen to be done: Beale v Government Insurance Office of NSW (1997) 48 NSWLR 430 at 431, per Mason P.
As McHugh JA explained in Soulemezis v Dudley (Holdings) Pty Ltd (1987)10 NSWLR 247 at 279, one of the purposes served by a judicial decision is that: "... [I]t enables the parties to see the extent to which their arguments have been understood and accepted as well as the basis of the judge's decision". Accordingly, as McHugh JA said (at 278-279): "... [A] judicial decision must be a reasoned decision arrived at by finding the relevant facts and then applying the relevant rules or principles. A decision which is made arbitrarily can not be a judicial decision; for the hallmark of a judicial decision is the quality of rationality ...".
In Flannery v Halifax Estate Agencies Ltd [2000] 1 WLR 377; [2000] 1 All ER 373, which was followed in Moylan v Nutrasweet Co [2000] NSWCA 337, Henry LJ said (at 381-382; 377-378) in regard to the general duty of a judge to give reasons for his or her decision (particularly in relation to expert evidence):
"(1) The duty is a function of due process, and therefore of justice. Its rationale has two principal aspects. The first is that fairness surely requires that the parties especially the losing party should be left in no doubt why they have won or lost. This is especially so since without reasons the losing party will not know ... whether the court has misdirected itself, and thus whether he may have an available appeal on the substance of the case. The second is that a requirement to give reasons concentrates the mind; if it is fulfilled, the resulting decision is much more likely to be soundly based on the evidence than if it is not."
It is, of course, well settled that a judge does not need to refer to all the evidence in the proceedings or to indicate which of the evidence is accepted or rejected. The extent of the duty to give reasons depends upon the circumstances of the individual case: Mifsud v Campbell (1991) 21 NSWLR 725 at 728 (per Samuels JA, with whom Clarke JA and Hope A-JA agreed). But it is not for nothing that in some bilingual countries the judgment of the court is given in the language of the unsuccessful party. The proper administration of justice requires reasons to be given in a form, firstly, that will enable the losing party to understand properly the grounds upon which the case was lost, and, secondly, that will not, effectively, frustrate the losing party's right of appeal: Public Service Board of NSW v Osmond (1986) 159 CLR 656 at 666-667."
In Young v Cesta-Incani (2007) 49 MVR 31; [2007] NSWCA 229, Tobias JA (with whom Ipp JA and Hoeben J agreed) said at [56] - [57]:
Essentially, a judge at first instance must engage with the case presented by each of the parties: Whalen v Kogarah Municipal Council [2007] NSWCA 5 at [40]; The Nominal Defendant v Kostic [2007] NSWCA 14 at [56]. As Meagher JA said in Beale v Government Insurance Office of New South Wales (1997) 48 NSWLR 430 at 443:
"There is no need to refer to the relevant evidence in detail, especially in circumstances where it is clear that the evidence has been considered. However, where certain evidence is important or critical to the proper determination of the matter and it is not referred to by the trial judge, an appellate court may infer that the trial judge overlooked the evidence or failed to give consideration to it ... Where conflicting evidence of a significant nature is given, the existence of both sets of evidence should be referred to."
Further, as Ipp JA pointed out in Kostic at [59],
"...Where one set of evidence is accepted over a conflicting set of significant evidence, the trial judge should set out his or her findings as to how he or she comes to accept one over the other."
In Beale, Meagher JA considered at p 443, that there are three fundamental elements of a statement of reasons. His Honour opined that a judge should;
1. refer to relevant evidence, but there is no need to refer to it in detail;
2. set out any material findings of fact and any conclusions or ultimate findings of fact reached; and
3. provide reasons for making the relevant findings of fact (and conclusions) and reasons in applying the law to the facts found.
Argument on appeal
Mr Southwick, counsel for ECS, contended that the magistrate's second judgment appeared to be at odds with his ex tempore judgment where he based his decision solely upon "the exchange of invoices". He submitted that his Honour failed to identify, discuss and analyse the invoices and emails in any way. The magistrate, it was said, failed to consider the oral evidence of the witnesses as to who DGA contracted with and to explain why he was (if it was the case) unable to reconcile the evidence. Mr Southwick pointed out that the magistrate had made no findings at all as to the terms of the alleged express oral contract nor were any findings made in relation to the quote to Cornish. Another complaint was that the magistrate did not discuss or make any findings on the "amended invoice" that had been the subject of extensive cross-examination.
Mr Southwick submitted that the difficulty with his Honour's judgment was that none of the evidence was discussed, there were no findings of fact and the magistrate had simply proceeded to say that the evidence of the plaintiff was more convincing. Mr Southwick complained that ECS did not know what evidence the magistrate was talking about.
Mr Woods, counsel for DGA, cited Wiki v Atlantis Relocations at [59] that a judge does not need to refer to all the evidence in the proceedings or to indicate which of the evidence is accepted or rejected. He pointed out that the magistrate found that he accepted DGA's explanation that the issuing of the invoice to and receipt of payment from Cornish in January 2011 was at the behest of ECS as a means of early payment. Mr Woods contended that although not specifically referred to in the reasons, it was clear from the transcript at ex A TB 21 p 72 how the magistrate viewed this evidence (see [21] above). He argued that having regard to communications from ECS's solicitor, the magistrate concluded that Mr Azzi's lawyer had taken a line of attack, which included an alternative claim against Cornish as the second defendant.
It was submitted by Mr Woods that the affidavit of debt sworn by Mr Azzi was not capable of establishing that DGA did not contract with ECS. Not only were there the invoices issued to ECS, but the joining of Cornish followed the letter from the solicitors dated 15 June 2010 (ex A TB 28). Mr Woods referred to the inconsistency between Mr Luck's affidavit at paragraph 23 and his evidence that he had spoken to Mr Azzi in February regarding payment.
Mr Woods submitted that although brief, the reasons of his Honour when read with parts of the transcript make clear the magistrates' reasoning process in favour of DGA on the real issue to be determined, that is whether the contract was between DGA and ECS, and why his Honour did not accept ECS's contentions arising from the payment by Cornish to DGA or the motion for default judgment.
Decision
The content required in a statement of reasons depends on the circumstances of the case. The proceedings had taken two days in the Local Court during which the parties were represented by counsel and the unpaid accounts involved amounts that were not insignificant. The evidence advanced by the parties on important issues was diametrically opposed. Moreover, Harrison AsJ in her judgment had reminded the magistrate of the obligation to provide adequate reasons. His Honour had reserved his decision.
The circumstances of the case obliged the magistrate to refer at least briefly to the significant conflicts between the evidence of Mr Azzi and Mr Kim for DGA on the one hand and the evidence of Mr Luck and Mr Morrison for ECS on the other and to the conflicting invoices. His Honour was required to set out any important findings of fact which included the terms of the contract between DGA and ECS (or Cornish). His Honour was not obliged to make explicit findings on each piece of evidence that was in dispute, but was required to set out his findings as to how he came to accept one set of significant evidence over the other.
In his second judgment, the magistrate did state that he found the evidence of "the plaintiff was more convincing". Presumably, he was referring to the evidence of Mr Azzi. He accepted Mr Azzi's evidence that the only way he became involved with Cornish was at the behest of ECS as a means to early payment. However, the magistrate made no attempt to explain how he came to accept Mr Azzi's evidence over the evidence of Mr Luck. He did not set out in his reasons how he reached the critical finding that the only way Mr Azzi became involved with Cornish was at the behest of ECS. Although his Honour referred to "the finding that [he] must make on the basis of the evidence that was before [him] that [he] found compelling", he neither identified that evidence nor provided reasons for reaching that conclusion. His Honour did not refer to the conflicting evidence, even in a cursory way. The obligation to provide adequate reasons is not fulfilled by making general statements as to the need "to examine the evidence of the parties, both oral and written."
His Honour's remarks at [21] above, were made on the first day of the hearing and before Mr Luck had given evidence. They were not incorporated in either judgment and do not provide a consideration of the affidavit of debt that was sworn by Mr Azzi or his evidence at [17] above that he had not sworn an affidavit that Cornish owed DGA money.
It is unfortunate that the magistrate appears to have had minimal regard to Harrison AsJ's judgment, even though by reserving for over two months, he had ample opportunity to provide adequate reasons for his decision. His Honour's reasons do not provide ECS with a satisfactory explanation for its lack of success.
Although an error of law may arise from inadequate reasons, the court has a discretion as to whether or not to direct a new trial. If the only conclusion open on the evidence is that reached by the magistrate, then, notwithstanding the inadequate reasons, the matter need not go to a new trial. Mr Woods submitted that a result in favour of DGA was the only conclusion available and there is no need for the proceedings to be returned to the Local Court for a re-trial.
The conclusion reached by the magistrate is not the only conclusion available on the evidence. As I have decided that this matter is to be re-heard, it is inappropriate for me to identify the strengths or weaknesses particularly of the evidence of Mr Azzi or Mr Luck, but I am unable to determine that DGA's case must succeed. The magistrate's reasons are so inadequate that they constitute an error of law.
ECS seeks an order that the proceedings not be returned to the magistrate but Mr Woods submitted that unless there was a finding of bias, the magistrate should be required to complete the case.
In Northern NSW FM Pty Limited v Australian Broadcasting Tribunal (1990) 26 FCR 39 at p 42-43 Davies and Foster JJ said:
"If a decision has been set aside for error and remitted for rehearing, it will generally seem fairer to the parties that the matter be heard and decided again by a differently constituted tribunal. This is because the member constituting the Tribunal in the original inquiry or hearing will already have expressed a view upon facts which will have to be determined in the rehearing. The aggrieved party may think that a rehearing before the Tribunal as originally constituted could be worthless, for the member's views have been stated. Thus, if a decision of the Administrative Appeals Tribunal has been set aside and the matter remitted for rehearing, the President of that Tribunal ordinarily allocates to the rehearing a different member of the Tribunal. There are, of course, cases where it is convenient for the Tribunal as previously constituted to deal with the matter. And occasionally the Court itself expresses such a view, so as to make clear that it would not be improper for the Tribunal as previously constituted to consider the matter again."
In my view, the overriding purpose of the Civil Procedure Act 2005 "to facilitate the just, quick and cheap resolution of the real issues in the proceedings" is not served by returning the proceedings for a second time to the magistrate who unfortunately has displayed little interest in providing adequate reasons.
I propose to place the proceedings before the Chief Magistrate of New South Wales so that another judicial officer may be allocated to rehear it.
In view of my findings, it is unnecessary to deal with ECS's complaints about the interlocutory judgments in any detail. The principal complaint about his Honour's dismissal of the motion seeking leave to call further evidence appears to be that Mr James was not allowed by his Honour to put oral submissions in support of the motion. This contention is not supported by the transcript of 13 November 2012 (ex A TB 39) that records Mr James saying:
"I wish to have some argument on that, your Honour"
His Honour replied:
"Yes, what would you like to say?"
The magistrate then heard Mr James' submission which he ultimately rejected.
The difficulty with Mr Southwick's submission that the magistrate should have disqualified himself is that Mr Southwick at no stage during the Local Court hearing objected to the magistrate's conduct of the case on the basis of an apprehension of bias. The application was made after the appeal had been heard by Harrison AsJ and the motion seeking leave to call further evidence was dealt with by the magistrate. To my mind, his Honour was entitled to reject the application because of the stage at which it was made. In Cassegrain v Commonwealth Development Bank of Australia [2003] NSWCA 260, Sheller JA said at [52]:
"In Vakauta v Kelly (1989) 167 CLR 568 the High Court pointed out at 572 and 587 that a party who has legal representation is not entitled to stand by until the contents of the final judgment are known and then, if those contents prove unpalatable, attack the judgment on the ground that, by reason of earlier comments, there has been a failure to observe the requirement of the appearance of impartial judgment.
"By standing by, such a party has waived the right subsequently to object. The reason why that is so is obvious. In such a case, if clear objection had been taken of the comments at the time when they were made or the judge had then been asked to refrain from further hearing the matter, the judge may have been able to correct the wrong impression of bias which had been given or alternatively may have refrained from further hearing."
In any event, I do not think that the material referred to in Mr James' affidavit dated 5 December 2012 and Mr Southwick's submissions in this court justifies the complaint of apprehended bias.
I do not grant leave to ECS to appeal against the interlocutory judgments. Neither complaint has a reasonable prospect of success.
Orders
I make the following orders:
(i) The judgment of Coombs LCM delivered on 29 January 2013 is set aside.
(ii) The matter be remitted to the Chief Magistrate of New South Wales so that he might allocate it to a judicial officer of the Local Court other than Coombs LCM to be heard and determined according to law.
(iii) DGA Holdings Pty Ltd is to pay the costs of ECS Services Pty Ltd of this appeal as agreed or assessed.
I grant to DGA Holdings Pty Ltd an indemnity certificate in respect of the appeal under the Suitors Fund Act 1951.
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Decision last updated: 01 July 2013
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