Gann v Hosny

[2014] VSCA 344

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S APCI 2014 0138

JASON WILLIAM GANN

Applicant

v

JOSEPH HOSNY

Respondent

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JUDGES:	WEINBERG JA and GINNANE and SLOSS AJJA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	12 December 2014
DATE OF ORDERS:	12 December 2014
DATE OF JUDGMENT:	22 December 2014
MEDIUM NEUTRAL CITATION:	[2014] VSCA 344
JUDGMENT APPEALED FROM:	Hosny v Victoria Racing Club & Anor [2012] VSC 661 (Judge S Davis)

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APPEAL – Application for extension of time within which to file notice of appeal – More than two years elapsed from date judgment delivered – Judgment allegedly procured by fraud – Compelling evidence that plaintiff below gave false testimony at trial – Reasonably arguable that damages award should be varied or set aside – Extension of time granted.

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APPEARANCES:	Counsel	Solicitors
For the Applicant	Mr A M Donald	K & L Gates
For the Respondent	Mr A G Uren QC	Nowicki Carbone

WEINBERG JA
GINNANE AJA
SLOSS AJA:

1. On 12 December 2014, this Court heard an application by Jason William Gann, the defendant to an action brought by Joseph Hosny for damages for assault and battery.  Judgment in that matter was delivered in favour of Hosny on 6 June 2012.  Damages in the sum of $325,000 (including aggravated damages, assessed at $25,000) were awarded against Gann.  There was no appeal against that decision.  It was not until October of this year, more than two years out of time, that Gann decided to appeal.  Plainly, it would require special circumstances before this Court would extend time for a period of that length.  Nonetheless, having heard the argument on the point, the Court ordered that time be extended.  We said we would publish short reasons in due course.  These are those reasons.

1. Hosny’s claim against Gann arose out of an incident that occurred at Flemington Racecourse on Derby Day 2007.  Hosny was employed by Victoria Racing Club Ltd (‘the VRC’) to drive a shuttle bus between various marquees at the racecourse on that day.

1. Gann and a friend both attempted to board the bus.  They were told by Hosny that it was overcrowded, and asked to get off.  That led to a verbal and physical confrontation.  Gann struck Hosny repeatedly to both the head and body.  Hosny sustained injuries, but was also traumatised by what had occurred.  He claimed that Gann’s attack upon him had led to his being unable to continue full-time or gainful employment.

1. In February 2008, Gann was charged with unlawful assault.  In May 2008, he pleaded guilty to that charge at the Melbourne Magistrates’ Court.  Subsequently, he returned to the United States where he apparently resides.

1. In February 2010, Hosny commenced legal proceedings against the VRC in the County Court.  He claimed that the VRC, as his employer, had been negligent in failing to protect him from being assaulted and injured. 

1. In August 2010, the Victorian WorkCover Authority (‘the VWCA’), which had been brought into the matter as the statutory insurer, instituted an indemnity proceeding against Gann. It did so pursuant to s 138 of the Accident Compensation Act 1985.  The VWCA’s proceeding was due to be heard immediately after the trial of Hosny’s action against the VRC.

1. In August 2011, Hosny was granted leave to amend his Writ and Statement of Claim against the VRC by adding Gann as a second defendant to that proceeding.  In his Amended Statement of Claim, he sought general damages in tort against Gann for the injuries he had sustained. 

1. The VWCA’s action against Gann was settled by consent prior to the commencement of the trial of Hosny’s proceeding against the VRC and Gann.

1. The trial of the Hosny proceeding began on 18 April 2012.  On that morning, Gann’s counsel informed the judge that his client would not defend the action brought against him.  He also sought leave, on his own behalf and on behalf of his instructing solicitors, to withdraw from the proceeding. 

1. The trial judge refused that application.  Her Honour took the view that, having regard to the fact that Gann lived in the United States, it was important to have his legal representatives remain on the record, at least for the limited purpose of accepting service.  Gann’s counsel made it clear, however, that Gann did not intend to defend the action against him, and would not in any way participate in the trial.  He indicated that Gann was content to have judgment entered against him.

1. On 23 April 2012, Hosny was granted leave to file and serve a Second Further Amended Statement of Claim against both the VRC and Gann.  One of the amendments allowed Hosny to claim against Gann for aggravated and/or exemplary damages. 

1. Over a period of two days, on 25 and 26 April 2012, Hosny gave evidence in chief.  He was extensively cross-examined by counsel for the VRC.  His credibility was challenged.  It was specifically put to him that, contrary to his evidence, he had continued to work, after the assault, and that he was therefore exaggerating the extent of his injuries.

1. On the afternoon of 26 April 2012, the trial judge ordered, by consent, that Hosny’s claim against the VRC be dismissed, with no order as to costs.  The jury which had been empanelled to try the matter was discharged.  The proceeding against Gann continued as a cause.

1. On 6 June 2012, the trial judge delivered reasons in favour of Hosny.  Her Honour ordered Gann to pay general damages in the sum of $300,000, and aggravated damages in the sum of $25,000, thereby making a total of $325,000.

1. That seemed to be the end of the matter.  However, subsequently new facts emerged.  Hosny was charged by the VWCA with 244 counts of obtaining a financial advantage by deception.  The charges related to the payments that had been made to Hosny under the Accident Compensation Act 1985 because of the psychological injuries which he claimed to have sustained as a result of the unlawful assault by Gann.  It was alleged that Hosny made numerous false declarations claiming that he was incapacitated for work when, in truth, he continued to work throughout.

1. On 1 September 2014, Hosny pleaded guilty to one rolled-up charge of obtaining a financial advantage by deception.  The particulars of that charge were that, between 4 March 2008 and 15 September 2009,  he obtained a financial advantage by deception in the sum of $49,787.20.

1. It seems as though Hosny’s plea to that charge represented a negotiated settlement.  The actual figure said to have been obtained by deception was in excess  of $80,000.

1. It was upon discovering that Hosny had, finally, admitted to having defrauded the VWCA that Gann, belatedly, sought to appeal against the judgment that Hosny had obtained against him in June 2012.

1. Self-evidently, any party more than two years out of time in seeking to file an appeal in this Court must be able to point to material upon which the discretion to enlarge time can properly be exercised.  Importantly, the delay must be explained, and reasons advanced to justify it.[1]

   [1]Jess v Scott (1986) 12 FCR 187; Gallo v Dawson (1990) 93 ALR 479; Secretary to the Department of Justice v XQH [2012] VSCA 72.

1. At the same time, the discretion, to a large part, is said to be unfettered, and should be exercised flexibly with regard to the facts of the particular case.  The discretion exists for the purpose of enabling the Court to avoid an injustice.  Accordingly, the Court must determine whether justice as between the parties is best served by granting or refusing the extension sought.[2]

   [2]Gallo v Dawson (1990) 93 ALR 479, 480.

1. A consideration relevant to the exercise of the discretion is the fact that, upon expiry of the time limited for appeal, the respondent has a vested right to retain the judgment unless time is extended.  In that regard, the length of the delay in commencing the appeal, the reasons for the delay, the chances of the appeal succeeding if an extension of time is granted, and the degree of prejudice to the respondent if time is extended are all matters that  need to be considered.

1. It was submitted on behalf of the applicant that until Hosny pleaded guilty in the Magistrates’ Court to the fraud that he had perpetrated upon the VWCA, there was no basis upon which the trial judge’s finding that he was a credible and truthful witness, insofar as he recounted the extent of his injuries, could be impugned.  Everything changed when Hosny effectively acknowledged that he had lied on oath during the course of the trial, and thereby procured a judgment in his favour that was inflated by reason of his fraud.

1. Although counsel for the VRC had put to Hosny, quite specifically, that his evidence was perjured, he had denied that allegation, and been believed by the judge.  Once he pleaded guilty, his denials were exposed as false, and a substantial part of his claim could be seen to have been fabricated.

1. Put simply, the applicant’s submission boiled down to this.  Fraud unravels everything.

1. The respondent resisted that contention.  It was submitted, on his behalf, that this Court should reject the application for a number of reasons. 

1. First, it was said that the delay in this case of more than two years had been inordinate. 

1. Secondly, it was said that, irrespective of whether Hosny had exaggerated the extent of his incapacity to engage in work, it was perfectly clear that he had suffered considerable psychological injury as a result of Gann’s actions.  It would be wrong, in those circumstances, to require Hosny to go through the ordeal of another trial. 

1. Thirdly, it was submitted that Gann’s explanation for not having initiated an appeal earlier was unsatisfactory.  In particular, he had not provided any information as to when he first learned of the matters in relation to which Hosny had ultimately pleaded guilty. 

1. Fourthly, it was said that Gann’s argument that he had to await ‘conclusive evidence’ of fraud before seeking to impugn the verdict below was without substance.  He could, with reasonable diligence, have obtained such evidence had he simply participated in the trial, rather than departing, having agreed to abide by any decision that might be made against him.  In that regard, all of the fraud now said to have been conclusively established was raised at the trial, and the facts regarding Hosny’s false evidence fully put to him in cross-examination.  Gann, had he chosen to be present, could have obtained the same documentary material as the VRC had elicited upon subpoena, and used that as the basis for an appeal. 

1. Fifthly, and finally, it was submitted that this was a judgment for pain and suffering, and not economic loss.  Accordingly, the fact that a component of economic loss may have been exaggerated could not materially have affected the outcome, at least in a global sense.

1. In summary, it was submitted on behalf of the respondent that the mere fact that, for a relatively short period between 2008 and 2009, Hosny had been able to engage in some work, although he claimed at trial that this was not the case, did not warrant the drastic step being taken of granting this extension of time.

1. We could see the force of some of these submissions.  Nonetheless, having read the transcript of Hosny’s cross-examination closely, it seemed to us that his plea of guilty indicated that he had deliberately falsified his evidence in certain important respects, but nevertheless succeeded in persuading the trial judge that he was a truthful witness in all aspects of his evidence.  Further, the medical evidence adduced on his behalf was also based on a patently false history.  That calls into question the soundness of the damages verdict.  Had her Honour known that Hosny was, in fact, lying about the extent to which he had been rendered unable to work, it may well have been, in our view, that a sum significantly less than $325,000 would have been awarded against Gann by way of damages.

1. We were taken, by senior counsel for Hosny, to the decision of the New South Wales Court of Appeal in Wentworth v Rogers (No 5).[3]  In that case, Kirby P (as his Honour then was) set out in considerable detail the principles that govern the setting aside of judgments procured by fraud.[4] 

   [3](1986) 6 NSWLR 534.

   [4]Ibid 538-41.

1. It is sufficient for present purposes to say that Kirby P’s judgment provides some support for the applicant’s contention that he should be granted an extension of time, based upon his recent discovery that Hosny had pleaded guilty to fraud.  In that regard, his Honour had made the point that ‘mere suspicion of fraud, raised by fresh facts later discovered, will not be sufficient to secure relief’.[5]  On the other hand, Kirby P also set out, in considerable detail, the various considerations that would apply, at the hearing of any appeal, which might militate against the drastic step being taken of setting aside the judgment allegedly affected by fraud.[6]  

   [5]Ibid 538.

   [6]Ibid 538-9. These latter considerations are more directly relevant to the hearing of the appeal, rather than the application for an extension of time.

1. In those circumstances, we determined that time should be extended, and the various matters raised on behalf of the respondent considered in due course by this Court.  It goes without saying that, although we concluded that the applicant’s proposed grounds of appeal were arguable, whether they ultimately succeed is another matter.

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