John Patrick Davey v Valerie Herbst, Adam Richard Herbst and Eric Malcolm Bray - [2012] ACTCA 31

JOHN PATRICK DAVEY v VALERIE HERBST, ADAM RICHARD HERBST and ERIC MALCOLM BRAY [2012] ACTCA 31 (8 May 2012)

PRACTICE AND PROCEDURE – written cases – failure of appellant to comply with court orders – abuse of court process – indemnity costs awarded

PRACTICE AND PROCEDURE – capacity of respondent to conduct litigation – courts and parties to facilitate just resolution of real issues in civil proceedings with minimum delay and expense – capacity of respondent to sue for entire debt

DEEDS – meaning of duress – consideration not necessary to support enforceability of deed – construction of deed

Court Procedures Rules 2006 (ACT), rr 21, 501, 230, 231, 5439, 5440, 5852, 5857
Civil Law (Property) Act 2006 (ACT), s 210
Magistrates Court Act 1930 (ACT), s 258

Charles Dickens, Bleak House

Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175
Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 40
Barton v Armstrong [1976] AC 104
Walton v Gardener (1973) 177 CLR 378

EX TEMPORE JUDGMENT

ON APPEAL FROM A SINGLE JUDGE OF THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

No. ACTCA 44 - 2011
No. SCA 34 of 2010

Judges: Higgins CJ, Penfold and Rares JJ
Court of Appeal of the Australian Capital Territory
Date: 8 May 2012

IN THE SUPREME COURT OF THE       )          No. ACTCA 44 - 2011
  )          No. SCA 34 of 2010
AUSTRALIAN CAPITAL TERRITORY    )
  )

COURT OF APPEAL )

ON APPEAL FROM A SINGLE JUDGE OF THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

BETWEEN:JOHN PATRICK DAVEY
Appellant

AND:VALERIE HERBST
First Respondent

AND:ADAM RICHARD HERST
Second Respondent

AND:ERIC MALCOLM BRAY
Third Respondent

ORDER

Judges:  Higgins CJ, Penfold and Rares JJ
Date:  8 May 2012
Place:  Canberra

THE COURT ORDERS THAT:

The appeal be dismissed.

The appellant pay the first respondent’s costs on an indemnity basis.

IN THE SUPREME COURT OF THE       )          No. ACTCA 44 - 2011
  )          No. SCA 34 of 2010
AUSTRALIAN CAPITAL TERRITORY    )
  )

COURT OF APPEAL )

ON APPEAL FROM A SINGLE JUDGE OF THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

BETWEEN:JOHN PATRICK DAVEY
Appellant

AND:VALERIE HERBST
First Respondent

AND:ADAM RICHARD HERST
Second Respondent

AND:ERIC MALCOLM BRAY
Third Respondent

Judges:  Higgins CJ, Penfold and Rares JJ
Date:  8 May 2012
Place:  Canberra

REASONS FOR JUDGMENT

THE COURT:

This is an appeal from a decision of a judge of the Court who dismissed an appeal from the Magistrates Court that, in turn, had dismissed an appeal from its registrar. The proceedings have some of the attributes of the fictional protracted suit of Jarndyce v Jarndyce described by Charles Dickens in his novel Bleak House. Another judge of the Court directed that this appeal be dealt with by written argument and that the parties, in effect, need not attend the hearing.

Background

The first and second respondents, Valerie and Adam Herbst, are mother and son. Mrs Herbst and her late husband, Peter, apparently entered into a deed dated 21 January 2005 between them, the appellant, John Davey, and his business partner, the third respondent, Eric Bray (“the deed”). The deed recorded that Peter and Valerie Herbst had lent Mr Davey and Mr Bray $123,995.04. The deed provided that Messrs Davey and Bray would repay that money by way of weekly instalments. By June 2008, Messrs Davey and Bray had paid 166 instalments leaving a balance of $39,247.44 outstanding for which Peter and Valerie Herbst brought proceedings in the Magistrates Court.
After Peter Herbst passed away, an issue arose in the Magistrates Court as to the capacity or the title of Valerie Herbst to continue the proceedings in her own right without joining the executor of her late husband’s will. During the argument before the Magistrate, Mr Walker of counsel for Adam and Valerie Herbst asserted that the evidence showed that Valerie Herbst was the sole beneficiary of her late husband’s will and would ultimately be entitled to the whole of his estate when it was administered. Mr Davey represented himself and Ms Harley appeared for Mr Bray when the following exchange took place:
Mr Walker:The relevance of that being that Mrs Herbst having obviously survived the thirty days got the lot, so to speak, including [any chose] in action but that’s not to the prejudice of my argument saying a joint debt survivorship applies to the will wouldn’t even have been necessary. If it is still a live issue, and I am not sure about it but forty-six.
Magistrate Doogan:                   Can we clarify it please, is that sort of, is that a live issue
Mr Davey:what the estate
Magistrate Doogan:                   of Mrs Herbst inherited
Mr Davey:not at all
Magistrate Doogan:                  inheritance of, likewise Miss Harley from your clients perspective it’s not a live issue either
Miss Harley:  no your honour, it’s not a live issue at all
Magistrate Doogan:                  thank you
Mr Walkerthank you I think. As to Mrs Herbst capacity you see paragraph forty-six and forty-seven, also forty-eight.
The upshot of this exchange was that Mr Davey acknowledged to her Honour that there was no live issue about Valerie Herbst being entitled to continue the proceedings in her own name to recover any debt due to her and her late husband since she was beneficially entitled to his interest in that chose in action.

Procedural history of this appeal

The litigious history of this matter is unfortunate. The Court has been told that the costs already assessed exceed, by many times, the amount in issue. In his notice of appeal, and several times subsequently, Mr Davey sought that he be able to present his case in writing, thus, at least inferentially, invoking r 5852 of the Court Procedures Rules 2006 (ACT) (“the Rules”). When they appeared before Refshauge J at the callover on 1 February 2012, all the parties agreed that the appeal would be heard on the papers, as his Honour noted. His Honour made orders providing for the appeal books to be filed by 15 February 2012 and for the filing of written submissions concluding, on 23 April 2012, with Mr Davey’s submissions in reply. A notice issued by the registry dated 28 March 2012 notified the parties of the hearing being listed for 8 May 2012.
On 11 April 2012, the deputy registrar made orders relating to what further material should have been included in the appeal books. The deputy registrar also ordered that Mr Davey file and serve the appeal books on or before 18 April 2012.
The appeal proceedings next came before Refshauge J again on 12 and 16 April 2012. Mr Davey and a lawyer for Valerie and Adam Herbst appeared on both occasions. On 12 April 2012, his Honour noted the hearing of the appeal was listed for 8 May 2012. On 16 April 2012, his Honour made orders that dispensed with compliance with rr 5439 and 5440 (that apply to matters to be heard by written cases) on the condition that the parties complied with r 5857. Mr Davey was given leave to file and serve certain supplementary submissions in relation to compliance with r 5857(1)(h) on or before 23 April 2012. Refshauge J directed Valerie and Adam Herbst to file and serve their written submissions on or before 29 April 2012.
Mr Davey did not file any appeal books on 18 April 2012 nor any supplementary submissions by 23 April 2012 and never filed any appeal books. He sent an email to the registry on Friday 4 May 2012 acknowledging that he was in default of orders relating to his filing of submissions in reply, a case list and authorities, concluding “I anticipate being able to provide the outstanding documents next week”.
Litigants are not entitled to ignore orders of the Court. Mr Davey was aware that the appeal was to be before the Court of Appeal on 8 May 2012. He had been in default of the order to file and serve the appeal books for over two weeks, conscious that the Court had made orders for the appeal to be dealt with on the papers. Previous attempts by Mr Davey to file appeal books had been rejected by the registry for non-compliance with the Rules. He failed to file his appeal books as ordered and, indeed, as at today, no appeal books have been filed.
The appeal was listed for hearing on 8 May 2012 and was shown in the published court lists for today. No party appeared. The Court had received and considered the parties’ filed written submissions. These included 53 pages of submissions filed by Mr Davey on 4 April 2012, with a three page chronology, and 18 pages of submissions with further attachments filed by lawyers for Valerie and Adam Herbst on 3 May 2012.

The primary judge’s decision

The primary judge dealt carefully with the plethora of grounds of appeal that he had before him. He found that the debt claimed was outstanding, that money had been lent to Mr Davey and Mr Bray by Peter and Valerie Herbst pursuant to the deed and that the deed had been formally executed by those parties. The effect of the deed can be discerned from the judgments below and the parties’ submissions. His Honour rejected Mr Davey’s claims that the agreement recorded in the deed was unenforceable. He found that those claims were not supported by the facts and were based on unjustified assertions that bordered on being vexatious. The primary judge made similar findings with respect to each of the other claims in Mr Davey’s and Mr Bray’s counterclaims and third party notices that alleged against the Herbst parties malicious prosecution, assault, duress, coercion and unjust enrichment. His Honour concluded that all those claims had no basis whatsoever in the facts found by the Magistrate and that those facts were clearly open for her Honour to find. We agree with his Honour for the reasons he gave for those findings.
His Honour dealt with the grounds of appeal, some of which are repeated in the prolix grounds of appeal in the amended notice of appeal in this Court. We will deal with the substance of each ground of appeal separately below.

Did the estate of Peter Herbst need to be joined?

The first ground raised an argument based on the late amendment of the pleadings to assert that Valerie Herbst was entitled to sue without the joinder of the estate of her late husband. The notice of appeal asserted, as had been argued before his Honour, that the registrar and then the Magistrates Court should not have allowed an amendment to the pleadings to remove Peter Herbst as a party after his death and allow his wife to proceed in her own right, because to do so was inconsistent with the decision in Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 (“Aon’).
The primary judge dealt with that by finding that the amendment did not substitute a new cause of action or a different claim and that Aon was distinguishable. His Honour found that the amendment was one “that could fairly be said to have been made for the purpose of deciding the real issue in the proceedings” (r501(a)). He said that, in any event, the amendment was part of an application for summary judgment originally before the registrar and that it was not a new claim.
Relevantly, the Rules provided:
21     Purpose of ch 2 etc
(1)     The purpose of this chapter, and the other provisions of these rules in their application to civil proceedings, is to facilitate the just resolution of the real issues in civil proceedings with minimum delay and expense.
(2)     Accordingly, these rules are to be applied by the courts in civil proceedings with the objective of achieving—
(a)the just resolution of the real issues in the proceedings; and
(b)the timely disposal of the proceedings, and all other proceedings in the court, at a cost affordable by the respective parties.
(3)     The parties to a civil proceeding must help the court to achieve the objectives
.....
230    Removing parties
(1)     The court may order that a person be removed as a party to a proceeding if the person—
…
(b)has stopped being an appropriate or necessary party.
(2)     The court may make an order under this rule—
(a)at any stage of the proceeding; and
(b)on application by a party to the proceeding or on its own initiative; and
(c)whether the person to be removed is a plaintiff or defendant....
231    Party becomes bankrupt, dies or becomes person with mental disability
(1)     This rule applies if—
(a)a party to a proceeding ...dies, during the proceeding, but a cause of action in the proceeding survives; or...
(2)     The proceeding is not suspended and does not end.
(3)     However, a person must not take a further step in the proceeding for or against the party unless—
(a)the court gives the person leave to continue the proceeding; and
(b)the person complies with the conditions (if any) of the leave.
Note Pt 6.2 (Applications in proceedings) applies to an application for leave and an order or directions under this rule.
(4)     The court may make any order it considers appropriate about including, removing, substituting or rearranging parties.
…
(6)     The court may make an order under this rule—
(a)on application by a party to the proceeding or anyone to whom an interest or liability in the proceeding has passed; or
(b)    on its own initiative.
...
(8)     Before making an order under this rule because a party has died, the court may require notice to be given to ––
…
(b)anyone else who has an interest in the deceased party’s estate.
(emphasis added).
Plainly, the Magistrate had to make some order to deal with the new situation brought about by Peter Herbst’s death (r 231(3)). Significantly, the exchange before the Magistrate quoted above dealt with what her Honour considered appropriate under rr 21 and 231(4) having regard to Valerie Herbst’s sole interest in the estate of Peter Herbst in accordance with r 231(8)(b). Both Mr Davey and Mr Bray’s lawyer said to her Honour that there was no issue about Valerie Herbst being able to continue the proceedings as the sole person with any beneficial interest in the debt. That was the substantive position that she would ultimately achieve if the executor were joined in lieu of Peter Herbst. All the parties before her Honour accepted that Valerie Herbst could and should continue the proceedings without wasting time and expense in going through those formal steps for what was a relatively small debt.
It is transparent that the Magistrate, when working through the issues, in dealing with the status of Peter Herbst’s estate and Valerie Herbst’s capacity to sue to recover the whole debt claimed, was mindful of the duty imposed by r 21 and her powers under r 231(4). Her Honour was entitled to assume that the parties before her were also mindful of those matters in making the submissions that they did. Whilst Mr Davey referred to the decision of the High Court in Aon, he has paid no regard at all to the principles that it established: indeed, those principles reflect the opposite of his contentions: see Aon at 213 [97]-[98], 217 [112]-[113] per Gummow, Hayne, Crennan, Kiefel and Bell JJ.
In our opinion, in essence, what the Magistrates Court was seeking to do was determine whether, for the purposes of rr 230 and 231, it was necessary to substitute the estate for Peter Herbst, or whether Valerie Herbst could continue the proceedings in her own right as sole plaintiff to recover the debt undoubtedly owed to her, at least in respect of half, as a tenant in common entitled to the benefit of the loan obligations assumed under the deed to Peter and Valerie Herbst as lenders (Civil Law (Property) Act 2006 (ACT), s 210), which provided that, in the absence of an expressed or implied provision that the parties to an instrument took as joint tenants, there was a presumption of parties holding their interests as tenants in common.
It was appropriate for the Magistrate to simplify and to proceed to identify the real issues. When the parties informed her Honour that there was no live issue about Valerie Herbst being able to continue as sole plaintiff, it was accordingly practical to allow an amendment under rr 230 and 231 to remove Peter Herbst as a party without requiring any further time, trouble and expense in adding his estate as a party. Mr Davey did not suggest that any defence that could have been raised in respect of the late Peter Herbst as a lender could not also have been raised against Valerie Herbst. Indeed, no substantive defence existed at all.
Moreover, under s 258 of the Magistrates Court Act 1930 (ACT), that Court has jurisdiction to grant any relief that the Supreme Court could have granted in such an action. Where parties inform a court that no issue is taken with a matter, it is entitled to proceed on that basis. Thus, following the exchange before the Magistrate quoted earlier at [3], Valerie Herbst could proceed to sue for the whole of the debt to which, in any event, as was admitted, she was beneficially entitled without the formality of joining the estate. That was a practical course .
Mr Davey did not suggest in the submissions before us that any point had been taken before the Magistrates Court to alert her Honour that, despite his and Mr Bray’s concession that there was no issue that Valerie Herbst took the whole beneficial interest in the estate, the proceedings were deficient for want of parties or that there was a need for further amendments.
Mr Davey sought to reopen this issue before the primary judge and on this appeal. His Honour correctly refused to let him do so. Points that have been abandoned in litigation cannot, and ought not, be resurrected, particularly when those points are meretricious and could easily have rectified at the time of the proceedings in the Magistrates Court had any serious issue been taken with them. Courts exist to deal with the real and substantive issues between the parties. Indeed, so much is recognised in r 21 that applies the rules to civil proceedings in all courts in the Australian Capital Territory. The objective of the rules is to achieve the just resolution of the real issues and the timely disposal of the proceedings at a cost affordable by the respective parties. It imposes a duty on the parties to the proceeding to help the Court achieve those objectives and empowers the Court to impose appropriate sanctions on a party who does not comply (see r 21(4)): Aon at 213 [97]-[98], 217 [112]-[113].
The notice of appeal also challenged the capacity of Valerie Herbst to sue for the whole debt. That related back to the argument above and it has no substance.
In our opinion, the primary judge was entirely correct to have found, as he did, that it not open to Mr Davey to take this point before him and that it was without merit. For those reasons this ground should not be allowed to be ventilated now.

Did Mr Davey execute the deed under duress?

The second ground of appeal contended that the Magistrate erred in not properly applying the test for duress stated in Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 40 (“Crescendo”) and Barton v Armstrong [1976] AC 104 or in otherwise failing to find that Mr Davey had been coerced or intimidated into signing the deed. Mr Davey claimed that he had acted under duress (or coercion or as a result of intimidation) when he executed the deed. This argument articulated the untenable basis that the duress consisted of lawful threats made in 2004 and 2005 by lawyers acting for the Herbsts’ interests, who were seeking to enforce a previously outstanding debt over the seven months during which the parties had been negotiating the terms of the deed through lawyers. Mr Davey also relied on a claim that in July 2004, during the course of a business dispute he and Mr Bray had had with Adam Herbst, there had been a small fracas between them and that that had occurred in connection with an illegitimate claim for payment of the debts that became the subject of the deed. Mr Davey wanted to assert that those recovery attempts were accompanied by threats amounting to duress.

The Magistrate had found that letters of demand sent by the solicitors for the Herbst parties on instructions of their clients could not constitute any form of duress. Any effect of the earlier fracas was spent well before the time the deed was signed.
The primary judge held that it was clear that her Honour’s findings encompassed the other notions of coercion or intimidation and her ultimate conclusion was that the matters referred to in the counterclaims had no merit. His Honour was correct to so have found. Indeed, McHugh JA, with whom Samuels and Mahoney JJA agreed, said in Crescendo at 46A-D that:
The proper approach in my opinion is to ask whether any applied pressure induced the victim to enter into the contract and then ask whether that pressure went beyond what the law is prepared to countenance as legitimate? Pressure will be illegitimate if it consists of unlawful threats or amounts to unconscionable conduct. But the categories are not closed. Even overwhelming pressure, not amounting to unconscionable or unlawful conduct, however, will not necessarily constitute economic duress.
In their dissenting advice in Barton v Armstrong [1973] 2 NSWLR 598; [1976] AC 104, Lord Wilberforce and Lord Simon of Glaisdale pointed out (at 634; 121):
… in life, including the life of commerce and finance, many acts are done under pressure, sometimes overwhelming pressure, so that one can say that the actor had no choice but to act. Absence of choice in this sense does not negate consent in law: for this the pressure must be one of a kind which the law does not regard as legitimate. Thus, out of the various means by which consent may be obtained — advice, persuasion, influence, inducement, representation, commercial pressure — the law has come to select some which it will not accept as a reason for voluntary action: fraud, abuse of relation of confidence, undue influence, duress or coercion.
In Pao On v Lau Yiu Long [1980] AC 614, the Judicial Committee accepted (at 635) that the observations of Lord Wilberforce and Lord Simon in Barton v Armstrong were consistent with the majority judgment in that case and represented the law relating to duress.
Here, no illegitimate pressure was, even arguably, established. This claim was an abuse of the process of the Court because it was foredoomed to fail: Walton v Gardener (1973) 177 CLR 378 at 393 per Mason CJ, Deane and Dawson JJ. This ground of appeal fails.

Other grounds

The amended grounds of appeal also asserted there was an absence of consideration for the deed. The primary judge correctly dismissed that ground as being without substance. Moreover, we would observe that it is trite law that no consideration is necessary to support the enforceability of obligations assumed by a party to a deed. His Honour rejected this argument in the course of dealing with Mr Davey’s assertion that he had an arguable defence to Valerie Herbst’s claim for summary judgment in the Magistrates Court.
The next ground of appeal dealt with asserted errors in the construction of the deed by the Courts below. This ground raised arguments about whether or not the recitals in the deed amounted to novations or assignments and the like. The deed has not been put in any appeal papers before the Court of Appeal.
The simple fact is that the parties executed a deed to record their agreed position. The deed operated of its own force as a series of covenants by the parties which were enforceable without the need for any further consideration. This meant that those covenants had the effect of resolving pre-existing disputes or conflicts and creating the new rights and obligations that the deed provided. The terms of the deed recorded the parties’ positions as at the date of its execution. It is to be remembered that Mr Davey was, himself, a lawyer, and all the parties acted with legal advice through solicitors in executing the document. This ground has no substance.

Conclusion

The very prolix written submissions advanced by Mr Davey have not made out any substantive basis for upholding the appeal. The matter was listed today for determination by the Court. No party appeared when the matter was listed in the ordinary court list at 10.00 am. Mr Davey has failed to comply with orders for the proper and orderly disposition of the proceedings by preparation and filing of appeal books for the assistance of the Court in being able to determine the real issues in the appeal, such as they might be seen to be.
No error is disclosed in any of the primary judge’s reasoning. He dealt with a number of other grounds of appeal that have not been raised before us. In our opinion, this appeal has no substance and should be dismissed.
Valerie Herbst sought an order for costs on an indemnity basis. She asserted that the arguments raised by the appellant were unmeritorious, misconceived, involved purely technical arguments, never had any substance, and have made the costs of recovery of a very small debt far more burdensome than they should be.
We are of opinion that her arguments were justified. It is entirely appropriate that this appeal should be dismissed with Valerie Herbst’s costs payable on an indemnity basis. The appeal had no merit and was an abuse of the process of the Court being foredoomed to fail. As referred to at [13] and [18] above, the principles in Aon justified the Magistrates Court in acting as it did.
I certify that the preceding thirty-five (35) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Court.
Associate:
Date: 4 July 2012

Solicitor for the Appellant:  The appellant acted for himself
Counsel for the 1^st, 2^nd and 3^rd Respondents:          Mr P Walker
Solicitor for the 1^st, 2^nd and 3^rd Respondents:          Williams Love & Nicol
Date of hearing:  8 May 2012
Date of judgment:  8 May 2012