Knapp v Hii
[2004] QDC 31
•9 March 2004
DISTRICT COURT OF QUEENSLAND
CITATION:
Knapp v Hii [2004] QDC 031
PARTIES:
BERNARD THOMAS KNAPP
Appellantv
YII ANN HII
RespondentFILE NO/S:
BD1498 of 2003
DIVISION:
Appellate
PROCEEDING:
Appeal
ORIGINATING COURT:
Magistrates Court at Brisbane
DELIVERED ON:
9 March 2004
DELIVERED AT:
Brisbane
HEARING DATE:
2 February 2004
JUDGE:
Alan Wilson SC, DCJ
ORDER:
Appeal allowed
CATCHWORDS:
APPEAL – ERROR OF LAW – FAILURE TO GIVE REASONS FOR FINDINGS OF FACT – whether Magistrate’s Reasons for judgment after trial so deficient as to found an appeal – whether judgment should be set aside – whether matter should be remitted for rehearing – whether all causes should be remitted
UCPR rr 184, 770
CASES CONSIDERED
Abalos v Australian Postal Commission (1990) 171 CLR 167
Beale v Government Insurance Office of NSW (1997) 48 NSWLR 430
Devries v Australian National Railways Commission (1993) 177 CLR 472
R v Maxwell, unreported, NSWCCA, 23 December 1998
Moylan v Nutrasweet Company [2000] NSWCA 337
Misfud v Campbell (1991) 21 NSWLR 725 at 728
Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247
State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (1999) 73 ALJR 305
Steggles Pty Ltd v Aguirre (1988) 12 NSWLR 693
Stojkovskiv v Fitzgerald (1989) WAR 328Suvaal v Cessnock City Council [2203] HCA 41 at para [145]
COUNSEL:
Mr K N Wilson SC and Mr R J Anderson for appellant
Mr F G Forde for respondentSOLICITORS:
Thompson Redhead for appellant
Quinn Scattini for respondent
This is an appeal from the decision of a Magistrate at Brisbane. The respondent here, Mr Hii, had sued the appellant Mr Knapp in that court for the balance of payments owed for the sale and purchase of a car, pursuant to written agreements between the parties dated 19 July 1993 and 25 July 1997. Mr Knapp counter-claimed for US$200,000, alleged to be a “success fee” for introducing the plaintiff to a logging concession in Papua New Guinea (abandoning any excess over the jurisdiction of the Magistrates Court).
The trial of the action occupied seven sitting days. It initially proceeded on 20, 21 and 22 November 2002 and was then adjourned, and resumed and was completed on 10, 11, 16 and 17 April 2003. At the conclusion of the hearing the Magistrate received written and oral submissions and then reserved his decision for approximately three hours before returning and delivering his reasons ex tempore. He upheld the respondent’s claim in connection with payments for the motor vehicle in the sum of $22,830.94 and also awarded interest in the agreed figure of $7,347.37, and assessed costs at $19,384 and outlays of $4,404.28. The total judgment for the respondent was, then, $53,966.59. The appellant’s counter-claim was dismissed.
The appellant’s principal attack is upon the adequacy of the Magistrate’s reasons and also what are said to be inherently contradictory or uncertain findings within them, particularly as to the credit of various witnesses. In the result, the appellant contends, the reasons are so defective the judgment cannot stand. The appellant initially argued that this court ought to substitute its own findings on credit and replace the Magistrate’s decision with a judgment in favour of the appellant. Ultimately, the appellant’s counsel Mr Wilson SC resiled from this submission and simply pressed for the matter to be returned to the Magistrates Court for re-trial. In light of the length of the trial and the fact that credit issues were central to the decision in the case I am unable to see how, if the appellant succeeds, any other course would be reasonably open.
For the respondent it was contended that if the sole criticism of the Magistrate arose from the adequacy of his reasons, the matter might simply be returned to him with a direction that he provide “proper” reasons. This remedy was said to be open under UCPR Rule 770. Inherent in the submission is the notion the decision is correct, but insufficiently enunciated. Even if that is so, there can be no guarantee the course suggested by the respondent would be fruitful, in the sense of finalizing the litigation. It would be an unusual case in which it could be adopted.
The parties did agree that, should the matter need to go back to the Magistrates Court for re-trial, the issues could be reduced. The appellant had also counter-claimed upon a quantum meruit (for work allegedly performed for the respondent to secure logging concessions, in the alternative to the claim for the success fee) and Mr Forde submitted and Mr Wilson SC did not disagree that this particular cause of action did not warrant re-trial, and should be extinguished.
The respondent also submitted that the appeal did not challenge the Magistrate’s decision in relation to the appellant’s indebtedness to the respondent for the car payments, but that ignores the appellant’s properly pleaded claim for a set off which has the result that, had he succeeded in his counter-claim, the total amount of it might have been set off against the respondent’s claim, but with any judgment for the appellant limited to the monetary jurisdiction of the court[1].
[1] UCPR Rule 184
On the claim, the respondent’s case relied upon the two written agreements made in 1993 and 1997. The appellant’s counter-claim alleged the success fee agreement had been made orally between the appellant and the respondent in February or March 1993, and its terms had been satisfied, and it was complete in all respects save payment by the respondent. The issues in respect of the counter-claim involve questions of credit - as to whether it was actually made, or not; and, if so, its terms as to quantum, and the areas to which it related, and the events which constituted ‘success’; and, if made, whether the appellant fulfilled his obligations so as to become entitled to the fee; and, whether in any event the appellant waived whatever entitlement he may have had to a success fee under a “compromise agreement” he signed on 18 July 1997 under which, on its face, the he waived all rights to a fee of that kind. The appellant admits he signed that document but claims its effect was vitiated by misrepresentations from the respondent about the outcome of efforts to secure logging agreements. The appellant alleged the respondent told him negotiations for logging permits had never reached fruition, so no entitlement in the appellant to the success fee had ever arisen.
The appellant gave evidence of a discussion with the respondent in about December 1992 concerning the appellant’s ability to help the respondent secure logging interests in PNG. The appellant and a witness, Mr McCall, both gave evidence of a conversation with the respondent in February or March 1993 at which, both alleged, the respondent agreed to pay them US$200,000 each if the respondent or a company with which he was associated became entitled to log timber concessions in areas called Seraji Extension, and Pondo. In his evidence the respondent did not deny there was a meeting, and said he simply could not recall it[2]; but, he contended, the appellant was not entitled to any success fee because, if made, it required him to secure a timber “permit” rather than a logging and marketing agreement; and, the “permit” was required to be in respect of what was called Baining Consolidated Timber Resource Area; and, in any event, no agreement had ever been reached as to the amount of this success fee.
[2] T 56
As to the first of these contentions, evidence from Mr Sabuin from the PNG Department of Forestry and a Dr Marat was that in 1993 timber permits commonly issued only in the names of traditional landowners and any company wishing to exploit timber resources would enter into a logging and marketing agreement with those persons; so it seems the respondent’s contention may be merely about nomenclature and nothing might turn on it. As to the second, the appellant said he was not aware of any area called Baining Consolidated Timber Resource Area until sometime after the success fee agreement was made and that evidence was corroborated by McCall and Marat and a number of documents which form part of Exhibit 11. In any event, the Magistrate apparently preferred the evidence of Mr McCall, that the agreement was limited to areas called Seraji Extension, and Pondo. As to the third, both McCall and the appellant said the fee agreed was $US200,000.
Some other documentary evidence also corroborated the appellant’s version. He certainly began negotiating with Dr Marat, who acted on behalf of the landowners, for rights to log the Seraji Extension and Pondo areas. It was also common ground at the trial that the company called Deegold (PNG) Pty Ltd entered into a logging and marketing agreement on 3 May 1996 to log the “Seraji Extension” Area which is in a geographical area known as Baining.
The respondent’s claim that any agreement related to the Baining Consolidated Area is also contradicted by other evidence which might be thought to have some persuasive force. In a letter of 10 August 1993[3] he himself referred to the Seraji timber concession but in oral evidence said this was a mistake and he meant to refer to the Baining Consolidated Timber Resource Area. His claim there was no discussion about the amount of the success fee was contradicted by Mr McCall (whose credit seems to have been preferred about the relevant areas) and might be said, at first blush, to defy common sense. In the upshot, there was evidence supporting the appellant’s counterclaim, and which cast doubt upon the respondent’s defence to it.
[3] Exhibit 6
That is not to say the appellant’s own credit is unassailable. Neither he nor McCall had ever claimed or sued for the success fee until this counter-claim, yet before he signed the waiver of 18 July 1997 the appellant knew Deegold had obtained some rights in the Baining Area. His pleadings had not initially, or through several amendments, presented the counter-claim in the form it ultimately took at trial, or the amount. The appellant is, too, an experienced solicitor and his execution of the waiver in the face of that knowledge, notwithstanding what he says were the respondent’s misrepresentations, is not without its surprising aspects.
In any event, as this discussion illustrates the case involved quite complex evidentiary issues about which the witnesses did not agree and which gave rise to seriously disputed matters of credit. All questions of that kind were, however, dealt with in very short compass in only two paragraphs of the Magistrate’s reasons:
I indicate at this stage that where Dr Murat’s (sic) evidence is in conflict with any person I prefer the evidence of Dr Murat. As between Dr Murat and Yii Ann Hii I prefer the evidence of Dr Murat where conflict occurs. However, where conflict occurs in the evidence of Bernard Knapp and Cameron McCall on the one hand as against the evidence of Yii Ann Hii on the other hand I accept the evidence of Yii Ann Hii in preference to that of Bernard Knapp and Cameron McCall and reject the conflicting evidence.
Likewise where conflict exists in the evidence of Bernard Knapp and Soo Heen Bay, I accept her evidence and reject the conflicting evidence of Bernard Knapp. In determining the question of credibility of the witnesses I accept and adopt as my reasons therefore the submissions by counsel for the plaintiff save where those submissions might differ from what I specifically state in this decision.
These very terse findings are troubling in a number of respects. No reason is advanced for the assessments of credibility made of the independent witnesses, Dr Marat and Mr McCall. Nor is there any explanation for preferring the evidence of the respondent over the appellant, and McCall, or Soo Heen Bay (the respondent’s wife) over the appellant. The appellant was able to point to a number of instances of inconsistencies between the evidence of these persons, aggravating the concern which is engendered by the absence of those reasons. An example occurs at page 4 where the Magistrate found “…that any amount intended to be paid by way of success fee would only be payable if the defendant were to be the effective cause of the securing for the plaintiff (of) logging entitlements to both the Saragi (sic) Extension and Pondo Areas.” McCall was the only witness, save for the appellant, who gave evidence which would form the basis of a finding to that effect – ie, that the success fee related to both the Seraji Extension and Pondo - yet McCall’s evidence was otherwise rejected, apparently in toto, in preference to the respondent’s.
A conflict also arose in one respect between the evidence of Dr Marat and Mr Sabuin but the matter is not mentioned, and nothing is revealed as to how that might have affected Dr Marat’s credit. There is a complete failure to mention a central credit issue having to do with areas called, variously, Seraji, Seraji Extension, Pondo, North Pondo, South to South-East Pondo, Tiriu Headwaters, Assengeng, and Baining Consolidated Timber Resource Area. As remarked earlier, the appellant and McCall both said the success fee related to Seraji Extension and Pondo, but the respondent was adamant it related to the Baining Consolidated Timber Resource Area which, the evidence showed, is a geographical area containing a number of logging entitlements; but Baining Consolidated did not, again, exist until some time after the discussions in early 1993 – at least, that was the crux of Dr Marat’s evidence in that respect. What Dr Marat said was that after a meeting in June 1993 in which the appellant and McCall negotiated with landowners of the Seraji Extension and Pondo Areas, other landowners heard of the matter and consolidated their interest to form Baining – which is consistent with the appellant’s evidence.
Equally problematic is the Magistrate’s reference to his acceptance of the submissions from counsel for the plaintiff concerning issues of credit, but in circumstances where it is unclear if they are to be imported into the reasons and, if so, to what extent? They are mentioned in the context of an exclusion, arising if they differ from anything the Magistrate specifically states in the reasons, but that does not appear to occur. If this is a shortcut to avoid duplication, it is a very unusual and, ultimately, confusing one because it is preceded by a number of findings on credit issues. It appears to be an attempt to repair an acknowledged shortcoming in the reasons and expose the basis for the preceding findings on credit but is open to the trenchant criticisms that, if so much was intended, the inconsistencies mentioned earlier are not deflected merely by a reading of counsel’s submissions; and, there is no attempt to address the other side of the coin, as it were – the credit issues where the respondent’s case had manifest weaknesses, and the appellant’s case apparent strengths.
The precise nature of the findings about the alleged success fee is also unclear, and contradictory. At page 3 the Magistrate said:
I am satisfied and do find on the balance of probabilities that in December 1992 the plaintiff and defendant entered into a very loose oral agreement most ill defined in its terms and conditions but which required the defendant to use his contacts and other endeavours to secure for the plaintiff logging entitlements and that in consideration thereof the plaintiff would pay the defendant a success fee.
I find that it was not in the minds of the parties that the plaintiff would be entitled to any payment in the event there was no success. I specifically reject the assertion that a figure of US$200,000 was to be the success fee regardless of what small result may be obtained from the defendant’s endeavours. Even if I were to accept that such a figure was mentioned in the December ’92 or the March ’93 meeting it is my view that the circumstances in which it was mentioned made it nothing more than an indication of the “richness” the defendant might achieve.
I find that any amount intended to be paid by way of success fee would only be payable if the defendant were to be the effective cause of the securing for the plaintiff (of) logging entitlements to both the Saragi (sic) Extension and Pondo Areas. I find that the defendant did not secure a logging and marketing agreement to those areas nor even to one of those areas.
It is uncertain precisely what has been found about the terms of the agreement. As remarked earlier, the reference to Seraji Extension and Pondo areas is consistent with the evidence of McCall, and the appellant. The first paragraph does imply a finding that a success fee might be payable for “logging entitlements” so the finding may be that the agreement was certain in what might be thought to have been two of its three essential elements – the area to which it related, and what had to be obtained – but not price. The reference to the possibility that the figure of $US200,000 had been mentioned, and the finding that it was “nothing more than an indication of the ‘richness’ the defendant might achieve” appears to be logically inconsistent. At the least, it is unexplained and unclear.
The finding that the defendant did not secure a “logging and marketing agreement to those areas” is ambiguous. It cannot mean that no logging agreement was ever entered into in respect of those areas because the evidence showed that Deegold did just that in May 1996. If the finding means that an agreement was entered into but the defendant was not an effective cause of it, that is a quite surprising conclusion in the face of the evidence of Dr Marat and Mr Sabuan.
At page 5 of the reasons, in support of the conclusion that the compromise agreement or waiver of 18 July 1997 was a bar to the counter-claim the Magistrate said:
In any event I find that the defendant knew prior to the 18th July 1997 and the 25th July 1997 that the plaintiff had entered into a logging agreement and was aware of the plaintiff’s stance that the defendant was not entitled to a success fee and despite his own investigations and enquiries and the alternatives available to him, nevertheless signed the waiver and the instalment repayment scheme.
This fails to deal in any meaningful way with some significant evidence from Dr Marat and the appellant and, in particular, the evidence of the former that he was instructed or exhorted not to reveal the existence of the logging and marketing agreement of May 1996 to the appellant. The evidence certainly showed the appellant had made some inquiries before he signed the waiver in July 1997 but he also said that the respondent and the respondent’s wife had told him that logging had not proceeded. That evidence might provide a plausible explanation for his subsequent execution of the waiver, but it is not mentioned in the reasons; and neither are the competing arguments as to whether or not simply securing a logging agreement would enliven entitlement to the success fee.
The appellant also attacked the finding on page 3, set out earlier, that a “very loose oral agreement” in respect of the success fee had been entered into in December 1992, when there was no evidence to that effect. The next paragraph does refer to December ’92 or March ’93 meetings and it may be that the first reference is simply a mis-statement. Nevertheless in the aura of uncertainty created by the passages already set out, it is another factor which gives rise to concern about the calibre of the findings and the tenor of the reasons.
Unfortunately a number of the Magistrate’s comments in the course of the trial suggest a continuing reluctance to come to grips with the issues. Some statements indicate difficulty following the evidence and concern about the problems which might arise because of the long adjournment between the hearing dates[4]. Other remarks can only be described as a clear indication the various issues in the case could not expect anything more than perfunctory attention:
[4] T 51.10, T 58, T 116, T 152, T 222, T 235.30, T 239.6, T 240.45, T 427.15
… I am not going to spend out of court time reading exhibits. I don’t intend reading the exhibits in my own time[5].
You will be asking me to reserve will you and read written submissions and then write a decision in my own time. I can indicate there’s not much chance of that[6].
I am getting right away from reserve decisions, I am too old for that now[7].
So I don’t look for pity, but you’ll have to understand that when I make findings later on, you might well sit there and say, he didn’t grasp such and such a point and you might understand why[8].
[5] T 151
[6] T 152
[7] T 153
[8] T 427.50
Another passage suggesting the issues could only expect short shrift appears at page 6 of the reasons, where the quantum meruit issue is dismissed, but by the making of findings as to the essential legal elements of a claim of that kind, without descent to any aspect of that part of the case and its attendant facts. While that part of the counter-claim was (as the appellant conceded) quite demolished in the course of the evidence, the manner with which it is dealt is peremptory, and troubling in the sense it fails to suggest a real attempt to focus on the issues.
At the end of the hearing each counsel presented lengthy written submissions. Oral submissions were relatively short. At the conclusion of the reasons the Magistrate asked the appellant’s counsel if there were “…any other findings that … you need made” and not surprisingly got a negative response. The delivery of very short ex tempore reasons after such a long trial means a query of that kind of the legal representative for the losing party is meaningless. In the context of the other surprising comments made in the course of the trial it can only be construed as a belated attempt to have counsel repair any shortcomings – or run the risk of being estopped from complaining about them later.
It is trite that the maxim that justice must not only be done, it must be seen to be done applies with particular emphasis to the reasons for judgment in a civil case like this, so the parties know why they have won, or lost. In particular, they have a right to expect that arguments put on their behalves will be dealt with in such a way they can be satisfied they have been understood and either accepted or, if rejected, that the rejection was based on a clear and rational process of reasoning[9].
[9]
The extent of the obligation will, of course, vary from case to case[10]. It was clearly expounded by McHugh JA (as he then was) in Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 at 281:
[10] Misfud v Campbell (1991) 21 NSWLR 725 at 728 per Samuels JA; Beale v Government Insurance Office of NSW (1997) 48 NSWLR 430 at 441 per Meagher JA
In a case where a right of appeal is given only in respect of a question of law, different considerations apply from the case where there is a full appeal. An ultimate finding of fact, which is not subject to appeal and which is in no way dependent upon the application of a legal standard, can be treated less elaborately than an issue involving a question of law or mixed fact and law. If no right of appeal is given against findings of fact, a failure to state the basis of even a crucial finding of fact, if it involved no legal standard, will only constitute an error of law, if the failure can be characterised a breach of the principle that justice mu st be seen to be done. If for example, the only issue before the Court is whether the plaintiff sustained injury by falling over, a simple finding that he fell or sustained injury would be enough, if the decision turns simply on the plaintiff’s credibility. But, if, in addition to the issue of credibility, other matters were relied on as going to the probability or improbability of the plaintiff’s case, such a simple finding would not be enough.
It follows, that reasons need not necessarily be lengthy or elaborate. Accordingly, the content of the obligation is not the same for every judicial decision. No mechanical formula can be given in determining what reasons are required. However, there are three fundamental elements of a statement of reasons, which is useful to consider. First, a judge should refer to relevant evidence. There is no need to refer to the relevant evidence in detail, especially in circumstances where it is clear that the evidence is being 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; North Sydney Council v Ligon 302 Pty Ltd (1995) 87 LGERA 435. Where conflicting evidence of a significant nature is given, the existence of both sets of evidence should be referred to.
Secondly, a judge should set out any material findings of fact and any conclusions or ultimate findings of fact reached. The obvious extension of the principle in North Sydney Council is that, where findings of fact are not referred to, an appellate court may infer that the Trial Judge considered that finding to be immaterial. Where one set of evidence is accepted over a conflicting set of significant evidence, the trial judge should set out his findings as to how he comes to accept the one over the other. But that is not to say that a judge must make explicit findings on each disputed piece of evidence, especially if the inference as to what is found is appropriately clear; Selvanayagam v University of the West Indies (1983) 1 WLR 585; (1983) 1 All ER 824. Further, it may not be necessary to make findings on every argument or destroy every submission, particularly where the arguments advanced are numerous and of varying significance.
Thirdly, a judge should provide reasons for making the relevant findings of fact (and conclusions) and reasons in applying the law to the facts found. Those reasons or the process of reasoning should be understandable and preferably logical as well.[11]
So far as the first point mentioned by McHugh JA is concerned (the need to refer to relevant evidence) the Magistrate has not reviewed any of the evidence given by any of the witnesses in respect of the appellant’s counter-claim for the success fee. All that appears in the reasons are bald findings of fact, with no reference to the evidence which might support them, or other explanation. The hearing occupied seven days and included many documentary exhibits relevant to that issue. At the end of the hearing the appellant’s counsel delivered written submissions of 25 pages, and the respondent’s counsel some 49 pages which analysed the evidence in detail and contended for different findings. None of that evidence nor the submissions is discussed, in any detail, in the judgment.
The second principle is also offended: no attempt has been made to set out findings as to how the Magistrate came to accept the respondent’s evidence about the success fee or the waiver in preference to conflicting evidence, not without some weight, from the appellant and his witnesses. As to the third principle, it simply cannot be said that the reasons or the process of reasoning are understandable, and logical.
Many of the findings relate to questions of credit, a matter often regarded as unassailable on appeal[12]. The mere fact that an attack is made upon findings of credit is not, however, a shield against a successful appeal if it is clear that the trial judge has failed to give any, or any proper consideration to important questions in the case[13].
[12] See, generally, Abalos v Australian Postal Commission (1990) 171 CLR 167; Devries v Australian National Railways Commission (1993) 177 CLR 472, at 479; and State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (1999) 73 ALJR 305
[13]Suvaal v Cessnock City Council [2203] HCA 41 per Callinan J at para [145]
The respondent also contended that unlike the circumstances arising in cases such as State Rail Authority of New South Wales v Earthline Constructions Pty Ltd[14] or Suvaal v Cessnock City Council[15] there was not, here, evidence which strongly compelled the court to an opposite conclusion – ie, the decision was not glaringly improbable, in the sense it had been reached in the face of powerful contradictory evidence. Those tests are usually applied to determine whether or not an appellate court is authorized to substitute its own conclusions for those reached by the decision maker at trial, and are not apposite where the error at first instance involves the delivery of reasons which are inherently defective because the basis for them is inadequately exposed and explained. Whether or not arguments of that kind could be mounted is simply impossible to determine. The fact the tests cannot be applied might be seen as a compelling argument the reasons are inadequate.
[14]supra
[15]supra
Magistrates have a heavy workload. It is clear from comments which fell from the Bench (some of them mentioned earlier) that the Magistrate was concerned by the long adjournment in the middle of the trial and the prospect that the heavy pressure of intervening cases would impede his prospects of giving satisfactory reasons. That is a concern common to judicial officers, at all levels. As a matter of general principle, however, it will be a rare case in which satisfactory ex tempore reasons can be given after six days of evidence. The attempt to do so here is further clouded by a legitimate concern that in light of the Magistrate’s expressed reluctance to read the voluminous documentary exhibits outside court time, or review the transcript, and the very long written submissions delivered at the end of trial, there was simply insufficient time for him to review all the evidence carefully and systematically in the short interval which elapsed before the reasons were dictated. The totality of these concerns and the serious and troubling defects in the reasons compel the conclusion the judgment cannot stand.
Regrettably, that means the matter must be tried again, and remitted to the Magistrates Court for that purpose (save in respect of the appellant’s counter-claim upon the quantum meruit, which should not be permitted to trouble the court further). I will hear submissions about the appropriate form of order, and costs.
R v Maxwell, unreported, NSWCCA, 23 December 1998, cited in Moylan v Nutrasweet Company [2000]
NSWCA 337, at p. 33
See also Steggles Pty Ltd v Aguirre (1988) 12 NSWLR 693, and Stojkovskiv v Fitzgerald (1989) WAR
328
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