Kowalski v Stanley & Partners
[2021] SASC 23
•3 March 2021
SUPREME COURT OF SOUTH AUSTRALIA
(Magistrates Appeal: Civil)
KOWALSKI v STANLEY & PARTNERS & ANOR
[2021] SASC 23
Judgment of the Honourable Justice Peek
3 March 2021
MAGISTRATES - APPEAL AND REVIEW - SOUTH AUSTRALIA - APPEAL TO SUPREME COURT
PROCEDURE - STATE AND TERRITORY COURTS: JURISDICTION, POWERS AND GENERALLY - VEXATIOUS LITIGANTS, PROCEEDINGS AND RELATED MATTERS - VEXATIOUS LITIGANT
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COSTS - OFFERS OF COMPROMISE, PAYMENTS INTO COURT AND SETTLEMENTS - OFFER OF COMPROMISE OR OFFER TO SETTLE OR CONSENT TO JUDGMENT PURSUANT TO RULES - OTHER MATTERS
Appeal against a Magistrate’s refusal to set aside a consent judgment.
Between 1988 and February 1991, Mr Timothy Bourne (Bourne) of Stanley & Partners acted for Mr Kazimir Kowalski (Kowalski) in relation to a common law claim and a worker’s compensation claim against his former employer. Later, negotiations concerning payment of costs failed and Stanley & Partners issued proceedings claiming the sum of $6,311.11 plus Court costs. On 29 January 1993, Kowalski consented to judgment in the amount of $6,684.11 (the subject consent judgment), which he paid on 26 July 1993.
Kowalski subsequently instituted numerous proceedings in various jurisdictions set out in a chronology commencing at paragraph [14] below. Kowalski has twice been declared a vexatious litigant. Relevantly, on 30 April 2019, Justice Blue granted Kowalski vexatious litigant permission pursuant to s 39 of the Supreme Court Act 1935 to institute an application in the Magistrates Court to set aside the subject consent judgment. On 28 October 2019, Magistrate Milazzo heard the application and declined to set aside the consent judgment.
On 25 November 2019, Kowalski filed a further interlocutory application in the Supreme Court seeking s 39 vexatious litigant permission to appeal against Magistrate Milazzo’s decision. On 28 October 2020, Justice Blue delivered judgment and granted such permission limited to one ground of appeal, namely that the Magistrate erred in failing to have regard to certain affidavit material including two letters dated 4 January and 26 January 1993 from Kowalski’s treating psychiatrist, Dr Jagermann, to Kowalski’s General Practitioner, Dr Hughes (the Jagermann letters).
Proceeding on the basis (but without deciding) that the Magistrate had committed a procedural error in not referring to the affidavit material, held that the appeal nevertheless be dismissed because, in summary:
1.It is not established that Kowalski was “mentally incompetent” in the relevant sense at the time of entering into the subject consent judgment.
2.Even if it were so established, there is no evidence to establish that Bourne knew of this at the relevant time.
3.The gross delay from entry into the consent judgment until the institution of the application to set that judgment aside on 1 May 2019 cannot be excused or condoned. It has in fact severely prejudiced Bourne in that critical witnesses such as Dr Jagermann are no longer available.
4.Considerations analogous to Anshun principles and impermissible re-litigation principles both apply in the present circumstances in which Kowalski has previously brought numerous unjustified proceedings to recover the consent judgment sum.
5.From Bourne’s perspective, the cost, time and inconvenience of the unjustified litigation has been huge, not only financially, but also personally. He has little realistic prospect of recovering cost awards that have been made against Kowalski for reasons that appear obvious.
6.If, in the highly unlikely circumstances that Kowalski were to set aside the subject consent judgment and then secure a judgment for Bourne to repay the money Kowalski paid to Stanley & Partners, I see no reason why Bourne could not refuse to pay on the basis that he is owed a greater amount by Kowalski due to his unpaid costs orders. I find Kowalski’s suggestion that such cost orders are invalid for some reason or other, or that he wishes to obtain a judgment against Bourne so as to reduce his overall indebtedness to Bourne, very unpersuasive.
Evidence Act 1929 (SA) s 59J; Magistrates Court (Civil) Rules 2013 (SA) r 104; Supreme Court Act 1935 (SA) s 39; Uniform Civil Rules 2020 (SA) rr 186.1, 217.6, 217.7, referred to.
Attorney-General (SA) v Kowalski (No 8) [2020] SASC 208; Bailey v Bailey (1924) 34 CLR 558; Crago v McIntyre [1967] 1 NSWLR 729; Crowther v Crowther (1951) AC 723; Ford by his tutor Watkinson v Perpetual Trustees Victoria Ltd (2009) 75 NSWLR 42; Gibbons v Wright (1954) 91 CLR 423; Holt v Bunney [2020] SASCFC 89; Imperial Loan Co v Stone (1892) 1 QB 599; Kowalski v Sim & Ors [2019] SASCFC 96; Kowalski v Stanley & Partners & Anor [2015] SASC 130; Kowalski v Stanley & Partners & Anor [2016] SASCFC 74; Kowalski v Stanley and Partners & Anor [2016] HCASL 270; Kowalski v Stanley & Partners & Anor [2019] HCASL 167; Mitsubishi Motors Australia Ltd v Kowalski (2019) 134 SASR 1; PT Ltd and Another v Maradona Pty Ltd and Others (1992) 25 NSWLR 643; Spalla Limited v St George Motor Finance Ltd (No 6) [2004] FCA 1699; Toll (FGCT) Pty Limited v Alphapharm Pty Limited (2004) 219 CLR 165, discussed.
Attorney-General (SA) v Kowalski [2014] SASC 1; Henderson v Henderson (1843) 3 Hare 100; Kowalski v Sim & Ors [2019] HCASL 391; Kowalski v Stanley & Partners & Anor [2014] SASC 198; Mitsubishi Motors Australia Ltd v Kowalski [2005] SASC 154; Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589, considered.
KOWALSKI v STANLEY & PARTNERS & ANOR
[2021] SASC 23
Magistrates Court Appeal: Civil
PEEK J: Appeal against a Magistrate’s refusal to set aside a consent judgment.
TABLE OF CONTENTS
Part A: Overview............................................................................................................... [2]
Part B: Introduction........................................................................................................... [7]
Proceedings initiated by Kowalski concerning the subject consent judgment.............. [10]
A partial chronology.............................................................................................. [14]
Part C: Supreme Court Action No 2472 of 1995 – Williams J............................................. [15]
Kowalski’s factual case at the Williams J proceedings............................................. [16]
Kowalski’s failure to call evidence concerning Dr Jagermann either before or
during the Williams J proceedings.......................................................................... [29]Part D: The proceedings before Magistrate Milazzo........................................................... [32]
Part E: Mental incapacity generally.................................................................................. [44]
The meaning of “mental incapacity” in the present context – “A person’s mind
is not one and indivisible”...................................................................................... [45]The requirement that the other party knew of the “mental incapacity”...................... [52]
Dr Jagermann’s letters to Kowalski’s General Practitioner...................................... [59]
Part F: The hearing of the present appeal........................................................................... [79]
The application by Kowalski for me to recuse myself................................................ [83]
Part G: Consideration...................................................................................................... [86]
The grant of s 39 vexatious litigant permission by Blue J on 28 October 2020............ [93]
The discretion to grant s 39 permission to a vexatious litigant to institute
a proceeding........................................................................................................ [101]A grant of s 39 vexatious litigant permission does not impinge on the
opposing party’s right to later contend that there is an abuse of process................. [104]The gross delay from Bourne’s point of view.......................................................... [109]
Part H: Conclusion........................................................................................................ [111]
PART A: OVERVIEW
Mr Kazimir Kowalski (Kowalski) has twice been declared to be a “vexatious litigant” and retains that status.[1] On 30 April 2019, Blue J granted Kowalski permission pursuant to s 39 Supreme Court Act 1935 (to be referred to as s 39 vexatious litigant permission) to file in Magistrates Court Action No 788 of 1993 an interlocutory application to set aside a consent judgment in that action into which he had entered as long ago as 29 January 1993 (the subject consent judgment); and as to which he has initiated much litigation over the intervening 28 years.
[1] First by Bleby J on 19 April 2005 in Mitsubishi Motors Australia Ltd v Kowalski [2005] SASC 154 and then by Blue J on 20 January 2014 in Attorney-General (SA) v Kowalski [2014] SASC 1.
On 28 October 2019, Magistrate Milazzo heard Kowalski’s application and refused to set aside the subject consent judgment.
One year later, on 28 October 2020, Blue J granted Kowalski s 39 vexatious litigant permission to institute in the Supreme Court an appeal against that decision of Magistrate Milazzo, which appeal is now before me (the present appeal). The only ground of appeal in the present appeal is:
His Honour Magistrate Milazzo erred in failing to have regard to the 1 May 2019 affidavit of Kazzimir Kowalski or the exhibits to the affidavit of Kazimir Kowalski dated 11 April 2019.
It is clear from Blue J’s reasons given on 28 October 2020[2] that this ground of appeal was intended to assert that when assessing whether Kowalski had been mentally incompetent to enter into the subject consent judgment, the Magistrate failed to have regard to the bearing of two letters dated 4 January 1993 and 26 January 1993, respectively, from Kowalski’s treating psychiatrist, Dr Karl Jagermann (Dr Jagermann), to Kowalski’s General Practitioner, Dr Hughes, (the Jagermann letters)[3] and Kowalski’s statements in an affidavit before the Magistrate.
[2] Attorney-General (SA) v Kowalski (No 8) [2020] SASC 208.
[3] For completeness, there may have been other letters, but these two were the only ones referred to by Kowalski in his 1 May 2019 affidavit and the only two annexed to the 11 April 2019 affidavit. Such was confirmed by Kowalski in dialogue with Blue J on 29 July 2020 (Transcript p.69).
I foreshadow that I later conclude that this appeal must be dismissed on the basis that even if the Magistrate committed the procedural error complained of in the ground of appeal, on a consideration of all relevant circumstances, the correct decision is to refuse to set aside the subject consent judgment. My reasons follow.
PART B: INTRODUCTION
To go back to the very beginning, between 1988 and February 1991, Kowalski was a client of Mr Timothy Bourne (Bourne) who was then a partner of Stanley & Partners (Stanleys), a firm of solicitors which acted for Kowalski in relation to a common law claim and a worker’s compensation claim against his former employer.[4]
[4] Stanleys ceased trading in the year 2000.
In February 1991, Kowalski instructed a different firm of solicitors, RJ Cole & Partners, to act in all of his litigation. Stanleys were prepared to release the files if costs were agreed at $2,000 plus disbursements. Kowalski rejected that proposal and requested that the costs be taxed. Stanleys retained a costs consultant who prepared a bill in taxable form with estimated costs owing in the amount of $6,331.11 (including $2,487 for preparation of the bill).
Negotiations concerning payment failed and Stanleys issued proceedings in Magistrates Court Action No 788 of 1993 claiming the sum of $6,311.11 plus Court costs. Kowalski consented to judgment in the amount of $6,684.11 (inclusive of costs – the subject judgment sum) which consent judgment was entered on 29 January 1993. On 26 July 1993, six months later, Kowalski paid that judgment sum to Stanleys.
Proceedings initiated by Kowalski concerning the subject consent judgment
Since paying the subject judgment sum, Kowalski has initiated and litigated a myriad of proceedings (all unsuccessful) in numerous different jurisdictions concerning the recovery of that sum of money. On 27 August 2015, more than 20 years after its payment, Bampton J delivered the judgment Kowalski v Stanley & Partners & Anor[5] (the Bampton J Judgment), in which her Honour recited in detail the various sets of proceedings that had been brought by Kowalski (up to that time) concerning the subject judgment sum; the present judgment proceeds as if the whole of the Bampton J Judgment in that regard appears as a schedule hereto. The Bampton J judgment concludes thus:
54. As the application is clearly an abuse of process, I refuse permission to appeal. The consent judgment was entered 22 years ago, after Mr Kowalski obtained legal advice, which advice included the topic of taxation of costs. In the past 22 years, Stanley & Partners and/or Mr Bourne have been burdened with defending proceedings in the Magistrates, Federal Magistrates and Industrial Relations Courts. They have also had to defend appeals to the Supreme Court, the Full Court of the Industrial Relations Court and the Federal Court as well as complaints to the Legal Practitioners Disciplinary Tribunal.
55. It is abundantly clear from the history of litigation between Mr Kowalski and Mr Bourne, Mr Kowalski’s submissions and conduct during the hearings before me in this matter that Mr Kowalski bears great hostility towards Mr Bourne. Like the Full Court of the Industrial Relations Court in Kowalski v Bourne and RJ Cole & Partners,[6] I too am led to drawing the irresistible inference that Mr Kowalski is determined to bring proceedings to harass Mr Bourne in any jurisdiction in which it is possible to do so.
56. There must be finality to this matter.
[5] [2015] SASC 130.
[6] [2015] SAIRC 17.
The decisions of the Full Court and High Court in Kowalski v Stanley & Partners & Anor
Kowalski appealed against the Bampton J Judgment. On 22 July 2016, in Kowalski v Stanley & Partners & Anor, the Full Court dismissed that appeal.[7] The plurality (Kelly and Peek JJ) particularly noted[8] the extended proceedings before the late former Supreme Court Justice Williams[9] in 1996-1997, in which Kowalski had had every opportunity to litigate all possible aspects of the obtaining and payment of the subject consent judgment; and further, that Kowalski had elected at that time not to appeal to the Full Court from the judgment of Williams J.[10] The relevance of analogies to Anshun[11] and to abuse of process by impermissible re-litigation when deciding whether or not to set aside a consent judgment is obvious, and such considerations will be considered below.
[7] [2016] SASCFC 74.
[8] At [6] to [7].
[9] The Honourable Horton Williams QC recently passed away on 17 December 2020.
[10] Bampton J also refers to this aspect at length in her judgment (including as to the fact that Kowalski had taken independent legal advice on the matter of entering the subject consent judgment).
[11] Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589.
In 2016, Kowalski applied to the High Court for special leave to appeal from the decision in Kowalski v Stanley & Partners & Anor. On 10 November 2016, Nettle and Gordon JJ dismissed the application in the following terms:[12]
1.There is no reason to doubt the correctness of the decision of the Full Court of the Supreme Court of South Australia (Kelly, Peek and Lovell JJ). Accordingly, an appeal to this Court would not enjoy sufficient prospects of success to warrant a grant of special leave.
2.The applicant’s summons filed on 23 September 2016 seeking leave to file additional authorities in support of his application for special leave is dismissed. The additional authorities do not support a grant of special leave.
3.Pursuant to r 41.08.1 of the High Court Rules 2004 (Cth), we direct the Registrar to draw up, sign and seal an order dismissing the application.
[12] Kowalski v Stanley and Partners & Anor [2016] HCASL 270.
In 2019, Kowalski again applied to the High Court for special leave to appeal from the decision in Kowalski v Stanley & Partners & Anor. On 15 May 2019, Bell and Gageler JJ again dismissed the application, in the following terms:[13]
1.The applicant seeks an extension of time so as to enable his application for special leave to appeal from a decision of the Full Court of the Supreme Court of South Australia (Kelly, Peek and Lovell JJ) to proceed. On 10 November 2016, Nettle and Gordon JJ refused an application for special leave to appeal from the same decision: Kowalski v Stanley and Partners [2016] HCASL 270.
2.The application discloses no reason to revisit the decision of Nettle and Gordon JJ. Accordingly, it would be futile to grant the extension of time that is sought and special leave to appeal should be refused.
3.Pursuant to r 41.08.1 of the High Court Rules 2004 (Cth), we direct the Registrar to draw up, sign and seal an order dismissing the application.
[13] Kowalski v Stanley & Partners & Anor [2019] HCASL 167.
A partial chronology
The following is a partial chronology setting out various of the proceedings initiated by Kowalski concerning the subject consent judgment. They include those referred to in the Bampton J Judgment; those occurring since then; and finally, the present proceedings.
Date
Event
1988 to February 1991
Kowalski was a client of Mr Timothy Bourne (Bourne) who was then a partner of Stanleys.
February 1991
Kowalski ceased being a client of Stanleys. RJ Cole & Partners commence to act for Kowalski.
15.01.1993
Kowalski received the summons from Stanleys concerning the Magistrates Court Action No 788 of 1993 it had instituted the previous day claiming the sum of $6,311.11 plus Court costs.
22.01.1993
Kowalski consulted an independent solicitor, Mr Michael W Speck, for advice concerning the claim by Stanleys (Speck letter reproduced at paragraph [24] herein).
29.01.1993
Kowalski signed and entered a consent judgment in the amount of $6,684.11 (inclusive of costs – the subject judgment sum) in Magistrates Court Action No 788 of 1993.
26.07.1993
Kowalski paid the subject judgment sum of $6,684.11 (inclusive of costs) to Stanleys.
29.03.1995
Kowalski filed an application in the Magistrates Court seeking that the subject consent judgment be set aside.
07.04.1995
Magistrate Millard dismissed the set aside application of 29 March 1995.
09.10.1995
Kowalski filed a second application in the Magistrates Court seeking that the subject consent judgment be set aside.
03.11.1995
Magistrate Johansen SM dismissed the set aside application of 9 October 1995.
10.11.1995
Kowalski filed an application in the Magistrates Court seeking that the costs upon which the subject consent judgment was based be rescinded or taxed.
Kowalski swore an affidavit in support of his application and asserted that he had consented to the judgment believing that the costs had been taxed in the Supreme Court; and having learned that they were not taxed, he asserted it was unconscionable for Stanleys to pursue judgment in this matter.
17.11.1995
Magistrate Millard dismissed the application of 10 November 1995 (and published detailed reasons on 27 November 1995).
1995
Kowalski filed Kowalski v Stanley & Partners Supreme Court Action No 2472 of 1995.
Kowalski sought an extension of time within which to appeal the Magistrates Court decisions on 7 April, 3 November and 17 November 1995 dismissing his applications.
05.07.1996
Supreme Court Action No 2472 of 1995 – Williams J made orders concerning the filing of affidavits.
20.08.1996
Supreme Court Action No 2472 of 1995 – Kowalski filed affidavit.
01.11.1996
Supreme Court Action No 2472 of 1995 – Williams J observed:
“I am putting it at its very lowest. I think it is fraud that would have to be demonstrated before granting an extension of time. It seems to me that I should be satisfied that there was at least some basis for the claim, I would not need to be satisfied that the claim would succeed, all I am looking for is to find something on which Mr Kowalski can hang his hat in terms of an argument. … At the moment I cannot see anything that is on the face of it. He had independent advice. That, of course, does not put the matter beyond doubt. But, I think I will give Mr Kowalski one last chance to bring forward an affidavit that demonstrates, if he can, a lack of bona fides on the part of Mr Bourne.”
Williams J ordered: “That Mr Kowalski within 7 days file any further affidavit upon which he relies, in particular any material upon which he relies to establish lack of bona fides of Mr Bourne on or before 29 January 1993 which may have led Mr Kowalski to consent to judgment as he did on 29 January 1993.”
07.11.1996
Supreme Court Action No 2472 of 1995 – Kowalski filed a further affidavit sworn on 7 November 1996 and exhibited a copy of a letter dated 10 April 1996 from the solicitor he had consulted about the consent judgment, Mr Michael W Speck.
15.11.1996
Supreme Court Action No 2472 of 1995 – Williams J refused Kowalski’s application.
08.07.1997
Supreme Court Action No 2472 of 1995 – Williams J refused an application by Kowalski to “reopen” the order he had made refusing the extension of time within which to appeal.
25.07.1997
Supreme Court Action No 2472 of 1995 – Williams J refused yet another application made by Kowalski J on 11 July 1997 seeking to set aside his order made on 15 November 1996. Williams J stated (inter alia):
“I have also explained to Mr Kowalski that this matter has now been exhaustively investigated before me and that as matters now stand I would not be prepared to consider any further application to vary my earlier orders. …
I have drawn the attention of Mr Kowalski to his right to apply for leave to appeal against my decisions. However, Mr Kowalski has indicated that he does not wish to take the matter further.
The application is dismissed.”
14.05.1999
Dr Karl Jagermann died.
19.04.2005
Kowalski was declared to be a vexatious litigant by Bleby J.
08.05.2010
The Legal Practitioners Disciplinary Tribunal (LPDT)
Kowalski complained against Bourne to the LPDT. It resolved to make no finding of unprofessional conduct. (Later, on 4 April 2012, Kowalski again complained to the LPDT, with the same result.)
May 2010
The Federal Magistrates Court
Kowalski commenced proceedings against Bourne and asserted fraud by him in connection with the claim for costs.
24.08.2010
The Federal Magistrates Court
Kowalski’s claim tried by Federal Magistrate Lindsay and dismissed. Kowalski ordered to pay Bourne’s costs in the sum of $9,675. Kowalski later lodged an appeal.
28.03.2011
The Appeal to the Federal Court
Kowalski’s appeal dismissed by Logan J. In a long and closely reasoned judgment, his Honour found that the appeal had a “complete absence of merit” and ordered costs in favour of Bourne on an indemnity basis.
Circa 2011
The LPDT
Kowalski laid charges alleging unprofessional conduct by, respectively, Mr Camatta (in appearing for Bourne on the Federal Magistrates Court proceedings above) and against Ms Nelson QC (in appearing for Bourne on the Federal Court appellate proceedings above). Both charges were in due course dismissed.
2011
The Industrial Relations Court
Kowalski instituted Action No 1114 of 2011 seeking declarations to the effect that Stanleys and Bourne did not have any legal right to sue him for legal costs and disbursements in the sum of $6,684.11 in the Adelaide Magistrates Court and a declaration that the sum was obtained by fraud, unconscionably and illegally.
Bourne made an application for summary dismissal of the proceedings. Judge Hannon summarily dismissed the action (reasons published on 23 August 2011). Kowalski lodged an appeal.
September 2011
The private criminal prosecution
Kowalski commenced a private prosecution against Bourne charging 11 contraventions of the Criminal Law Consolidation Act 1935 (SA).
07.11.2011
The private criminal prosecution
Dr Cannon SM dismissed the Information. Kowalski appealed.
13.01.2012
Kowalski’s appeal from the dismissal of the private criminal prosecution heard by Kourakis J (as he then was) who stayed the prosecution as an abuse of process of the Court.
20.02.2012
Kowalski’s application for permission to appeal against the judgment of Kourakis J refused.
09.03.2012
Supreme Court Action No 2472 of 1995 – Williams J
Kowalski’s application for an extension of time within which to apply for permission to appeal against the judgment of Williams J refused by David J.
28.11.2013
Kowalski applied to the Supreme Court for the costs the subject of the consent judgment to be taxed.
20.01.2014
Kowalski was declared to be a vexatious litigant by Blue J.
27.11.2014
The Full Court of the Industrial Relations Court
Appeal from the judgment of Judge Hannon heard and judgment reserved.
17.12.2014
Judge Dart dismissed the application to have the costs taxed as an abuse of process of the Court: [2014] SASC 198.
29.05.2015
The Full Court of the Industrial Relations Court held that to allow the appeal to proceed would be an abuse of process, that it was plainly vexatious, and permanently stayed the proceedings.
27.08.2015
Kowalski appealed from Judge Dart’s decision. Bampton J dismissed the appeal: [2015] SASC 130.
22.07.2016
Kowalski appealed to the Full Court from Bampton J’s dismissal of the appeal from Judge Dart’s decision. The Full Court dismissed the appeal: [2016] SASCFC 74.
10.11.2016
Kowalski applied to the High Court for special leave to appeal against the decision of the Full Court in Kowalski v Stanley & Partners & Anor [2016] SASCFC 74. Special leave was refused: [2016] HCASL 270.
11.04.2019
Kowalski filed an interlocutory application in the Magistrates Court seeking permission to set aside the subject consent judgment. Kowalski also swore and filed an affidavit in support of the application (the 11.4.19 affidavit). (These documents appear to have been filed before Kowalski received s 39 vexatious litigant permission from Blue J): Kowalski Appeal Book Document No 1.
30.04.2019
Blue J granted s 39 vexatious litigant permission to Kowalski to lodge an application in the Magistrates Court to set aside the subject consent judgment. His Honour gave no reasons. Both Kowalski and Bourne requested reasons, but his Honour declined: Kowalski Appeal Book p.1; Bourne affidavit 9.9.19.
01.05.2019
Kowalski re-filed the 11.4.19 affidavit without its exhibits (the 1.5.19 affidavit).
15.05.2019
Kowalski’s second application to the High Court for special leave to appeal against Kowalski v Stanley & Partners & Anor [2016] SASCFC 74. Special leave again refused: [2019] HCASL 167.
09.09.2019
Magistrate Milazzo listed the present matter for hearing on 28 October 2019 (on the basis that all evidence to be relied upon had been filed by 9 September 2019).
17.09.2019
Kowalski filed the affidavit sworn on 11.4.19 with its exhibits, which include Dr Jagermann’s letters to Kowalski’s General Practitioner dated 4 January 1993, 26 January 1993 and 23 February 1993, respectively.
28.10.2019
Magistrate Milazzo heard the subject application. His Honour delivered an ex tempore judgment and declined to set aside the subject consent judgment.
25.11.2019
Kowalski filed an interlocutory application in the Supreme Court seeking s 39 vexatious litigant permission to appeal against the Judgment of Magistrate Milazzo and swore an affidavit in support.
14.07.2020
Initial hearing before Blue J (ex parte).
29.07.2020
Second hearing before Blue J (Bourne invited to attend and did so).
28.10.2020
Blue J delivered judgment. His Honour granted permission as to one ground of appeal only.
05.11.2020
Blue J signed order: Kowalski Appeal Book pp.15-16.
12.11.2020
Kowalski filed the present Notice of Appeal with only the ground of appeal approved by Blue J. (After a delay of about one year and two weeks since the delivery of judgment by Magistrate Milazzo on 28 October 2019): Kowalski Appeal Book p.18.
PART C: SUPREME COURT ACTION NO 2472 OF 1995 – WILLIAMS J
As noted in the above chronology, more than 25 years ago in Supreme Court Action No 2472 of 1995 heard by Williams J (the Williams J proceedings), Kowalski sought an extension of time within which to appeal against the Magistrates Court decisions on 7 April, 3 November and 17 November 1995, which had dismissed his applications to set aside the subject consent judgment. These proceedings were patiently dealt with at length by Williams J and are highly relevant to the correct disposition of the present application.
Kowalski’s factual case at the Williams J proceedings
On 5 July 1996, Williams J made orders concerning the filing of affidavits. On 20 August 1996, Kowalski filed an affidavit and deposed (inter alia) as follows:
- AFFIDAVIT -
I Kazimir Kowalski of 26 Nalimba Street Hallett Cove 5158 the above named applicant make oath and say:
1.Leave was granted, by His Honour Justice Bollen, on 1st March 1996, to seek an extension of time to launch an appeal against the consent judgement in the Magistrates Court of Adelaide, for action No. 788/93.
2.My counsel and I attended before His Honour Justice Williams, on the 5th July 1996, and His Honour made an order that:
a. The Applicant within two months file and serve additional affidavit including any calculations as to costs, and specify items in dispute.
b. Leave for Respondent to file answering affidavit within 14 days of receipt of additional matterial.
c. Either party to bring the matter on as required.
d. Costs reserved.
3.His Honour Justice Williams requested a chronology of events and why the applicant waited so long to seek recovery of the costs that he paid to the respondent.
4.The events in chronological order are as follows:
a. I instructed Stanley & Partners to act for myself on or about 28.1.88. Annexure marked with the letter “K1”.
b. I received an offer to consent to judgement for a sum of $3000.00 plus Party/Party costs from the defendant on or about 30.8.89.
So party/party costs did not have to be paid by myself upto this date. Annexure marked with the letter “K2”.
c. By letter dated 8.2.91, RJ Cole and Partners, Barristers and Solicitors contacted myself and said “we would like the opportunity of discussing any potential entitlement to compensation flowing from that injury” this was the eye injury that Stanley’s had been representing myself. Annexure marked with the letter “K3”.
d. I was asked to sign an authority to release Stanley and Partners file to R J Cole and Partners, as found in letter from RJ Cole to myself, dated 13.2.91. Annexure marked with the letter “K4”.
e. RJ Cole informed Stanley’s, by letter dated 13.2.91, that I had terminated my instructions to Stanley’s. It appears from the stamp on the letter, that Stanley’s received this letter on the 20.2.91, therefore I was not a client of Stanley and Partners from 20.2.91. Annexure marked with the letter “K5”.
f. I signed an authority for Stanley’s to release my file to RJ Cole and Partners on 15.2.91. Annexure marked with the letter “K6”.
g. Mr T Bourne confirmed in his affidavit sworn on or about 5th April 1995, which was filed in the Magistrates Court of Adelaide, that I terminated my instructions to Stanley and Partners “In or about February 1991”. Annexure marked with the letter “K7”. [Underlining in original]
Kowalski then referred to the negotiations as to outstanding fees which led to the issuing of a summons by Stanleys. He continued thus:
b.1.I believe that I received the summons on or about 15.1.93, which placed myself under extreme pressure.
I was being enticed to accept a settlement in regards a WorkCover matter, by a solicitor with RJ Cole and Partners, at the time that Stanley’s sued myself for the $6,684.11.
Mr L Owens, the CEO of the WorkCover Corporation refused to give his consent to the WorkCover settlement, so I refused to enter into what I was informed was an illegal settlement.
c.1.Then by letter dated 18.1.93, Mr P Harris from RJ Cole and Partners, tried to entice myself, in breach of S119(3) of the WorkCover Act, to accept the WorkCover settlement.
I was made to believe that if I accepted the WorkCover settlement then all of my legal costs would have been paid by Mitsubishi. Annexure marked with the letter “K30”.
d.1.I approached the Legal Services Commission for assistance, on or about 22.1.93 and I was referred to a solicitor for a ½ hour free consultation.
I was given the impression that I had no option but to pay the sum that Stanley’s were suing myself for, by the solicitor, so as I did not want to enter into an illegal settlement in regards the WorkCover matter therefore disposing of the costs that I was being sued for, I consented to judgment on 29.1.93.
Annexure marked with the letter “K31”.
e.1.On 7.5.93 Mr T Bourne of Stanley and Partners informed myself by letter of the following:
“Our accounts have been outstanding since 25.2.91. We obtained Judgement by Consent in the Magistrates Court (Civil) on 29.1.93. To date, no firm arrangements have been made for payment by you of the account.”
Although I informed Mr Bourne that I was selling my house in order to pay the sum that Stanley’s sued myself for, he said:
“It is not economically viable for us to continue to defer payment. Unless firm arrangements are made within 7 days, we propose to issue enforcement proceedings for recovery of the Judgement sum together with interest and further costs.”
Annexure marked with the letter “K32”.
f.1.Mr T Bourne and his firm contacted LJ Hooker at Mc Laren Vale and myself and my wife at home, in order to confirm that I was selling my house and when settlement would take place, which I now consider as being unprofessional of him because he was prevented from suing on the bill because it had not been delivered to myself in the proper form. Refer to Item r of affidavit.
g.1.I sold my house and paid Stanley and Partners the sum of $6684.11 by cheque No. 155109, on the 26th July 1993.
h.1.I was still being treated by a psychiatrist for my mental break-down in 1993 and 1994, however in November 1994 I filed a complaint with the Legal Practitioners Complaints Committee in regards the manner that T Bourne, from Stanley and Partners, deceived myself into paying his firm the $$6684.11 and using the Court system to assist him. Annexure marked with the letter “K33”. [Underlining in original]
On 1 November 1996, there occurred the following dialogue:
MR COGAN: Yes. The bill was prepared in the usual fashion. What Stanley & Partners did was proper. They drew the bill, they proceeded in the Magistrates Court for the judgment sum that they were seeking. That’s entirely in accordance with the principles laid down.
MR KOWALSKI: By Stanleys preparing the documents in taxable form, they were prepared to have the tax prepared by my solicitor at the time. They failed to do so. They prepared it at the cost of $2,500. It wasn’t until 1995 that the Legal Practitioners Complaints Committee gave me a copy of the bill. Why didn’t Mr Bourne serve the bill on us? He was prevented from suing on the bill. These are clear cases. He has still got away with it. 14 months after the last letter, he sues me. I was under the care of a psychiatrist. I was under a lot of pressure. I wanted to get rid of this litigation. This is why I succumbed to the pressure and ended up paying. [Emphasis added]
And later during that same hearing:
HIS HONOUR: You agree that on 9 January 1993 you signed a document whereby you consented to judgment against yourself in the Adelaide Local Court for $6,684.11.
MR KOWALSKI: Unconscionably and under duress. [Emphasis added]
It can be seen in these emphasised passages that Kowalski was advancing in the Williams J proceedings matters concerning his mental state and asserting that the subject consent judgment occurred “unconscionably and under duress”.
At a further hearing on 1 November 1996, Williams J observed as to the evidence before him:
I am putting it at its very lowest. I think it is fraud that would have to be demonstrated before granting an extension of time. It seems to me that I should be satisfied that there was at least some basis for the claim, I would not need to be satisfied that the claim would succeed, all I am looking for is to find something on which Mr Kowalski can hang his hat in terms of an argument. … At the moment I cannot see anything that is on the face of it. He had independent advice. That, of course, does not put the matter beyond doubt. But, I think I will give Mr Kowalski one last chance to bring forward an affidavit that demonstrates, if he can, a lack of bona fides on the part of Mr Bourne.
…
I am going to direct that that material be filed within seven days. We will bring the matter on again. We’ll adjourn the matter for a fortnight until Friday, 15 November at 9.30 a.m. when I would expect to hear further argument and to dispose of the matter.
I should tell you that at the moment you will not succeed because before giving an extension of time, I would need to be satisfied that there was some prospect of success and at the moment there is none because there is that absence of material on the face of the file. But, I am not going to shut you out without giving you a full opportunity. [Emphasis added]
Williams J ordered as follows:
That Mr Kowalski within 7 days file any further affidavit upon which he relies, in particular any material upon which he relies to establish lack of bona fides of Mr Bourne on or before 29 January 1993 which may have led Mr Kowalski to consent to judgment as he did on 29 January 1993.
I foreshadow here my conclusion below that Williams J was quite correct in his repeated statements to Kowalski to the effect that it was not enough for Kowalski to establish (if he could) that he was mentally incompetent at the relevant time; rather, it was also necessary to establish that Bourne, at the relevant time, knew of the existence of such mental incompetence. This principle was clearly confirmed for Australia, at the latest, by the seminal decision of the High Court in Gibbons v Wright[14] (to be considered below). True it is that his Honour did not pause to cite such authorities, but I have no doubt that his Honour was well aware of them and considered that a statement of bottom line principles was all that was needed for disposal of the particular task at hand. Perhaps, with the benefit of hindsight, that was a little optimistic; but his Honour should not be criticised for that.
[14] (1954) 91 CLR 423.
On 7 November 1996, Kowalski filed a further affidavit and exhibited as an annexure a copy of a letter dated 10 April 1996 written by the solicitor Mr Michael W Speck (Mr Speck) from whom Kowalski had taken advice on 22 January 1993 concerning his entry into the subject consent judgment, only one week before he did so. It was (in full) as follows:[15]
[15] The letter was addressed to the Legal Practitioners Complaints Committee to whom Kowalski had subsequently made a complaint concerning Mr Speck. I understand that it was dismissed.
We refer to your letter of 15 March last. Mr. Kowalski attended at our office on 22 January 1993 with a summons from Messrs Stanley and Partners whereby they were seeking to recover their costs in relation to a workers compensation claim.
Mr. Kowalski had elected to change solicitors to Messrs. R.J. Cole and Partners and there was a dispute with respect to the fees outstanding to Messrs. Stanley and Partners.
We advised Mr. Kowalski that we had assumed that Stanley and Partners had calculated their account for the amount of the summons pursuant to the Supreme Court Scale and that they could substantiate this. We indicated that if he lodged a defence they would be left with no option but to tax their costs. We pointed out that if Stanley and Partners could back up their claim for costs, then he would be left with a greater debt by reason of the additional costs associated with the taxation.
On the other hand he may well have been able to reduce the amount that Messrs. Stanley and Partners were seeking to recover from him by the proceedings issued. We indicated that it was very much a decision for him.
Mr. Kowalski was in no position to instruct us as not only did he have a dispute regarding his legal costs with Stanley and Partners, it was our understanding that he had an outstanding account which was unpaid to Messrs. R.J. Cole and Partners in the region of approximately $20,000.00.
We suggested finally to him that he should contact Mr. Bourne from Messrs. Stanley and Partners to see whether he may be able to strike some sort of compromise agreement.
We attempted to telephone Mr. Bourne whilst Mr. Kowalski was with us, but were not able to get through. Mr. Bourne later returned the call, indicating that the amount that was sought in the summons had been calculated by strictly adhering to the Supreme Court Scale.
In relation to this point we did not see or hear from Mr. Kowalski again.
We did not charge Mr. Kowalski for the advice we provided as we had some sympathy for his circumstances.
We wish to emphatically deny that we have acted in an unprofessional way or that we have provided any false advice.
We are happy for this letter to be tendered in any proceedings currently before the Court.
Yours faithfully
MICHAEL W SPECK & COPer:
MICHAEL W SPECK
[Emphasis added]
It has been asserted by Kowalski, from time to time, that the reason that he entered the subject consent judgment was because Bourne had given him to understand that the costs being claimed had in fact been taxed by the Supreme Court at the claimed amount, and thus suggesting some sort of fraudulent conduct in this regard. However, this letter from the independent solicitor, Mr Speck, indicates that Kowalski received legal advice that the costs had not been taxed and that there was a commercial risk that, if Stanleys were forced to tax their costs, then Kowalski might end up paying the not inconsiderable expense of that procedure.
At a hearing on 15 November 1996, Williams J refused Kowalski’s application. His Honour stated:
Having previously adjourned the hearing to give Mr Kowalski the opportunity to adduce further evidence by affidavit, I have reached the conclusion that Mr Kowalski is not able to demonstrate even an arguable case. I consider that it would be oppressive, from the point of view of Stanley & Partners, that this matter should be allowed to proceed further in those circumstances. Accordingly, the application for extension of time is refused.
At a further hearing on 8 July 1997, Williams J refused an application by Kowalski to “reopen” the order he had made refusing the extension of time within which to appeal. His Honour stated that there was nothing before him which would justify reopening the decision he had made on 15 November 1996.
On 11 July 1997, Kowalski made yet another application seeking to set aside Williams J’s order made on 15 November 1996. At a hearing on 25 July 1997, Williams J stated:
I have reviewed the proceedings of 8 July 1997 in light of Mr Kowalski’s complaint. Having heard Mr Kowalski this morning I am satisfied there is nothing new which he can advance. After further discussion today Mr Kowalski intimated that he does not wish to argue that any further formal step need be taken to put on the court record the material upon which I have relied.
I have explained to Mr Kowalski there is in place a monetary judgment which entitles Stanley & Partners to take steps to recover money. I have refused to extend time to allow Mr Kowalski to apply to set aside the judgment which was originally entered by consent after Mr Kowalski obtained legal advice.
I have also explained to Mr Kowalski that this matter has now been exhaustively investigated before me and that as matters now stand I would not be prepared to consider any further application to vary my earlier orders. …
I have drawn the attention of Mr Kowalski to his right to apply for leave to appeal against my decisions. However, Mr Kowalski has indicated that he does not wish to take the matter further.
The application is dismissed. [Emphasis added]
Kowalski’s failure to call evidence concerning Dr Jagermann either before or during the Williams J proceedings
It is important to note that Kowalski had available to him the Jagermann letters from January 1993 onwards,[16] but made no attempt to utilise them prior to, or at, the Williams J proceedings. Further, Kowalski makes no suggestion in the present proceedings that he could not have obtained a report from Dr Jagermann, or that he could not have called Dr Jagermann to give evidence, either prior to, or at, the Williams J proceedings.
[16] Each of the letters state on their face that a copy was sent to Kowalski.
At the hearing of this appeal, both sides agreed that Dr Jagermann had died some years ago. Kowalski stated that he thought it was in about 1998.[17] Since this matter clearly falls within s 59J of the Evidence Act 1929, my Associate made inquiries and ascertained that the records indicate that Dr Jagermann died on 14 May 1999 at the age of 69 (date of birth: 3 September 1929); his Funeral Notice was published in The Advertiser newspaper on Thursday, 20 May 1999; and his funeral was held at Mawson Chapel of the Jubilee Complex, Centennial Park Cemetery on Friday, 21 May 1999 (cremation).
[17] Transcript of Appeal Hearing on 1 February 2021, p.68.
I consider that Kowalski’s failure to advance the Jagermann letters before, or at, the Williams J proceedings is highly indicative of Kowalski’s then acceptance that any degree of mental trauma that he may have had at the time of entering the subject consent judgment was simply insufficient to establish the degree of “mental incompetence” that would be required to justify the setting aside of the subject consent judgment.
PART D: THE PROCEEDINGS BEFORE MAGISTRATE MILAZZO
As noted above, Kowalski is a declared vexatious litigant. On 30 April 2019, some 26 years after the entry of the subject consent judgment, Blue J granted Kowalski s 39 vexatious litigant permission to file an application in the Magistrates Court to set aside the subject consent judgment. The order made was recorded as follows:
30.04.2019 Order
1.Mr Kowalski is granted permission to file an interlocutory application and accompanying affidavit in Adelaide Magistrates Court action no. 788 of 1993 seeking to set aside the consent judgment dated 29 January 1993.
For Plaintiff 1 : NA
For Defendant 1 : NA
For Other Party 1, 3 : NA
The Honourable Justice Blue
30.04.2019 3.00pm – 3.01pmAlthough both Kowalski and Bourne subsequently applied for reasons for the making of that order, his Honour declined to give any (by email from his Associate dated 14 May 2019).
On 28 October 2019, the substantive hearing before Magistrate Milazzo took place; his Honour declined to set aside the consent judgment and delivered the following ex tempore judgment:
1This is an application by Mr Kowalski to set aside a consent order made 21 January 1993. The grounds set out in the application are said to be:
… on the grounds found in the defendant’s defence dated 2 April 2018 and that the plaintiff illegally breached s.41 of the Legal Practitioners Act 1981.
2In the hearings leading up to my hearing of the matter, I attempted to get Mr Kowalski to identify specifically what grounds he wished to argue before me. As I understood when the matter was listed for hearing by me on 9 September 2019, the ground advanced by Mr Kowalski was that at the time he consented to judgment, he was mentally incompetent so to do. However, this morning I attempted to clarify that and Mr Kowalski identified three grounds upon which his application was made.
3The first ground was that pursuant to s41(1) in the circumstances that persisted at the time the judgment was entered, Stanley & Partners should have taxed their costs. This was an argument put to Mr Millard in 1995. He determined the matter in detailed published reasons on 27 November 1995.[18] Mr Millard specifically rejected the argument that as a bill of costs had never been taxed, Stanley & Partners were not entitled to recover judgment.[19] Accordingly, this matter has already been determined by a court. An application for leave to appeal was dismissed by Williams J in November 1996. I am not prepared to reopen the matter after over 20 years.
4The second ground advanced by Mr Kowalski was that under the Workers Rehabilitation and Compensation Act 1986, Mr Bourne was not entitled to any costs other than costs specifically awarded by the court. An application on that basis was made to the Industrial Relations Court in action number 1114 of 2011. That application was dealt with summarily by Hannon J who on 23 August 2011, dismissed it.[20]
5I should specifically identify that the application was for a declaration that the judgment sum of $6,684.11, was obtained by fraud, unconscionably and illegally.[21] I note in passing that a complaint of overcharging made to the Legal Practitioners Conduct Board in 1995 was dismissed by the Board.[22] Again I am unprepared to reopen the matter.
6Mr Kowalski’s third basis for applying setting aside the judgment was that he was mentally incompetent to consent to judgment. At the time this matter was listed for hearing, Mr Kowalski specifically advised me that all material in relation to his mental incompetence to consent to judgment in favour of Stanley & Partners in 1993 was before the court. Notwithstanding that advice, Mr Kowalski attempted to rely on further affidavit material filed by him on 17 September 2019 and not served on Mr Bourne because, as Mr Kowalski claimed, ‘he is not a party’.
7I will not allow reference to the affidavit but for the sake of completeness, I note Mr Kowalski attempted to refer to paragraph 13 of his affidavit. That paragraph reads as follows:
On 10-7-1992, my treating psychiatrist Dr K Jagermann admitted me into the Fullarton Private Hospital in order to protect me from myself.
8The details of Mr Kowalski’s mental incompetence are not dealt with in that paragraph. The date of the admission to Fullarton Private Hospital pre-dated the date of the signing of judgment by a number of months. Furthermore, as Mr Millard noted in his reasons in 1995, Mr Kowalski was represented by lawyers at the time.[23]
9Mr Kowalski has failed to satisfy me that he was mentally incompetent to consent to judgment. There is nothing before me to indicate that is the case.
10For those reasons Mr Kowalski’s application on this occasion must be dismissed. Mr Bourne makes no application for costs.
[18] Bourne 9/9/2019 ‘TDB1’
[19] Bourne 9/9/2019 ‘TDB’ at p6 17 – p8 110
[20] Bourne 9/9/2019 ‘TDB4’. Appeals to the Full Court of the Industrial Relations Court and the Full Court of the Supreme Court were dismissed. Bourne 9/9/2019 paras 27 and 34.
[21] Bourne’s affidavit did not annex the application but I was advised it could be provided. As the application is a matter of record and has been referred to in other cases between the same parties, I reference Kowalski v Stanley and Partners [2016] SASCFC 74 [30]
[22] Bourne 9/9/2019 para16 and ‘TDB2’. Mr Kowalski’s affidavit 9/9/2019 para 7 and ‘KK-1’ p95.11, omitted reference to ‘TDB2’, no doubt in an attempt to mislead the court.
[23] Bourne 9/9/2019 ‘TDB1’ p7 11 1-18.
Blue J, in his reasons for granting the later s 39 vexatious litigant permission to appeal against the judgment of Magistrate Milazzo,[24] found fault only with the Magistrate’s dismissal of the third basis of Kowalski’s application, that of mental incompetency.
[24] Attorney-General (SA) v Kowalski (No 8) [2020] SASC 208.
Putting the matter very briefly, Blue J essentially considered that on 1 May 2019, Kowalski filed in the Christies Beach Magistrates Court an interlocutory application[25] together with an affidavit (the 1 May 2019 affidavit) which was in the same terms as an affidavit that he had apparently previously sworn (but not filed) on 11 April 2019 (the 11 April 2019 affidavit), but lacking its annexures (including the Jagermann letters). Blue J went on to say:
39. On 17 September 2019 Mr Kowalski filed an affidavit that he had sworn on 11 April 2019 (the 11 April affidavit). This affidavit contained paragraphs 1 to 29 which were identical word for word to paragraphs 1 to 29 of the 1 May affidavit. However, this affidavit exhibited the documents referred to in the body of the affidavit as pages 1 to 80. Pages 49 to 51 comprised the report from Dr Jagermann dated 26 January 1993, from which Mr Kowalski had quoted at paragraph 17 of both affidavits and of his points of claim. Pages 31 to 33 comprised the report from Dr Jagermann dated 4 January 1993, from which Mr Kowalski had quoted at paragraph 15 of both affidavits and his points of claim.
[25]Blue J concluded that it was arguable that the Magistrate had erred in declining to take that material into account when considering his decision.
However, it does appear that Kowalski had deliberately refrained from serving Bourne with the 11 April 2019 affidavit, or the 17 September 2019 affidavit, or copies of the Jagermann letters or the written submissions he supplied to the Magistrate on the day of the hearing on the specious basis that Bourne was not a party to the proceedings before Magistrate Milazzo.
Since the hearing before me on 1 February 2021, I have read the transcript of evidence of the proceedings before Magistrate Milazzo on 9 September 2019, when a very lengthy Directions Hearing was held, during which Kowalski continually insulted both the Magistrate and Bourne and which culminated as follows:
MR BOURNE: Your Honour I’m not going to stomach much more of these gratuitous insults. Can your Honour just give me a date for a hearing and I will come back and deal with it?
MR KOWALSKI: You’re a criminal and a liar. See this is it – I can provide you with –
HIS HONOUR: Mr Kowalski could you please stop it?
MR KOWALSKI: Okay.
HIS HONOUR: You are wasting my time.
MR KOWALSKI: Sorry. I’ve got whole volume for your Honour then you will understand.
HIS HONOUR: I will be doing this on the affidavit material.
MR KOWALSKI: We are?
HIS HONOUR: We are.
MR KOWALSKI: Okay.
HIS HONOUR: I can return that now to Mr Kowalski. So the material that’s been filed today. So I will make these orders. 1. Materials filed by parties today is the material to be considered by me at the hearing of Mr Kowalski’s interlocutory application and no other material.
MR KOWALSKI: This is for summary judgment?
HIS HONOUR: Setting aside the judgment and as I understand it the basis that you are doing it is that you are not mentally competent to agree, is that right?
MR KOWALSKI: True.
HIS HONOUR: All of the expert material that proves your mental incompetence at the particular time you agree is here in these papers?
MR KOWALSKI: Yes.
HIS HONOUR: Good.
MR KOWALSKI: And the breach of s.41. There are two issues.
MR BOURNE: Your Honour I haven’t seen any expert report and to the extent that the affidavit contains hearsay evidence I will object to that and I will put Mr Kowalski on notice.
HIS HONOUR: Understand. 1. Matter will proceed to the hearing on the material before the court. 2. Mr Kowalski specifically advises the court that all material in relation to his mental incompetence to consent to judgment in favour of Stanley & Partners in 1993 is before the court. 3. Matter is listed for hearing at 10 a.m. on Monday 28 October concluding at 1 p.m. More than long enough? Three hours should be plenty.
MR KOWALSKI: I suppose. … [Emphasis added]
I have also read the transcript of evidence of the proceedings before Magistrate Milazzo on 28 October 2019, when his Honour heard and disposed of the application. After referring to the first two aspects of the application put by Kowalski, appear the following passages:
HIS HONOUR: Mr Kowalski, we are dealing now with one issue. You are mentally incompetent to consent to judgment. Could you please address it?
MR KOWALSKI: I am addressing it.
HIS HONOUR: Good.
MR KOWALSKI: But your Honour’s interrupting. So if you look at the document I filed today, Kas Kowalski submissions for the hearing before Magistrate Milazzo on 28/10/2019 at 10.30 a.m.
HIS HONOUR: Okay. Mr Bourne do you have a copy of that?
MR BOURNE: No.
MR KOWALSKI: No address for service. He’s not a party. Stanley & Partners is not a party. Nobody is a party. He’s got no standing to be here.
HIS HONOUR: Nobody’s a party? Alright.
MR KOWALSKI: Your Honour’s allowing him to come here and I don’t know what he’s doing here. He’s not a party to the proceedings. Stanley and Partners are supposed to be the defunct which is a –
HIS HONOUR: My heading on your application or your further submissions is that –
MR KOWALSKI: Any way your Honour if you look at this affidavit which Justice Blue asked for, okay? You’ll see it’s an affidavit and on there I exhibited to him –
HIS HONOUR: Now, where will I find the affidavit please?
MR KOWALSKI: On p.65.
HIS HONOUR: 65.
MR KOWALSKI: Filed in the Supreme Court –
HIS HONOUR: Okay I’ve got that.
MR KOWALSKI: - at Justice Blue’s request.
HIS HONOUR: Yes.
MR KOWALSKI: And I say on p.66 I reply to the Honourable Justice Blue pursuant to s.39 whatever, okay.
MR BOURNE: This is from a document filed today?
HIS HONOUR: Apparently yes.
MR BOURNE: I haven’t seen it your Honour.
MR KOWALSKI: I don’t have to talk to Mr Bourne. He’s got no standing to be here.
…
MR KOWALSKI: I’m talking about the documents that I have filed today. Have you got those?
HIS HONOUR: Mr Kowalski, hang on a second and listen. I made orders on 9 September, ‘The matter will proceed at the hearing on the material before the court’.
MR KOWALSKI: Yes.
HIS HONOUR: ‘Mr Kowalski specifically advises the court that all material in relation to this mental incompetence to consent to judgment in favour of Stanley & Partners is before the court’. So, I’m not going to receive further affidavit material now.
MR KOWALSKI: Hang on if I made a mistake and I think everything is before – because after you made, you said that, I went home and I had a little more look at my documents and I had this affidavit which was sworn, I thought I’d filed it but obviously I hadn’t. So, I went and filed it in the court.
HIS HONOUR: Alright, so is this now what you want to refer to or rely on in relation to our claim that you were mentally incompetent to consent to judgment.
MR KOWALSKI: I am telling your Honour that Justice Blue has already found that I was incompetent to sign because he gave me permission to commence these proceedings.
HIS HONOUR: No. He hasn’t made any findings at all. He made an administrative order giving you leave to bring the proceedings. There is no finding at all. That’s not accurate.
…
… Now, let’s focus on your mental incompetence.
MR KOWALSKI: Well I’m showing you. In my affidavit dated 11 April 19 which I filed on 17 September 2019.
HIS HONOUR: After I said that all material that was before the court was dealt with on that basis but anyway on we go.
MR KOWALSKI: Anyway, you’ll see –
HIS HONOUR: Page number?
MR KOWALSKI: Page no.2.
HIS HONOUR: Alright. I’m talking about page numbers to your affidavit.
MR KOWALSKI: Yeah.
HIS HONOUR: Page no.2. Okay in the body of the affidavit and the page starting with para.10 going down to 23, is that right?
MR KOWALSKI: On 10/7/92 my treating psychiatrist –
HIS HONOUR: What number page are we on?
MR KOWALSKI: About 1, 2, 3, 4 paragraphs down. On 25 –
HIS HONOUR: I’ve got that ‘My treating psychiatrist …’
MR KOWALSKI: Yeah ‘Dr Jagermann admitted me into Fullarton Private Hospital in order to protect me from myself’.
HIS HONOUR: Right, I see that now.
MR KOWALSKI: That’s not made up.
HIS HONOUR: Pausing a second. I said we would deal with the application on the basis that you have filed – on the basis of the material you had filed prior to 9 September 2019.
MR KOWALSKI: Well I attended to fight (sic file) it on 11.4.19 when I swore the affidavit but they wouldn’t accept it for filing. This is how this court operates.
HIS HONOUR: Why didn’t you draw my attention to that on 9 September?
MR KOWALSKI: I couldn’t remember. You know you’re saying – this is a psychiatrist. I’m still being treated for my psychiatric illness.
HIS HONOUR: Okay so para.13, I will allow you to refer to this particular affidavit at this stage and let’s see where we go.
MR BOURNE: Is this today’s affidavit?
HIS HONOUR: This is an affidavit which he has filed in court sworn 11 April 2019. Have you been given a copy of that? It was filed on 17 September (2019) –
MR KOWALSKI: He’s not a party to these proceedings. There’s no address for service.
…
HIS HONOUR: I’d like you to please accept that at this point he is a party to the court –
MR KOWALSKI: Okay, I’ll accept, I’ll accept he is –
HIS HONOUR: - and if you could move on. Have you served him with this affidavit?
MR KOWALSKI: I haven’t.
HIS HONOUR: Alright, well for two reasons I’m not going to allow you to rely on it. One you didn’t give it to Mr Bourne and secondly you told me on 9 September all the material that you wanted to rely on in relation to your mental incompetence to consent to judgment was before the court. [Emphasis added]
I consider that Magistrate Milazzo would have found the matter difficult and confusing. If the matter were res integra, I am not certain that I would have interpreted what occurred on 28 October 2019 in quite the same way as Blue J has in his reasons at [47] to [58], particularly having regard to the fact that Kowalski had deliberately refrained from serving Bourne with the materials referred to above.
However, in order to give Kowalski every consideration, I will approach the matter on the basis as summarised by Blue J in his reasons at [47] to [58]. Accordingly, for present purposes, I will assume that Magistrate Milazzo should have taken into account the materials upon which Kowalski now seeks to rely and thereby committed procedural error.
The issue before me then distils to the question of whether the appeal should nevertheless be dismissed despite that procedural error. I turn to consider that matter.
PART E: MENTAL INCAPACITY GENERALLY
I now turn to the principles and authorities relating to the following two highly important aspects of the present appeal:
1.The meaning of “mental incapacity” in the present context – “A person’s mind is not one and indivisible”; and
2.The requirement that the other party to the transaction knew of the “mental incapacity”.
The meaning of “mental incapacity” in the present context – “A person’s mind is not one and indivisible”
A proponent’s contention that his mental state at the time of his entry into a transaction was such as to constitute “mental incompetence” sufficient to make such transaction voidable, must carefully address the precise facts and circumstances of the subject case.
While Kowalski wishes to assert a broad remedy said to be based on “mental incapacity”,[26] a critical question immediately arises: What do terms such as “mental incapacity” really mean in the present context? As Lord Reid observed (with respect, correctly) in Crowther v Crowther,[27] “There are many degrees of mental incapacity …”. And indeed, the general concept of mental incapacity is discussed in many different areas of the law.
[26] There are various other similar labels (such as “mental incompetence”, “mental infirmity”, “mental impairment” etc) but I will generally use the term “mental incapacity” since that seems to be the most frequently encountered in the authorities.
[27] (1951) AC 723, 736 (Lord MacDermott agreeing).
In what I consider to be a particularly helpful judgment, Holland J in Crago v McIntyre emphasised that “A person’s mind is not one and indivisible”.[28] His Honour stated:[29]
On the question of mental capacity to engage in a legal transaction, one may be pardoned for hesitating to conclude that a mind which is proved to have been seriously disturbed in some related aspects at the time of an important and far reaching transaction nevertheless retained sufficient capacity validly to make that transaction. Unfortunately, no psychiatrist was called, and I have no expert evidence to guide me on this delicate question. However, it has been accepted in cases of high authority that a person may be suffering severely from depression, fears, hallucinations, or delusions and yet be capable of understanding fully the nature and effect of a particular transaction, and that, in such a case, the validity of the transaction is unassailable. Any notion that a person’s mind is one and indivisible, so far as his legal capacity is concerned, as was postulated in Waring v. Waring, was rejected in Banks v. Goodfellow. This case, apart from any other case, firmly establishes and gives legal recognition to the fact that a mind may be rendered partially unsound by the existence of delusions or persecution mania or other aberration, and yet be capable of the management and disposition of property. In that case it was held that it is only when the partial unsoundness has some governing and relevant influence on the challenged disposition that it may result in legal incapacity with respect to that disposition. This view was followed in the High Court in Tipper v. Moore. Therefore, I must start with the proposition that, for the purposes of considering legal capacity, a person’s mind is not one and indivisible, and that, in this case, the plaintiff’s partial unsoundness of mind does not necessarily spell total legal incapacity. Thus, in Jenkins v. Morris the Court of Appeal held that proof of the existence of delusions was not enough to establish legal incapacity, as it was also necessary to establish that the particular delusion affected the person’s capacity to transact the business in question. The same view was taken by the High Court in Timbury v. Coffee. [Citations omitted; Emphasis added]
[28] [1967] 1 NSWLR 729.
[29] Ibid 738-739.
Much earlier, in Bailey v Bailey, Knox and Starke JJ had observed in the context of mental capacity of testators:[30]
So far as the principles of law governing this case are concerned, they are well settled, and may be found in the cases of Banks v. Goodfellow and Boughton v. Knight. A testator is “left free to choose the person upon whom he will bestow his property after death entirely unfettered in the selection he may think proper to make”, but “it is essential to the exercise of such a power that a testator ... shall understand the extent of the property of which he is disposing; shall be able to comprehend and appreciate the claims to which he ought to give effect”. “Mental power may be reduced below the ordinary standard, yet if there be sufficient intelligence to understand and appreciate the testamentary act in its different bearings, the power to make a will remains”. The testator’s “memory may be very imperfect; it may be greatly impaired by age or disease; he may not be able at all times to recollect the names, the persons, or the families of those with whom he had been intimately acquainted; may at times ask idle questions, and repeat those which had before been asked and answered, and yet his understanding may be sufficiently sound for many of the ordinary transactions of life. He may not have sufficient strength of memory and vigour of intellect to make and to digest all the parts of a contract, and yet be competent to direct the distribution of his property by will. This is a subject which he may possibly have thought of, and there is probably no person who has not arranged such a disposition in his mind before he committed it to writing. The question is not so much what was the degree of memory possessed by the testator? as this: Had he a disposing memory? was he capable of recollecting the property he was about to bequeath; the manner of distributing it; and the objects of his bounty? To sum up the whole in the most simple and intelligible form, were his mind and memory sufficiently sound to enable him to know and to understand the business in which he was engaged at the time he executed his will?”. It is “a practical question, one in which the good sense of men of the world is called into action, and ... it does not depend solely on scientific or legal definition”. [Citations omitted]
[30] (1924) 34 CLR 558, 566-567. Their Honours in fact found the testator to have been incompetent, but the majority (Isaacs, Gavan Duffy and Rich JJ) found him to have been competent.
In the later seminal judgment of the High Court in Gibbons v Wright,[31] the Court considered the situation of the degree of mental incapacity required when executing a deed in circumstances not amounting to a defence of non est factum. In the course of a lengthy judgment, their Honours stated:[32]
The learned Chief Justice was clearly right in treating the validity of the instruments in suit as depending upon the possession by Ethel Rose Gibbons and Olinda Gibbons of a degree of understanding relative to the nature of that which they were doing. The law does not prescribe any fixed standard of sanity as requisite for the validity of all transactions. It requires, in relation to each particular matter or piece of business transacted, that each party shall have such soundness of mind as to be capable of understanding the general nature of what he is doing by his participation. …
The principle which the case supports, and for which Boughton v. Knight; Jenkins v. Morris; Birkin v. Wing and Estate of Park may also be cited, appears to us to be that the mental capacity required by the law in respect of any instrument is relative to the particular transaction which is being effected by means of the instrument, and may be described as the capacity to understand the nature of that transaction when it is explained. As Hodson L.J. remarked in the last-mentioned case, “one cannot consider soundness of mind in the air, so to speak, but only in relation to the facts and the subject-matter of the particular case”. [Citations omitted; Emphasis added]
[31] (1954) 91 CLR 423 (Dixon CJ, Kitto and Taylor JJ).
[32] Gibbons v Wright (1954) 91 CLR 423, 437-438 (Dixon CJ, Kitto and Taylor JJ).
In a recent decision, the Full Court of South Australia in Holt v Bunney[33] considered the question of mental capacity of Mr Bunney during lengthy discussions which, according to the plaintiff, Mr Holt, were negotiations concerning the sale of an Aston Martin car to Mr Bunney. During the relevant period, Mr Bunney was aged 62 and was then experiencing an episode of hypomania associated with the bi-polar disorder type from which he suffered. The trial Judge found that Mr Bunney did not intend to purchase the car at any time during the negotiations.
[33] [2020] SASCFC 89.
On appeal, Nicholson J (with whom Kourakis CJ and Hughes J concurred) came to the opposite conclusion and stated:[34]
142. … the Judge appears to have considered (his view of) the respondent’s actual intention, in isolation. In this context, the statement of basic principle by McLelland J in Film Bars Pty Ltd v Pacific Film Laboratories Pty Ltd[35] is of assistance.
Questions of the relevance and probative value of evidence cannot properly be considered independently of what the relevant issue is. It is thus necessary to identify with some degree of precision what the relevant issue is, in the present case. This involves a consideration of what it is in point of fact that constitutes the making of an informal contract, in circumstances such as the present. In my opinion, in such circumstances, a contract is made by the mutual communication between the parties of their respective assents to being bound by identifiable terms otherwise capable of having contractual force, the mutual communication typically taking the form of offer and acceptance. “It is not the subjective thing known as meeting of the minds, but the objective thing, manifestation of mutual assent which is essential to the making of a contract.” (Williston on Contracts, 3rd ed, vol 1 para 21.)
Frequently one finds the relevant issue formulated in terms of the “intention of the parties”. It is necessary to understand the sense in which the expression “intention” is thus used. In my opinion the following words of Lord Diplock in Gissing v Gissing [1971] AC 886 at 906, albeit in another context, are apt here:
“… the relevant intention of each party is the intention which was reasonably understood by the other party to be manifested by that party’s words or conduct, notwithstanding that he did not consciously formulate that intention in his own mind or even acted with some different intention which he did not communicate to the other party.”
In my view, with respect and for reasons to be explained, the Judge failed to address the correct question. [Emphasis added]
[34] Ibid.
[35] (1979) 1 BPR 9251 at p 9254.
The requirement that the other party knew of the “mental incapacity”
However, of paramount importance in the present case, it was not enough for Kowalski to establish (if he could) that he was mentally incompetent at the relevant time; rather, it was also necessary to establish that Bourne, at the relevant time, knew of the existence of such incapacity.
In the judgment of the High Court in Gibbons v Wright (Gibbons)[36] (referred to above), the Court proceeded to a detailed (and of course interesting) discussion of the law as it evolved from about the 16th century onwards; and their Honours came to agree[37] with the principle as it was stated by Lopes LJ in the late 19th century in Imperial Loan Co v Stone thus:[38]
“A contract made by a person of unsound mind is not voidable at that person’s option if the other party to the contract believed at the time he made the contract that the person with whom he was dealing was of sound mind. In order to avoid a fair contract on the ground of insanity, the mental incapacity of the one must be known to the other of the contracting parties. A defendant who seeks to avoid a contract on the ground of his insanity, must plead and prove, not merely his incapacity, but also the plaintiff’s knowledge of that fact, and unless he proves these two things he cannot succeed”. [Citations omitted; Emphasis added]
[36] (1954) 91 CLR 423 (Dixon CJ, Kitto and Taylor JJ).
[37] Ibid 441.
[38] (1892) 1 QB 599, 602-603.
The High Court later observed in Gibbons:[39]
In truth the plea does not deny the defendant’s execution of the document. It assumes his execution of it. It concedes that his mind, such as it was, went with his act. What it asserts is that the state of his mind was such that if the other contracting party was aware of it he ought not to be allowed to insist upon the contract. … [Emphasis added]
[39] (1954) 91 CLR 423, 443.
In PT Ltd and Another v Maradona Pty Ltd and Others, Giles J stated:[40]
As was stated in the judgment of Barwick CJ, McTiernan, Gibbs, Stephen and Mason JJ in Petelin v Cullen (1975) 132 CLR 355 at 359, the defence of non est factum must reconcile the injustice of holding a person to a bargain to which he has not brought a consenting mind and the necessity of holding a person who signs a document to that document, more particularly so as to protect innocent persons who rely on that signature when there is no reason to doubt its validity. The defence is to be kept within narrow limits, and their Honours said (at 359-360):
“The class of persons who can avail themselves of the defence is limited. It is available to those who are unable to read owing to blindness or illiteracy and who must rely on others for advice as to what they are signing; it is also available to those who through no fault of their own are unable to have any understanding of the purport of a particular document. To make out the defence a defendant must show that he signed the document in the belief that it was radically different from what it was in fact and that, at least as against innocent persons, his failure to read and understand it was not due to carelessness on his part. Finally, it is accepted that there is a heavy onus on a defendant who seeks to establish the defence. All this is made clear by the recent decision of the House of Lords in Saunders v Anglia Building Society (Gallie v Lee) [1971] AC 1004, esp at p 1019.”
Where mental infirmity is in question, the defence of non est factum must be distinguished from the defence that the instrument is voidable by reason of mental incapacity. In Gibbons v Wright (1954) 91 CLR 423 at 442-443, it was pointed out that it is erroneous to assume “that a plea that the defendant was unable to understand the nature of the document sued upon is equivalent to, or involves, an allegation that he did not intend to sign it”. Such a plea does not deny the execution of the document, but assumes the execution. It concedes that the mind, such as it was, went with the act of execution, but it asserts that the state of mind was such that if the other contracting party were aware of it he ought not to be allowed to insist upon the contract. [Emphasis added]
[40] (1992) 25 NSWLR 643, 673.
In the more recent case of Ford by his tutor Watkinson v Perpetual Trustees Victoria Ltd, Allsop P and Young JA (with whom Sackville AJA concurred) stated:[41]
30. The primary judge concluded as follows:
(a)Mr Ford was entitled to invoke the plea of non est factum as a defence. (The conclusion that the plea of non est factum was available made it unnecessary to deal with the separate defence of incapacity. It is clear, however, that given the primary judge’s conclusions as to lack of knowledge or notice of Mr Ford’s incapacity in Perpetual, this defence would have failed.)
…
71. The relationship between incapacity and non est factum was dealt with by the Court in Gibbons v Wright (at 442–444) in the passages which we have set out at 59 [65]–[67] supra. The two pleas (non est factum and incapacity) must be distinguished, as is clear from Gibbons v Wright (at 443). Each may be seen to occupy distinct areas and each is theoretically distinct from the other. But it goes too far, in our respectful view, to say that the two pleas are “incompatible”: cf Crago v McIntyre [1976] 1 NSWLR 729 at 737. Facts which, if known by the other party, would make the deed voidable may also, if sufficient in themselves, found a conclusion that the document was not signed. … [Emphasis added]
[41] (2009) 75 NSWLR 42, 51, 60-61.
Of course, such a requirement of knowledge by the other party is entirely consonant with the approach to contractual documents explicated in Toll (FGCT) Pty Limited v Alphapharm Pty Limited, wherein the High Court stated:[42]
[42] (2004) 219 CLR 165, 180-183.
45. It should not be overlooked that to sign a document known and intended to affect legal relations is an act which itself ordinarily conveys a representation to a reasonable reader of the document. The representation is that the person who signs either has read and approved the contents of the document or is willing to take the chance of being bound by those contents, as Latham CJ put it, whatever they might be. That representation is even stronger where the signature appears below a perfectly legible written request to read the document before signing it.
46. The statements in the above authorities accord with the well-known principle stated by Scrutton LJ in L’Estrange v F Graucob Ltd (“L’Estrange v Graucob”) that “[w]hen a document containing contractual terms is signed, then, in the absence of fraud, or, I will add, misrepresentation, the party signing it is bound, and it is wholly immaterial whether he has read the document or not.” Scrutton LJ, in turn, was repeating the substance of what had been said by Mellish LJ in Parker v South Eastern Railway Co. The principle was applied in Foreman v Great Western Railway Co. A consignor of cattle sent them for transportation by a railway company. They were put in the charge of a drover, who could not read. The drover signed a contract of carriage which contained an exclusion clause. The drover’s employer was held to be bound by the clause. The Exchequer Division said that “the plaintiff who sends the [illiterate] servant to sign the document is in no better or worse position than if he had signed it himself without reading it.” In his lecture published as “Form and Substance in Legal Reasoning: The Case of Contract”, Professor Atiyah posed, with reference to L’Estrange v Graucob, the question why signatures are, within established limits, regarded as conclusive. He answered:
“A signature is, and is widely recognized even by the general public as being a formal device, and its value would be greatly reduced if it could not be treated as a conclusive ground of contractual liability at least in all ordinary circumstances.”
Professor Atiyah added:
“However, what is, I think, less clear is what is the underlying reason of substance in this kind of situation. The usual explanation for holding a signature to be conclusively binding is that it must be taken to show that the party signing has agreed to the contents of the document; but another possible explanation is that the other party can be treated as having relied upon the signature. It thus may be a mistake to ask, as H L A Hart once asked, whether the signature is merely conclusive evidence of agreement, or whether it is itself a criterion of agreement.”
These themes appeared in the judgment of this Court in Petelin v Cullen. There, the Court upheld a plea of non est factum. Under the common law rules, a plea of non est factum was a plea of the general issue which put in issue that the defendant had executed the deed alleged in its declaration. In their joint judgment in Petelin, Barwick CJ, McTiernan, Gibbs, Stephen and Mason JJ said:
“The principle which underlies the extension of the plea to cases in which a defendant has actually signed the instrument on which he is sued has not proved easy of precise formulation. The problem is that the principle must accommodate two policy considerations which pull in opposite directions: first, the injustice of holding a person to a bargain to which he has not brought a consenting mind; and, secondly, the necessity of holding a person who signs a document to that document, more particularly so as to protect innocent persons who rely on that signature when there is no reason to doubt its validity. The importance which the law assigns to the act of signing and to the protection of innocent persons who rely upon a signature is readily discerned in the statement that the plea is one ‘which must necessarily be kept within narrow limits’ ... and in the qualifications attaching to the defence which are designed to achieve this objective.”
47. The importance which, for a very long time, the common law has assigned to the act of signing is not limited to contractual documents. Wilton v Farnworth was not a contract case. The passage from the judgment of Latham CJ quoted above is preceded by a general statement that, where a man signs a document knowing that it is a legal document relating to an interest in property, he is in general bound by the act of signature. Legal instruments of various kinds take their efficacy from signature or execution. Such instruments are often signed by people who have not read and understood all their terms, but who are nevertheless committed to those terms by the act of signature or execution. It is that commitment which enables third parties to assume the legal efficacy of the instrument. To undermine that assumption would cause serious mischief.
48. In most common law jurisdictions, and throughout Australia, legislation has been enacted in recent years to confer on courts a capacity to ameliorate in individual cases hardship caused by the strict application of legal principle to contractual relations. As a result, there is no reason to depart from principle, and every reason to adhere to it, in cases where such legislation does not apply, or is not invoked.
It is also important to bear in mind that any so-called “pressure” (and asserted consequential effect upon Kowalski’s mental state) must be established to have occurred before the entry of the subject consent judgment on 29 January 1993 as distinct from, say, during the later six-month period leading up to the eventual payment of the subject judgment sum on 26 July 1993. This is because what is sought to be set aside is the entry of the subject consent judgment for mental incompetency – and ex hypothesi, this depends on mental state at the time of the entry of the subject consent judgment, and not later. This distinction is to be emphasised because it appears that the so-called “pressure” that Bourne is alleged to have exerted is in fact said to have largely occurred after the entry of the subject consent judgment and in an effort to collect the subject judgment sum.
Dr Jagermann’s letters to Kowalski’s General Practitioner
It appears to me, just as it did to Williams J, that Kowalski is unable to comply with the requirement of establishing that the other party had knowledge of the asserted mental incapacity. The Jagermann letters in no way alter this position and accordingly may be discussed relatively briefly.
As noted above (at [31]), Kowalski’s failure to advance the Jagermann letters before Williams J is highly indicative of his then acceptance that any degree of mental trauma that he may have had at the time of entering the subject consent judgment was simply insufficient to establish the degree of “mental incompetence” that would be required to justify the setting aside of the subject consent judgment.
It is to be further noted that, both before Magistrate Milazzo and on the present appeal, Kowalski made no attempt to obtain from a qualified psychiatrist an expert report addressing the bearing that the Jagermann letters and/or Kowalski’s own statements in the 1 May 2019 affidavit may legitimately have upon Kowalski’s contention now being advanced that he was “mentally incompetent” to enter the subject consent judgment.
Clearly, the Jagermann letters are not expert medical reports addressing and opining as to the present particular contention that Kowalski was “mentally incompetent” to enter the subject consent judgment on 29 January 1993. There is nothing approximating any letter requesting a report in which the facts and circumstances to be considered are delineated and objective opinions are sought as to certain carefully stated topics or questions.
In my view, the Jagermann letters appear to have been a treating tool rather than a medico-legal record in that, although they were in the form of letters to Kowalski’s General Practitioner, their real intended audience was Kowalski himself. (Indeed, the letters stated that Kowalski was being provided with copies.)
Thus, empathy and sympathy were shown in abundance to Kowalski by the use of florid language; and his lawyers (RJ Cole & Partners) and the lawyers for Mitsubishi Motors and WorkCover were disparaged in equally florid and partisan terms. Interestingly, WorkCover was bruited as the possible “white knight” (particularly in the second letter, with a copy of it being provided to WorkCover by Dr Jagermann).
I wish not to be misunderstood here. For all I know, this sort of approach may be viewed by psychiatrists as a legitimate treatment modality. I do not debate such matters. I simply note that the chasm between a treating tool and a medico-legal report for use in legal proceedings is here particularly wide.
Importantly, the letters almost exclusively refer to Kowalski’s various (then ongoing) legal problems that RJ Cole & Partners were managing. It will be remembered that in February 1991, Kowalski had terminated Stanleys’ instructions to act and retained RJ Cole & Partners to act in all his litigation. Kowalski had no further contact with Stanleys or Bourne after that termination other than in relation to the matter of fees outstanding to Stanleys. It is clear that all of the litigation and negotiations to which Dr Jagermann refers in his letters (including the loss of the trial before District Court Judge Anderson and the prolonged settlement negotiations with WorkCover) had by then been managed for about two years (and was continuing to be managed) by RJ Cole & Partners.
Thus, the first Jagermann letter of 4 January 1993 makes no reference to Stanleys at all, but explicitly refers at length to the matters managed by RJ Cole & Partners. It commences with the first paragraph thus:
I regret to say that with Mr Kowalski’s position in life remaining stalemated on all fronts there clearly is not much going for him to look forward to – without re-experiencing surges of misgivings, disquiet, regret and doubt. Mr Kowalski’s mind remains torn in different directions wherein he cannot clearly decide on what next to do. Similarly Mr Kowalski cannot escape from the ravages of recurring anger and depression lashing out at Mr Kowalski making him believe that it is all his fault. It is no wonder that Mr Kowalski continues to register surges of tension and tears, poor appetite, insomnia, loss of energy and fatigue, low self-esteem and cognitive impairment. His driving, pardon my english, is currently up the creek. As he is at present, Mr Kowalski cannot apply, enthuse and entrust himself to anything. The stuffing has literally been knocked out of Mr Kowalski.
Dr Jagermann then directly addresses the role he considered was being played by RJ Cole & Partners in the second paragraph on that first page thus:
I was given to understand by Mr Kowalski that his firm of solicitors (presumably in collusion with those acting for Mitsubishi) are intent on applying further pressure on WorkCover for them to sanction the (il)legality of their formulated compensation proposition that would equally count Mr Kowalski out of work. But as it had previously failed to meet up with Departmental approval then, I am afraid to say it may still not be condoned by WorkCover if in their estimation it falls short of meeting up with due standards of expectation and the spirit of rehabilitation. [Underlining in original]
Dr Jagermann continued to dilate upon the Mitsubishi Motors matter and then concluded as follows:
Much depends of course on the outcome of his WorkCover claim that is listed for final hearing in March of this year to thereby deflate or inflate the sagging spirit of Mr Kowalski. In the meantime I have seen it fit to prolong the period of his anticipated total work incapacitation from 1.1.93 – 28.2.93 included with the clinical diagnosis as before resting with a ‘pathologically intense state of anxiety’ which Mr Kowalski claims was caused by ‘an unwarranted verbal attack claim incurred at work with Mitsubishi’ on 16.8.91.
As doctors are not empowered to tell a person what to do I took great pains to inform Mr Kowalski that he should not be unduly intimidated by his current run of legal losses and position of derived financial weakness that conceivably may be capitalised on by others. Mr Kowalski is not a blind pawn of the system that prevents him from gathering breath and resume stock taking.
I doubt that it is in Mr Kowalski to blindly commit himself to the proceeds of a ‘grab and run’ policy and the restoration and preservation of his health mostly depend on factors of long term gains and persisting psychological improvement which Mr Kowalski is already fully appreciative of himself.
I regret to say that for Mr Kowalski there are no easy options and he will be left labouring under a multitude of probably well meant but never-the-less conflicting welter of advice and opinion. This can be thoroughly confusing and delay Mr Kowalski’s recovery in turn. With his emotions being affected by the push and pull of medico-legal matters that fails to provide Mr Kowalski with satisfaction and certainty the course of his future leaves everybody guessing and it is virtually impossible for me as a doctor to advance a firm prognosis.
One should aim of course to resolve all outstanding matters without evoking the procrastination of further untoward delay that Mr Kowalski cannot adequately cope with but as WorkCover proceedings are known to take their own time (additionally influenced by the protraction of legal matters) as before it leaves Mr Kowalski stranded, lost and dangling that cannot be corrected by either the giving of medication or guesswork of speculation.
Out of a sense of entrapment, futility and mounting desperation Mr Kowalski is seemingly prepared to place his rural property on the market in order to cut his financial losses and next benefit by moving closer to the city but the gains of such a proposition remain equally uncertain and conjectural. Needless to say it weighs heavily on the mind of Mr Kowalski also.
Finally it behoves to say that were it not for the strength of endurance, attention, devotion and dedication by his wife and family to cater to the daily fluctuation of mood and needs of Mr Kowalski then he certainly would be shifted into far greater troubles. Conversely it should be acknowledged that as set limits are applied to most human endeavours the good will and capacity for intervention by his family may one day fade, fail and falter. For their sake also it is essential that Mr Kowalski be moved on soon. [Emphasis added]
With kind regards,
Yours sincerely,
(signed Karl Jagermann)
Copy … Mr K. Kowalski
Verrall Road
HOPE FOREST via WILLUNGA 5172
As appears in the following passage of transcript later in the hearing, Kowalski had been mistaken about not having received this letter:
HIS HONOUR: Just on that topic, can I ask you a question. On 25 January 2021, you sent from your email address to my chambers address, an email. It says: ‘Dear Stanley & Partners and Timothy Bourne -’ because obviously you sent a copy to Mr Bourne; do you understand?
MR KOWALSKI: Yes.
HIS HONOUR: This is what you wrote: ‘It has been brought to my attention that you have up to 27 January 2021 to file in the Supreme Court and to serve on me your written submissions, a list of authorities and any chronology, not less than three business days before Peek J’s hearing of my appeal on 1st February 2021. I shall provide a copy of this email to Peek J, the FCSA, the High Court of Australia and to whom it may concern. Regards Kaz Kowalski.’
The basis for that statement to Mr Bourne, I take it, was that you were aware that Mr Bourne had, in fact, been ordered to file and serve written submissions, a list of authorities and any affidavit sought to be relied upon at the hearing by no later than 4 p.m. on Wednesday, 27 January 2021, weren’t you?
MR KOWALSKI: I read it in an email from your associate.
HIS HONOUR: That’s exactly right.
MR KOWALSKI: Yes.
HIS HONOUR: You did.
MR KOWALSKI: Yes.
HIS HONOUR: Yes. This is the email that you’ve said this morning that you didn’t get.
MR KOWALSKI: Well -
HIS HONOUR: Well what?
MR KOWALSKI: I don’t know.
HIS HONOUR: You don’t know?
MR KOWALSKI: I don’t know; I can’t explain it.
HIS HONOUR: Can’t explain it.
MR KOWALSKI: No.
HIS HONOUR: Thank you. You continue.
MR KOWALSKI: Well maybe -
HIS HONOUR: No, continue, Mr Kowalski.
MR KOWALSKI: So, maybe I made a mistake by saying I didn’t receive …
PART G: CONSIDERATION
As I understand it, Kowalski’s position on the appeal is that notwithstanding all of his previous litigation, the matter of the subject consent judgment should now again be re-litigated on the basis that he was not mentally competent to enter into such a judgment. It is apparently asserted that this precise argument was not previously raised and, ipso facto, should now be litigated.
In his 1 May 2019 affidavit, Kowalski made a number of interesting assertions. First, he deposed at paragraph 19:
19.On 29-1-1993, I thought that the Plaintiffs had had their legal costs taxed by the Supreme Court, therefore I was afraid that if I did not sign the consent judgment, the Plaintiffs would commence a fresh legal action, against me, for its legal costs, which would have placed me under unwarranted stress and anxiety, although, I was completely out of it mentally at the time. [Emphasis added]
However, this is in direct conflict with the statement of the solicitor, Mr Speck, whose letter was tendered by Kowalski in the Williams J proceedings as discussed above at [24] to [25].
Secondly, he deposed at paragraph 21:
21.On 29-1-1993, I was not mentally competent to sign the consent judgment, therefore equity demands that it is set aside or revoked.
This statement is quite incorrect in that it entirely omits the requirement that the other party be aware of such mental incompetence as recognised by Williams J and as discussed above at [52] to [58].
Thirdly, he deposed at paragraph 28:
28.The reason why I have not brought this application in the Adelaide Magistrates Court, un-till (sic) now, is because I thought that my only avenue to set aside my consent judgment dated 29-1-1993, was to commence legal proceedings in the Supreme Court for an extension of time to set my consent judgment aside, however Justice Williams and Justice David has not granted, to me, an extension of time, therefore, I applied to Justice Blue for his permission to apply, to set aside my consent judgment dated 29-1-1993, in Magistrate Court Action No. 788 of 1993.
This statement presents a surprising attitude that if one has several unsuccessful attempts in the Magistrates Court to set aside a consent judgment; and then has elaborate but unsuccessful litigation in the Supreme Court (the Williams J proceedings in 1995 to 1997); and after a further substantial delay unsuccessfully applies for permission to appeal to the Full Court (refused by David J on 9 March 2012); one can nevertheless simply start again back at the Magistrates Court (Magistrate Milazzo) and if unsuccessful there, again ascend the appellate ladder (starting with the present appeal[49]).
[49] During the hearing of the present appeal Kowalski announced that he would appeal against this Judgment if it were to go against him.
The grant of s 39 vexatious litigant permission by Blue J on 28 October 2020
After Magistrate Milazzo dismissed Kowalski’s application on 28 October 2019, Kowalski applied to Blue J on 25 November 2019 for s 39 vexatious litigant permission, this time to appeal against Magistrate Milazzo’s judgment. However, it was not until 28 October 2020 (a year after Magistrate Milazzo’s judgment) that Blue J delivered a judgment[50] granting a further s 39 vexatious litigant permission to Kowalski to appeal from Magistrate Milazzo’s decision. His Honour concluded thus:
102. I am satisfied that Mr Kowalski would have a reasonably arguable case on appeal against the Magistrate’s dismissal of his set aside application and such an appeal would not fall within the “without reasonable ground” limb of the definition of a vexatious proceeding.
Would the appeal be instituted for an ulterior purpose?
103. Before granting permission pursuant to section 39, I am required to be satisfied that the appeal would not be instituted to harass or annoy, to delay or for any other ulterior purpose.
104. Mr Kowalski has demonstrated that he feels aggrieved by the Magistrate’s decision, and in turn by the consent judgment and, for the reasons given above, it is reasonably arguable that the Magistrate erred, that Mr Kowalski’s consent was vitiated by mental incompetence and that Stanley & Partners was not entitled to judgment on the merits for the amount claimed. I am satisfied that Mr Kowalski’s sole purpose in seeking to appeal is to seek to set aside the consent judgment and have the claim by Stanley & Partners determined on its merits. I am satisfied that Mr Kowalski’s purpose is not to harass or annoy Mr Bourne, no question of Mr Kowalski causing delay arises, and Mr Kowalski is not motivated by any other ulterior purpose.
105. Mr Kowalski is not seeking to relitigate a matter previously decided against him. His set aside applications in 1995 were not made on the ground that he had not been mentally competent to consent to judgment. Mr Kowalski is not seeking to relitigate a matter decided against him in the proceedings he has brought since then. [Emphasis added]
[50] Attorney-General (SA) v Kowalski (No 8) [2020] SASC 208.
As to his Honour’s conclusion at [105] immediately above, it seems to me that a major question in the courtroom, indeed of elephantine stature, is: “If this matter of so-called mental incompetence was not raised throughout the last 28 years of litigation, why not?”
It is to be remembered that the subject matter of the present application is prosaic. It is Kowalski’s positive decision in 1993 to dispose of Stanleys’ action against him by entering into a consent judgment. Such a decision may be taken by a debtor for all sorts of reasons, such as a wish to avoid the inconvenience and stress of a trial and the possibility of paying substantially increased Court costs if one were to lose at such a trial. According to the solicitor, Mr Speck, whose letter was tendered by Kowalski in the Williams J proceedings as discussed above at [24] to [25], those commercial risks were specifically discussed with Kowalski.
Thus, the mere fact that a person takes a course of settling a matter to avoid the stress of further negotiation or the stress of a trial does not derogate from the legal validity of the settlement (which is here embodied in a highly formal entity, a consent judgment). It was for Kowalski to positively justify before this Court his protracted delay in bringing forward this claim of mental incapacity.
In Kowalski v Stanley & Partners & Anor[51] (discussed above), the Full Court plurality noted that apart from his various litigation against Stanleys, Kowalski had also brought a separate raft of proceedings against RJ Cole & Partners[52] which mirrored almost exactly his proceedings against Stanleys. The plurality referred to both sets of proceedings as the “Parallel proceedings against RJ Cole & Partners and Stanley & Partners”.
[51] [2016] SASCFC 74.
[52] They and he having also fallen out.
These “parallel proceedings” against RJ Cole & Partners culminated in the decision of the Full Court in Kowalski v Sim & Ors (Sim)[53] delivered on 9 August 2019 (Mr Sim being another partner in the firm of RJ Cole & Partners). That decision confirmed that questions relating to protracted delay will be determined by reference to a number of factors, including analogies with Anshun[54] principles and analogies with abuse of process by impermissible re-litigation. These matters were considered in some depth in Sim at [57] to [69] and this section of the judgment concludes with a reference to the valuable consideration by French J (as he then was) of what he referred to as “Relitigation as Abuse of Process” in Spalla v St George Motor Finance Ltd (No 6) (Spalla)[55] as follows:
[53] [2019] SASCFC 96. (Special leave was refused on 6 December 2019: Kowalski v Sim & Ors [2019] HCASL 391).
[54] Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589.
[55] [2004] FCA 1699.
59. The Federal Court, like every Court of Justice, has an implied incidental power to prevent abuse of its processes. There are many ways in which the processes of a court may be abused. One form of such abuse is to invoke the procedures of the court to attempt to relitigate controversies which have already been decided by the court. The court may be protected against such use of its procedures by the doctrines of res judicata and issue estoppel and their analogical extension to issues which ought reasonably to have been litigated in original proceedings as enunciated in Henderson v Henderson (1843) 3 Hare 100; 67 ER 313 and Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589.
60. The protection afforded the administration of justice by the general concept of abuse of process in this context subsumes that afforded by the specific doctrines of res judicata, issue estoppel and their Anshun extension. …
…
62. The breadth of abuse of process protection against attempted relitigation was considered in Walton v Gardiner per Mason CJ, Deane and Dawson JJ (at 393):
‘... proceedings before a court should be stayed as an abuse of process if, notwithstanding that the circumstances do not give rise to an estoppel, their continuance would be unjustifiably vexatious and oppressive for the reason that it is sought to litigate anew a case which has already been disposed of by earlier proceedings.’
Their Honours cited Reichel v Magrath and Connelly v Director of Public Prosecutions [1964] AC 1254 at 1361-1362. They also adopted and approved the description of the relevant jurisdiction of superior courts given by Lord Diplock in Hunter v Chief Constable of the West Midland Police [1982] AC 529 (at 536):
‘... the inherent power which any court of justice must possess to prevent misuse of its procedure in a way which, although not inconsistent with the literal application of its procedural rules, would nevertheless be manifestly unfair to a party to litigation before it, or would otherwise bring the administration of justice into disrepute among right-thinking people.’
The category of ‘right-thinking people’ is elusive. However the passage may be taken as emphasising that the task of the judge in such a case is evaluative.
…
66. The doctrines of res judicata, issue estoppel and Anshun do not exhaust the circumstances in which a proceeding may be regarded as amounting to an abuse of process by way of attempted relitigation of a dispute already judicially determined. As another Full Court said in Coffey v Secretary, Department of Social Security (1999) 86 FCR 434 (at 443):
‘An attempt to litigate in the Court a dispute or issue which has been resolved in earlier litigation in another court or tribunal may constitute an abuse of process even though the earlier proceeding did not give rise to a res judicata or issue estoppel: see Sea Culture International v Scoles (1991) 32 FCR 275 at 279 and Walton v Gardiner (1993) 177 CLR 378 at 393-394. Whether it does depends on the facts of the particular case.’
67. The considerations of public policy which underlie res judicata and issue estoppel help to define the scope of abuse of process by relitigation generally. As Lord Hoffman said in Arthur JS Hall & Co v Simons [2000] 3 WLR 543 at 572, the underlying policies are that a defendant should not be troubled twice for the same reason and that there is ‘a general public interest in the same issue not being litigated over again’. … [Emphasis added]
In my view, Kowalski’s failure previously to advance a case based on mental incompetence in fact militates strongly against his present appeal. As noted by French J in Spalla (reproduced above), a litigant should raise such all central matters upon which reliance may be placed in original proceedings.
To be quite clear, I do not proceed by way of reliance upon an estoppel. Rather, I consider that in exercising a discretion such as to set aside a judgment, many factors may be taken into account; and one is the application by analogy of the reasoning in Henderson v Henderson[56] and Port of Melbourne Authority v Anshun Pty Ltd.[57]
[56] (1843) 3 Hare 100.
[57] (1981) 147 CLR 589.
The discretion to grant s 39 permission to a vexatious litigant to institute a proceeding
As to the passage from [102] to [105] in Blue J’s judgment[58] more generally, I think it is appropriate to call attention to the decision of the Full Court in Mitsubishi Motors Australia Ltd v Kowalski, and particularly the following passages in the Judgment of the Court:[59]
[58] Reproduced above at paragraph [93].
[59] (2019) 134 SASR 1, 11-12.
The test for s 39 permission
33. It is a testament to the amount of litigation generated by Mr Kowalski that the leading authority in this Court on the test to be applied on an application for permission pursuant to s 39 of the SCA was established by this Court in 2006 in Kowalski v Mitsubishi Motors Staff Superannuation Fund Pty Ltd.[60]
[60]34. In that case Doyle CJ articulated the following approach:
[25] In that context, the issue before the Master had two facets. First, it was necessary to look at the claim itself. On its face did it appear to be tenable as a matter of fact and law, or to have a possible chance of success? It was appropriate to consider, in a preliminary manner, whether there appeared to be a tenable factual basis for the claim, as well as a tenable legal basis. Having regard to the context in which the application for leave was made, it was not sufficient to examine only the legal aspects of the claim made, treating as correct assertions of fact made by Mr Kowalski.
[26] The second facet of the issue before the Master required, having regard to the circumstances that gave rise to the order, that he consider whether there was reason to think that the proceedings, if instituted, would give rise to the re-agitation of matters already decided between Mr Kowalski and MMAL or the Trustee. That is, would the proceedings be vexatious? This aspect is significant. The purpose of the restraining order would be defeated if the Court confined its attention to the proposed proceedings, without considering their relationship to other proceedings that caused the Judge of this Court to make the restraining order.
[27] It was neither necessary nor appropriate for the Master to embark on a preliminary trial of the action. Nor was it necessary to require Mr Kowalski to outline his whole case, or to explain how he would meet each difficulty of fact and law that might confront him. However, while it is not possible to state with precision how the line was to be drawn, it was necessary to consider both facets of the issue identified by me, and to consider matters of fact and law. Otherwise, as I have said, the order will provide little protection to MMAL. To put it simply, it was not appropriate to accept Mr Kowalski’s assertions of fact without enquiry, and it was necessary to consider to some extent at least the relationship between the claim that he wished to make and other claims he had made.
35. The second limb of the test explained by Doyle CJ in [26] of his reasons does not present any obstacle to a s 39 applicant seeking redress for completely unrelated wrongs committed by different defendants. Personal injuries claims for later accidents are obvious examples. For such matters the applicant need only overcome the relatively low hurdle of demonstrating a tenable case. The two limbs of the test strike a balance between protecting defendants who have been vexed by unmeritorious proceedings which seek to undermine the final judgment in their favour, and allowing the applicant the protection of the law for unrelated wrongs.
36. Doyle CJ concluded by emphasising that whilst a mini-trial of the merits of the proposed actions was not required, it was not appropriate that the assertions should be accepted without enquiry:[61]
[28] It is no answer to this to say that if the Statement of Claim was defective, the Trustee was entitled to attack it in the District Court. The purpose of requiring leave to proceed is to provide a preliminary screening to prevent unsustainable or vexatious claims, as a matter of fact or law, being instituted. [Emphasis added]
[61] Kowalski v Mitsubishi Motors Australia Staff Superannuation Fund Pty Ltd [2006] SASC 159 at [28].
Later, the Court further observed as to Doyle CJ’s second limb:[62]
78. The second limb, of the discretion to give permission to a vexatious litigant to bring a proceeding, is an important aspect of the protection given by s 39 of the SCA. It is not uncommon for the original action brought by a vexatious litigant to have a reasonably arguable claim at its core. For that reason, pursuit of that claim in other actions may also appear to be reasonably arguable, particularly if, as Doyle CJ observed, the Court confines its intention to the proposed proceedings without considering the context of the historical litigation. It is for that reason that the second limb, as Doyle CJ said, is significant.
…
81. … The very purpose of s 39 of the SCA is to relieve proposed defendants from the obligation to, and the expense of, litigating proceedings in the same way as they would have to be litigated if brought as of right. Accordingly, it is, with respect, a mistake to understand the second limb identified by Doyle CJ as simply another element of the proposed cause of action which the s 39 applicant must show is reasonably arguable. In the cited passage, Doyle CJ did do more than identify the existence of a threshold. MMAL’s submission to this Court that Doyle CJ imposed a requirement on a s 39 applicant to show that the proposed action would not be an abuse of process by re-litigation should be accepted. That approach is consistent with the mischief to which s 39 of the SCA is addressed, which is to prevent a multiplicity of suits over the same underlying controversy. [Emphasis added]
[62] Mitsubishi Motors Ltd v Kowalski (2019) 134 SASR 1, 25-26.
And later, the Court made the following further remarks which have a direct bearing on the present case:[63]
83. There may be some persons who bring frivolous proceedings which have no basis at all simply to draw attention to themselves, or because, for unfathomable reasons, they enjoy interactions with courts, or for any number of other personality or psychological traits. However, the common experience of the courts is that many are brought because of a disappointment, and deep sense of grievance, at having failed in a claim which the litigant believes has merit. The purpose of the multiplicity of actions which are subsequently brought is to re-litigate the claim in the hope that a judge who shares the disappointed litigant’s sense of injustice will eventually be found and the wrong righted. That particular mischief can only be addressed if the applicant on a s 39 permission application persuades the Court that the proposed proceeding is not an abuse of process by way of re-litigation.
84. The s 39 permission sought by Mr Kowalski was, on its face, an attempt to re-litigate, because it sought permission to bring an application pursuant to s 88H of the WRCA. The very purpose of such applications is to set aside decisions which had been made adversely to the applicant, so that the underlying controversy may be re-litigated.
85. It is in the very nature of an exercise of judicial power that judicial orders are final and binding save for any appeal allowed by statute and by a review for legality. Exceptionally, courts and tribunals are given a limited power by statute or by rules of court made under statute to set aside decisions. That exceptional power is necessary to guard against fraud which, it has been authoritatively held, vitiates everything. The special powers may also allow judicial decisions to be set aside, depending on the width and validity of the rule, on the ground of other vitiating factors, but the principle of finality remains an important consideration.[64]
86. The permission granted by Blue J in this case was to bring an application invoking that very exceptional power. Moreover, the basis for the application which was said to be reasonably arguable by Blue J was not based on factual events or changes in the law discovered, or made, after the impugned decisions were handed down. Rather, the applications are based on contentions of fact and law which could and should have been made, and points taken, in the hearing which resulted in the adverse decisions which Mr Kowalski now wishes to have set aside.
87. The very mischief a vexatious litigant declaration is calculated to address is that issues are re-agitated on grounds not taken in the earlier proceedings. [Emphasis added]
A grant of s 39 vexatious litigant permission does not impinge on the opposing party’s right to later contend that there is an abuse of process
[63] Mitsubishi Motors Ltd v Kowalski (2019) 134 SASR 1, 26.
[64] Clone v Players Pty Ltd (in liq) (Receivers and Managers Appointed) (2018) 264 CLR 165.
Having regard to remarks made by Kowalski before the Magistrate and during the hearing of the present appeal, it is well to repeat the following. The decision of a Supreme Court Judge to grant s 39 vexatious litigant permission does not impinge on the right of an opposing party to later contend that the proceedings constitute an abuse of process. In Kowalski v Stanley & Partners & Anor[65] (discussed above), the Full Court plurality noted that apart from his various litigation against Stanleys, Kowalski had also brought a separate raft of proceedings against RJ Cole & Partners[66] which mirrored almost exactly his proceedings against Stanleys. The plurality stated:
Parallel proceedings against R J Cole & Partners and Stanley & Partners
9. The above summary takes us to 20 January 2014 when the appellant was declared to be a vexatious litigant.[67]
10. Subsequent to that declaration, Blue J granted to Mr Kowalski permission pursuant to s 39 Supreme Court Act 1935 to institute separate parallel applications for a Supreme Court Master to tax both the R J Cole & Partners costs and the subject costs (to which the consent judgment in favour of Stanley & Partners entered on 29 January 1993, more than 23 years ago, related).
11. Mr Kowalski vehemently submitted to this present Full Court that Blue J was “a gatekeeper” and that if his Honour granted permission to institute proceedings, such proceedings could not possibly be later declared to be an abuse of the process of the Court. However, that very same submission has already been declared to be quite wrong in the course of the R J Cole & Partners proceedings. [Emphasis added]
[65] [2016] SASCFC 74.
[66] They and he having also fallen out.
[67] Attorney-General (SA) v Kowalski [2014] SASC 1.
The plurality in Kowalski v Stanley & Partners & Anor then referred to the course of the RJ Cole & Partners proceedings through the stages of the original decision by Judge Dart, the dismissal of the appeal by the single Judge and the dismissal of the further appeal by the Full Court thus:
15. Further, it was held at each of those stages that any permission granted by Blue J pursuant to s 39, Supreme Court Act 1935 in no way affected either the subsequent rights of a defendant to any such instituted proceedings to raise objections to the propriety of the continuation of such proceedings before the judicial officer hearing such proceedings or the right of that judicial officer to accede to such an application and implement it. [Emphasis added]
Further, at footnote 21, the plurality in in Kowalski v Stanley & Partners & Anor stated:
And nor does the fact that documents initiating such proceedings are accepted by the Supreme Court Registrar for filing prevent the Judge later hearing the proceedings ordering such documents to be removed from the file as being an abuse of the process of the Court. Thus see Lunn’s commentary at [R53.20], Civil Procedure South Australia: “The fact that documents have not been rejected by the Registrar under r 53 does not affect the right of a party subsequently to have them struck out as an abuse of process: Kowalski v RJ Cole & Partners [2014] SASC 137 (Peek J), 23 September 2014, [17]-[18] and appeal dismissed: Kowalski v RJ Cole & Partners (2015) 122 SASR 320; [2015] SASCFC 35, (Full Court), 2 April 2015.”
The plurality concluded:
38. Judge Dart found that an abuse of process was occurring in the present proceedings on 27 November 2014, just as it had previously occurred in the parallel Kowalski v R J Cole & Partners proceedings. Justice Bampton declined to interfere with that finding. We agree with both the decisions of Judge Dart and Bampton J. …
In similar vein, Lovell J (the third member of the Coram in Kowalski v Stanley & Partners & Anor) concluded:
49. His attempts to redress what he considers to be an injustice are set out in the judgment of Bampton J. Mr Bourne has had over 20 years of litigation to contend with over this account.
50. In my view a person has a statutory right to have their legal costs taxed, pursuant to s 42 of the Legal Practitioners Act 1981 (SA) even if the costs have been paid. The right exists, for example, independently of the proceedings brought in the Magistrates Court by Stanley & Partners. The question of res judicata, does not of itself stop Mr Kowalski from seeking to utilise s 42. However as articulated by Peek and Kelly JJ, with whom I agree, the right to have the costs taxed is a discretionary one. The issue of res judicata has a role to play as a factor in the exercise of the discretion.
51. It was accepted before Judge Dart and Bampton J that if Mr Kowalski was allowed to pursue the taxation of his costs some amounts were likely to be deducted from the sum of $6311.11. However it is difficult to see what Mr Kowalski could achieve even if the costs were taxed. Even if Judge Dart had allowed them to be taxed he could stay any attempt by Mr Kowalski to in some way enforce the taxation. It is also arguable that the consent judgment Mr Kowalski entered, as mentioned earlier, may stand in his way in taking this matter any further.
52. The application to now have the Court tax the costs occurs some 23 years after he consented to judgment. His application has been refused by Judge Dart and Bampton J. Judge Dart was entitled to exercise his discretion to refuse to allow the taxation to proceed. It has not been shown that the discretion was exercised incorrectly or miscarried in any way. As stated the facts in this case are extreme.
The gross delay from Bourne’s point of view
From Bourne’s point of view, the unjustifiable delay from the entry of the subject consent judgment on 29 January 1993 until the present day has been truly gross. In the scale of things, it seems almost petty to add that the application to Magistrate Milazzo was determined in Bourne’s favour on 28 October 2019, but it was not until about nine months later (when he appeared before Blue J on 29 July 2020) that he became aware that an appeal from the Judgment of Magistrate Milazzo was under consideration; and it was not until 12 November 2020 when the Notice of Appeal was filed.
The present case is at least analogous to a statutory time limit within which to commence an appeal (a period of three weeks) rather than a procedural rule of Court dealing with the progress of the hearing of the appeal after an appeal has been validly commenced. The importance of that distinction was emphasised in Kowalski v Sim & Ors thus:[68]
35. There is, of course, a distinction between a statutory time limit within which to commence an appeal (on the one hand) and procedural rules of Court dealing with the progress of the hearing of the appeal after an appeal has been validly commenced (on the other hand). Thus in their joint judgment in Jackamarra v Krakouer Brennan and McHugh JJ stated:[69]
4. … In that class of case [an application for an extension of time to lodge an appeal], the respondent to the application has a vested right to retain the judgment[70], the subject of the appeal. To grant the application for an extension of time is to put at risk a vested right of the respondent. [Emphasis added]
[68] [2019] SASCFC 96.
[69] (1998) 195 CLR 516, 519-520. See also the judgment of Kirby J at 540.
[70] Vilenius v Heinegar (1962) 36 ALJR 200 at 201; Gallo v Dawson (1990) 64 ALJR 458 at 459; 93 ALR 479 at 480.
PART H: CONCLUSION
As at the date of the Magistrate’s judgment herein, on 28 October 2019, the power of a Magistrate to set aside a judgment in a Magistrates Court was governed by r 104(1) of the Magistrates Court (Civil) Rules 2013 which provided:
104. (1) The Court may vary or set aside a judgment—
(a) before it is entered; or
(b) after it is entered—
(i) if the judgment was obtained by fraud;
(ii) if the judgment does not reflect the intention of the Court;
(iii) if the parties consent; or
(iv) if it was obtained consequent upon any irregularity.
(2) A clerical mistake in a judgment, or an error arising in it form a slip or omission, may at any time be corrected by the Court, or the Registrar at the direction of the Court.
Rules 104(2), 104(1)(b)(ii) and (iii) are obviously inapplicable.
Rule 104(1)(b)(i) “fraud” does not assist Kowalski for at least two reasons. First, there was simply no evidence of fraud by Bourne before the Magistrate or myself. Secondly, Kowalski had previously brought numerous proceedings alleging fraud and all had been unsuccessful.
As for r 104(1)(b)(iv) “obtained consequent upon any irregularity”, one’s initial impression might be that an “irregularity” here connotes an irregularity in Court process and that there is no such evidence here. I suppose one could postulate a scenario of Court staff assisting a person to enter a consent judgment while so extremely and obviously intoxicated as not to know what he was doing as such an irregularity – but again, there is no evidence of anything like that.
Whether there might have been some additional common law jurisdiction in the Magistrates Court to set aside a consent judgment on the basis of mental incompetency is an interesting question that I do not need to answer. That is because, if there were such a jurisdiction in the Magistrates Court, it would require proof not only that Kowalski was mentally incompetent in the relevant sense, but also that Bourne, at the time of the execution of the subject consent judgment, knew this to be so. Again, there is no evidence of this.
I note that since the decision of the Magistrate on 28 October 2019, the Uniform Civil Rules 2020 have been enacted so as to apply to all South Australian Courts. They relevantly provide:
Part 6—Setting aside or varying judgment
186.1—Power to set aside or vary judgment
(1) The Court may at any time correct an error in a judgment.
(2) The Court may, if satisfied that the interests of justice so require—
(a) vary a judgment; or
(b) set aside a judgment and reopen a proceeding.
Since I am proceeding on the basis that the Magistrate committed a procedural error and that I am to exercise the discretion to set aside the subject consent judgment (or not) afresh, I will assume in favour of Kowalski (without deciding) that I should exercise the discretion by reference to the broader criterion “the interests of justice so require” that is now in operation.
However, in exercising that discretion, I must have close regard to the judgment of the Court in Mitsubishi Motors Australia Ltd v Kowalski,[71] and particularly the passage at [85], which it is convenient to again reproduce here:
85. It is in the very nature of an exercise of judicial power that judicial orders are final and binding save for any appeal allowed by statute and by a review for legality. Exceptionally, courts and tribunals are given a limited power by statute or by rules of court made under statute to set aside decisions. That exceptional power is necessary to guard against fraud which, it has been authoritatively held, vitiates everything. The special powers may also allow judicial decisions to be set aside, depending on the width and validity of the rule, on the ground of other vitiating factors, but the principle of finality remains an important consideration.[72] [Emphasis added]
[71] (2019) 134 SASR 1.
[72] Clone v Players Pty Ltd (in liq) (Receivers and Managers Appointed) (2018) 92 ALJR 399.
In the present case, I consider that the principle of finality is a very important consideration indeed.
For the reasons (singularly and cumulatively) appearing above in this judgment, I am not satisfied that the interests of justice require that the subject consent judgment be set aside and the proceeding be reopened. Without derogating from them, they include reasons which may be very briefly summarised as follows:
1.I am not satisfied that it is established that Kowalski was “mentally incompetent” in the relevant sense at the time of entering into the subject consent judgment.
2.If it were established that Kowalski was “mentally incompetent” in the relevant sense at the time of entering into the subject consent judgment, there is no evidence to establish that Bourne knew of this at the relevant time.
3.I am satisfied that the gross delay from the date of entry into the subject consent judgment until the institution of the application to set the subject consent judgment aside on 1 May 2019 cannot be excused or condoned. Further, it has in fact severely prejudiced Bourne in that critical witnesses such as Dr Jagermann are no longer available.
4.I am satisfied that considerations analogous to Anshun principles and impermissible re-litigation principles both apply in the present circumstances in which Kowalski has brought a large number of unjustified proceedings with the direct or indirect purpose of recovering the subject consent judgment sum. He only now seeks to rely on the evidence of the Jagermann letters as the centrepiece of this latest application to set aside the subject consent judgment.
5.From the point of view of Bourne, the cost, time and inconvenience of the unjustified litigation has been huge, not only financially, but also personally having regard to the fact that such litigation has included private prosecutions for criminal offences and complaints of unprofessional conduct. He has little realistic prospect of recovering cost awards that have been made against Kowalski for reasons that appear obvious.
6.If, in what I consider to be highly unlikely circumstances, Kowalski were to set aside the subject consent judgment and then secure a judgment for Bourne to repay the money Kowalski paid to Stanleys, I see no reason why Bourne could not refuse to pay on the basis that he is owed a greater amount by Kowalski due to his unpaid costs orders. I find Kowalski’s suggestion that such costs orders are invalid for some reason or other, or that he wishes to obtain a judgment against Bourne so as to reduce his overall indebtedness to Bourne, very unpersuasive.
I hereby dismiss this appeal.
Kowalski Appeal Book p.1. This document has a Christies Beach Magistrates Court date stamp “1 May 2019”. However, it also has a date stamp “11 April 2019” and refers to a “Defence dated
2-4-2018”. Since Blue J did not give his s 39 vexatious litigant permission until 30 April 2019, these matters are somewhat puzzling, but I will pass them by.
Kowalski v Mitsubishi Motors Australia Staff Superannuation Fund Pty Ltd [2006] SASC 159 at
[25]-[27].
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