Kowalski v Stanley & Partners

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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…

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Details
Case
[2021] SASC 23
Decision Date

CaseChat Overview and Summary

The case of Kowalski v Stanley & Partners involves a protracted legal dispute between the plaintiff, Kowalski, and the defendants, Stanley & Partners and Timothy Bourne. The crux of the matter is Kowalski's challenge to a consent judgment that was entered over two decades ago. This appeal before the South Australian Supreme Court concerns the refusal of the Magistrates Court to set aside the consent judgment on the basis that Kowalski was mentally incompetent at the time of signing. The defendants have consistently argued that Kowalski's claims are vexatious and an abuse of process, a stance upheld by the lower courts.

The primary legal issues before the court were whether the Magistrate erred in not considering certain affidavit material and whether the Magistrate should have set aside the consent judgment on the grounds of Kowalski's alleged mental incompetence. The court had to determine if Kowalski's claim of mental incompetence was credible and whether Bourne was aware of such incompetence at the time the consent judgment was signed. Additionally, the court needed to address the implications of the extensive litigation history between the parties and the principles of finality and abuse of process.

In dismissing the appeal, the court found that Kowalski had not established that he was mentally incompetent at the time of entering into the consent judgment. The court noted that Kowalski had been provided with ample opportunity to litigate this issue previously but had failed to do so. Furthermore, the court held that even if Kowalski had been mentally incompetent, there was no evidence that Bourne was aware of this at the time. The gross delay in bringing the current application further prejudiced Bourne, as critical witnesses were no longer available. The court emphasized that considerations analogous to Anshun principles and impermissible re-litigation applied, given Kowalski's history of bringing numerous unjustified proceedings. The court also highlighted the significant cost, time, and personal inconvenience caused to Bourne by Kowalski's vexatious litigation.

Given these findings, the court dismissed the appeal, affirming the Magistrate's decision and the previous judgments. The court underscored that the matter should finally be brought to an end, given the extensive and unjustified litigation history between the parties.

Orders

Orders of the court

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.

Background

Background to the litigation

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.

Evidence

Evidence Before The Court

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

Decision

Reasons for decision

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.

Ratio Decidendi

Legal Principle Established

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.