Peakhurst Inn Pty Ltd v Fox

NEW SOUTH WALES COURT OF APPEAL

CITATION: Peakhurst v Fox & Ors; Newton v Fox & Ors [2004] NSWCA 74

FILE NUMBER(S):
40857/02
40935/02

HEARING DATE(S): 8 March 2004

JUDGMENT DATE: 08/04/2004

PARTIES:
Peakhurst Inn Pty Limited
Joshua Michael Fox
Honeheke Gerald Newton
Allianz Australia Workers Compensation (NSW) Ltd

JUDGMENT OF: Sheller JA Tobias JA Pearlman AJA

LOWER COURT JURISDICTION: District Court

LOWER COURT FILE NUMBER(S): DC 4318/00
DC 4541/00

LOWER COURT JUDICIAL OFFICER: McGuire DCJ

COUNSEL:
For Peakhurst Inn P/L - Mr Maconachie / Mr Kelly
For Honeheke Newton - Mr Kennedy SC / Mr Quickenden
For Joshua Fox - Mr Earl
For Allianz Australia - Ms Holz

SOLICITORS:
For Peakhurst Inn - Moray & Agnew, Sydney
For Honeheke Newton - Demaine & Associates, Hurstville
For Joshua Fox - McBridge Harle & Martin, Hurstville
For Allianz Australia - A O Ellison & Co, Sydney

CATCHWORDS:
PRACTICE & PROCEDURE - procedural fairness - fair trial - where primary judge utilises unfavourable finding of credit against party without giving party chance to make submission - where primary judge imputes to Witness B unfavourable finding of party's credit vis a viz Witness A without giving party chance to make submission - whether deprived of possibility of successful outcome - new trial
APPEAL - new trial - civil jurisdiction - whether substantial wrong or miscarriage of justice - whether departure from rules of natural justice will entitle aggrieved party to new trial - whether compliance with rules of natural justice would have made any difference to the result - whether new trial would be a futility - inappropriateness of appellate court to deal with matters that will figure in new trial - inappropriateness of appellate court to exclude a party from new trial in circumstances where it is open to new trial judge to resolve matter in way that may make party liable
EVIDENCE - late admission of evidence - reopening case - Pt28 r8(3) District Court Rules - prejudice associated with late admission of evidence - inability to cure prejudice by adjournment - new trial - standard of proof - balance of probabilities - civil litigation - tort of assault

LEGISLATION CITED:
District Court Rules 1970 (NSW)
Employees Liability Act 1991(NSW)
Evidence Act 1995 (NSW)
Home Invasion (Occupant's Protection) Act 1998 (NSW)
Supreme Court Rules 1970 (NSW)

DECISION:
In CA 40857/02
a) Appeal dismissed
b) Each party to bear its/his/her own costs of the appeal
In CA 40935/02
a) Appeal allowed
b) Orders 1 to 5 (inclusive) made by Maguire DCJ on 29 August 2002 and the orders for costs made by Maguire DCJ on 5 November 2002, be set aside
c) Order that there be a new trial in proceedings CA 4318/00 and 4541/00 filed in the District Court including those cross-claims in each of those proceedings which were the subject of appeals CA 40857/02 and CA 40935/02
d) Order that the costs of the first trial (other than in respect of the cross-claim by the appellant against the third respondent for damages for personal injury) abide the result of the new trial
e) Order that the first, second and third respondents pay the appellant's costs of the appeal but to have a certificate under the Suitor's Fund Act 1951 Act with respect to those costs if otherwise entitled thereto

JUDGMENT:

IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40857/02 CA 40935/02
DC 4318/00 DC 4541/00
SHELLER JA
TOBIAS JA
PEARLMAN AJA
Thursday 8 April 2004

PEAKHURST INN PTY LIMITED v JOSHUA MICHAEL FOX (KILBY) & ORS
HONEHEKE GERALD NEWTON v JOSHUA MICHAEL FOX & ORS

Judgment

SHELLER JA: I agree with Tobias JA.
TOBIAS JA: On 23 April 1999, Joshua Michael Fox (Fox) was allegedly bashed by Honeheke Gerald Newton (Newton) when he was discovered by Newton in a laundry on the upper level of the Peakhurst Inn, a hotel owned by Peakhurst Inn Pty Limited (Peakhurst) who employed Newton as its licensee and manager. As a consequence of the alleged assault, Fox sustained serious injuries in respect of which he sued Newton for damages for the tort of assault and Peakhurst as being vicariously liable for that assault.
There were a number of cross claims between the parties. The first was a cross-claim by Newton against Fox for personal injuries sustained by him as a result of an alleged assault by Fox upon him. The second was a cross-claim by Newton against Peakhurst seeking indemnity in respect of Fox's claim against him and further seeking damages from Peakhurst in that it had failed to provide him with a safe system of work which resulted in his sustaining the injuries alleged in the first cross-claim. The third cross-claim was by Peakhurst against Newton seeking indemnity in respect of any damages it was required to pay Fox as a result of Newton's alleged assault upon him.
A separate action was commenced by Michelle Lee Kilby, Fox's mother, who sued both Peakhurst and Newton for what is colloquially referred to as nervous shock resulting from her becoming aware of her son's injuries and her observation of him in an injured state. Finally, there was a claim by Allianz Australia Workers Compensation (NSW) Limited (Peakhurst's workers compensation insurer) but it is unnecessary to refer to that claim further as Allianz played no part in the appeal having submitted to the Court's order other than in respect of costs.
The proceedings before the primary judge
On 17 May 2002, McGuire DCJ, at the invitation of the parties, published what he referred to as an interim or preliminary judgment setting out his findings of fact in relation to what occurred on the evening in question. The purpose of that judgment was to resolve the stark difference between the version of events advanced by Fox and that advanced by Newton.
Having considered the parties' versions of events, the primary judge accepted that of Fox and rejected that of Newton. He then received written submissions and further oral argument as to the legal consequences of the findings contained in his preliminary judgment.
On 29 August 2002, the primary judge delivered his final judgment in which he:
a)rejected a claim by Fox for aggravated or exemplary damages;
b)assessed Fox's damages in the sum of $49,049 and entered a verdict in his favour against both Peakhurst and Newton;
c)entered judgment for Fox on Newton's cross-claim for damages against him;
d)found that Fox was not guilty of contributory negligence such as would justify a reduction in the damages awarded to him;
e)entered a verdict in favour of Ms Kilby against Peakhurst and Newton in the sum of $18,578;
f)rejected Newton's claim that he was entitled to the statutory defence provided by the Home Invasion (Occupant's Protection) Act 1998;
g)found that Peakhurst was vicariously liable for the conduct of Newton in assaulting Fox;
h)rejected Peakhurst's claim that it was not liable to indemnify Newton because the latter's conduct constituted "serious and wilful misconduct" within the meaning of s 5 of the Employees Liability Act 1991;
i) found that Newton was entitled to be indemnified by Peakhurst;
j)entered a verdict for Newton against Peakhurst in respect of his claim to be indemnified by Peakhurst and entered a verdict in favour of Newton in respect of Peakhurst's claim for indemnity against him;
k)rejected Newton's claim for damages against Peakhurst for breach of the duty of care owed to him as its employee.
Pursuant to leave granted on 30 June 2003, Peakhurst appeals to this Court in respect of the findings referred to in sub-paragraphs (g), (h), (i) and (j) above and Newton appeals against those set forth in sub-paragraphs (b), (c), (d) and (f) above. No issue was taken with the primary judge's assessment of damages referred to in sub-paragraphs (a) and (e) and there was no appeal by Newton against the finding in sub-paragraph (k).
In essence, Peakhurst's appeal is against the primary judge's finding that it was vicariously liable in respect of the tort of assault found by his Honour to have been committed by Newton upon Fox and against his consequential order that Newton was entitled to be indemnified against the damages in respect of which a verdict in favour of Fox was entered against him. Its submissions on those issue proceeded upon the basis that the primary judge had correctly accepted Fox's version of the relevant events. In fact, during the course of the hearing and in response to Newton's appeal, Peakhurst sought to support the primary judge's finding in favour of that version.
On the other hand, Newton contended that the primary judge erred in accepting Fox's version of events on two bases. The first was that he had been denied natural justice in circumstances to which I shall refer and, further, that his Honour had wrongly admitted certain medical evidence of Dr Susan Jennings upon which he had relied to support his acceptance of Fox's version of events. Newton therefore submitted that there should be a new trial confined to the issue of liability. The second was that the finding of the primary judge in favour of Fox's version of events was "glaringly improbable" and, therefore, open to challenge in accordance with the principles recently reaffirmed by the High Court in Fox v Percy (2003) 77 ALJR 989 at 995 [29]; Whisprun Pty Limited v Dixon (2003) 77 ALJR 1598 at 1610 [67].
As will be apparent from the issues, as I have stated them, it was appropriate to hear Newton's appeal first because if he succeeded on one or both of his arguments in support of the first basis identified above, and a new trial became necessary, then the question of Peakhurst's vicarious liability for Newton's conduct became moot. Peakhurst argued that this was not so and I shall refer to the issues raised by that submission later in these reasons.
The different versions of the events of 23 April 1999
It was common ground that Fox who was aged 16 years and 10 months at the time had, in the company of three under-aged friends, been drinking at a party on the night in question and had consumed a significant amount of alcohol. On leaving the party, the group came to the Peakhurst Inn. Fox sought entry to the hotel's nightclub which was refused because he was underage. However, he was determined to gain entry and reconnoitred the hotel premises hoping to find an access point. The western side of the hotel was bounded by a lane and a set of fire-stairs at the south-western corner that ran from street level to the roof of the hotel premises. Access to these stairs could not be gained from the laneway but Fox observed that he could gain access by climbing up the exterior wall of the hotel to a height of approximately 8'-10' above ground level. As he possessed skills as a rock climber, he successfully negotiated the vertical wall, gained access to the stairs and then to the hotel roof upon which Newton's residence was situated. The residence comprised a kitchen, lounge room and bedrooms and included a laundry adjacent to the lane on one side and the kitchen on the other.
It is at this point that the versions of Newton and Fox radically diverge. According to Fox, his desire to attend the nightclub was so strong that he was prepared to take any steps to achieve this end. He therefore set about investigating a possible entry point to the hotel and noticed an open window with a light on. On pulling the window curtain aside he found himself face to face with Newton who was sitting in a chair. Fox then fled and, in order to hide, entered the nearby darkened laundry.
Fox asserted that he sat on the laundry floor in the dark covering his head with his hands. Newton then entered the laundry and turned on the light. From his position on the floor Fox could see Newton's legs and hands and observed him holding a metallic black baton-like object. Newton then made some remark about his family and proceeded to belt Fox with the baton, striking his arms, back and sides "countless times". Fox pleaded with Newton to stop whereupon he heard a female voice say "Stop, that's enough". He then lowered his hands but Newton struck him again over the right eye with the baton and continued to strike him until security guards arrived and separated Newton from him. He was then escorted through the hotel to the ground floor and held until the police arrived. He was taken to Hurstville Police Station and thence to St George Hospital where he was treated for a frontal fracture to the right orbit and other injuries.
Newton's version of events was entirely different. It was common ground that he and his family had resided in the residence on the roof of the hotel as its manager/licensee since 1991. He was about 45 years old and weighed 110 kilos. He described all of the residence's windows as fitted with external metal roller shutters and the various doors as being protected by metal grills. Some of the windows had curtains fitted on the interiors. On the evening in question he and his wife had attended a rugby league match, returning home late in the evening. They had left their two children (aged 10 and 12) securely within the residence. According to Newton, all of the metal roller shutters on the windows were down prior to their leaving for the match and they remained closed on and after their return.
Newton asserted that he was sitting in his lounge room watching a replay of the football match when he heard a rustle of bushes on the roof behind him. He next heard a noise, which he related to a roller shutter over the window of an adjacent room. On proceeding down the hallway and inspecting the rooms where his children were sleeping, he heard a noise in the laneway. He looked through a gap in a wooden door leading from the residence to the roof but could see nothing as the roof area was dark. He unlocked the metal security door, walked out and headed towards the laneway in order to ascertain the source of the noise. He believed there had been an intruder who had made the noise relating to the shutter but who had fled into the laneway so that there was no further danger. He intended to proceed down the fire-stairs into the laneway to further investigate but on hearing his wife call out, he commenced to return to the residence.

As Newton passed the laundry door on the way to the kitchen (from where his wife had called) a figure jumped out from the vicinity of the laundry and hit him on his left side. They both collided with the wall and began grappling.
Newton asserted that he believed that his life was in danger as he fought off his attacker. In the course of the struggle the two men fell inside the laundry with Newton on top of the intruder (Fox). A number of punches were thrown but ultimately, according to Newton, he subdued Fox who was lying on his back with Newton on top of him holding his forearms across his chest until the security guards arrived.
Newton denied that he was carrying a baton or any other weapon, that he had abused Fox or that he had struck Fox with any weapon or object. However, he agreed that he had pushed Fox with his fists during the course of the struggle.
The primary judge accepts Fox's version of events
The primary judge acknowledged in his preliminary judgment that in order to establish the true factual position, he had to examine the conflicting accounts of ostensibly reliable witnesses which could not stand together. As he said (Red 65):
"I am faced with diametrically opposed versions of events, with the plaintiff and Newton giving totally contradictory accounts of what occurred between them. My task involves the determination of who has given me a reliable description of what happened in or about that laundry. The plaintiff must, of course, satisfy me as to his allegations regarding the assault visited upon him on the balance of probabilities."
The primary judge then acknowledged that his starting point was to examine the credit and reliability of Fox. In so doing, he said that he needed to consider his evidence and the differing account proffered by Newton, Newton's wife and Mr Kenny, a hotel employee. He then said this (Red 66):
"I have also taken into account the conflicting evidence between Newton and Mrs. Durkin, the managing director of Peakhurst."
It will be recalled that Newton had cross-claimed against Peakhurst alleging that it was in breach of its duty of care towards him as its employee. The gravamen of that charge was that Peakhurst had failed to provide him with suitable and safe premises and, in particular, that it had failed to take adequate precautions to prevent Fox's intrusion onto the roof area of the hotel where Newton's residence was located. He maintained that previous requests had been made in the course of various discussions with Mrs Durkin relating to the security of the roof area seeking the installation of fencing, lighting, cameras, alarms and the like but that she had failed to respond and had fobbed him off with claims that the hotel could not afford the suggested security precautions.
Mrs Durkin denied these assertions and the primary judge accepted her evidence. In the course of his final judgment of 29 August 2002, he said (Red 109):
"I further accept Mrs Durkin when she flatly denied the suggestions put to her which reflected the evidence of Newton, to the effect that he suggested such precautions as a barbedwire fence around the perimeter of the roof, the installation of cameras, additional lighting and that she rejected his proposals.
I don't believe that Newton raised such matters and was ignored. It appears to me that in entrusting security matters to Newton, Mrs Durkin would have acceded to any suggestions raised by Newton to further security.
In resolving the conflict between Newton and Mrs Durkin, in particular with regard to his assertions that she had refused to spend money, I have taken into account the substantial expenditure she in fact authorised:…This is not conclusive evidence however it is persuasive."
At Red 72-74, the primary judge in his preliminary judgment set out a number of reasons why he thought that Fox's version of events was more probable. However, his Honour also said this (Red 76):
"In the course of their submissions counsel invited me to consider the contrasting accounts of Newton and Mrs Durkin. In testing the credit of Newton I have had regard to the sharp conflict between the evidence of he and Mrs Durkin in relation to a separate issue in the hearing. I heard them both give completely contradictory accounts of a number of conversations between them regarding the matter of security around the hotel, involving the roof area in particular, the installation of cameras and the erection of a barbed wire fence.
I accept the evidence of Mrs Durkin with regard to these conversations and reject the evidence of Newton on this issue. This is not conclusive in my determination of the dispute between he and the Plaintiff however, this is a matter which I consider to be of importance in assessing Newton's credit and the accuracy of his account in relation to what occurred in and about the laundry."
Newton's appeal – The first argument
Was Newton denied procedural fairness?
Newton submitted that in relying in his preliminary judgment upon the evidentiary conflict between Newton and Mrs Durkin, accepting the evidence of Mrs Durkin and rejecting that of Newton and thereby relying upon that lack of credit in assessing Newton's credit with respect to the factual conflict between he and Fox, the primary judge had denied Newton procedural fairness. The basis of this submission was that his Honour stopped counsel for Newton addressing him on this issue as he considered that the question of Newton's credit vis-à-vis Mrs Durkin was an "unrelated issue" and, impliedly, not relevant to the issue of Newton's credit vis-à-vis Fox.
In the course of addresses on 15 May 2002 (ie before his Honour delivered his preliminary judgment) and immediately prior to the commencement by Newton's counsel of his address on the factual issues concerning what happened on the evening in question, his Honour observed (Black 2/541):
"His Honour: Mr Kelly, your submission, I think has merit and its not something that had previously escaped me, but in testing the conflict between the plaintiff and Newton I would also look at the credit of Newton having regard to the evidence of Mrs Durkin."

Counsel for Newton then addressed at some length particularly on the issue of Newton's credit and Fox's alleged lack of it. At the end of his address, the following exchange took place between he and the primary judge (Black 2/553):
"Quickenden: …
Your Honour, there were further submissions I wanted to make about Mrs Durkin, a suggestion that any conflict between them somehow impacts on the credit issue …
His Honour: I don't need to hear you on that. I consider them to be unrelated issues."
Notwithstanding that the primary judge stopped Newton's counsel from addressing him on the conflict of evidence between Newton and Mrs Durkin on the one hand and the suggestion that that conflict could impact upon the credit issue between Newton and Fox on the other, his Honour did two things. Firstly, without hearing any submissions from Newton's counsel as to whether his client should be accepted where his evidence conflicted with that of Mrs Durkin, his Honour found in his preliminary judgment that he accepted the evidence of Mrs Durkin and rejected that of Newton where their evidence as to conversations conflicted. Secondly, he utilised his rejection of Newton's credit vis-à-vis Mrs Durkin in assessing his credit vis-à-vis Fox. As he said, although he did not regard his determination of the credit issue between Mrs Durkin and Newton as "conclusive in my determination of the dispute between Newton and Fox", nevertheless he considered it to
"be of importance in assessing Newton's credit and the accuracy of his account"
Furthermore, as I have already noted his Honour specifically said (Red 66) that he took the conflicting evidence between Newton and Mrs Durkin "into account". It is clear that he intended by that statement to take that conflict into account when assessing Newton's credit with respect to his version of events as against that of Fox.
In my opinion, there was a clear denial of procedural fairness. The seriousness of what occurred was exacerbated by the fact that, as at the time he delivered his preliminary judgment (including his findings with respect to Newton's credit, not just vis-à-vis Fox but also vis-à-vis Mrs Durkin), the primary judge had not at that point heard any submissions from Newton's counsel with respect to the factual dispute between Newton and Mrs Durkin. That issue was to come later after he had made his findings of fact with respect to whether he accepted Fox's or Newton's version of the events of the evening of 23 April 1999. As his Honour had said in the exchange with Newton's counsel extracted in [27] above, it was an "unrelated issue".
In his submissions before this Court, counsel for Fox properly and fairly conceded that the primary judge had denied procedural fairness to Newton in taking into account, on the issue of Newton's credit, his findings with respect to the evidentiary conflict between he and Mrs Durkin. However, he submitted that notwithstanding that denial of natural justice, no substantial prejudice or miscarriage of justice had occurred. He relied upon the decision of this Court in State Rail Authority of NSW v Luckwell [2000] NSWCA 223 to support the proposition that, by virtue of Pt 51 r23 of the Supreme Court Rules, this Court had no power to order a new trial on the ground of error of law or on any other ground unless it appeared to the Court that a substantial wrong or miscarriage had been occasioned. It was submitted that there was no such wrong or miscarriage because, even if the primary judge had not relied upon Newton's lack of credit vis-à-vis Mrs Durkin in his assessment of his credit vis-à-vis Fox, inevitably he would still have accepted Fox's version of events.
The leading authority where there has been a departure from the rules of natural justice in a case such as the present is the decision of the High Court in Stead v State Government Insurance Commission (1986) 161 CLR 141. In a joint judgment, the Court adopted (at 145) the general principle as expressed by the English Court of Appeal in Jones v National Coal Board [1957] 2 QB 55 at 57:
"There is one thing to which everyone in this country is entitled, and that is a fair trial at which he can put his case properly before the judge… No cause is lost until the judge has found it so; and he cannot find it without a fair trial, nor can we affirm it".
The joint judgment then stated what it regarded as an important qualification to that general principle (at 145):
"That qualification is that the appellate court will not order a new trial if it would inevitably result in the making of the same order as that made by the primary judge in the first trial. An order for a new trial in such a case would be a futility".
The Court then illustrated this qualification in its application to questions of law but, in its application to questions of fact, observed:
"Where, however, the denial of natural justice effects the entitlement of a party to make submissions on an issue of fact, especially when the issue is whether the evidence of a particular witness should be accepted, it is more difficult for a court of appeal to conclude that the compliance of the requirements of natural justice could have made no difference".
The Court then held that the Full Court of South Australia had failed to apply the correct criteria if it was saying no more than that a new trial would probably make no difference to the result. The Court then concluded (at 147):
"All that the appellant needed to show was that the denial of natural justice deprived him of the possibility of a successful outcome. In order to negate that possibility, it was, as we have said, necessary for the Full Court to find that a properly conducted trial could not possibly have produced a different result".
See also, Escobar v Spindaleri (1986) 7 NSWLR 51 at 57-58.
It was submitted by Fox, and supported by Peakhurst, that even if the primary judge had ignored his credit finding as between Newton and Mrs Durkin, the inherent improbability of, and the internal inconsistencies within, Newton's version of events was such that it was inevitable that in any new trial the result would be the same. With respect, I do not agree. As already observed, there is no doubt that the primary judge's finding with respect to Newton's credit vis-à-vis Mrs Durkin played an important, if not a conclusive, part in his assessment of Newton's credit vis-à-vis Fox. It would be pure speculation to assert that his Honour would have come to the same factual conclusion even if he had ignored the Newton/Durkin credit issue. I would not be prepared to find that a properly conducted trial could not possibly have produced a different result, especially given the fact that, as the primary judge himself made clear, the resolution of the dispute between Fox and Newton depended very much upon his assessment of whether their evidence was reliable and credible.
Given this view, it would be inappropriate to deal with the various submissions that were made with respect to the evidence and as to why Newton's version was allegedly inherently improbable whereas that of Fox was inherently probable. Ultimately, those submissions raise issues that will loom large in any new trial and it is therefore inappropriate for this Court to comment upon them. The hurdle erected by the High Court in Stead over which Fox and Peakhurst must jump if a new trial is to be avoided is particularly difficult to clear in a case such as the present. Notwithstanding the arguments which were advanced by the parties to the contrary, I am firm in my opinion that they have failed to establish that a properly conducted new trial could not possibly produce a different result so that the ordering of a new trial would be an exercise in futility.
Was the report of Dr Susan Jennings of 22 July 1999 properly admitted?
Given my finding that there should be a new trial, the issue raised by the primary judge's very late admission of the report of Dr Jennings becomes academic. However, I shall deal with this issue briefly.
Dr Jennings was a police (forensic) medical officer. She examined Fox in St George Hospital on 27 April 1999. She prepared a report setting out her clinical findings on examination. In particular, she referred to the injuries to Fox's head, left arm and hand, right arm and hand and back. In relation to the injuries to his left arm and back, she opined that the appearance of the injuries were consistent with the history that he had given her of being struck by a baton.
After Fox's counsel had closed his case, he sought the primary judge's leave to reopen to tender Dr Jennings' report. Although the report then formed part of the police file which had been subpoenaed and was therefore available to the other parties, notice had not been given that it was proposed to tender that report as Pt 28 r 8 of the District Court Rules required. Objection was taken to the tender by Newton's counsel on the basis that he would be prejudiced as had notice of its tender been given in a timely fashion, Dr Jennings would have been subpoenaed for cross-examination and a report of a medical expert qualified to express an opinion on the issues raised by her would have been sought. Ultimately, as a consequence of these objections Fox's counsel withdrew the tender at that point, the primary judge indicating that he would entertain a further application for its tender in the event that the author was available for cross-examination.
On 14 May 2002, Fox's counsel renewed his application to tender Dr Jennings' report. He asserted that it was admissible as a business record of the Police Department but, before this Court, accepted that its admissibility as a business record was excluded by s 69(3)(b) of the Evidence Act. His Honour rejected the tender upon the basis that as the author was not available for cross-examination and as Newton had not had the opportunity to qualify an expert with a view to possibly refuting the contents of the report, he would be materially prejudiced given that the rules had not been complied with.
What then happened was, with respect, bizarre. The evidence had concluded on 15 May 2002 and addresses had commenced but were not finished on that day. Before the court sat on the morning of 16 May 2002, the primary judge called counsel into his chambers and informed them that he proposed to admit Dr Jennings' report. When the Court convened he confirmed that he proposed to admit the report subject to giving Newton's counsel the opportunity to have the trial adjourned so as to meet it and/or to require the author to attend in due course – she being then unavailable due to maternity leave and having a sick child to look after. Because of the stage the case had reached, objection to the tender of the report on behalf of Newton was renewed. No doubt because of the extensive costs that had already been incurred in what was a relatively small claim, Newton's counsel indicated to the primary judge that he was instructed not to seek an adjournment of the proceedings. The report was then admitted into evidence and relied upon by the primary judge in his preliminary judgment to support Fox's version of events. His Honour gave no reasons for his change of heart.
Having summarised the contents of the report and noting Dr Jennings' opinion that Fox's injuries to his left forearm and back were consistent with blows from a baton, the primary judge utilised the contents of the report as follows (Red 78):
"As I understand it the general tenor of her report is that various marks and bruises she observed were consistent with the plaintiff's account of how they were sustained".
His Honour then referred to the photographs in evidence as demonstrating the various marks on Fox's body that accorded with Dr Jennings' observations. He concluded in these terms (at Red 79):
"I hold no doubt that the plaintiff sustained in the subject assault the various injuries which he described. My belief is substantially confirmed by the findings of Dr Jennings and the findings recorded in the clinical notes of St George Hospital. The history he gave on admission to hospital was immediate and consistent with his account before me".
Although the primary judge had a discretion pursuant to Pt 28 r 8(3) of the District Court Rules to admit the document notwithstanding non-compliance with that rule, in my opinion his discretion miscarried. It was quite wrong of his Honour, near the end of the addresses, suddenly, and without warning or the proffering of reasons, to admit the report and then place Newton's counsel in the position of accepting or rejecting the offer of an adjournment as if that, without more, would necessarily cure the prejudice which the admission of the report would inevitably produce.
In the circumstances, his Honour's admission of the report was both unreasonable and plainly unjust and, therefore, justifies the interference of this Court in the primary judge's exercise of his discretion: House v The King (1936) 55 CLR 499 at 505.
This further error on the primary judge's part necessitates, in my opinion, a new trial.
Newton's second argument
Notwithstanding that the primary judge's acceptance of Fox's version of events was credibility-based, it was submitted by Newton that that version was so glaringly improbable compared to that of Newton that it was open to this Court to interfere with his Honour's acceptance of it. In Fox v Percy (2003) 77 ALJR 989 at 995, Gleeson CJ, Gummow and Kirby JJ said (at [29]):
"In some, quite rare, cases, although the facts fall short of being 'incontrovertible', an appellant conclusion may be reached that the decision at trial is 'glaringly improbable' or 'contrary to compelling inferences' in the case".
Given that I am of the opinion that there should be a new trial, it is inappropriate to express any concluded views with respect to the issues raised. Suffice it to say that I do not consider that the present case is one of those rare cases to which their Honours in Fox v Percy were referring. Although both versions had their strengths and weaknesses, and it was and will be open to a judge to find one more probable than the other, it cannot be said that either was glaringly improbable.
Newton's other arguments
Newton further submitted that his Honour, when he accepted Fox's version of events, erred in failing to apply the standard of proof as laid down by Dixon J in Briginshaw v Briginshaw (1938) 60 CLR 336 at 362. This statement of Newton's submission contains an inherent fallacy. The statement of Dixon J in Briginshaw upon which reliance was placed is not to be understood as directed to the standard of proof which, even in the case of an allegation of a serious criminal offence amounting to a tortious assault, is proof on the balance of probabilities: Neat Holdings Pty Limited v Karajan Holdings Pty Limited (1992) 67 ALJR 170 at 171. As the joint judgment of Mason CJ, Brennan, Deane and Gaudron JJ in that case made clear, such statements (of Dixon J and those who have expressed the principle in similar terms):
"should be understood as merely reflecting a conventional perception that members of our society do not ordinarily engage in fraudulent or criminal conduct and a judicial approach that a court should not lightly make a finding that, on the balance of probabilities, a party to civil litigation has been guilty of such conduct".
In the present case the primary judge was correct when he said (at Red 65):
"that the plaintiff must satisfy me as to his allegations regarding the assault visited upon him on the balance of probabilities".
It is however true that his Honour did not purport, at least expressly, to refer to the statement of Dixon J in Briginshaw upon which reliance is now placed.
However, as was conceded during the course of argument, the primary judge was neither referred to that statement nor requested to apply it or take it into account. In those circumstances, it is not open to Newton to complain of the fact, if it be the fact, that his Honour failed to take account of the matters to which Dixon J referred.
Newton further submitted that in his process of evaluation of the evidence, the primary judge failed to weigh up a number of negative factors relating to Fox's evidence in assessing his credibility and, further, that he failed to give any or any adequate reasons for his rejection of the evidence of Mrs Newton and Mr Kenny. Reliance was placed upon a passage in the judgment of Heydon JA, with whom Stein JA and Grove J agreed, in Hadid v Redpath (2001) 35 MVR 152 at 164 [53].
In my opinion, there is some substance in these complaints. However, as I am of the opinion that there should be a new trial, it is unnecessary to pursue them further.
It follows from the foregoing that, in my opinion, Newton's appeal should be upheld.
Peakhurst's appeal on vicarious liability and indemnity
The primary judge found that Peakhurst was vicariously liable for Newton's conduct. Essentially, he held that the assault by Newton on Fox was in the course of apprehending him and involved "a mode, albeit improper, of doing that which he was employed to do" (Red 103). Furthermore, he found that although when Newton struck Fox he was improperly performing his functions, he was not engaging in an act of retribution.
Peakhurst relied upon the following passage from the judgment of Gummow and Hayne JJ in New South Wales v Lepore (2003) 77 ALJR 558 at 602 [239]:
"For present purposes, it is enough to conclude that when an employer is alleged to be vicariously liable for the intentional tort of an employee, recovery against the employer on that basis should not be extended beyond the two kinds of case identified by Dixon J in Deatons: first, where the conduct of which complaint is made was done in the intended pursuit of the employer's interests or in the intended performance of the contract of employment or, secondly, where the conduct of which complaint is made was done in the ostensible pursuit of the employer's business or the apparent execution of the authority which the employer held out the employee as having."
It was submitted that the act of assault by Newton upon Fox was not performed in the intended pursuit of Peakhurst's interests or in the intended performance of Newton's contract of employment. Accordingly, it was not vicariously liable for Fox's tortious conduct.
Apposite to Peakhurst's submission is the following paragraph from the judgment of Gleeson CJ in Lepore where his Honour said (at 571 [54]):
"Where acts of physical violence are concerned, the nature and seriousness of the criminal act may be relevant to a judgment as to whether it is to be regarded as a personal, independent act of the perpetrator, or whether it is within the scope of employment. A security guard at business premises who removes a person with unnecessary force may be acting in the course of employment. On the other hand, as Jordan CJ pointed out in Deatons Pty Ltd v Flew, extreme and unnecessary violence, perhaps combined with other factors, such as personal animosity towards the victim, might lead to a conclusion that what is involved is an act of purely personal vindictiveness."
Allied with this submission was a contention by Peakhurst that in the event that the Court concluded in Newton's appeal that there should be a new trial, that trial should be confined to issues between Fox and Newton and should not extend to issues between Fox and Peakhurst or Newton and Peakhurst. The basis for this contention was two-fold. Firstly, it was submitted that, given the primary judge's findings with respect to the Fox version of events, Peakhurst could not be held vicariously liable for Newton's conduct as it was not conduct performed in the intended pursuit of Peakhurst's interests notwithstanding the primary judge's finding to the contrary. Secondly, it was submitted that in the event of a new trial, the judge would be faced with the same issues as was the primary judge, namely, whether to accept the Fox or Newton version of events. If he accepted the Newton version, then Fox would fail against Newton and would therefore fail against Peakhurst. It was submitted that there was no middle ground.

It is of course true that if the Newton version of events is accepted in a new trial then Fox will fail but it does not follow that even if Fox succeeds in a new trial the findings of the trial judge will, so far as the issue of the vicarious liability of Peakhurst is concerned, be identical to those of the primary judge. On the findings as they stand, it is fairly evenly balanced as to whether Newton merely employed excessive force whilst acting in the scope of his employment or whether the assault was so extreme and unnecessary as to lead, whether combined with other factors or not, to the conclusion that it was an act of retribution or, as Gleeson CJ suggested in Lepore, an act of purely personal vindictiveness. To a degree, a finding as to whether it fell on one side of the line or the other involved both subjective and objective considerations dependant upon the judge's assessment of Newton's motives.
Notwithstanding the findings of the primary judge, in my opinion it would clearly be open to a judge at a new trial to express a view on the facts or to draw inferences from the facts as ultimately found which is different, either in express terms or in emphasis, from those of the primary judge upon which Peakhurst presently relies. In essence, in the event that in a new trial Fox's version of events is generally accepted, it is not a given that it will follow that all other aspects of the primary judge's findings with respect to Newton and his intentions when assaulting Fox will be replicated. They may well be different without detracting from a general acceptance of Fox's version of events.
The same observations apply to Peakhurst's submissions with respect to the applicability to the facts as found by the primary judge of s 5(a) of the Employees Liability Act 1991. Although the primary judge found that the assault by Newton upon Fox did not amount to "serious and wilful misconduct", it does not follow that in a new a trial the judge will necessarily come to the same conclusion.
Accordingly, I am of the opinion that the issues as between Peakhurst and Fox and Peakhurst and Newtown should be included within any new trial. That being so, it would be both pointless and inappropriate to resolve the issues raised by Peakhurst with respect to the primary judge's findings regarding vicarious liability and "serious and wilful misconduct".
Conclusion
It follows that in my opinion Newton's appeal should be allowed, the orders of the primary judge should be set aside and there should be a new trial on the issues of liability including those between Fox and Peakhurst and Newton and Peakhurst. The costs of the first trial should abide the result of the second trial. As Newton has succeeded on his appeal which was resisted by both Fox and Peakhurst, they should pay Newton's costs of that appeal. With respect to Peakhurst's appeal, it has not been successful in having itself removed from any new trial. On the other hand, because there is to be a new trial ordered in Newton's appeal, I have determined that it is unnecessary and inappropriate to determine the issues more directly raised by Peakhurst in its appeal. In these circumstances, Peakhurst's appeal should be dismissed but there should be no order as to the costs of that appeal.
Accordingly, I would propose the following orders:
In CA 40857/02
a) Appeal dismissed;
b) Each party to bear its/his/her own costs of the appeal
In CA 40935/02
a)Appeal allowed;
b)Orders 1 to 5 (inclusive) made by Maguire DCJ on 29 August 2002 and the orders for costs made by Maguire DCJ on 5 November 2002, be set aside;
c)Order that there be a new trial in proceedings numbers 4318/00 and 4541/00 filed in the District Court including those cross-claims in each of those proceedings which were the subject of appeals CA 40857/02 and CA 40935/02;
d)Order that the costs of the first trial (other than in respect of the cross-claim by the appellant against the third respondent for damages for personal injury) abide the result of the new trial;
e)Order that the first, second and third respondents pay the appellant's costs of the appeal but to have a certificate under the Suitor's Fund Act 1951 with respect to those costs if otherwise entitled thereto.

PEARLMAN AJA: I agree with Tobias JA.

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LAST UPDATED: 08/04/2004

[2004] NSWCA 74

8 April 2004

Key Legal Topics

Areas of Law

Civil Procedure

Negligence & Tort

Evidence

Legal Concepts

Procedural Fairness

Appeal

Vicarious Liability

Costs

Natural Justice