State of New South Wales v Nash

[2016] NSWCA 98

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation:	State of New South Wales v Nash [2016] NSWCA 98
Hearing dates:	2 May 2016
Decision date:	06 May 2016
Before:	Barrett AJA
Decision:	1.   Rule that the court attendance notices and facts sheets which are annexures B and C to the affidavit of Belinda Michalk of 19 paragraphs affirmed 26 February 2016 are admitted upon the hearing of the notices of motion heard by me on 2 May 2016. 2.   Order that the use that may be made of the said court attendance notices and facts sheets is limited to proof of steps (which may or may not be legally effective steps) that have been taken to institute criminal prosecutions against the respondent on the basis of the untested allegations appearing from the documents. 3.   Rule that the witness statement which is annexure A to the affidavit of Belinda Michalk of 14 paragraphs affirmed 26 February 2016 is admitted upon the hearing of the notices of motion heard by me on 2 May 2016. 4.   Order that the use that may be made of the said witness statement is limited to proof of what the maker of the witness statement has expressed a willingness to say in evidence. 5.   Order that the claims in prayers 3 and 4 of the appellant’s notice of motion filed on 26 February 2016 be dismissed. 6.   Order that the claims in the amended notice of motion filed by the respondent seeking an order that the notice of appeal filed on 6 November 2015 be dismissed be themselves dismissed. 7.   Make no order as to costs of and incidental to the notices of motion to the intent that each party should bear its or his own costs.
Catchwords:	APPEAL AND NEW TRIAL – grounds of appeal – whether formulated with sufficient specificity – grounds of appeal – whether appellant should be allowed to add grounds that judgment below procured by fraud – where fraud not admitted – whether new evidence upon which appellant would seek to rely is incontrovertible – held not appropriate for question of fraud to be tried by appellate court
Legislation Cited:	Civil Procedure Act 2005 (NSW) pt 6, div 1 Crimes Act 1900 (NSW) s 338 Evidence Act 1995 (NSW) ss 55, 59, 75, 135, 136 Uniform Civil Procedure Rules 2005 (NSW) rr 51.18, 51.34, 51.38
Cases Cited:	Bishop v Chhokar [2015] EWCA Civ 24 (30 January 2015) Cabassi v Vila [1940] HCA 41; 64 CLR 130 Durham v Durham [2011] NSWCA 62 Gann v Hosny [2015] VSCA 43 (16 March 2015) Hip Foong Hong v H Neotia & Co [1918] AC 888 Jonesco v Beard [1930] AC 298 Ladd v Marshall [1954] 1 WLR 1489; 3 All ER 745 McDonald v McDonald [1965] HCA 45; 113 CLR 529 Noble v Owens [2010] EWCA Civ 224; 1 WLR 2491 Permanent Trustee Australia Ltd v FAI Insurance Co Ltd (in liq) [2003] HCA 25; 214 CLR 514 Sansom v Sansom [1956] 1 WLR 945 Singh v Owners Strata Plan No 11723 (No 3) [2012] FCA 1121; 207 FCR 390 Southend-on-Sea Borough Council v Armour [2014] EWCA Civ 231 (12 March 2014) Toubia v Schwenke [2002] NSWCA 34 ; 54 NSWLR 46 Wentworth v Rogers (No 5) (1986) 6 NSWLR 534 Zagarac v Dellios [2007] FCAFC 58
Category:	Procedural and other rulings
Parties:	State of New South Wales (Appellant) Bernard Andrew Nash (Respondent)
Representation:	Counsel: Ms S Pritchard SC / Mr M Hutchings (Applicant) Mr R McIlwaine SC / Mr R Quickenden (Respondent)   Solicitors: Sparke Helmore (Applicant) Aubrey Brown Partners (Respondent)
File Number(s):	CA 2015/260282
Decision under appeal	Court or tribunal: District Court of New South Wales Jurisdiction: Civil Citation: Nash v State of New South Wales (No. 2) [2015] NSWDC 156 Date of Decision: 7 August 2015 Before: Gibson DCJ File Number(s): DC 2013/134798

Judgment

1. HIS HONOUR: On 6 November 2015, the appellant filed a notice of appeal in respect of a judgment and orders of the District Court (Gibson DCJ) adverse to it in proceedings in which it was sued by the respondent.

2. The respondent, as plaintiff, sued for damages in tort, specifically, wrongful arrest, assault and battery and malicious prosecution. The relevant acts were acts of a police officer, Senior Constable Hicks. The appellant accepted that it was vicariously liable for wrongs committed by the officer. The primary judge ordered judgment for the respondent (plaintiff) and awarded substantial damages against the appellant (defendant).

3. The notice of appeal, as filed, comprises four grounds of appeal. A notice of motion filed by the respondent on 30 March 2016 seeks an order that all four grounds of appeal be struck out (or, as the notice of motion puts it, “dismissed”). A notice of motion filed by the appellant on 26 February 2016 seeks an order granting leave to amend the notice of appeal by adding two further grounds. Each party opposes the other’s application.

4. The six grounds of appeal that the appellant wishes to advance are as follows (grounds 3, 4 5 and 6 being the four originally included and grounds 1 and 2 being the two new grounds sought to be added):

“1   The judgment was obtained by fraud and perjury.

2   Her Honour made factual assumptions which have been falsified by subsequent events, and a substantial wrong or miscarriage was thereby occasioned.

3   Her Honour erred in finding that the respondent was the subject of a malicious prosecution, and in particular in finding that:

(a)   the prosecutor lacked reasonable and probable cause;

(b)   the prosecutor acted with malice.

4   Her Honour erred in failing to give reasons, or adequate reasons, for finding that there was a malicious prosecution.

5   Her Honour erred in finding that the respondent was wrongfully arrested.

6   Her Honour erred in finding that the respondent was the subject of an assault and battery.”

5. Also sought by the appellant are the following:

1. an order staying execution of the District Court judgment and orders pending determination of the appeal;

2. an order that further evidence be received by the Court of Appeal; and

3. an order staying the hearing of the appeal until the determination of certain criminal proceedings pending against the respondent.

6. On 7 March 2016, it was ordered that the appellant’s claims concerning amendment of the notice of appeal (by adding the two new grounds 1 and 2) and a stay of the hearing of the appeal pending determination of criminal charges be heard and determined separately from the appellant’s remaining claims. On 2 May 2016, I heard the two claims of the appellant just mentioned and the whole of the claims in the respondent’s notice of motion. The issues before me for decision are therefore:

1. whether the original grounds of appeal (grounds 3, 4, 5 and 6 at [4] above) should be struck out;

2. whether the appellant should be permitted to add grounds 1 and 2 at [4] above; and

3. whether the hearing of the appeal should be stayed until the criminal charges pending against the respondent have been determined.

Factual background

7. The events central to the District Court proceedings occurred on 13 October 2011. At about 6.30 pm on that day, the respondent left a golf clubhouse at which he had spent about two and a half hours. He drove to his home which was only about 150 metres from the golf club. Senior Constable Hicks was driving nearby and decided to require the respondent to submit to a breath test. The police officer turned his vehicle and followed the respondent but had not caught up with him by the time the respondent reached his home, drove into the property and parked his car in the driveway. After the respondent alighted from his car and began to walk towards the back of the house, Senior Constable Hicks entered the grounds, placed the respondent in a “bear hug” and tripped him so that he fell to the ground where Senior Constable Hicks put his weight on the respondent, including by placing his knees on the respondent’s back. Senior Constable Hicks told the respondent that he was under arrest. After a time, the situation calmed and Senior Constable Hicks issued a handwritten court attendance notice charging driving under the influence. He had earlier indicated to the respondent that, because he was at his place of abode, a breath test could not be administered. By that time, a second police officer (Constable McKay) had attended in response to a call from Senior Constable Hicks. That other officer took the respondent’s fingerprints.

8. The respondent’s wife emerged from the house less than a minute after Senior Constable Hicks’ arrival and witnessed the whole of the episode from that point. A neighbour witnessed it from an upstairs window across the street. Constable McKay witnessed the later stages of it. The respondent and Senior Constable Hicks were present throughout. The primary judge had before her audio recording captured on the system in Senior Constable Hicks’ police vehicle (Exhibit B). This picked up only words and sounds fairly close to that vehicle. Also in evidence was CCTV footage from the golf club of the period in which the respondent was there on the relevant day (Exhibit H).

9. At a later time, Senior Constable Hicks issued the respondent with a second court attendance notice. That notice charged resisting arrest. After a Local Court hearing on 18 May 2012, both that charge and the original charge of driving under the influence were dismissed.

10. The respondent subsequently commenced the District Court proceedings. The primary judge gave two judgments. The first (dated 10 June 2015) was a comprehensive judgment of 70 pages on issues of liability. The second (7 August 2015) dealt with quantification of damages and the matter of costs. Damages were assessed at $124,958.80, being $25,000 for assault and battery, $25,000 for wrongful arrest, $70,000 for malicious prosecution and special damages (medical expenses and prosecution legal costs) of $4,958.80. Each of the first three amounts included an aggravated damages component.

11. On 19 November 2015, following a police investigation, the respondent was arrested and charged with certain offences arising out of his initiation and prosecution of the District Court action and the evidence he gave both in that action and at the Local Court trial of the charges instigated by Senior Constable Hicks.

The original grounds of appeal

12. The controversy litigated in the District Court was, of course, defined by the pleadings. Certain factual issues were not in issue, in particular, that Senior Constable Hicks arrested the respondent, made the several forms of physical conduct with him and later laid the Local Court charges against him. In that way, the physical acts necessary to a finding of tortious liability on all three bases were not disputed. What was in dispute before the primary judge was the quality of the acts, that is, whether the arrest was unlawful, whether the physical contact constituted assault and battery and whether the prosecution by laying of the charges was malicious.

13. The extensive fact-finding undertaken by the primary judge was directed towards these issues of quality of conduct.

14. Rule 51.18(1) of the Uniform Civil Procedure Rules 2005 (NSW) requires that a notice of appeal specify any material facts that the appellant contends that the court below should, or should not, have found. The original grounds of appeal (grounds 3, 4, 5 and 6 at [4] above) contain no such specification. The appellant thus indicates that, at the factual level, the decision of the primary judge is not challenged. What is challenged, by clear implication, is the primary judge’s decision as to the quality of Senior Constable Hicks’ acts and whether they were such as to come within the relevant tortious categories.

15. The respondent contends that the original grounds do not satisfy r 51.18(1)(e) which requires that a notice of appeal state:

“briefly, but specifically, the grounds relied on in support of the appeal.”

16. The respondent also refers to Practice Note SC CA 1 which, in Clause 10 , states:

“A notice of appeal … must state the matters required by r 51.18. It is not enough merely to allege that the primary court erred in law or fact or that its decision is against the evidence or the weight of the evidence. The grounds of appeal must identify the respects in which error in law or (if applicable) fact occurred as well as any material findings that it is said that the primary court should or should not have made, and any material facts that it is said that the primary court should or should not have found.”

17. Reference was made in submissions to statements of Tobias JA and Campbell JA in Durham v Durham [2011] NSWCA 62 regarding the objective of these provisions.

18. The respondent maintains that, because of the deficient expression of all four grounds of appeal, there should be an order that the notice of appeal be “dismissed for non-compliance with” either r 51.18(1)(e) or Practice Note SC CA 1. Counsel for the respondent submitted that the original notice of appeal, containing only the four grounds, “is invalid”.

19. The concept of dismissal of the notice of appeal as distinct from the appeal itself is a curious one. If the respondent’s submission is that the appeal should be dismissed, the submission cannot be accepted. The notice of appeal is not unintelligible or concerned with irrelevant matters. That being so, its content cannot be seen as warranting dismissal of the appeal as incompetent: see Zagarac v Dellios [2007] FCAFC 58; Singh v Owners Strata Plan No 11723 (No 3) [2012] FCA 1121; 207 FCR 390. If the respondent’s complaint about any of the grounds of appeal has substance, the correct approach is to order that the offending grounds be struck out on the footing that the appellant may substitute re-formulated grounds.

20. The alleged deficiency in the grounds of appeal is, in essence, lack of specificity. It is said that there should be, for example, explanation of the ways in which the primary judge erred in finding lack of reasonable and probable cause and malice (ground 3) and the ways in which the reasons are inadequate in relation to malicious prosecution (ground 4).

21. It may readily be accepted that a ground of appeal must do more than merely allege that the decision below is wrong or that the judge erred in fact or law or that the verdict was against the weight of the evidence. The aim underlying the rules is to eliminate points that are not in controversy and to leave an intelligible and coherent core to be litigated: Sansom v Sansom [1956] 1 WLR 945.

22. Viewed in the context in which they were formulated, the four grounds in question do, to my mind, identify the matters in controversy. As I have said, there is nothing in the notice of appeal challenging any finding of fact. The facts as found by the primary judge will accordingly be before the Court of Appeal in unmodified and unchallenged form. The appeal will thus be approached on the basis that the respondent was physically restrained by Senior Constable Hicks, arrested by Senior Constable Hicks and prosecuted by Senior Constable Hicks. The issues then will be whether, having regard to the facts as, first, admitted on the pleadings and, second, found by the primary judge, the prosecution was malicious (and, in particular, whether Senior Constable Hicks lacked reasonable and probable cause and whether he acted with malice), the physical contact constituted assault and battery and the arrest was wrongful.

23. That, to my mind, is a sufficient delineation of the grounds of appeal. Further elucidation will follow when written submissions are filed and served in accordance with rr 51.34 and 51.38.

24. There will be no order striking out the existing grounds of appeal.

Further facts – objections to evidence

25. Two claims remain for consideration: the appellant’s claim to add two new grounds of appeal; and the appellant’s claim for an order staying the hearing of the appeal until determination of criminal charges against the respondent quite separate from those dealt with on 18 May 2012. As will become evident, these claims are connected.

26. Counsel for the respondent referred in submissions to events that happened after the conclusion of the proceedings determined by the primary judge. Those events form the basis for the remaining claims of the appellant. I quote from the written submissions of counsel for the respondent:

“25.   On 6 October 2015 the NSW Police Force covertly formed ‘Strike Force Valla’. Strike Force Valla was formed to investigate matters pertaining to alleged judicial offences by [the respondent] of perjury, perverting the course of justice and fraud. The offences being connected with the prosecution of [the respondent] in the Local Court and the civil proceedings commenced by [the respondent] in the District Court.

…

28.   On 19 November 2015, at about 11.26 am, [the respondent] was arrested for perjury, perverting the course of justice and fraud. These charges relate to evidence given by [the respondent] in the Local Court (18 May 2012) and when [the respondent] gave evidence in the District Court (10 and 11 November 2014).

These allegations factually rest on:

28.1   Alleged evidence the respondent drank 7 schooners of full strength beer during a period of about 2.5 hours during the afternoon of 3 October 2011.

28.2   The respondent allegedly giving evidence in the Local Court and District Court that he had three schooners of light beer knowing that evidence to be false.”

27. On the hearing of the motions, the appellant read certain affidavits and tendered certain exhibits to them. That material goes to two matters: the subsequent events concerning prosecution of the respondent following his arrest on 19 November 2015; and further facts about events at the golf club on 13 October 2011. Counsel for the respondent objected to some of this evidence and, in the circumstances in which the motions were heard on referral by the Registrar, I found it necessary to adopt the undesirable course of reserving the rulings on evidence.

28. Objection is taken to certain court attendance notices in respect of the charges following the arrest on 19 November 2015, facts sheets related to those court attendance notices and an unsworn statement of an employee of the golf club. The court attendance notices are the annexure B to an affidavit of Ms Michalk of 26 February 2016, the facts sheets are the annexure C to that affidavit and the golf club employee’s witness statement is the annexure A to another affidavit of the same deponent of the same date.

Ruling on objection – court attendance notices and facts sheets

29. In relation to the court attendance notices and the facts sheets, the objection is a relevance objection. It is also submitted that, if those documents are otherwise admissible, they should be excluded under s 135 of the Evidence Act 1995 (NSW).

30. The court attendance notices and facts sheets relate to charges against the respondent arising out of his initiation and pursuit of the District Court proceedings and evidence he gave in those proceedings and in the Local Court proceedings prosecuted by Senior Constable Hicks. There are three charges being, in brief terms, perjury, perverting the course of justice and dishonestly obtaining a financial advantage by deception. The objection is that all the court attendance notices and facts sheets lack probative value concerning the charges brought against the respondent, given that the charge of perjury (arising from evidence given by the respondent at the two earlier proceedings) is, as it were, the main charge to which the other charges are adjuncts. The focus, however, is on the documents relating to the perjury charge. Those documents indicate prosecution by a prosecutor who is not within the permitted class of prosecutors specified in s 338 of the Crimes Act 1900 (NSW). As a result, it is said that there has been no lawfully effective prosecution for perjury. [1]

    1. Section 338 provides that a person is not to be prosecuted for perjury except by the Director of Public Prosecutions, or at the direction of the Attorney General, or by some other person with leave of the judicial officer who constituted the judicial tribunal before which the perjury is alleged to have been committed. If it is impracticable to apply to that judicial officer for leave, leave of the Supreme Court should be sought.

29. The court attendance notices and facts sheets concerning perjury identify the prosecutor as Detective Sergeant Little. Clearly enough, he is not within any of the s 338 categories. There is therefore apparent substance to the proposition that there has been no prosecution for perjury according to law. But that, to my mind, does not, in terms of the concept of relevance in s 55(1) of the Evidence Act, deprive the perjury court attendance notices and facts sheets of all probative value as regards moves to prosecute the respondent. It is probative of the fact that a named police officer has attempted, perhaps unsuccessfully, to initiate prosecutions for perjury – something that may well ground an inference that, if the steps he has taken are in truth devoid of legal effect, he will seek to have them rectified by action of one of the s 338 functionaries. [2] In view of these considerations, I do not uphold the relevance objection as it applies to the perjury documents. Nor do I uphold the relevance objection attaching to the documents relating to other charges. This is because the objection is premised on some form of derivative inadmissibility stemming from their relationship to the perjury documents.

    2. The appellant points to evidence of some involvement by the office of the Director of Public Prosecutions.

30. As to s 135 of the Evidence Act, I am not satisfied that admission of the court attendance notices and facts sheets would be “unfairly prejudicial to” the respondent. Given that his counsel put it to me that the respondent was arrested and charged with perjury, he will not suffer prejudice if the court has before it evidence that there has been a move – arguably, a legally ineffective move – to prosecute him by means of the particular court attendance notices and facts sheets.

31. The court attendance notices and facts sheets, being annexures B and C to Ms Michalk’s affidavit, will therefore be admitted.

32. Counsel for the respondent submitted that, in that eventuality, there should be an order under s 136 limiting the use to which the documents may be put. I will make an order that the documents may be used only to prove that steps (which may or may not be legally effective steps) have been taken to institute criminal prosecutions against the respondent on the basis of the untested allegations appearing from the documents.

Ruling on objection – witness statement

35. I turn now to the other document sought to be tendered by the appellant to which the respondent takes objection. That document is an unsworn but signed statement of an employee of the golf club who was involved in the club’s response to a police request for CCTV footage of the respondent’s movements and actions at the club on 13 October 2011. It is unnecessary to detail the content of the statement. It is sufficient to say that, if evidence were given by the maker of the statement in terms of the content of the document, there might be grounds for a finding that the CCTV footage supplied by the club to the police and put into evidence before the primary judge as Exhibit H recorded only part of the relevant activities of the respondent at the club, that the full footage from which the part was taken is still in existence and that that full footage, if tendered, would show that the respondent consumed seven schooners of full strength beer rather than the three schooners of light beer as found by the primary judge on the basis of the respondent’s own testimony and Exhibit H.

36. The objection to this document is a hearsay objection pursuant to s 59 of the Evidence Act; however, counsel for the respondent acknowledge that the exception in s 75 applies (the hearing by me of the motions being an interlocutory proceeding), provided that the appellant in adducing the evidence also adduces evidence of its source. Evidence of the source is given in the affidavit of Ms Michalk who arranged for the employee to prepare the statement and received it after employer had signed it. The condition for the operation of s 75 (which, of course, disapplies the hearsay rule of its own force and without any exercise of judicial discretion) is therefore satisfied. In any event, the statement of the employee was not tendered upon the hearing before me to prove the truth of the statements made in it by the club employee but, rather, to prove that there exists a person who, if and when events concerning preparation and supply of CCTV footage are put in issue, may be expected to give the evidence set out in the statement. The representation of willingness is, in its own right, a hearsay representation but a much narrower one. Because s 75 disapplies the hearsay rule in relation to the statement of the Club employee, the hearsay objection cannot be upheld.

37. Again, however, the respondent seeks to invoke s 135. And again, I am of the opinion that admission of the club employee’s statement on the present applications (as a representation as to evidence the employee is willing to give) would not be “unfairly prejudicial to” the respondent, given that his counsel conceded in submissions the existence of “alleged evidence the respondent drank 7 schooners of full strength beer during a period of about 2.5 hours during the afternoon of 3 October 2011” rather than three schooners of light beer: see 28.1 at [26] above.

38. While the objection to the statement by the club employee is not upheld and the statement will be admitted, it is appropriate, in view of the way in which the statement was deployed upon the hearing of the interlocutory applications, to order pursuant to s 136 that, for the purpose of determining those applications, it may only be used to prove what its maker has expressed a willingness to say in evidence.

The appellant’s application for leave to amend

39. The appellant’s desire to add grounds 1 and 2 to the notice of appeal (see [4] above) comes in the wake of the events concerning the new charges against the respondent following conclusion of the District Court proceedings determined by the primary judge.

40. The basic proposition advanced by the appellant is that those subsequent events (including the availability of the evidence of the club employee) indicate that the respondent gave false evidence before the primary judge as to the extent of his beer consumption, that the CCTV footage before the primary judge did not correctly depict the respondent’s beer consumption, that there is now evidence to show that he drank seven schooners of full strength beer (not three schooners of light beer) and that, with the aid of that evidence, the Court of Appeal can conclude that the decision of the primary judge is tainted by fraud and proceeded on a false factual premise regarding the state (or likely state) of the respondent’s intoxication at the relevant time.

41. I am not called upon at this point to decide whether the appellant should be allowed to adduce further evidence in the Court of Appeal (para 2 of the appellant’s notice of motion filed on 26 February 2016). The fact that that evidence exists and that the appellant will attempt to adduce it is, however, relevant to the claim for leave to amend the notice of appeal, as well as the associated claim for an order staying the hearing of the appeal.

42. The issue of the extent of the respondent’s alcohol consumption arises, on the existing grounds of appeal (grounds 3, 4, 5 and 6 at [4]) above), principally in relation to the question whether Senior Constable Hicks had reasonable and probable cause to prosecute the respondent for driving under the influence. The primary judge found that Senior Constable Hicks did not form an honest belief that the respondent was driving under the influence. On that question, her Honour had before her evidence from the respondent, his wife and Senior Constable Hicks, as well as the CCTV footage from the club (Exhibit H). Evidence on the subject was not given by Constable McKay (who attended in in the later stages on 6 November 2015) or in the transcript of Local Court evidence of the neighbour who had witnessed the events (the neighbour had died by the time of the trial and the transcript was admitted on the basis that he was not available). The respondent denied that he was under the influence of alcohol. His wife supported him. Senior Constable Hicks gave evidence that the respondent was unsteady on his feet, slurred his words and smelled of alcohol when first approached by him. He said that the unsteadiness ceased at a later point.

43. It is pertinent to record the primary judge’s findings on the matters of slurred speech and unsteadiness on the feet:

“45   None of the objective evidence supports either of these contentions. The few words spoken by the plaintiff that can be heard from Exhibit B were not identified by Senior Constable Hicks as sounding intoxicated, and it was not put to the plaintiff that his language at this initial encounter was that of an intoxicated person. As to the plaintiff’s steadiness on his feet, the evidence of Mr Ford, Mrs Nash and observations of the plaintiff’s behaviour in the second part of Exhibit B do not support this assertion. The golf club video confirms that the plaintiff only drank three light beers, and Mrs Nash did not say her husband smelled of alcohol. Senior Constable Hicks’ evidence as to the basis for his belief that the plaintiff was intoxicated is hard to credit.”

44. The appellant says that, pursuant to the proposed grounds 1 and 2, it will argue on the hearing of the appeal that, had the new evidence been before the primary judge, it would have been of such materiality that it would probably or almost certainly have affected the outcome of the District Court proceedings; and that it would have been of such strength that it would reasonably be expected to be decisive at a rehearing or if unanswered must have that effect.

45. The central issue raised by proposed grounds 1 and 2 is not whether the appellant should be permitted to argue that the District Court judgment was procured by fraud. Rather, the issue turns on the means by which that will appropriately be done – in essence, whether that matter should be litigated as a component of the existing appeal or in separate and independent proceedings in equity of the kind referred to by Handley JA (with the concurrence of Heydon and Hodgson JJA) in Toubia v Schwenke [2002] NSWCA 34 ; 54 NSWLR 46 at [5]:

“Under the general law a party who claims that an adverse judgment was procured by the fraud of his adversary can bring an action to set aside that judgment. Such proceedings are equitable in origin and nature and in fact are proceedings for the judicial rescission of the judgment. Such proceedings, when successful, do not result in "the scandal of conflicting decisions" because if the second action succeeds the first judgment is set aside.” [Citations omitted.]

46. An appellate court to which an appeal has been brought on other grounds may entertain, as an additional ground, the proposition that new evidence warrants a finding that the judgment below was obtained by fraud. Where such a proposition is the sole ground of attack, however, the course usually appropriate is not to resort to appeal but, rather, to commence a separate action of the kind I have mentioned. In Hip Foong Hong v H Neotia & Co [1918] AC 888, an appeal had been brought but was abandoned in favour of an attempt to establish to the satisfaction of the appeal court that the challenged judgment had been obtained by fraud and that a new trial should be ordered on that ground alone. In the subsequent case of Jonesco v Beard [1930] AC 298, it was said (at 300) that Hip Foong Hong v H Neotia & Co was an example of “special cases” in which there is jurisdiction to set aside a judgment for fraud on a motion for a new trial.

47. The approach that an appellate court should take in such matters was summarised by Menzies J in McDonald v McDonald [1965] HCA 45; 113 CLR 529 at 542 as follows:

“[If] a new trial is sought upon the ground of the discovery of fresh evidence which, if believed, would show that a fraudulent case has been presented to the Court at the original trial, and if it is also shown that this evidence was not available at the original trial notwithstanding the exercise of reasonable diligence, then a new trial will be ordered if the case made out is such as to satisfy the Court that, in the interests of justice, the matter in question should be tried afresh.”

48. In Wentworth v Rogers (No 5) (1986) 6 NSWLR 534, this Court (Kirby P, Hope and Samuels JJA) referred to this aspect of appellate jurisdiction and to the earlier decision of the Court in that litigation to decline to consolidate an attack on the first instance judgment for fraud with the existing appeal and to require that it instead be tried separately in the Equity Division.

49. The question of how an appellate court should deal with an allegation that the judgment below was procured by fraud has received recent attention in the English Court of Appeal. In Noble v Owens [2010] EWCA Civ 224; 1 WLR 2491, reference was made to two lines of authority. One derives from Ladd v Marshall [1954] 1 WLR 1489; 3 All ER 745 where it was said that where fresh evidence is properly admissible and might, if admitted, have had an important effect on the trial, the appellate court should remit the case for retrial. The other approach, derived from Jonesco v Beard (above), is that the aggrieved party should be left to commence a new action, unless there is no controversy or, put otherwise, if the fraud is admitted or the evidence is incontrovertible.

50. Smith LJ said at [27]:

“In my judgment, the true principle of law is derived from Jonesco v Beard and is that, where fresh evidence is adduced in the Court of Appeal tending to show that the judge at first instance was deliberately misled, the court will only allow the appeal and order a retrial where the fraud is either admitted or the evidence of it is incontrovertible. In any other case, the issue of fraud must be determined before the judgment of the court below can be set aside.”

51. Elias LJ said at [50]:

“Even if the appellate court can order a retrial in the context of a fraud action, it should only do so where it can be satisfied to the appropriate standard of proof that the fraud has been established, with the burden on he who alleges the fraud. Plainly it would be futile to require a party to incur the cost and the delay of fresh proceedings where the evidence is overwhelming and therefore incontestable, or where the alleged fraud is not contested. But where the issue is in doubt, separate proceedings in fraud should be pursued.”

52. Elias LJ also made particular reference to the case where the party subsequently alleging fraud is the successful party. In relation to a case of that kind, Elias LJ said (at [39]):

“The appropriate remedy in such circumstances is for the defendant to take separate proceedings to have the judgment set aside for fraud. Save where the fresh evidence sought to be admitted is so probative of fraud that it would be futile to require the defendant to take separate proceedings, the court should never order a retrial without fraud being proved.”

53. These statements were repeated and endorsed in both Southend-on-Sea Borough Council v Armour [2014] EWCA Civ 231 and Bishop v Chhokar [2015] EWCA Civ 24. As Aikens LJ acknowledged in the latter case (at [31]), the statements of principle leave a question as to what should be done in a particular case.

54. Reference should also be made to Gann v Hosny [2015] VSCA 43 where the sole ground of appeal was that the judgment in the County Court had been procured by fraud. Whelan and Ferguson JJA, after referring to Noble v Owens (above), decided that the appropriate course was to allow the appeal to the extent of referring the issue of fraud to the County Court for trial. In Noble v Owens itself, the appeal court decided to remit the issue of fraud for trial by the primary judge.

55. The case law thus indicates that an important consideration is whether there is, or is likely to be, factual dispute on the issue of fraud. The appeal court is more likely to retain and determine the matter if fraud is admitted or the evidence of fraud is incontrovertible. But if there are likely to be dispute about the facts, the preferred course is to see the matter of fraud determined in a trial court.

56. There are two reasons for this. First, the appellate court setting is not conducive to cross-examination and determination of issues of credit based on raw testimony. A judge sitting alone is much better equipped to deal with such matters. Second, pre-trial processes are apt to distil factual issues in an efficient way that is of particular relevance to fraud cases. As was said in Permanent Trustee Australia Ltd v FAI Insurance Co Ltd(in liq) [2003] HCA 25; 214 CLR 514 at [38], “[a]n allegation of fraud should be clearly and distinctly pleaded and put”, or, as Williams J put it in a case of the present kind,[3] “[i]n actions based on fraud the particulars of the fraud must be exactly given and the allegation established by the strict proof such a charge requires”.

    3. Cabassi v Vila [1940] HCA 41; 64 CLR 130 at 147.

57. With all these principles in mind, I return to the present case.

58. There is, at this point, no indication that the respondent admits the fraud postulated by the appellant or that he is likely to do so. It is therefore relevant to consider whether the evidence on which the appellant would seek to rely can be said to be incontrovertible and, for that reason, to postulate how things might develop if the new grounds are added to the notice of appeal.

59. Let it be assumed that the club employee will give evidence as outlined in the statement already mentioned. Leaving to one side questions of form and admissibility which might be addressed when the evidence is put into an affidavit, one can easily foresee the possibility that the respondent will himself wish to adduce further evidence. According to the employee, the respondent was served alcohol by at least two different bar attendants on the afternoon in question and, for part of the time, was a member of a group of club members or patrons drinking and chatting together. Also, the club employee’s statement refers to the involvement of at least one other club staff member in the preparation and delivery of the CCTV copy produced in response to the police request. If the matters to which the club employee is willing to testify are introduced into evidence in the appeal or in separate proceedings, the result may be a move to adduce evidence of any one or more of the two bar attendants, the fellow drinkers and the second staff member involved in preparation and delivery of the CCTV copy. There may also be a desire to obtain expert technical evidence about the CCTV system. It is conceivable that there may be an attempt to introduce medical evidence about the respondent’s resistance to and tolerance for alcohol, bearing in mind that the issue in the District Court was not simply one of the extent of alcohol consumption but rather as to the effect of consumed alcohol on the respondent’s ability to function.

60. There is thus a possibility that the addition of grounds 1 and 2 will precipitate further applications for leave to adduce further evidence on appeal. In that way, the appeal might become the vehicle for a trial of a number of contested issues of fact of a kind best avoided at appellate level.

61. If the appeal proceeds on the existing grounds 3, 4, 5 and 6 only, one of two results will emerge: the existing judgment will stand or it will be set aside. If it is set aside, there will be no occasion or need to test whether it was procured by fraud. If it stands, the question whether it was procured by fraud will remain a live issue capable of being pursued and determined in separate Equity Division proceedings.

62. The appellant says that, if grounds 1 and 2 are not added, the appeal will proceed on the false premise that there is no challenge to the credit of the respondent. But the issue of credit cannot be exposed in the Court of Appeal without giving rise to the difficulties I have outlined; and there is, as discussed, another available means for the appellant to raise not only the proposition that the respondent gave untruthful evidence before the primary judge but also the proposition that her Honour’s judgment was obtained by fraud.

53. In the particular circumstances, I am of the opinion that the course taken in Wentworth v Rogers (No 5) (above) is the course more consistent with Part 6 Division 1 of the Civil Procedure Act 2005 (NSW) and should be followed here. Leave to amend the notice of appeal by adding proposed grounds 1 and 2 will not be granted.

The stay application

64. It remains to consider the appellant’s application for an order staying the hearing of the appeal pending determination of the criminal charges against the respondent arising out of his pursuit of the District Court action and the evidence he gave in that action. In light of my decision on the application for leave to add grounds 1 and 2, there is no good reason to delay the orderly progress of the appeal.

65. I note the statement in the appellant’s written submissions that, if those grounds are not added, it reserves its right to commence separate Equity Division proceedings and also to seek a stay of the appeal pending determination of those proceedings. I note also the statement in the respondent’s written submissions that, if the appellant commences Equity Division proceedings, the respondent will undertake to the Court to agree to a stay of those proceedings until determination of both the appeal and the pending criminal proceedings against him.

66. There are thus foreshadowed issues of sequencing arising from my decision that the question whether the District Court judgment was obtained by fraud should not form part of the current appeal and, if agitated at all, should be litigated in separate Equity Division proceedings. Those issues are not before me on the present applications.

Conclusion

67. The outcome is as follows:

1.   Rule that the court attendance notices and facts sheets which are annexures B and C to the affidavit of Belinda Michalk of 19 paragraphs affirmed 26 February 2016 are admitted upon the hearing of the notices of motion heard by me on 2 May 2016.

2.   Order that the use that may be made of the said court attendance notices and facts sheets is limited to proof of steps (which may or may not be legally effective steps) that have been taken to institute criminal prosecutions against the respondent on the basis of the untested allegations appearing from the documents.

3.   Rule that the witness statement which is annexure A to the affidavit of Belinda Michalk of 14 paragraphs affirmed 26 February 2016 is admitted upon the hearing of the notices of motion heard by me on 2 May 2016.

4.   Order that the use that may be made of the said witness statement is limited to proof of what the maker of the witness statement has expressed a willingness to say in evidence.

5.   Order that the claims in prayers 3 and 4 of the appellant’s notice of motion filed on 26 February 2016 be dismissed.

6.   Order that the claims in the amended notice of motion filed by the respondent seeking an order that the notice of appeal filed on 6 November 2015 be dismissed be themselves dismissed.

7.   Make no order as to costs of and incidental to the notices of motion to the intent that each party should bear its or his own costs.

68. I should say, in relation to costs, that the outcome I have indicated follows from the fact that the two motions were argued together and involved common themes and that each party had only partial success.

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Endnotes

Decision last updated: 06 May 2016