Ying v Hou

[2023] NSWSC 1291

Supreme Court

New South Wales

Medium Neutral Citation:

Ying v Hou [2023] NSWSC 1291

Hearing dates:

29 June 2023

Date of orders:

31 October 2023

Decision date:

31 October 2023

Jurisdiction:

Common Law

Before:

Dhanji J

Decision:

(1)   The time to file a summons commencing an appeal be extended to 16 December 2022.

(2)   The appeal be allowed.

(3)   The orders made on 16 September 2022 by the Local Court of New South Wales be set aside.

(4)   The proceeding be remitted to the Local Court of New South Wales for determination according to law.

(5)   The respondent is to pay the appellant’s costs of, and incidental to, the appeal.

Catchwords:

Appeal – Appeal from Local Court to Supreme Court – appeal out of time – agreement to loan $50,000 – Rolex watch used as collateral – authenticity of Rolex watch – question as to whether the loan sum was advanced – use of affidavit where deponent died prior to final hearing – deponent estranged from respondent –availability of error of law on the basis that there was no evidence to support a finding or the finding was irrational or illogical – whether error of law by admitting evidence of a deed of settlement made between the parties on a without admissions basis – s 131 of the Evidence Act 1995 (NSW) – whether there was waiver of consent – significance of s 132 of the Evidence Act to waiver – appeal allowed

Legislation Cited:

Administrative Appeals Tribunal Act 1975 (Cth)

Civil Procedure Act 2005 (NSW)

Evidence Act 1995 (NSW)

Local Court Act 2007 (NSW)

Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited:

Amaba Pty Ltd v Booth [2010] NSWCA 344

Amalgamated Television Services Pty Ltd v Marsden [2002] NSWCA 419

Australian Securities and Investments Commission vRich (2005) 218 ALR 764; [2005] NSWCA 152

Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139

Ballina Shire Council v Knapp [2019] NSWCA 146

Bruce v Cole (1998) 45 NSWLR 163

Cripps v G&M Dawson Pty Ltd [2006] NSWCA 81

Haritos v Federal Commissioner of Taxation (2015) 233 FCR 315; [2015] FCAFC 92

Herron v HarperCollins Publishers Australia Pty Ltd (2022) 292 FCR 336; [2022] FCAFC 68

Hyhonie Holdings Pty Ltd v Leroy [2003] NSWSC 520

IMM v The Queen (2016) 257 CLR 300; [2016] HCA 14

Kostas v HIA Insurance Services Pty Ltd (2010) 241 CLR 390; [2010] HCA 32

Lee, Matthew v R [2016] NSWCCA 146

Leichhardt Municipal Council v Seatainer Terminals Pty Ltd (1981) 48 LGRA 409

Mann v Carnell (1999) 201 CLR 1; [1999] HCA 66

McDowell v Fox [2003] NSWSC 495

Meyer v Hall (1972) 26 DLR (3d) 309

Orr v Cobar Management Pty Limited (2020) 103 NSWLR 36; [2020] NSWCCA 220

Print National v Helps [2007] NSWSC 1050

Resource Pacific Pty Ltd v Wilkinson [2013] NSWCA 33

Sydney Water Corporation v Caruso (2009) 170 LGERA 298; [2009] NSWCA 391

Workers Compensation Nominal Insurer v Al Othmani [2012] NSWCA 45; (2012) 10 DDCR 290

Young v Legal Profession Complaints Committee [2022] WASCA 52

Texts Cited:

The Macquarie Dictionary, online ed, October 2023

Category:

Principal judgment

Parties:

Yim Hung Ying (Plaintiff/Appellant)
Xiaolong Hou (Defendant/Respondent)

Representation:

Counsel:
BD Kaplan and AEL Flick (Plaintiff/Appellant)
S Hoare (Defendant/Respondent)

Solicitors:
Westlink Legal Pty Ltd (Plaintiff/Appellant)
Sun Lawyers (Defendant/Respondent)

File Number(s):

2022/379999

Publication restriction:

Nil

JUDGMENT

1. By her amended summons filed on 13 March 2023, Ms Ying appeals against the decision of the Local Court in which orders were made against her and in favour of Mr Hou. Given the roles of Ms Ying and Mr Hou as, respectively, the defendant and the plaintiff in the Local Court, I will, for convenience, refer to Ms Ying as the appellant and Mr Hou as the respondent. The appellant seeks, amongst other orders, that the orders of the Local Court be set aside and the matter be remitted to the Local Court for further hearing.

2. The appeal to this Court is brought pursuant to s 39 of the Local Court Act 2007 (NSW) as of right, on the basis that each of the grounds is “on a question of law”. In oral submissions, the appellant supplemented her position, by adding that in the event that a ground or grounds involves a question of mixed law and fact, the appellant seeks leave to appeal pursuant to s 40 of the Local Court Act is sought.

The appeal is out of time

3. The decision of the Local Court was delivered on 16 September 2022. The appellant had 28 days in which to bring her appeal to this Court: Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”), r 50.3(1)(a). There was no extension to this time limit by the Court below: cf UCPR, r 50.3(1)(b). The appellant’s summons was filed on 16 December 2022. Rule 50.3(1)(c) of the UCPR provides that an appeal may be brought within such further time as this Court may allow. The principles applicable to the grant of an extension of time pursuant to this rule are well settled. The appellant has explained the delay. Her affidavit of 13 March 2023 establishes that she acted promptly in securing legal representation but, as a result of a dispute with respect to the payment of fees, that representation was terminated two days prior to the expiry of the relevant period. In the ensuing period, she sought alternative representation. The delay in filing was, ultimately, relatively short, amounting to approximately two months. The respondent takes no issue with the reasons for delay. Nor does he submit that he is prejudiced by the delay. In these circumstances, the respondent accepts that the question of whether leave should be granted to appeal out of time turns largely on the merits of the appellant’s appeal: Print National v Helps [2007] NSWSC 1050 at [6]-[7] (per Harrison AJ); McDowell v Fox [2003] NSWSC 495 at [22].

The proceedings in the Local Court

4. The dispute the subject of the Local Court proceedings concerns an agreement between the parties, made in September 2018, the terms of which are not in dispute. The agreement was that the respondent was to loan the appellant $50,000 for a one-month term at a rate of interest of 10 percent per month. It was not in dispute that around the time the agreement was made, the appellant provided a watch (the watch) to the respondent as collateral for the loan.

5. The proceedings have been protracted. They were commenced when the respondent, on 11 April 2019, filed his Statement of Claim in the Local Court, claiming that the loan and interest had not been paid. It appears there was no response to the claim and the respondent obtained default judgment against the appellant. Subsequently, the appellant applied to have the default judgment set aside. In support of that application, she filed her own affidavit sworn on 16 April 2021, and an affidavit of Ms Ying Chou sworn 16 April 2021 (the Chou affidavit). The detail of that affidavit will be addressed in more detail below in the context of ground 1, but, in essence, the Chou Affidavit supported the appellant’s assertion in her affidavit that the respondent had never provided her with the loan amount.

6. In addition to her defence (that she had not been provided with the loan amount), the appellant filed a cross-claim wherein she claimed that despite her providing the watch to the respondent as collateral, the respondent had not advanced the money as agreed or returned the watch. Thus, the primary factual disagreement between the parties in the proceedings below was whether the sum of $50,000 had been advanced to the appellant. There was a subsidiary issue as to the authenticity of the watch, which was purported to be manufactured by Rolex, and its consequent value.

7. The respondent filed an affidavit in response, affirmed on 12 December 2021.

8. The matter was set for hearing on 31 January 2022, however, on that day, the parties informed the Court that the matter had settled, and the hearing date was vacated.

9. A deed was then entered into between the parties on a without admissions basis. The use of the deed in the context of the Local Court proceedings will be discussed in more detail below, when dealing with the second ground of appeal.

10. Pursuant to a condition of the deed, the respondent provided a watch (purportedly the watch) to the appellant’s solicitors for the purposes of an assessment. On having the watch valued, the appellant was informed that the watch provided by the respondent was counterfeit. The appellant does not accept that the watch she had assessed is the same watch she provided the respondent as collateral. As a result of the dispute with respect to the authenticity of the watch, the settlement collapsed and the matter returned to the Local Court in February 2022 and again in July 2022 for case management.

11. Following the making of a guillotine order for evidence to be served by 12 July 2022, the appellant sent a letter to the Court enclosing the affidavit affirmed by her on 16 April 2021 and a further affidavit affirmed by her on 12 July 2022, a copy of the deed, and a letter of Mr Karl Brausteiner, a master watchmaker, to the respondent’s lawyers. On 27 July 2022, the respondent filed a second affidavit affirmed by him on 27 July 2022 and an affidavit affirmed by his solicitor on that same date.

12. The matter was heard on 2 August 2022. The appellant had legal representation at various stages of the proceedings but, by the time of the hearing, was unrepresented. The respondent was represented by counsel.

13. The evidence in the Local Court hearing is, to the extent necessary, expanded upon in the context of the grounds of appeal. For present purposes, it is sufficient to note that orders were made in favour of the respondent. His Honour (at [103]-[104]) gave judgment for the respondent in the amount of $55,000, together with interest at the statutory rate from 23 October 2018 to the date of judgment, pursuant to s 100 of the Civil Procedure Act 2005 (NSW). In relation to the cross-claim, his Honour gave judgment for the respondent.

The appeal to this Court

The nature of the appeal

14. As noted above, s 39 of the Local Court Act provides a right of appeal to this Court “but only on a question of law”. As Bathurst CJ and Bell P (as the Chief Justice then was) observed in Orr v Cobar Management Pty Limited (2020) 103 NSWLR 36; [2020] NSWCCA 220 at [40], “the expression ‘question(s) of law’ and cognate expressions are not deployed uniformly in the statute books” and “there is no universal meaning or understanding of what is a question of law.” Their Honours continued, stating that the meaning to be given to the expression in a particular case is “ultimately to be derived from its statutory context and by reference to the purpose of the provision and statute in which it appears”. The statutory context provided by the Local Court Act will be considered in more detail below.

The asserted errors of law

15. The appellant relies on the following grounds of appeal, which are submitted as questions of law:

“1.   The primary judge erred in law in its [sic] treatment and use of an affidavit sworn by Ying ‘Yuki’ Chou on 16 April 2021 (Chou Affidavit), which the [appellant] read in the proceeding in circumstances where the deponent had died prior to the final hearing. Specifically, the primary judge made the following errors of law (judgment at [30), [68), [89]):

a.    the primary judge found that the deponent had become estranged from the [respondent] where there was no evidence to support such a finding;

b.    the primary judge determined that, because the deponent had become estranged from the [respondent] and was not available for cross-examination (because she had died), her evidence ought to be given no weight. That finding was legally unreasonable, irrational and/or illogical;

c.    in so far as the primary judge purported to assess the probative value of the Chou Affidavit, his Honour:

i.    misapplied the test for so doing by not taking the evidence at its highest:

ii.    had regard to matters (namely, that the deponent had become estranged from the [the respondent] and was not available for cross-examination) that could not rationally or logically bear upon that question; and/or

iii.    failed to provide any, or any adequate, reasons for that finding,

and thereby failed to consider the Chou Affidavit.

d.    The primary judge determined to place no weight on the Chou Affidavit by applying an incorrect test which incorporated the finding that the deponent had become estranged from the [respondent] with the fact that the deponent was not available for cross-examination.

2    The primary judge erred in law by admitting evidence of a deed of settlement made between the parties on a without admission basis (judgment at [49], [51], [83], [91], [97]), in that his Honour:

a.    misconstrued the terms of that agreement; and/or

b. contravened s 131 of the Evidence Act 1995 (NSW) or the common law privilege applicable to evidence of settlement negotiations.”

Ground 1 – the Chou affidavit

16. Ms Chou had died by the time of the Local Court hearing in August 2022. The Chou affidavit was read by the appellant at the hearing. The primary judge, while having admitted the evidence, ultimately, in his judgment in favour of the respondent, determined that he would place “no weight” on the affidavit. The appellant asserts that a number of errors of law were made by the primary judge in his “treatment and use of” the Chou affidavit.

The Chou affidavit

17. Ms Chou stated in her affidavit that between June 2018 and January 2019, she was in a personal relationship (which all parties took to be an intimate personal relationship) with the respondent. Ms Chou’s affidavit was supportive of the appellant’s case. She confirmed a conversation with the appellant in around August 2018, in which the appellant told her that she had money problems and needed to borrow $50,000, to which Ms Chou said she responded that her then boyfriend, the respondent, had some extra cash and might be able to help. She said she could introduce the respondent and the appellant.

18. Ms Chou also deposed as to the events on 23 September 2018. She said that she and the appellant met with the respondent in Haymarket, at which point she introduced them. Having done so, Ms Chou said that the three of them went to a pawnbroker where the appellant provided a watch and sought the pawnbroker’s opinion as to whether it was a genuine Rolex. She said they were told that the watch was genuine and worth about $35,000. She said that after this, they returned to Ms Chou’s home where the appellant and respondent signed an agreement in relation to the loan. A copy of the agreement was annexed to the affidavit. Critically, Ms Chou said that after the agreement was signed, the respondent took the Rolex watch and told the appellant that he would go and deposit the watch at the bank and would then transfer the $50,000 to her.

19. Ms Chou said in her affidavit that between September 2018 and December 2018, the appellant made a number of telephone calls, inferentially to the respondent, which either went unanswered or ended after the appellant said words to the effect of “[w]hen can you transfer the $50,000?”. Ms Chou said she spoke to the appellant after these calls and the appellant confirmed the nature of the calls and that the respondent had not transferred the money to her.

20. Ms Chou said that on or about 10 December 2018, she answered a call to the respondent’s phone and spoke to the appellant. She said she told the appellant that the respondent was not available and was told that he still had not transferred the $50,000. The appellant asked Ms Chou to ask the respondent to either transfer the money or give her the watch back. Ms Chou said she later spoke to the respondent to this effect and was told “don’t worry, the watch is kept in a safe and you don’t need to worry about the rest. If you keep asking me, you can leave my home for good”.

His Honour’s reasons in relation to the Chou affidavit

21. In his judgment, in relation to the Chou affidavit, the primary judge said (at [30]):

“The documentary evidence-in-chief consisted of affidavits made by the [respondent] dated 12 December 2021 and 27 July 2022; by his solicitor, Mr Li dated 27 July 2022; by the [appellant] dated 16 April 2021 and 12 July 2022; and by Ms Ying Chou (Yuki) dated 16 April 2021. This last affidavit was controversial in that the [appellant] had not put the [respondent] on notice that the affidavit was to be relied on. [Ms Chou], the deponent, died last year, and was not therefore available for cross-examination. I decided, however, to allow that affidavit to be read, on the basis that the weight to be given to it would depend on the totality of the other evidence”.

22. And (at [68]):

“The [respondent] relied on an affidavit made by [Ms Chou] on 16 April 2021 to corroborate certain aspects of her case. It is not disputed that [Ms Chou] died after making this affidavit, before this matter came to trial. As recounted above, I allowed [Ms Chou’s] affidavit to be read, subject to weight.”

23. Under his Honour’s final heading, “Findings and conclusions”, his Honour commenced as follows (at [88]-[91]):

“88   There is a direct conflict in this matter as to the fundamental issue of fact, the resolution of which informs the ultimate outcome of these proceedings: did the [respondent] hand $50,000 in cash to the [appellant] on 23 September 2018, or not?

89    The only potential direct corroboration for either version of the events on 23 September 2018 comes from the affidavit of [Ms Chou], the deceased former partner of the [respondent], which substantively supports the [appellant’s] version of the events on that day. However, because [Ms Chou] became estranged from the [respondent], and was not available for cross-examination, I place no weight on her evidence, and in my view her affidavit has no probative value.

90    I am left therefore with the contemporaneous documentary, electronic and text evidence and the [appellant’s] subsequent conduct and admissions to resolve the central factual dispute; and my assessment of the credibility of the parties.

91   In my view, the [respondent’s] submissions in relation to the contemporaneous material, including the deed of settlement, are compelling.”

Error of law on the basis of no evidence, irrationality, or illogicality

24. In relation to ground 1, the appellant relied on a number of sub-grounds various of which assert an error of law on the basis that there was no evidence to support a particular finding or that the finding was irrational or illogical. It is convenient to first consider the availability of such a complaint in an appeal limited to error of law.

25. A finding of fact for which there is no evidence is an error of law: Kostas v HIA Insurance Services Pty Ltd (2010) 241 CLR 390; [2010] HCA 32 at [33], [69] (“Kostas”); Bruce v Cole (1998) 45 NSWLR 163 at 187E. A complaint of an error of law on the basis that a finding was irrational or illogical is less straightforward. The appellant pointed to the following passage from the Full Court of the Federal Court in Haritos v Federal Commissioner of Taxation (2015) 233 FCR 315; [2015] FCAFC 92 (“Haritos”) (at [212]):

“It may be an error of law to make a decision which is irrational, illogical and not based upon findings or inferences of fact supported by logical grounds: Re Minister for Immigration and Multicultural Affairs; Ex parte Appellant S20/2002 [2003] HCA 30; 198 ALR 59; 77 ALJR 1165 and SZMDS at [40] per Gummow A-CJ and Kiefel J; at [130] per Crennan and Bell JJ. In this case, we are not concerned with whether the lack of reason or logic relates to a matter going to jurisdiction so as to amount to jurisdictional error.”

26. The Court in Haritos was concerned with s 44 of the Administrative Appeals Tribunal Act 1975 (Cth), which allowed for an appeal from the Administrative Appeals Tribunal “on a question of law” and was thus in similar terms to s 39 of the Local Court Act. Even so, it is not self-evident that the decision is directly applicable in the present context. It remains the case, as noted above by reference to Orr v Cobar Management Pty Limited, that in the absence of any uniform meaning or understanding of what “a question of law” is, the meaning is “ultimately to be derived from its statutory context and by reference to the purpose of the provision and statute in which it appears”: at [40].

26. The extract from Haritos relied on by the appellant refers to “a decision” which is not supported by logical grounds. It is not self-evident that a principle in relation to a decision, in the sense of a final determination, is applicable to an attack, as sought to be made here, on an intermediate finding of fact used, with other evidence, to support a conclusion which is relied on in the final determination.

27. Perhaps more significantly, Haritos was concerned with legislation providing for review of administrative decisions in a federal context. There is reason to question the transferability of such statements made in the context of review of administrative decisions (by a tribunal constitutionally excluded from the exercise of judicial power) to an appeal from a judicial decision.

28. It is convenient to begin with the oft cited decision of Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 (“Azzopardi”), in which the context was an appeal on an error of law from a judicial decision. Glass JA (with whom Samuels JA agreed) said (at 155G-156D):

“… To say of a finding that it is perverse, that it is contrary to the overwhelming weight of the evidence, that it is against the evidence and the weight of the evidence, that it ignores the probative force of the evidence which is all one way or that no reasonable person could have made it, is to say the same thing in different ways. Upon proof that the finding of a jury is vitiated in this way, it will be set aside because it is wrong in fact. Since the Act does not allow this Court to correct errors of fact, any argument that the finding of a Workers’ Compensation Commission judge is vitiated in the same way discloses no error of law and will not constitute a valid ground of appeal. It is also pointless to submit that the reasoning by which the court arrived at a finding of fact was demonstrably unsound as this would not amount to an error of law: R v District Court of the Metropolitan District Holden at Sydney; Ex parte White (1966) 116 CLR 644 at 654.

A finding of fact in the Commission may nevertheless reveal an error of law where it appears that the trial judge has misdirected himself ie has defined otherwise than in accordance with law the question of fact which he has to answer. A possibility of this kind exists with ultimate findings of fact but not with respect to primary findings of fact such as whether the applicant suffered injury on a particular date. Further an ultimate finding of fact, even in the absence of a misdirection, may reveal error of law if the primary facts found are necessarily within or outside a statutory description and a contrary decision has been made, Hope v Bathurst City Council (1980) 144 CLR 1 at 10; Australian Gas Light Co v Valuer-General (1940) 40 SR (NSW) 126 at 13857 WN 53 at 55. The decision here assailed is not of that character.”

30. In Bruce v Cole, a case dealing with judicial review of an administrative decision, Spigelman CJ referred to the line of authority, including Azzopardi, excluding perverse (or similarly described) decisions from the ambit of review on the grounds of error of law and said (at 189C):

“Azzopardi and subsequent cases involved the proper construction of a statutory formula which limits appeals to ‘errors of law’. The issue turned on the intention of parliament. Different considerations arise in the development and application of common law principles identifying the proper basis for judicial review of administrative action. In my opinion, at common law, a decision-maker who acts without probative evidence — to which conduct the word ‘perversely’ has appropriately been attached — does not make a valid decision. It is the equivalent of acting without evidence.”

31. Notably, his Honour went on to consider the particular statutory context, which supported the view that “the common law principle, that an illogical inference does not in itself constitute an error of law” did not apply in the context of the review of the administrative decision with which his Honour was dealing (at 189F).

32. The appellant additionally relied on Ballina Shire Council v Knapp [2019] NSWCA 146. In that case, Payne JA, with whom the other members of the Court agreed, was concerned with the question of error “in point of law”. His Honour (at [37]) acknowledged the well-known principal that any “no evidence ground” may be characterised as a “decision of a question with respect to a matter of law”, referring to Kostas at [59], or as “a question of law”, referring to Kostas at [90]-[91]. His Honour said, in relation to a no evidence ground, in a formulation notably broader than Azzopardi (at [38]):

“The relevant question is whether there was evidence available from which the Deputy President could draw inferences and make findings. Whether the evidence was sufficient was a matter for the Deputy President to determine, so long as the evidence taken into account could be described as rationally probative of the existence of a fact in issue.”

33. In support of that formulation, his Honour referred to the reasons of Basten JA in Amaba Pty Ltd v Booth [2010] NSWCA 344 at [21]-[24]. It is helpful to set out those passages of Amaba Pty Ltd v Booth, together with [25] and [26] of that judgment:

“21   That question aside, it is necessary to address the respondent’s argument that, once the medical evidence tendered on behalf of Mr Booth is held to be properly admitted, it will not be open to the appellants to challenge findings based on that evidence because it will be impossible for them to say that there was no evidence capable of supporting the findings of the trial judge. In accordance with statements by Glass JA (Samuels JA agreeing) in this Court in Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 and the statement of Mason CJ in Australian Broadcasting Tribunal v Bond [1990] HCA 33; 170 CLR 321 it was submitted that no broader claim is permitted. As explained by Mason CJ at 356:

‘Thus, at common law, according to the Australian authorities, want of logic is not synonymous with error of law. So long as there is some basis for an inference – in other words, the particular inference is reasonably open – even if that inference appears to have been drawn as a result of illogical reasoning, there is no place for judicial review because no error of law has taken place.’

22    However, as I noted recently in Goodwin v Commissioner of Police [2010] NSWCA 239 at [12], some doubt has been cast on the scope and operation of that principle by reference in later judgments to the need for findings or inferences of fact to be supported by ‘logical grounds’: see Re Minister for Immigration and Multicultural Affairs; Ex parte Appellant S20/2002 [2003] HCA 30; 77 ALJR 1165 at [52] (McHugh and Gummow JJ, Callinan J agreeing); Minister for Immigration and Multicultural and Indigenous Affairs v SGLB [2004] HCA 32; 78 ALJR 992 at [38] (Gummow and Hayne JJ); Minister for Immigration and Citizenship v SZMDS [2010] HCA 16; 240 CLR 611 at [40] (Gummow and Kiefel JJ, dissenting); cf [113], [119] and [129]-[130] (Crennan and Bell JJ).

23    Implicit in the statement that there is no evidence to ‘support’ a particular finding, is the characterisation of a relationship between the evidence and the finding. It is the same relationship inherent in the concept of ‘relevance’, on which the laws of evidence depend. That relationship depends on a process of reasoning which must be logical or rational. Thus, evidence is relevant which, if accepted, ‘could rationally affect (directly or indirectly) the assessment of the probability of the existence of a fact in issue in the proceeding’: Evidence Act 1995 (NSW), s 55(1). As explained by Gleeson CJ, Heydon and Crennan JJ in Washer v Western Australia [2007] HCA 48; 234 CLR 492 at [5]:

‘The word ‘rationally’ is significant in this context. In order to establish relevance, it is necessary to point to a process of reasoning by which the information in question could affect the jury's assessment of the probability of the existence of a fact in issue at the trial.’

24    Whether an inference is reasonably open, in the sense of being logically available, involves an evaluative judgment, which is to be assessed by the court exercising appellate or supervisory jurisdiction.

25    Although it appears not to have been addressed in these terms, it seems that the reviewing court should make its assessment, based on findings of primary fact made by the trial judge, as an exercise of its own judgment, rather than by analysing the cogency of the reasons given by the primary judge. This point may be significant, depending upon whether the challenge is directed to inferences drawn from primary facts, or to the findings of primary facts themselves, which are said not to be supported by the evidence. As a practical matter, of course, it is neither appropriate nor necessary to disregard the reasons given by the primary judge for reaching a particular conclusion.

26 These issues were not addressed in the course of the appeal, but it is convenient to assume that illogicality, in the sense noted at [23] above, can be relied upon by the appellants as a basis of challenge to facts found or inferences drawn by the primary judge, as demonstrating error of law.”

34. Having regard to the decision in Ballina Shire Council v Knapp, I am of the view that I should proceed on the basis that illogicality as described in Amaba Pty Ltd v Booth (at [23]) is sufficient to found an error of law essentially the equivalent of a no evidence finding.

Ground 1(a) – the primary judge found that Ms Chou had become estranged from the respondent where there was no evidence to support such a finding

35. The appellant contends that there was no evidence that Ms Chou “became estranged” from the respondent. The primary judge referred to Ms Chou’s evidence that the relationship ended one month after a conversation in which the respondent told her that if she kept asking about the payment she could “leave [his] home for good”. The appellant notes that, having referred to this evidence, his Honour immediately observed that the circumstances under which the relationship ended “are not known”.

36. The Macquarie Dictionary, online ed, October 2023 defines “estranged” as follows:

“estranged

/əˈstreɪndʒd/ (say uh'straynjed)

adjective 1.  no longer in a previously close or affectionate relationship with someone: his estranged brother.

2.  (of a spouse) no longer living with their partner: an estranged wife.”

37. As set out above, Ms Chou, in her affidavit, stated that she had been in a personal relationship with the respondent between June 2018 and January 2019. Ms Chou records having referred to the respondent as her boyfriend in the conversation with the appellant in August 2018. The clear effect of Ms Chou’s affidavit is that she had been in a girlfriend/boyfriend relationship with the respondent, which ended in January 2019. There was no direct evidence as to the state of the relationship after January 2019. However, what was clear was that the relationship had changed from a boyfriend/girlfriend relationship. This was evidence that Ms Chou was, by the time of her affidavit, “no longer in a previously close or affectionate relationship” with the respondent, consistent with the above dictionary definition. There was, in this regard at least, evidence that the respondent and Ms Chou were “estranged”.

38. The above conclusion does not fully answer the appellant’s complaint. She submits that the better view of his Honour’s reasons is that by “estranged”, his Honour intended to impart a sense that the circumstances of the separation involved hostility, or something similar. The appellant made the allied submission that if his Honour meant no more than that they were no longer partners, the finding could have no bearing on the reliability of Ms Chou’s affidavit. In other words, the conclusion as to estrangement was either one as to which there was no evidence, or, one that was irrelevant to any finding as to whether the affidavit could be relied upon. Either way, in the appellant’s submission, the result was a conclusion with respect to the affidavit that was reached through a process that was “irrational, illogical and unsupported by any evidence”.

39. The finding that Ms Chou and the respondent were estranged needs to be seen in the context of all the evidence. As noted above, the Chou affidavit suggested some disharmony in the relationship as at December 2018. On the respondent’s case, the conversation Ms Chou deposed to, in which the respondent indicated his frustration with her, was necessarily a fiction. Irrespective of where the truth lies, it does indicate a willingness to show the respondent in a negative light. (Of course, that, and the remainder of her evidence, may have been based on a desire to tell the truth.)

40. Of more significance, to my mind, is the context of the relationships between all three persons, the appellant, the respondent, and Ms Chou. Ms Chou described the appellant as her friend and said she had known her since June 2018. The appellant also described Ms Chou as her friend. The respondent, in his evidence, said that the appellant and Ms Chou were “really close friends”. His Honour’s finding that Ms Chou was estranged from the respondent was relevant this context. It had the result that the relationship between Ms Chou and the respondent was no longer as significant, in circumstances where there was no suggestion the relationship between the appellant and Ms Chou had changed. The evidence made it more likely that Ms Chou was in the appellant’s camp rather than the respondent’s camp. The change in the relationship between Ms Chou and the respondent was therefore relevant. Reliance by his Honour on Ms Chou having become “estranged” was not illogical in the relevant sense. Put another way, the appellant has not established that there was no evidence that Ms Chou was relevantly estranged from the respondent. Nor do I regard the finding as unreasonable, illogical, or irrational in the sense discussed above.

41. Ground 1(a) must fail.

Ground 1(b) – the primary judge determined that, because Ms Chou had become estranged from the respondent and was not available for cross-examination (because she had died), her evidence ought to be given no weight. That finding was illegally unreasonable, irrational and/or illogical

42. The appellant complains, under this ground, that having admitted the evidence (without limitation) and having heard all the evidence and argument in the case, his Honour determined it would be given no weight. With respect to this argument, had the primary judge indicated that the weight to be given to the evidence of Ms Chou was affected by her unavailability for cross-examination, there could be no complaint. Nor could there have been any complaint had his Honour assessed the affidavit in the context of all the evidence and rejected it as inconsistent with other evidence which he accepted. However, the appellant contends that prior to any assessment or weighing of the evidence, the affidavit was rejected out of hand, on the sole basis that the deponent was (in the terms I have used above) in the appellant’s camp and unavailable for cross-examination.

43. There is no issue that the weight to be given to the Chou affidavit was a matter for his Honour. There is a significant body of authority dealing with the weight to be given to evidence of witnesses an opponent has not had an opportunity to cross-examine.

44. In Amalgamated Television Services Pty Ltd v Marsden [2002] NSWCA 419, in the context of a witness who gave oral evidence but was discharged prior to cross-examination, the Court (Beazley, Giles and Santo JJA) said (at [188]-[191]):

“188   There appears to be no direct authority as to how a court should deal with the evidence of a witness discharged in such circumstances. There is, however, some authority as to how to deal with evidence upon which there has been no opportunity to cross-examine, because, for example, a witness had died. It has been held that such evidence is admissible but that the ‘court [would] not attach so much weight to it as it would have been done if there had been an opportunity of cross-examination’, Daniell’s Chancery Practice, 6th Ed, p 786’: Estex Clothing Manufacturers Pty Ltd v Ellis & Goldstein Ltd (1967) 116 CLR 254 at 263. In that case, a witness who had died by the time the trial came on for hearing swore two contradictory affidavits. Windeyer J said at 263:

‘The latter I think makes the former of no weight; and it can itself be of little or no weight in the circumstances, except to the extent that it is supported by documents which accord with other evidence to which I shall come later.’

189    Abadom v Abadom (1857) 24 Beav 243 is to the same effect. There it was held that whilst an affidavit of a witness who had died could be read, the court would ‘pay much less attention to it than the other evidence’.

190    The case of R v Stretton (1988) 86 Cr App Rep 7, is perhaps closer to this. The complainant in a sexual assault trial took a series of epileptic fits during the course of her cross-examination. She was discharged from giving further evidence. The trial judge allowed the trial to proceed but gave the jury a warning in terms that if they were of the view that the defendant was deprived of the opportunity of properly testing and probing the complainant’s evidence, he ‘advised’ they should acquit the defendant. If, however, as a matter of ‘commonsense and fairness’ they considered they had had ‘a fair and complete opportunity of judging her credibility’ they should assess the case accordingly. The English Court of Appeal held that it was a matter for the trial judge’s discretion as to whether to permit the trial to continue and no error had been shown in the manner in which he had exercised that discretion.

191    Likewise, in Meyer v Hall (1972) 26 DLR (3d) 309, it was held that it was a matter for the discretion of the trial judge as to the weight to be given to the evidence of a witness who could not be cross-examined, including if the trial judge thought appropriate, ignoring the evidence.” (emphasis in original)

45. See also Herron v HarperCollins Publishers Australia Pty Ltd (2022) 292 FCR 336; [2022] FCAFC 68 at [521]-[530].

46. The respondent, before me, stressed the approval of Meyer v Hall (1972) 26 DLR (3d) 309 in the passage set out above and, in particular, the entitlement of the primary judge to ignore such evidence. That was expressed, however, on the basis that the evidence could be ignored if the primary judge “thought appropriate”. Significant solemnity and responsibility attaches not just to giving evidence, but also to swearing or affirming affidavits. To dismiss entirely the content of an affidavit solely on the basis that the deponent could not be cross-examined is tantamount to finding the deponent had committed a serious criminal offence, at least if the rejection carries with it the implication the affidavit was knowingly false. Given the content of Ms Chou’s affidavit, that is certainly the implication here.

47. Read in isolation, his Honour’s statement “because [Ms Chou] became estranged from the [respondent], and was not available for cross-examination, I place no weight on her evidence, and in my view her affidavit has no probative value” is open to criticism. With the exception of the suggestion the witness was in the appellant’s camp, there is no reasoning as to why the inability of the respondent to test the witness through cross-examination alone, would result in her evidence having no value.

48. The reasons, however, must be read in their entirety. His Honour structured his reasons by providing an introduction, the procedural history, summaries of the respective cases and submissions, before the resolution of the matter under the heading “Findings and conclusions”.

49. In detailing the procedural history, his Honour said (at [30], set out above), that the at the time of its tender, the affidavit was admitted on the basis its weight “would depend on the totality of the other evidence”. By the time of his Honour’s decision, the time for determining that weight, based on all the evidence, had clearly arrived.

45. On this appeal, the appellant was critical of his Honour’s treatment of the affidavit as “controversial” (at [30] of the reasons). At the hearing in the Local Court, counsel for the respondent indicated that he had not received the Chou affidavit. It became apparent that the appellant had filed and served the Chou affidavit earlier as part of the material relied upon by her to set aside the default judgment which was obtained by the respondent on 19 May 2021. The affidavit was not, however, referred to in a letter sent by the appellant by email on 13 July 2022 indicating the evidence she intended to rely upon at the hearing. In the course of the discussion, his Honour noted the version of Ms Chou was diametrically opposed to that of the respondent, and that, in the absence of cross-examination, and impliedly, at that stage of the hearing, he did not know what probative value the evidence had. His Honour indicated he would admit the affidavit, but its weight would be “a matter for submission, particularly given the [respondent’s] inability to cross-examine the deponent”. While the appellant’s failure to refer to the Chou affidavit in her letter setting out the evidence relied upon at hearing might be seen in the context of the fact she was, at that stage, unrepresented, I do not accept the appellant’s criticism of his Honour’s reference to the Chou affidavit as “controversial”.

46. Having noted that the Chou affidavit would be admitted subject to its weight being determined with regard to all the evidence, his Honour subsequently set out the appellant’s case. His Honour again (at [53], set out above) referred to the Chou affidavit, and again indicated that he allowed it to be read, subject to weight. His Honour then set out, in some detail, the contents of the Chou affidavit. In recounting the appellant’s submissions, his Honour noted that the appellant relied on the Chou affidavit.

47. Having made the various references to the affidavit referred to above, his Honour, under the heading “Findings and conclusions”, made the impugned finding (at [89], set out in full above) that “because [Ms Chou] became estranged from the [respondent], and was not available for cross-examination, I place no weight on her evidence, and in my view her affidavit has no probative value”.

48. His Honour then provided reasons as to why he regarded the respondent’s submissions as compelling, referring to the quality of the evidence of the respondent and the appellant respectively, and the extent to which that evidence was, or was not, supported by other evidence. As noted above, the effect of the appellant’s complaint is that the evidence of Ms Chou was not weighed in this process.

49. In assessing his Honour’s reasons, the observations of Basten JA in Resource Pacific Pty Ltd v Wilkinson [2013] NSWCA 33 at [48] (Beazley JA agreeing), are to be borne in mind:

“When an appellate court is invited to find that a trial judge provided inadequate reasons, it is important to understand the nature of the function being invoked. It is not the function of an appellate court to set standards as to the optimal, or even desirable, level of detail required to be revealed in reasons for judgment. Rather it is to determine whether the reasons provided have reached a minimum acceptable level to constitute a proper exercise of judicial power. Transparency in decision-making is an important value, but it is not cost free, and may involve separate parameters of quantity and quality.”

55. See also Lee, Matthew v R [2016] NSWCCA 146 at [24]-[25].

56. It is clear, on reading the entirety of the reasons for judgment, his Honour was well aware of the content of the Chou affidavit and its capacity to support the appellant’s case. His Honour, earlier in the reasons, made reference to the weighing of that affidavit against the other evidence in the case. While his Honour’s reasoning is perhaps infelicitously expressed, I would not infer that his Honour had simply forgotten these considerations when he came to the final section of his reasons.

57. It follows that I would infer that his Honour did have regard to the other evidence in the case, together with his findings as to Ms Chou’s alignment with the appellant and the inability of the respondent to cross-examine her, in coming to his conclusion that the evidence should be given no weight.

58. His Honour’s finding that the affidavit should be given no weight was based on evidence. It was not illogical or irrational in the relevant sense. While the appellant also complained of “unreasonableness” under this sub-ground, this does not add to the argument.

59. Included in the appellant’s complaint under this ground was a submission that his Honour failed to perform an assessment of the competing issues in the manner which ss 135 and 136 of the Evidence Act 1995 (NSW) dictate. The argument must be rejected. His Honour admitted the evidence. Once admitted, the probative value of the evidence was a matter for his Honour. The appellant can have no complaint with respect to the failure to apply tests applicable to admissibility (or in the case of s 136 of the Evidence Act, limited admissibility).

60. It follows that the appellant’s complaint under this sub-ground must be rejected.

Ground 1(c) – in so far as the primary judge purported to assess the probative value of the Chou affidavit, his Honour (i) misapplied the test for doing so by not taking the evidence at its highest; (ii) had regard to matters that could not rationally or logically bear upon that question; and/or (iii) failed to provide any, or any adequate, reasons for that finding, and thereby failed to consider the Chou affidavit

61. The appellant’s complaint under this sub-ground can be dealt with relatively briefly. It is similar to the argument at [59] above. The appellant notes that the dictionary to the Evidence Act defines “probative value” as “the extent to which the evidence could rationally affect the assessment of the probability of the existence of a fact in issue”. As the appellant submits, this requires an assessment of the capability of the evidence to support the case of the tendering party: IMM v The Queen (2016) 257 CLR 300; [2016] HCA 14. That assessment, is, however, for the purposes of applying the various provisions of the Evidence Act that require an assessment of the probative value of the evidence: see Evidence Act, ss 97, 98, 101, 135, 137. Once any threshold test of admissibility has been passed, it is for the tribunal of fact to determine the weight to be given to the evidence. At this point, while evidence may have had a capacity to support a party’s case it is, plainly, open to the tribunal of fact to reject the evidence, or, in other words, to regard the evidence as not, in fact, probative of any fact in issue. Having admitted the evidence, there was no obligation on his Honour to take the evidence at its highest. To the contrary, it was necessary to have regard to matters relevant to the weight of the evidence.

62. In so far as the appellant complains (in ground 1(c)(iii)) that his Honour failed to provide “any, or any adequate, reasons” for his finding as to the probative value of the Chou affidavit, I understand this to be a complaint with respect to the reasons for not taking the evidence at its highest, and the complaint must fail for the reasons I have given. Insofar as it is a complaint with respect to the reasons more generally, that complaint has been dealt with in the context of grounds 1(a) and (b). It follows that ground 1(c) is rejected.

Ground 1(d) – the primary judge determined to place no weight on the Chou affidavit by applying an incorrect test which incorporated the finding that Ms Chou had become estranged from the respondent with the fact that Ms Chou was not available for cross-examination

63. The appellant submitted, by reference to what was said in Australian Securities and Investments Commission vRich (2005) 218 ALR 764; [2005] NSWCA 152 at [163], that “[b]y ‘not … conduct[ing] any systematic analysis of the probative value’ of the Chou Affidavit, and instead relying on the matters of estrangement and unavailability for cross[-]examination, the primary judge erred in law in the assessment of the probative value of the evidence”. As indicated above, I do not accept that in assessing the Chou affidavit, his Honour was not mindful of the evidence in the case more generally. This complaint must fail.

Conclusion with respect to ground 1

64. Each of the sub-grounds fail for the reasons set out above. To the extent the appellant also pointed to the inadequacy of reasons, that complaint has also been dealt with. While the reasoning process was not completely transparent, the reasons are sufficiently clear to satisfy me that considerations beyond Ms Chou’s alignment and her unavailability for cross-examination were taken into account in determining the weight to be given to the Chou affidavit. Those considerations included the inconsistency between the Chou affidavit and the evidence of the respondent; the terms of the agreement; and the contemporaneous WeChat messages relied on by the respondent.

Ground 2 – the deed of settlement

65. The appellant asserts that the primary judge erred by admitting a deed of settlement made between the parties. Two sub-grounds were advanced by the appellant.

The deed of settlement and its consideration by the primary judge

66. On 31 January 2022, a deed of settlement was entered into by both parties. In essence, the deed provided that the appellant was to pay the respondent $40,000 in exchange for the Watch and was entered into “without admission of liability” of either party. The terms of the deed stated that “the contents of this Deed, the fact of this Deed, and any terms or incidental to this Deed are to remain confidential and must not be disclosed to any person”, except in certain listed circumstances which are not presently relevant.

67. The primary judge accepted the respondent’s submission that entry into the deed was evidence supporting the contention the appellant had received the loan amount. His Honour said (at [91]):

“In my view, the [respondent’s] submissions in relation to the contemporaneous material, including the deed of settlement, are compelling.”

68. His Honour continued (at [97]):

“I am satisfied that the various messages in evidence, including the WeChat screenshots, were sent by the [appellant], and that the totality of the contemporaneous material, including the Deed of Settlement, appropriately interpreted and analysed, constitute acknowledgments on her part that she in fact received the money the subject of the loan. …”

69. His Honour had, earlier in his reasons, recorded the respondent’s submission as to the significance of the Deed (at [83]):

“... in relation to the deed of settlement again there’s no explanation offered by the [appellant] as to why she would agree to this deed if the principal had not been advanced. The only inference in my submission that is available is that this deed is predicated on an acceptance that the loan occurred and the parties were attempting to resolve their differences through Ms Ying’s payment of the bulk of what was owed and Mr Hou's return of the watch.”

The significance of the deed to the primary judge’s decision

70. Before turning to the sub-grounds as advanced by the appellant, it is convenient to first to address a preliminary issue raised by the respondent which would, if correct, obviate the need to consider this ground. The respondent submitted that his Honour reached his conclusion by two separate paths of reasoning. Firstly, on the basis of his acceptance of the respondent over the appellant, and secondly, on the basis of various documents admitted into evidence. The respondent submitted that this ground must fail on the basis that the deed was simply one matter relied upon by his Honour in the course of the second path of reasoning, and thus, his Honour’s reliance on the deed had no impact on the result.

71. The argument, in my view, fails for reasons similar to those given above with respect to the appellant’s attempt to read parts of his Honour’s reasons as independent of other parts. In dealing with the credit of the respondent, for example, I cannot accept that his Honour was not at the same time mindful of the evidence matrix more generally. Immediately prior to considering the credit of the respondent and the appellant, his Honour indicated his view that the respondent’s submissions as to the documentary evidence were compelling, and then returned to that evidence after his discussion of the evidence of the respondent and the appellant. The primary judge’s findings inevitably involve a synthesis of various matters, including the deed, leading to the acceptance of the respondent’s case.

72. It is not to the point that other evidence was capable of establishing the respondent’s case. The present case is distinguishable from cases relied on by the respondent involving independent paths of reasoning: see Young v Legal Profession Complaints Committee [2022] WASCA 52 at [225]; Leichhardt Municipal Council v Seatainer Terminals Pty Ltd (1981) 48 LGRA 409 at [419]. Nor could I be satisfied that his Honour’s reliance on the deed was (assuming it to have been an error) not material or operative: cf Sydney Water Corporation v Caruso (2009) 170 LGERA 298; [2009] NSWCA 391 at [56]; Workers Compensation Nominal Insurer v Al Othmani [2012] NSWCA 45; (2012) 10 DDCR 290 at [92]. It is therefore necessary to consider the appellant’s arguments under this ground.

Ground 2(a) – the primary judge erred in law by admitting evidence of a deed of settlement made between the parties on a without admission basis in that his Honour misconstrued the terms of that agreement

73. The appellant, by ground 2(a), asserts an error of law in admitting the evidence of the deed. In her submissions, however, the complaint was that his Honour erred in his reliance on the deed as a result of his failure to “appropriately interpre[t] and analys[e]” the deed. The appellant points to the entry into the deed “without admission of liability by any of the [p]arties” and submits that his Honour either misconstrued or overlooked the basis upon which the appellant entered into the deed. The appellant submits that a finding the deed constituted an acknowledgement of liability was directly contradicted by the deed and this finding involved an error of law. In this regard, the appellant observes that the proper construction of a contract, such as a deed of release, involves a question of law, citing Cripps v G&M Dawson Pty Ltd [2006] NSWCA 81 at [46].

74. Contrary to the appellant’s submissions, the primary judge was not concerned with construing the legal effect of the deed. Neither party relied on the legal effect of the deed. Rather, his Honour was concerned with the fact that the appellant had entered into a deed in the terms in which she did and any inference to be drawn from that act. The deed having been admitted into evidence, it was open to his Honour to consider that it was unlikely to have been entered into in those terms had the money in fact been advanced by the respondent. The fact that the deed was entered into on the basis that it was “without admission of liability” was simply part of the factual matrix. This fact certainly warranted care being taken before accepting the submission of the respondent that the “deed [was] predicated on an acceptance that the loan occurred”. However, that did not change the nature of the exercise as one of fact-finding.

75. I accept that, in considering the relevance of the appellant’s entry into the deed, there were various considerations at play. These included the appellant’s evidence as to the sentimental value of the watch, which together with its monetary value meant she was prepared to, in effect, buy it back pursuant to the settlement deed. Quite apart from this consideration, and perhaps more significant, were the potential best-case and worst-case scenarios for each party, the parties’ assessment of the strength of the respective cases, and their appetite for risk. Alternatively, it was possible that the appellant would not countenance the (voluntary) payment of any money to the respondent in circumstances where she owed him nothing. While this possibility was contradicted by the appellant’s evidence, his Honour made adverse findings with respect to her credit, leaving this possibility open.

76. None of the above considerations, affects the conclusion that his Honour’s reliance on the deed was for the purposes of drawing an inference of fact. Nor, as discussed above, did his Honour rely solely on the deed to find the money had been paid. It was but one factor that, in his Honour’s view, pointed in that direction. The various considerations referred to above might demonstrate that his Honour’s reasoning was, at least arguably, lacking. But that is not to deny that it was a finding of fact. As noted by Payne JA in Ballina Shire Council v Knapp at [38], in the passage set out above, “whether the evidence was sufficient was a matter for the [primary judge] to determine, so long as the evidence taken into account could be described as rationally probative of the existence of a fact in issue”.

77. Ground 2(a) must be dismissed.

Ground 2(b) – the primary judge erred in law by admitting evidence of a deed of settlement made between the parties on a without admission basis, in that his Honour contravened s 131 of the Evidence Act or the common law privilege applicable to evidence of settlement negotiations

78. Section 131 of the Evidence Act relevantly provides:

131   Exclusion of evidence of settlement negotiations

(1)     Evidence is not to be adduced of—

(a)     a communication that is made between persons in dispute, or between one or more persons in dispute and a third party, in connection with an attempt to negotiate a settlement of the dispute, or

(b)     a document (whether delivered or not) that has been prepared in connection with an attempt to negotiate a settlement of a dispute.

(2)     Subsection (1) does not apply if—

(a)     the persons in dispute consent to the evidence being adduced in the proceeding concerned or, if any of those persons has tendered the communication or document in evidence in another Australian or overseas proceeding, all the other persons so consent, or

(b)     the substance of the evidence has been disclosed with the express or implied consent of all the persons in dispute, or

(c)     the substance of the evidence has been partly disclosed with the express or implied consent of the persons in dispute, and full disclosure of the evidence is reasonably necessary to enable a proper understanding of the other evidence that has already been adduced, or

(d)    …

(3)     ....

(4)     …

(5)     In this section—

(a)     a reference to a dispute is a reference to a dispute of a kind in respect of which relief may be given in an Australian or overseas proceeding, and

(b)     a reference to an attempt to negotiate the settlement of a dispute does not include a reference to an attempt to negotiate the settlement of a criminal proceeding or an anticipated criminal proceeding, and

(c)     a reference to a communication made by a person in dispute includes a reference to a communication made by an employee or agent of such a person, and

(d)     a reference to the consent of a person in dispute includes a reference to the consent of an employee or agent of such a person, being an employee or agent who is authorised so to consent, and

(e)     a reference to commission of an act includes a reference to a failure to act.

(6)     In this section—

power means a power conferred by or under an Australian law.

79. There was no issue on the appeal that the deed admitted was a document within s 131(1)(b) of the Evidence Act. Thus, it was not admissible absent, in the present circumstances, satisfaction that one of s 131(2)(a) to (c) applied. To determine this question, it is necessary to set out the manner in which the document came to be in evidence.

Circumstances surrounding admission of the deed

80. In an apparent response to orders made by the Court, described by the appellant’s counsel in the course of the hearing before me as a guillotine order (and there was reference in the transcript of the proceedings below to a guillotine order having been made), the appellant, then representing herself, wrote by email to the Court as follows:

“Your Honour, Registrar,

This note pertains to matter Xiaolong HOU v. Yim Hung Ying with case number 2019/00113743.

Apologies again for not attending last Tuesday 05 July 2022. Additional to attachment re illness provided last Tuesday (GP referral and Radiologist assessment and referral to Emergency Department). I have today attached a doctor's certificate dated 05 July 2022.

Please find attached the evidence to comply with Court's order made last week. I attach as follows evidence pertaining to procedure statement of claim:

1)    Deed of release and settlement signed by [respondent] dated 31 January 2022;

2)    Affidavit Yim Hung Ying dated 16 April 2022; and,

3)    Affidavit Yim Hung Ying dated 12 July 2022.

Finally I attach evidence pertaining to cross-claim:

4)    Independent expert assessment outcome: watch [respondent] intended to return [appellant] as if it were the original security provided is actually counterfeit.”

81. The letter continued, referring to the appellant’s medical issues and to difficulties she had faced in uploading the documents as a result her being self-represented.

82. When the matter was called for hearing, the appellant was still self-represented and no interpreter had arrived. (I note that a Mr Zhang was in attendance with the appellant to assist her.) The respondent’s representative handed up a “Court book”. Included in that Court book was an affidavit of the respondent dated 27 July 2023, said to be in reply to the appellant’s evidence provided with the email of 13 July 2023, which annexed a copy of the deed. The respondent, in that affidavit, stated that, in contemplation of settlement in accordance with the deed, he provided the watch which had been provided to him by the appellant as collateral for the loan to his solicitor. He said that his solicitor told him that the appellant was “having questions” as to the authenticity of the watch. As a result, he had the watch appraised and received a report that it was not a genuine Rolex watch. A copy of the report was annexed to the affidavit. An issue arose as to whether the report related to the watch the appellant provided to the respondent as collateral. The original loan agreement made no reference to the serial number of the watch. It is, however, apparent that the deed referred to a watch with a different serial number to the watch with respect to which the report was obtained by the respondent (and which the respondent proposed to provide to the appellant).

83. The primary judge noted that it would be necessary for the appellant to indicate any objections she had to the evidence in that Court book. In the course of discussions, it became apparent that the affidavit of Ms Chou was not included in the Court book, however, his Honour noted that it had been filed by the appellant’s former solicitors. As noted above, after some discussion, the affidavit of Ms Chou was admitted. His Honour continued to discuss the case with the respondent’s counsel.

84. With respect to the deed, the following exchange occurred:

“HIS HONOUR: So am I allowed to admit the evidence of the deed, for example, the $40,000 or is that a without prejudice negotiation?

HOARE: So, your Honour, that was as I understand in the context of settlement negotiations so on the face of it 131 would make that inadmissible.

But I understand that the [appellant] has wanted to adduce that into evidence herself.

HIS HONOUR: Really?

HOARE: She has attached that to her own material served on us. So in those circumstances unsurprisingly we consent.

HIS HONOUR: Maybe she’s waiving any privilege relating to without prejudice negotiations. I don't know. But certainly the text messages and all of those annexures, they are all admissible one would have thought as admissions against interest.

HOARE: Yes.”

85. Discussion continued between his Honour and the respondent’s counsel as to the affidavits relied on by the appellant. His Honour referred to the content of the appellant’s second affidavit:

“HIS HONOUR: And that goes to the -

‘I am the [appellant]. I went to inspect the security. [The respondent] provided a watch .. for us to inspect.. and claim it is my watch. I took the watch to Master Watchmaking at World Square to check the originality of the security. I soon was informed that the watch which [the respondent] supplied for the inspection is a counterfeit watch. I discovered that [the respondent] initiated this proceedings against me about the loan again.’

So what's she saying there?

HOARE: I anticipate from this that she had understood that the settlement deed had the effect of discharging the proceeding irrespective of it eventually falling over and she annexed the settlement deed to this affidavit and she refers to its contents at 2 and 3, which is why I anticipate she seeks to introduce the settlement into evidence.

HIS HONOUR: And she hasn't put on a defence to that effect. She’s not relying on the deed. No?

HOARE: No.

HIS HONOUR: So that's not relevant either.

HOARE: No, and in any event, your Honour, on its proper--

HIS HONOUR: And I wondered whether what she was saying - we will wait and see what she does say - whether she's saying that the watch which is the subject of the evidence of the expert was not the watch she gave him.

HOARE: I anticipate that's the case. Of course we say the opposite.

HIS HONOUR: We will wait and see whether that’s what’s she’s saying, but she's not said it anywhere really yet, has she?

HOARE: No, it's not anywhere in the pleadings.”

86. The matter was adjourned to await the arrival of the interpreter. On resumption, his Honour clarified with the appellant the evidence on which she relied:

“HIS HONOUR: So we now have all of the relevant evidence-in-chief which is in documentary form. You are relying on your affidavit of 16 April 21.

INTERPRETER: Yes.

HIS HONOUR: Your affidavit of 12 July 2022.

INTERPRETER: Yes.

HIS HONOUR: And the affidavit of Ying Chou - that's C-H-O-U - who we all know as Yuki of 16 April 2021, and you understand that's all of the evidence that you rely on. Do you agree with that?

INTERPRETER: Yes.”

87. It might be noted, his Honour did not expressly refer to the deed as part of the evidence on which the appellant sought to rely. As is apparent from the earlier exchange, the appellant’s affidavit of 12 July 2022 made express reference to the deed, although it did not purport to annex it. The body of that affidavit is relatively short and can be set out in full:

“1   I am the defendant to this proceeding.

2   On 31 January 2022, I entered into a deed of settlement and release with Xiaolong Hou and dismissed the proceeding on a party party cost basis.

3    Oh 7 February, I went to inspect the security pursuant to section 4 of the settlement deed.

4    HOU provided a watch for us to inspect and claim it is my watch.

5    I took the watch to master watchmaking at world square 10 check the originality of the security.

6   I soon informed that the watch which Hou supplied for the inspection is a counterfeit watch.

7   I discovered that HOU initiate this proceeding against me about the loan again.”

88. His Honour indicated that the next step in the proceedings was for the appellant to be cross-examined on her affidavits, and the appellant was affirmed. (It is not clear why the respondent was not cross-examined in his case first.) In the course of her cross-examination, the appellant was taken to photographs of a watch. When asked by his Honour as to the provenance of the photographs, the respondent’s counsel said:

“These photos that the witness has just confirmed as being of the watch are annexed to the deed of settlement that she has attached to her own affidavit, and has read into evidence as I understand.”

89. Close to the end of the appellant’s cross-examination, the following exchange occurred:

“[HOARE:] But so this is my I believe final question.

HIS HONOUR: I'm happy for you to ask her about the deed.

HOARE: So am I able to proceed, your Honour, on the basis she has introduced into evidence 131, consent is there?

HIS HONOUR: Yes.

HOARE: Thank you, your Honour.

HIS HONOUR: In my view any privilege that may have attached to that deed has been waived.

HOARE: Thank you, your Honour. Perhaps I was being too cautious in not going there, but I think that’s —”

90. Reference was then made by his Honour to s 131 of the Evidence Act. His Honour appears to have consulted the provision at this point and said “Yes, I think that [s 131(2)] clearly applies”. The appellant, on this appeal, pointed to this determination having been made after the deed had already been admitted.

91. The appellant was then cross-examined on why she would agree to the settlement, and in particular, why she would agree to pay $40,000 for the return of a watch which, on the evidence she had led, was worth $35,000. The unstated premise of the questioning was that she would not have done so if she did not also owe the respondent the money he said he had lent her. On a fair reading of her evidence, her answer to that was that the watch was worth much more to her than $35,000, and she would be prepared to pay $100,000 for it as a result of its sentimental value.

Was there waiver?

92. I have set out the circumstances and evidence surrounding the admission of the deed in some detail given the appellant’s contention that there was no waiver, and the deed was therefore inadmissible. What then, did the appellant do that might be regarded as waiver? In essence, she sent a copy of the deed to the Court. It was not annexed to any affidavit, nor apparently attached to any affidavit, though it would appear both were electronically “attached” to the covering email. The respondent submits that, in substance, she did annex it to the affidavit but, being self-represented, did not do so formally. She did not object to the respondent’s affidavit which did annex the deed. That affidavit was filed in response to the appellant’s email attaching her affidavits and the deed. The appellant’s affidavit of 12 July 2022 did refer to the deed but did not disclose anything of its terms, other than the result which was the dismissal of the proceedings on a party/party costs basis.

93. The appellant was at a clear disadvantage. She was unrepresented and English was not her first language. While the appellant may have given ostensible consent to the admission of the deed, she contends that there was no “informed” consent and relies on the observations of Young CJ in Eq in Hyhonie Holdings Pty Ltd v Leroy [2003] NSWSC 520 (“Hyhonie”).

94. The circumstances in Hyhonie were, as the respondent points out, somewhat different. There, the evidence had been admitted in other proceedings. The party seeking to resist the tender had objected to the evidence on the basis of relevance but failed to object on the grounds that the evidence disclosed settlement negotiations. The evidence was admitted. Young CJ at Eq, framed the question (at [10]) as “if a person objects to evidence on the ground of relevance, but does not take any other objection, such as an action under s 131 of the Evidence Act, and the judge overrules the objection … can that be said to be evidence disclosed with the implied consent of the [party]?”.

95. Young CJ in Eq said (at [11]):

“There is no definition of ‘consent’ in s 131 and, as far as I am aware, there has been no decision of a superior court, in the parts of Australia where this Act is in force, on the ambit of the term ‘consent’. The term is, however, used in other parts of the Act, notably s 122 (1) and in decisions under that section the word appears to have the flavour of a deliberate informed waiver of the statutory rights; see egSunstate Airlines (Queensland) Pty Ltd v First Chicago Australia Securities Ltd, Giles CJ CommD, 26 March 1997; Causley v Savins Giles CJ CommD, 11 April 1997 and Perpetual Trustees (WA) Ltd v Equuscorp Pty Ltd [1999] 1 FCA 925, but cf Garratt's Ltd v Thanga Thangathurai [2002] NSWSC 39.”

96. Young CJ in Eq found that there had been no consent to the disclosure of the proposed evidence. As is apparent, his Honour, in construing “consent” in s 131, relied on its use in s 122(1), which deals with loss of client legal privilege. The respondent points to the fact that s 122 was, at the time of Hyhonie, in a different form. Sections 122(1) and (2), in their current form, provide:

122   Loss of client legal privilege: consent and related matters

(1)   This Division does not prevent the adducing of evidence given with the consent of the client or party concerned.

(2)   Subject to subsection (5), this Division does not prevent the adducing of evidence if the client or party concerned has acted in a way that is inconsistent with the client or party objecting to the adducing of the evidence because it would result in a disclosure of a kind referred to in section 118, 119 or 120.

…

97. Subsection 122(1) has not changed. The primary change is to s 122(2) which, at the time of Hyhonie, provided that, other than in the case of defined exceptions, the Division (dealing with client legal privilege) did not prevent “the adducing of evidence if a client or party has knowingly and voluntarily disclosed to another person the substance of the evidence”. As can be seen, the provision now provides a test of inconsistency. This brings the provision into line with waiver at common law: Mann v Carnell (1999) 201 CLR 1; [1999] HCA 66. The respondent’s point is that the authority referred to by Young CJ in Eq in Hyhonie represented a strand of authority subsequently rejected by the legislature in preference for a broad approach based on inconsistency.

98. While related, it is clear from the structure of s 122 of the Evidence Act that “consent” and waiver, either by “knowingly and voluntarily disclosing” the material (the earlier form of s 122(2)) or acting “in a way that is inconsistent” with maintaining privilege (the current form of s 122(2)) are different things. Further, and more significantly, while s 122 was amended to provide for waiver where the party acts in a manner inconsistent with maintaining privilege, no such amendment was made to s 131.

99. There is no suggestion the appellant was aware that privilege attached to the deed and that, as a result, she could resist its admission into evidence. However, in this case, not only did the appellant not resist its admission (as was the case in Hyhonie), but rather she actively put the material forward in her email to the Court of 13 July 2022. I will return to the significance of this.

100. Section 132 of the Evidence Act is, to my mind, important in the present context. It provides:

132 Court to inform of rights to make applications and objections

If it appears to the court that a witness or a party may have grounds for making an application or objection under a provision of this Part, the court must satisfy itself (if there is a jury, in the absence of the jury) that the witness or party is aware of the effect of that provision.

101. On one view, there was no occasion for objection as the appellant was putting the material forward herself. The proper focus, however, is on the proceedings, not the communications with the Court prior to the commencement of the proceeding. The respondent was the plaintiff below. He was required to present his case first. At the time the respondent tendered his Court book, the appellant had not gone into evidence. At that time, the appellant did have grounds for an objection under Part 3.10 of the Evidence Act.

102. Of course, any grounds for objection to the deed were potentially affected by the appellant’s email of 13 July 2022. It is necessary to consider that email in more detail. The email indicated the deed was part of the evidence she wished to put before the Court. That email was responsive to the court order requiring evidence to be provided. Is not clear what the appellant understood by “evidence”. It is not clear whether she understood there to be an obligation to explain the recommencement of the proceedings and understood the relevance of the deed in that context. Her purpose in providing the deed was never made clear. The appellant did not herself proffer any evidence with respect to the deed (though she was cross-examined on it) or make any submissions on the deed. All that appears to have occurred is that it was used against her. Of course, the fact that consent might be given, which later becomes clear to have been ill-advised, does not mean it was not consent.

103. Section 132 of the Evidence Act provides important context to s 131. It, in essence, makes clear that a person’s silence in the course of proceedings is not consent. This tends to underscore the importance of genuine consent. Had s 132 of the Evidence Act been complied with, some understanding would likely have been gained as to the appellant’s purpose in providing the deed, her understanding of her rights in that regard, and whether she was willing to forgo those rights. In the circumstances of this case, I am not satisfied that the appellant consented, either expressly or impliedly, to the evidence being adduced in the proceeding for the purposes of ss 131(2)(a), 131(2)(b) or 131(2)(c). Nor, by reference to the appellant’s affidavit of 12 July 2022, or the evidence more generally, was there evidence adduced that was likely to mislead the Court in the absence of the deed: cf s 131(2)(g). It follows from the above that his Honour erred in law in admitting evidence of the deed.

Conclusion and orders

104. Despite the simplicity of the issue in the Court below, the appeal was of some complexity. I acknowledge the assistance provided to me by very able counsel on both sides, each of whom presented thoughtful and engaging arguments on behalf of their respective clients. The appellant has been successful on one of her grounds. It follows that the appeal should be upheld. Costs should follow the event. Insofar as the appellant sought that, if successful, she should be awarded her costs in the proceedings below, I do not regard this as appropriate. The costs in the Local Court should be determined by that Court.

105. I make the following orders:

1. The time to file a summons commencing an appeal be extended to 16 December 2022.

2. The appeal be allowed.

3. The orders made on 16 September 2022 by the Local Court of New South Wales be set aside.

4. The proceeding be remitted to the Local Court of New South Wales for determination according to law.

5. The respondent is to pay the appellant’s costs of, and incidental to, the appeal.

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Decision last updated: 31 October 2023